Contact Name:
Jeffrey Upin
Contact Title:
General Counsel
Company:
International Green Power
• When I started my interview, I asked Mr. Upin what exactly his company does because I was a little confused based on what I read from the website. He immediately complimented me on my knowledge of his company because it showed I that I had a true interest in him and his company. He said that knowledge on the company is important for any job candidate.
• Venture capital firms, most notably Khlosa Ventures, have been investing huge sums of money into the green energy sector. With an emphasis on the fact that oil production is going to slow down, he says that this sector shows huge potential for growth. He notes Mutamax, which is a joint venture between BP and Dupont, as a result of the changing landscape. It hopes to create massive amounts biobutamol, a reproducible biofuel.
• When I asked him about investing, he told me that it is all about my preference in investing. For a high risk, high return investor, he would suggest biofuel companies. For a low risk, low reward investor, he suggests wind and solar companies.
Thursday, November 18, 2010
Tuesday, November 16, 2010
Plausible TVA Auction
According to a Wall Street Journal article from Monday November 15th, a clean energy group called the Coalition for the Green Bank (CGB) is set to propose an auction of the Tennessee Valley Authority (TVA), a federally owned corporation in charge of electricity generation among other things. There are several companies like Duke Energy and Southern Co. that could potentially be interested in this sort of purchase. The money from the auction would go to green energy projects, to finance tax breaks for renewable energy, or to balance the growing federal budget deficit, a measure that could appeal to the tea party. This effort comes in the wake of the GOP surge on November 2nd as Democrats are reaching out to Republicans.
Another group, the Center for American Progress (CAP), plans to sign proposals “for how to move beyond legislation to establish a ‘cap and trade’ system,” a bill that never developed in the senate. They are making proposals and announcements to change their strategy, now pushing an agenda that is more investment focused and not reliant on a cap and trade system. The CAP has not endorsed the TVA auction but it relates to its agenda of fostering investment, not forcing it like a cap and trade bill would. As I wrote before, this sort of proposal comes after the November mid-term elections. Environmentalist and clean energy groups have been forced to adapt to a new house majority and compromises will be more important than ever any sort of progress to be made. Both the CAP and the CGB have proposed mandatory investments in clean energy enforced by states and they are beginning a discussion about reclassifying nuclear as clean energy, an argument I have made countless times in this blog. In order to finance these projects, the CAP and the CGB are examining the idea of an Energy Independence Trust that would “provide low-cost financing for ‘clean energy’ and energy efficiency projects,” (WSJ).
I do not think there is anything wrong with this proposed auction. The author of the article, Siobhan Hughes, explained that southern Democrats have been for the auction of the TVA for a long time, and of course Republicans and tea partiers would support it because it would shrink the government. Therefore, it sounds like everybody would agree on this measure. To be honest, the way the proceeds are spent is not the important part of this issue for me. I realize that it would be a huge sum, but the options that I listed in the first paragraph—financing green energy projects, financing tax breaks for renewable energy, or balancing growing federal budget deficit—all sound like pretty logical, wise plans of action to me. I would prefer a smaller government and it seems that every one would agree that the TVA can be auctioned and that the proceeds can finance some useful projects or lighten the debt load.
Hughes, Siobhan. "Shift To Center On Energy: TVA Auction Up For Consideration." Wall Street Journal (2010). Web. 16 Nov 2010.
Enel Green Power's IPO
On Monday, John and I asked the guest lecturer, Marla, what her thoughts were on investing in alternative energies versus in big oil and gas. Her answer was that she would stick with oil and for many reasons. The main reason being that the majority of alternative energy projects rely heavily on government subsidies, and these aren't a guarantee. There is always a demand for oil, and the stocks always seem to be doing well. She said that she won't invest in alternative energy until she sees a company come up with a viable plan to stand on there own. Ironically enough, when I logged into the WSJ today, there is an article about an alternative energy company that recently issued an IPO and is raising concerns due to this issue.
Enel Green Power has issued an Initial Public Offering and took their company public in Italy and Spain. They are an alternative energy company dealing in wind, solar, hydro, and geothermal with a "unusually international reach" (WSJ). Their hydro and geothermal sectors are the majority of their current assets, but have big plans for wind. There market capital is currently at 8 billion Euro, which makes them the 13th largest company in Italy (WSJ). The shares since their IPO have remained flat, which leaves investors weary of the company for several reasons. One of the biggest reasons correlates directly with what Marla said to John and I. People are concerned that governments no longer have the funds to provide subsidies for these renewable energy companies and nobody is sure if the companies can stand on their own. Wind energy is the asset with which they plan to grow, but this is the most expensive and requires the most subsidies, which is another reason for concern to investors. Investors are also concerned due to the company's amount of debt, which it has given plans on how to reduce this and already has reduced it a bit. One last concern is that of the initial shares sold, the majority were to individuals and not to investment firms, which is a cause for alarm in the markets. Enel Green Power is positive that they will perform well in the markets, but have yet to perform.
With the IPO remaining flat, it isn't a good sign for renewable energy in the markets. As very few companies specializing in alternative energies are entering the public market, how the first ones due is very crucial. Although it is still early, the fact remains that in the markets, the first couple of days are key and this one isn't as successful as hoped. This could send signs to other alternative energy firms thinking of doing the same thing. Investors still clearly aren't ready for this, and it seems they won't be until these companies can rely on themselves and not government subsidies. This could also be read as a vote of confidence to the oil industry, as their stocks are still performing brilliantly. When it comes to the markets, people seem to cherish the security of big oil companies and are very uncertain about investing in alternative energy companies.
http://online.wsj.com/article/SB10001424052748703805704575594102623544836.html?mod=WSJ_Energy_leftHeadlines
Enel Green Power has issued an Initial Public Offering and took their company public in Italy and Spain. They are an alternative energy company dealing in wind, solar, hydro, and geothermal with a "unusually international reach" (WSJ). Their hydro and geothermal sectors are the majority of their current assets, but have big plans for wind. There market capital is currently at 8 billion Euro, which makes them the 13th largest company in Italy (WSJ). The shares since their IPO have remained flat, which leaves investors weary of the company for several reasons. One of the biggest reasons correlates directly with what Marla said to John and I. People are concerned that governments no longer have the funds to provide subsidies for these renewable energy companies and nobody is sure if the companies can stand on their own. Wind energy is the asset with which they plan to grow, but this is the most expensive and requires the most subsidies, which is another reason for concern to investors. Investors are also concerned due to the company's amount of debt, which it has given plans on how to reduce this and already has reduced it a bit. One last concern is that of the initial shares sold, the majority were to individuals and not to investment firms, which is a cause for alarm in the markets. Enel Green Power is positive that they will perform well in the markets, but have yet to perform.
With the IPO remaining flat, it isn't a good sign for renewable energy in the markets. As very few companies specializing in alternative energies are entering the public market, how the first ones due is very crucial. Although it is still early, the fact remains that in the markets, the first couple of days are key and this one isn't as successful as hoped. This could send signs to other alternative energy firms thinking of doing the same thing. Investors still clearly aren't ready for this, and it seems they won't be until these companies can rely on themselves and not government subsidies. This could also be read as a vote of confidence to the oil industry, as their stocks are still performing brilliantly. When it comes to the markets, people seem to cherish the security of big oil companies and are very uncertain about investing in alternative energy companies.
http://online.wsj.com/article/SB10001424052748703805704575594102623544836.html?mod=WSJ_Energy_leftHeadlines
Informational Interview With Liberty Tower
Last week I interviewed Felice Gorordo who is a consultant at Liberty Tower and is responsible with the government sales sector. Throughout the interview I learned key aspects of our industry that could help with the final paper. For an example, in the regulations section there are two aspects of the market, the regulated and deregulated, that require different policies and serve different types of consumers. Also, in the entrepreneur section I learned that there is a lot of opportunities for innovation in the renewable energy resources. I also learned that energy corporations are looking for researchers that can invent ways to supply "green energy" with more affordable prices. The Smart Grid is another innovation that is also being highly talked about. When I asked him what part of the industry he would recommend me to invest in, he suggested any sector within the renewable energy area.
Question and Answer:
Q: Can you first tell me about your job at Liberty Tower and what are your responsibilities?
A: “I am in charge of government sales. As we know, Florida is a monopoly, where consumers only have one choice for their energy supply which is FPL. In other states they have up to 16 different companies to chose where their energy comes from and this makes it a competitive market driving costs down. What I do is that I sell energy to the government at the state and national level from an energy source in Connecticut making costs more affordable.”
Q: What employment trends to you see in your industry over the next five years? For example, are you hiring more engineers and salespeople while decreasing the number of administrative support staff?
A: “There are a lot of opportunities in sales, innovation, research, and development especially in global energy.”
Q: In what area of the industry are there opportunities for innovation?
A: “Research development having to do with renewable energy. We are working a lot with wind, solar, ethonal, crude, and coal. The problem with renewable energy is that we have not been able to find a way to make it affordable. That is why there is so much opportunities for innovation, we want to make it affordable so that everyone can participate in it.”
Q: What are key regulatory issues that affect the industry's future prospects?
A: “There are two parts of the market, regulated and deregulated. Regulated are like the monopolies, they produce to distribute. Deregulated cannot do both so there are companies that focus on one aspect. When there are multiple companies, consumers have multiple choices making more competition driving down costs. This is where more regulatory issues come up because the more competition the cheaper consumers want power to be. There is also Cap and Trade where the government puts pressure on energy producers. The government puts a tax based on how much energy was produced and how much it polluted the air. If companies use renewable energy then the tax can be offset or exempt. Each company should participate in green energy to off set the carbon foot print so that taxes are lower. Using green energy gives credit to companies which can be bought and sold on the market for lower taxes. This affects many energy producers and their major consumers that manufacture goods.”
Q: In what area of the industry do you recommend to invest in and why?
A: “I definitely recommend to invest in any renewable energy area, not only in the production but also in the demand and response. In markets that have a high demand they are starting to implement a new technology called Smart Grid. Smart Grid offers to give companies that run big generators the ability to shut off production that uses a lot of energy remotely. The extra energy made through the generators can be sold through the Smart Grid system and they will get paid in either credit or cash. Also, there are a lot of opportunities in clean technology which cleans “brown energy” and lessens the pollution. The reason why I would recommend to invest in these renewable resources are that there are tax incentives involved.”
Wednesday, November 10, 2010
Not So Sure Anymore
“For investors, the energy business used to be a pretty simple play: Buy a stock and stick with it.” Now, the game has changed says Liam Denning. Everything is far more complex. Due to the economic stumble in 2008, the energy industry has been as stable as the infamous BP oilrig.
Oil and gas producers are now suffering from the storm that ensued after the BP debacle. And, alternative energy companies are not doing any better because legislation in their favor has been stalled.
Yet, he states that the biggest problem facing the oil industry is oversupply. New techniques have allowed companies to obtain higher levels of crude and gas, but the demand of oil has gone down. Also, he says that if there is more economic trouble, then the prices of energy will fall even more causing more trouble for energy companies.
Despite the dark clouds looming above, Denning still says there is light; you just need to know where to spot it. He tells us to look for a premature cancellation of the deepwater-drilling moratorium. Some of the new technologies are more expensive than the more traditional types. If the cost of these new techniques does not go down quickly, then supply will go down and prices will go back up, thus pushing up stock prices.
Oil and gas producers are now suffering from the storm that ensued after the BP debacle. And, alternative energy companies are not doing any better because legislation in their favor has been stalled.
Yet, he states that the biggest problem facing the oil industry is oversupply. New techniques have allowed companies to obtain higher levels of crude and gas, but the demand of oil has gone down. Also, he says that if there is more economic trouble, then the prices of energy will fall even more causing more trouble for energy companies.
Despite the dark clouds looming above, Denning still says there is light; you just need to know where to spot it. He tells us to look for a premature cancellation of the deepwater-drilling moratorium. Some of the new technologies are more expensive than the more traditional types. If the cost of these new techniques does not go down quickly, then supply will go down and prices will go back up, thus pushing up stock prices.
My Informational Interview
I did my informational interview with Mark Nutt, who is a section manager at Argonne National Laboratory. He works primarily in nuclear energy, specifically in waste disposal. His interview yielded some interesting points that I think we should consider when making our investment decision. His main points are listed below:
- What Will Determine Growth?: Government funding primarily drives the nuclear energy industry. The industry's growth mainly depends on how the government and the public see nuclear energy relative to other options. My interviewee hopes that “they [the government] have a clue,” because he sees nuclear as a viable option given U.S. energy demand. He expects demand to rise rapidly, which would cause the price of natural gas, currently a major fuel source, to increase quickly. This would make options like nuclear more cost-competitive. He then explained that many renewable energy sources that are focused on right now, such as wind and solar, will not be able to keep up with the growing demand for energy. This is a useful point when considering a long-term investment.
- Short vs. Long Term: He also explained that there is a big push in renewable energy like wind, solar, and battery technology and that government financing is currently behind this movement. He told me that these “renewables” are solid for growth. He also said that for short-term investments, natural gas has potential to grow quickly. For a more long-term investment, he said either nuclear or traditional “renewables” like wind and solar will grow. This would depend on government policy, though.
- A Specific Company: In a more specific suggestion, he brought up an interesting company with a unique business model. It is called Castle Holdings, Limited. They are in the business of going through the licensing process that is required before building a nuclear plant. Essentially, this company finds a site, takes care of the government and all of the regulatory hurdles, and then sells the license and the site to a builder. To me, this sounds like a great investment idea if nuclear grows. I posted an article about an incident in which a nuclear project was going to end because of a dispute between two companies and the government. This sort of company could be useful in averting these disputes and ensuring that nuclear projects do not fail for insignificant reasons.
Tuesday, November 9, 2010
Informational Interview
I did my informational interview with a man who works in Dubai. He is the CEO, owner, and founder of the company The Oil Consultancy. They are consultants dealing with oil, gas, and mining. I learned a great deal from the man and he was quite helpful in providing insights on the industry.
He listed some of his job responsibilities as bringing in new business, procuring mandates, overall management, and dealing with the financials of the company. When I asked him about what types of entry-level jobs his company offers, he told me that they don't hire entry-level, a candidate must have at least 15 years experience. A valuable trait he looks for in potential candidates is the drive to succeed. He stressed the fact that he wants employees who are driven and determined. He said that in the past couple of years, he has seen an immense amount of job growth in the alternative energies sector. He told me of the rising popularity of social responsibility and how that has created many new jobs. Along with this point, he predicts that in the next couple of years, there will be many new jobs in the green sector of the industry. He said what he calls 'specialty' engineers will be where there is future job growth. By this, he didn't mean mechanical or civil engineers, but ones that specialize in things that will help in the green sector, such as radiology or biotechnology. These will be areas of growth because these jobs are needed to expand the alternative energy movement.
When I asked him where he would invest his money in the energy industry, he told me that he would invest in the oil exploration and production sector. He gave many reasons for this. First, there is much opportunity for rapid capital growth here. This sector has the ability to develop it as an investment, meaning it can easily be evolved into trade. Also, the value that lies within this sector could virtually be endless. This was very valuable advice.
This man gave me much useful information and was very accommodating with answering anything I could ask him.
He listed some of his job responsibilities as bringing in new business, procuring mandates, overall management, and dealing with the financials of the company. When I asked him about what types of entry-level jobs his company offers, he told me that they don't hire entry-level, a candidate must have at least 15 years experience. A valuable trait he looks for in potential candidates is the drive to succeed. He stressed the fact that he wants employees who are driven and determined. He said that in the past couple of years, he has seen an immense amount of job growth in the alternative energies sector. He told me of the rising popularity of social responsibility and how that has created many new jobs. Along with this point, he predicts that in the next couple of years, there will be many new jobs in the green sector of the industry. He said what he calls 'specialty' engineers will be where there is future job growth. By this, he didn't mean mechanical or civil engineers, but ones that specialize in things that will help in the green sector, such as radiology or biotechnology. These will be areas of growth because these jobs are needed to expand the alternative energy movement.
When I asked him where he would invest his money in the energy industry, he told me that he would invest in the oil exploration and production sector. He gave many reasons for this. First, there is much opportunity for rapid capital growth here. This sector has the ability to develop it as an investment, meaning it can easily be evolved into trade. Also, the value that lies within this sector could virtually be endless. This was very valuable advice.
This man gave me much useful information and was very accommodating with answering anything I could ask him.
Thursday, November 4, 2010
PANASONIC INVESTS $30 MILLION IN TESLA
Pansonic as we all know it is a company supplying consumer electronics for many countries all over the world. A few of us know that Pansaonic is the world’s leading battery cell manufacturer and one of the biggest automotive industry providers. Recently, Panasonic purchased 30 million dollars worth of stocks from Tesla Motors, a manufacturer of high performance electrical vehicles. The deal was sealed through the purchase of common stocks in a private placement. The deal was struck to expand and elevate the market of electrical vehicles.
Tesla In order to produce advanced battery packs for it’s products, saw this deal as fundamental and crucial to the company. Many people will wonder why I brought up this article in the energy industry blog. Well, the main reason is that Tesla cars are electrical rather than depending on gas. Panasonic aims to be one the leading Green companies in the electronics industry. This vision will propel the cultural corporate image and boost it’s public relations.
http://online.wsj.com/article/SB10001424052748704506404575593162128563810.html?mod=WSJ_Energy_leftHeadlines
Is Biofuel The Future of This Industry?
Bio MCN, one of the leading biofuel manufacturers in the world, has over produced to supply the entire Dutch biofuel gasoline quota for 2010 and more. Biofuel gasoline is produced by vegetables and animal fat and is considered as a renewable energy since it is made from certain types of residue. The positive aspect that biofuel has is that it reduces 78% of the carbon dioxide emissions. This company focuses to expand and influence others around the world to invest in biofuels as well. They strongly believe that this is a great alternative to natural gas and that it could possibly be the future.
Though I am impressed by Bio MCN’s aspirations and accomplishments in expanding and encouraging biofuel, I do not think that it is neither the answer nor the future. All that biofuel does is replace natural gas, and to produce this biofuel natural gas is used. So in the end we are still using harmful substances. This biofuel is great for if and when we run out of oil, but others are looking to alternative resources that use wind, water, and solar to create energy. Burning biofuel can still harm the ozone layer since it is burned substances. It is a great start in looking into other forms of energy, but if this company wants to expand I think they should also consider other options.
Wednesday, November 3, 2010
Top Ten Alternative Energy Companies
The author, Jeffery Martin, starts off by saying this is a “one-in-a-lifetime opportunity” to invest because our green economy is just starting. He compares our opportunity to those who had the chance to invest in AT&T in 1877. But, of course, he says that you must know which particular companies are safe to grow your portfolio.
Topping the list is Winslow Green Growth (WGG). Martin says that the safest investments are those that span the spectrum of risk. WGG is a fund that invests in socially responsible companies.
Number two on the list is WFI Industries. It helps to produce geothermal energy in new buildings. It does this by drilling long pipes more than five feet into the ground and then sending that air, which is basically constant throughout the year, into the building above. This air is warm enough for winter, yet cold enough for summer.
First Solar is ranked third for the sole reason that its solar panels are much cheaper than the rest. Their panels lack silicon.
Fourth on the list is Fuel Tech. He mentions how Fuel Tech has zero profitability but still an egregiously high stock price. He says that this is risky, but he points back to history to others like Google and Amazon that were once in the same position.
Bio-Solutions Corporation rounds out the top five. It offers organic solutions to organic problems. Not only has it developed a method to reduce mortality among industrially farmed poultry, it has discovered innovative ways to fight malaria. All of this is done with chemicals that are eco-friendly.
Sixth is Blue Earth Solutions, which has developed a way to breakdown styrofoam. The brokendown molecules can then be sold back to the Styrofoam producers.
Seventh is Zoltek. Zoltek produces carbon nanofibers. The nanofibers that it produces are extremely strong and equally lightweight. These are purchased by airplanes and car companies to reduce weight and therefore fuel consumption.
At eight is Composite Technologies, which produces some the world’s biggest wind turbines.
Number nine is Plug Power. It produces hydrogen fuel cells that might be the energy of the future. The writer notes that this company has the highest potential.
At bottom of the top is Ormat Industries. It provides alternative and renewable energy solutions. It also owns geothermal power plants.
So what do you guys think? Should we advise others to invest in these companies? Quite honestly, after reading the article, I’m tempted to invest in all of them. Obviously more research must be done. What other criteria do you think we should look for in companies that we plan on investing in? Do you think potential of the these green companies is worth risk? Should we go with the fail-proof option? Or, should we go with both and diversify?
http://www.helium.com/items/1537789-invest-in-green-companies
Topping the list is Winslow Green Growth (WGG). Martin says that the safest investments are those that span the spectrum of risk. WGG is a fund that invests in socially responsible companies.
Number two on the list is WFI Industries. It helps to produce geothermal energy in new buildings. It does this by drilling long pipes more than five feet into the ground and then sending that air, which is basically constant throughout the year, into the building above. This air is warm enough for winter, yet cold enough for summer.
First Solar is ranked third for the sole reason that its solar panels are much cheaper than the rest. Their panels lack silicon.
Fourth on the list is Fuel Tech. He mentions how Fuel Tech has zero profitability but still an egregiously high stock price. He says that this is risky, but he points back to history to others like Google and Amazon that were once in the same position.
Bio-Solutions Corporation rounds out the top five. It offers organic solutions to organic problems. Not only has it developed a method to reduce mortality among industrially farmed poultry, it has discovered innovative ways to fight malaria. All of this is done with chemicals that are eco-friendly.
Sixth is Blue Earth Solutions, which has developed a way to breakdown styrofoam. The brokendown molecules can then be sold back to the Styrofoam producers.
Seventh is Zoltek. Zoltek produces carbon nanofibers. The nanofibers that it produces are extremely strong and equally lightweight. These are purchased by airplanes and car companies to reduce weight and therefore fuel consumption.
At eight is Composite Technologies, which produces some the world’s biggest wind turbines.
Number nine is Plug Power. It produces hydrogen fuel cells that might be the energy of the future. The writer notes that this company has the highest potential.
At bottom of the top is Ormat Industries. It provides alternative and renewable energy solutions. It also owns geothermal power plants.
So what do you guys think? Should we advise others to invest in these companies? Quite honestly, after reading the article, I’m tempted to invest in all of them. Obviously more research must be done. What other criteria do you think we should look for in companies that we plan on investing in? Do you think potential of the these green companies is worth risk? Should we go with the fail-proof option? Or, should we go with both and diversify?
http://www.helium.com/items/1537789-invest-in-green-companies
Federal Funding For Renewable Energies
In my previous post regarding the California solar energy plant, I discussed the federal program through which they are trying to receive a loan for the plant. Now the government is discussing whether they should continue this loan program or cancel it. Many of the president's aides are telling him to not discontinue it but there are some other concerns. The main argument is over a wind farm in Oregon. There are concerns that the corporate backers are only contributing about 10%, whereas the government would be providing over 65% and they don't feel this is a fair trade (WSJ). The government claims that they have no plans to discontinue the program and that they just plan to streamline it.
I felt this loan program, which pushed for advancement of of renewable energies, is a great program. I appreciate when the government tries to move our country towards better forms of energy. It saddens me to see that they are going to cut back with it, when oil projects aren't stopping. This will also have a wide effect on the industry as a whole, as it hurts the advancement towards renewable energies and possibly fosters positive energy for the oil and gas industry.
http://online.wsj.com/article/SB10001424052748703506904575592843603174132.html?mod=WSJ_Energy_leftHeadlines
I felt this loan program, which pushed for advancement of of renewable energies, is a great program. I appreciate when the government tries to move our country towards better forms of energy. It saddens me to see that they are going to cut back with it, when oil projects aren't stopping. This will also have a wide effect on the industry as a whole, as it hurts the advancement towards renewable energies and possibly fosters positive energy for the oil and gas industry.
http://online.wsj.com/article/SB10001424052748703506904575592843603174132.html?mod=WSJ_Energy_leftHeadlines
Proposition 23 Rejected in California
A November 3rd Wall Street Journal Article states that a ballot measure that would have delayed the implementation of a state cap on greenhouse gas emissions in California has failed (WSJ). The vote was not a close one, with 61% against the measure to postpone the bill and 39% for it. The bill was called Proposition 23 and it created a lot of controversy. There were oil companies and other businesses dependent on the fossil fuels industry who campaigned for the proposition and environmentalist groups and “alternative energy investors” who were against the proposition. In total, the campaigns both for and against Proposition 23 spent $40 million, a sum that mostly went to advertising (WSJ).
There are, of course, legitimate arguments coming from both sides of this debate. Again, according to the Wall Street Journal article, the National Petrochemical and Refiners Association said that because of the greenhouse gas cap, businesses and jobs will simply move from California to other states and countries because outside of California, they will not have to pay for their emissions (WSJ). On the other end of the spectrum, a group called the Union of Concerned Scientists claims California’s rejection of this proposition shows their belief that reducing carbon emission can help both the economy and the environment (WSJ).
This is an important issue for the energy industry. Because the proposition has now failed, I predict, like the National Petrochemical and Refiners Association, that traditional energy companies that rely on fossil fuels will simply abandon California because of the increased costs. Yes, rejecting this measure is an accomplishment for alternative energy investors because they will see less of an influence of oil and gas companies and an incentive to invest in clean energy. However, I am not entirely sure how intelligent it is to scare large companies that provide large amounts of tax revenue and jobs away from a state that is facing a $19 billion deficit and 12.4% unemployment, according to the Los Angeles Times and the U.S. Department of Labor Statistics. Perhaps this sort of bill will be wiser when the economy is more stable than it is now and when other states and countries adopt the same policy. For now, I think that Californians have made a mistake.
Ball, Jeffrey. "Californians Defend Carbon Caps." Wall Street Journal (2010): n. pag. Web. 3 Nov 2010.
Thursday, October 28, 2010
Shell's Profit, Smaller Companies' Demise
According to a Wall Street Journal article, Royal Dutch Shell PLC increased its profit strongly in the third quarter. However, the Obama administration’s drilling moratorium in the Gulf of Mexico, which ended this month, will have long lasting effects on production. Because of the ban, next year Shell expects to pump 40,000 barrels per day less than it had planned before the moratorium was enacted. This is 1.3% of its production (WSJ). Interestingly, Shell still reported an 88% rise in profit that beat expectations on Wall Street. This rise is likely because of increased natural gas and oil prices (WSJ). The company has also embarked on an “efficiency drive”, which also had an effect on profit. So far, Shell has lost $115 million because the moratorium forced some rigs to be unused (WSJ).
It is unlikely that production will return to forecasted levels very soon because of uncertainty about new regulations. Companies are trying to figure out how increased inspections, required spill cleanup plans, and more examination of testing will change business (WSJ). There are other companies, unlike Shell, that have taken unsustainable losses because of the ban. Some smaller companies, which represent 60% of production in the Gulf, will have to leave the Gulf of Mexico (WSJ). This could leave negative consequences for production of oil and gas in the U.S. While Shell increased profit, its development projects in Alaska and its projects in the Gulf have been slowed or stopped as well (WSJ).
All in all, this issue is not very complicated. Shell has increased profits, but it has still been hurt by the moratorium. The same cannot be said for smaller, independent companies. I hope that their production is not harmed to a large extent because as the article stated, that could have a large effect on U.S. production, which would likely push prices up. I suppose the only way to resolve this and move on is to figure out the new regulations in the Gulf so companies can get back to work and adjust their plans to reflect the new policies. Otherwise, the U.S. energy industry could be hurt by increased prices.
Chazan, Guy. "Shell: Drilling Ban Fallout Will Endure." Wall Street Journal (2010): Web. 28 Oct 2010.
Wednesday, October 27, 2010
It's About Location
This piece by Sam Hopkins shows that investing in green energies has just as much to do with the location as the company itself. He breaks down the pros and cons of each of the major area of oil producing and consuming.
North America
Pros- Political pressure is higher than ever to purse renewable energies.
Cons- Mexico’s biggest oil reserve, the Cantarell offshore field, has had 34% decline in production in the past year. Also, entrenched political groups, namely the corn industry, have dictated the US’s approach to clean energy.
Europe
Pros- The EU has many new members from the east, who have low-cost but high-tech industrial bases, that are former Soviet satellites. The EU also has a binding “20x20” target, which forces each of its 27 members to have 20% of all their energy to come from renewable energies by 2020. The Cleantech Competition across the EU will help them innovate and share to reach the 2020 target.
Cons- The recession has begun to slow down government spending on green energies.
Asia-Pacific:
Pros-As countries like China and India dance in their new money, they have spared plenty and are eager to invest and innovate to “leapfrog” fossil fuels.
Cons- Asia is way too reliant on coal.
Middle East
Pros- Superfluous money and an understanding that its oil reserves are running out have given reason to try greener energies. Masdar City in the UAE is fine example of the Middle East’s progress. Masdar City will be a walled city that is powered by solar panels and other green energies to achieve a zero-carbon output.
Cons-
Political questions and Iran’s increasing oil production are big obstacles to be overcome.
Africa
Pros-Africa has such a wide variety of climates and terrains. Every type of energy can be found there.
Cons- Rampant corruption and lack of unity are the biggest problems Africa’s green dream faces.
Latin America
Pros- Many countries are veterans to localized energy, like sugar ethanol, palm oil, and jatropha biodiesel. Solar energy is also abundant and cheap in Latin America.
Cons-
There are protective tariffs in a majority of the ethanol consuming countries. Also, Venezuela’s energy plan is oil-centric.
Sam Tompkins ends with to final points: politics is key and look out for a green Latin America.
When we plan our investing, I think all of his pointers will help. One of the things that I think could use some more research is the niche in Latin America. We need to find out more on why he points us so confidently in that direction.
http://www.greenchipstocks.com/articles/international-clean-energy/388
North America
Pros- Political pressure is higher than ever to purse renewable energies.
Cons- Mexico’s biggest oil reserve, the Cantarell offshore field, has had 34% decline in production in the past year. Also, entrenched political groups, namely the corn industry, have dictated the US’s approach to clean energy.
Europe
Pros- The EU has many new members from the east, who have low-cost but high-tech industrial bases, that are former Soviet satellites. The EU also has a binding “20x20” target, which forces each of its 27 members to have 20% of all their energy to come from renewable energies by 2020. The Cleantech Competition across the EU will help them innovate and share to reach the 2020 target.
Cons- The recession has begun to slow down government spending on green energies.
Asia-Pacific:
Pros-As countries like China and India dance in their new money, they have spared plenty and are eager to invest and innovate to “leapfrog” fossil fuels.
Cons- Asia is way too reliant on coal.
Middle East
Pros- Superfluous money and an understanding that its oil reserves are running out have given reason to try greener energies. Masdar City in the UAE is fine example of the Middle East’s progress. Masdar City will be a walled city that is powered by solar panels and other green energies to achieve a zero-carbon output.
Cons-
Political questions and Iran’s increasing oil production are big obstacles to be overcome.
Africa
Pros-Africa has such a wide variety of climates and terrains. Every type of energy can be found there.
Cons- Rampant corruption and lack of unity are the biggest problems Africa’s green dream faces.
Latin America
Pros- Many countries are veterans to localized energy, like sugar ethanol, palm oil, and jatropha biodiesel. Solar energy is also abundant and cheap in Latin America.
Cons-
There are protective tariffs in a majority of the ethanol consuming countries. Also, Venezuela’s energy plan is oil-centric.
Sam Tompkins ends with to final points: politics is key and look out for a green Latin America.
When we plan our investing, I think all of his pointers will help. One of the things that I think could use some more research is the niche in Latin America. We need to find out more on why he points us so confidently in that direction.
http://www.greenchipstocks.com/articles/international-clean-energy/388
Tuesday, October 26, 2010
Cali Solar Power Plant Gets Approval
A solar power plant project has been given approval by the United States government. This project consists of a plant located in the region of Blythe, California on federal land. According to the Wall Street Journal, this plant is a joint venture, called Solar Trust of America, by the German company Solar Millennium AG and Ferrostaal AG. It is a six billion dollar project located on 7,025 acres in a California desert with the potential to generate up to 2,800 megawatts (WSJ). Now that approval has been granted, the next step for developers is to seek federal grants and loans. If everything is done in a timely fashion, as this certain grant is soon to expire, the company could get up to a 900 million dollar grant. California is eager for this project, as it is one of many solar plants they are envisioning for the state. Another benefit for everybody is the job creation. During construction, up to 1,000 jobs will be created and 300 daily jobs once it is completed. This plant isn't using conventional solar panels that you or I think of. It uses curved mirrors to send light into a central tube that will create steam to rotate the turbines and create energy.
As is California, I am much to eager about this project. It is a sign of the future of alternative energies in America. With the Obama administration's approval of this plant, much headway will be made. Being as California has many acres of desert, projects like these make perfect sense. The German company seems to have a firm grasp on the technology and if they feel this can be done in a cost efficient manner, then kudos to them. This will be of great concern to the oil and gas industry. As California has plans to build several more of these plants, the other energy companies in the industry might begin to worry with this project breaking ground. I feel that regardless of how they take this news, it is a good sign of the future of the energy industry and the direction it is heading. My only concern is that it would be nice to see some American companies gaining momentum in this sector of the industry. However, I feel after seeing the potential success and profits of this project, they might begin to see the light.
http://online.wsj.com/article/SB10001424052702303467004575574392614626562.html?mod=WSJ_Energy_leftHeadlines
As is California, I am much to eager about this project. It is a sign of the future of alternative energies in America. With the Obama administration's approval of this plant, much headway will be made. Being as California has many acres of desert, projects like these make perfect sense. The German company seems to have a firm grasp on the technology and if they feel this can be done in a cost efficient manner, then kudos to them. This will be of great concern to the oil and gas industry. As California has plans to build several more of these plants, the other energy companies in the industry might begin to worry with this project breaking ground. I feel that regardless of how they take this news, it is a good sign of the future of the energy industry and the direction it is heading. My only concern is that it would be nice to see some American companies gaining momentum in this sector of the industry. However, I feel after seeing the potential success and profits of this project, they might begin to see the light.
http://online.wsj.com/article/SB10001424052702303467004575574392614626562.html?mod=WSJ_Energy_leftHeadlines
Wednesday, October 13, 2010
Bumpy Road for a Maryland Nuclear Project
Mark Peters recently wrote an article in the Wall Street Journal about a nuclear project that has run into some trouble. Constellation Energy Group Inc. was going to build a reactor in Calvert County, Maryland, but it recently exited a government program that would guarantee funds for the project. This project was going to be a joint venture between Constellation and Electricite de France SA. However, Constellation claims that the government’s terms are unrealistic, making the project impossible at this point. The federal government demanded $880 million up front from Constellation, in case of a default on the loan. This large request essentially made the project “uneconomic,” according to Constellation (WSJ). This however, is not the only issue in this project. There have been disputes between Constellation and the French company as well. They are arguing a clause in the contract and whether or not EDF is stipulated to buy 12 power plants from Constellation (WSJ). This government problem is just another, larger bump in the road.
All the sides are pushing blame on each other in this dispute. Electricite de France SA is frustrated with Constellation and Constellation is frustrated with both Electricite de France SA and the federal government. They complained in a letter to the Department of Energy that the $880 million in fees came from a “flawed approach that the White House Office of Management and Budget has taken” (WSJ). They claim that the fees could end the project altogether. The government claims that this program is in place to provide affordable financing. There has only been one other grant under this project that went a company in Georgia (WSJ). Now competition remains between other companies and other sites.
This is a tricky article to judge. There is one quotation that brings in what I have said about natural gas, but not about nuclear: “The economics of building multibillion-dollar nuclear reactors have deteriorated with a sharp drop in the price of natural gas… and a pullback in electricity demand during the recession” (WSJ). I have not thought about the correlation between nuclear and natural gas, but it makes sense. One issue that this quotation brings out is the focus of the energy industry. Clearly it is still focused on cheaper fuel like natural gas, not a more expensive cleaner alternative, whether that is nuclear, solar, or wind. I would not necessarily disagree with this approach because raising prices would drastically affect the market. However, at some point, we will have to sacrifice prices for environmentalism.
Peters, Mark. "Constellation Energy Nuclear Project Snags." Wall Street Journal (2010): n. pag. Web. 12 Oct 2010.
Are Ocean Based Alternative Energies Really Better For Our Environment?
According to the Wall Street Journal, Google, Good Energy, and Mavuben Corporation, have all invested in a ten-year offshore wind energy plan. The starting price of this plan is five billion dollars. This plan is to provide energy to 1.9 million houses along the east coast by placing windmills on the shallow parts of the Atlantic Ocean. A transmission line that runs 350 miles between Virginia and New Jersey caries the energy from the windmills to the houses. Though this is a great innovation for alternative energy, it runs into many problems. One of which the infrastructure is extremely complicated in both economic and technical ways.
I think it is wonderful that Google is investing in eco-friendly projects, it shows that as a big company it also cares about the environment. However, in the article I read that the environmentally friendly groups support this innovation, but do they know what damage goes into the ocean? For such infrastructure to be built, reefs are going to be torn apart and marine habitats are going to be destroyed. This affects the food chain and also the biogeochemical of the environment. In my opinion, this is way more harmful than polluting our air because reefs and marine life is something that cannot be replaced, since it can take up to one million years for an extensive reef to be developed. Also, there is already another alternative energy source that uses the ocean called the Wave Power. It has the same concept as the windmill, but instead of being exposed to the air, it is built under the water and runs on the waves. This infrastructure is proved to be more effective than windmills because waves and tides are much easier and precise to predict than wind. In my opinion, I really do not see the point in investing so much money in this project, but you never know where it can take us.
http://online.wsj.com/article/SB10001424052748703440004575547381873787098.html?mod=WSJ_newsreel_technology
Monday, October 11, 2010
Shell's Last Stand in the Arctic
According to a recent Financial Times article, Royal Dutch Shell is offering to create an oil containment system for the Arctic if the government allows them to drill offshore in Alaska. The company is extremely eager to start drilling in this region because it is considered a mecca of untapped oil reserves (FT). Shell signed a ten year lease to drill here almost five years ago and have yet to begin drilling. This is due to government barriers and environmental concerns that have blocked the drilling here. They've invested several billion dollars in this project, which is why they are so eager to get things moving. The company has laid out a plan that consists of containing the oil, should there be a spill. The details of this plan include a collector anchored to the ocean floor and a standby rig which would provide relief in case of a disaster (FT). They have presented these ideas to the government for approval and are eagerly awaiting a response. Many feel they won't have an issue, but one never knows. Shell is asking for a decision by December 1st. The man that is vice-president of Shell Alaska even released a statement saying that the situation would not be good if they decided to sue for losses on leases they paid for due to the government barriers (FT).
If Shell truly has the technology and expertise to start safely drilling offshore in Alaska, this could be huge progress for the industry. As the reserves here stand in the billions of gallons, there is much money to be made. Another great thing about this is, it is domestic oil reserves. However, in the wake of the Deepwater Horizon, all safety issues need to be dealt with, as drilling in the Arctic presents many challenges that were not even factors in the Gulf of Mexico. Shell did pay for these leases and deserves the right to drill, but their vice-president's remarks came off with a threatening tone to me and I don't know how much the government and the public will appreciate that. The industry will benefit as a whole from this because it presents potential to gain a lot of profit domestically, which will benefit the nation as a whole as well. That being said, the plan that they have come up with is a safety plan simply attached to their old drilling plan. The government needs to ensure that it all flows cohesively in order to guarantee that it is a solid plan that will work properly. At the bottom of the Arctic lies great potential for the oil industry. If Shell can safely and effectively tap these reserves, there will be numerous benefits for the energy industry.
http://www.ft.com/cms/s/0/3c15baec-d4a6-11df-b230-00144feabdc0.html
If Shell truly has the technology and expertise to start safely drilling offshore in Alaska, this could be huge progress for the industry. As the reserves here stand in the billions of gallons, there is much money to be made. Another great thing about this is, it is domestic oil reserves. However, in the wake of the Deepwater Horizon, all safety issues need to be dealt with, as drilling in the Arctic presents many challenges that were not even factors in the Gulf of Mexico. Shell did pay for these leases and deserves the right to drill, but their vice-president's remarks came off with a threatening tone to me and I don't know how much the government and the public will appreciate that. The industry will benefit as a whole from this because it presents potential to gain a lot of profit domestically, which will benefit the nation as a whole as well. That being said, the plan that they have come up with is a safety plan simply attached to their old drilling plan. The government needs to ensure that it all flows cohesively in order to guarantee that it is a solid plan that will work properly. At the bottom of the Arctic lies great potential for the oil industry. If Shell can safely and effectively tap these reserves, there will be numerous benefits for the energy industry.
http://www.ft.com/cms/s/0/3c15baec-d4a6-11df-b230-00144feabdc0.html
Wednesday, October 6, 2010
The Most UnConcerned, Now Concerned?
Wal-Mart, yes Wal-Mart, is installing solar panels in California, Hawaii, and Puerto Rico. It has also announced plans to mount panels another 20 to 30 locations in California and Arizona. The panels will be sourced from MiaSolé and First Solar, both American companies. Wal-Mart will take advantage of their newer, more practical and cost-efficient type of panel called thin-film solar panels. This newer type is an alternative to the more pricey and bulky silicon panels with no significant comprise in terms of energy absorption. Besides being much cheaper, the thin-film panels work better in fog and smog and don’t interfere with skylights. Due to their thin and light nature, they are also much easier to handle and install. Like everything, this new technology is not perfect. Cold temperatures can affect the mixture and make it much less effective. Scientists are working are currently working on this problem.
Now, as it was explained latter in the article, Wal-Mart is most likely just doing this to save face. In a forum that I attended headed by Tyson Slocum, an alternative energy expert, he stated Wal-Mart is one of the biggest polluters if not the biggest polluter in the world because of the massive amounts of goods it sells, which are mostly made in China and then shipped half-way-around-the-world to the United States. Clearly by adding some solar panels on roofs of maybe 50 or so of its over 8,000 stores will not a save even the most stubborn bush from Wal-Mart’s eco-slaughter.
On the positive, I must acknowledge Wal-Marts’s effort. If Wal-Mart, IF WAL-MART, is going green, then maybe all of us should. Maybe all of us are behind. Wal-Mart’s initiative will also help the newly expanding thin-film solar panel sector.
http://www.alternative-energy-news.info/walmart-to-install-thin-film-solar-panels/
Now, as it was explained latter in the article, Wal-Mart is most likely just doing this to save face. In a forum that I attended headed by Tyson Slocum, an alternative energy expert, he stated Wal-Mart is one of the biggest polluters if not the biggest polluter in the world because of the massive amounts of goods it sells, which are mostly made in China and then shipped half-way-around-the-world to the United States. Clearly by adding some solar panels on roofs of maybe 50 or so of its over 8,000 stores will not a save even the most stubborn bush from Wal-Mart’s eco-slaughter.
On the positive, I must acknowledge Wal-Marts’s effort. If Wal-Mart, IF WAL-MART, is going green, then maybe all of us should. Maybe all of us are behind. Wal-Mart’s initiative will also help the newly expanding thin-film solar panel sector.
http://www.alternative-energy-news.info/walmart-to-install-thin-film-solar-panels/
Barclays Pays $1.15 Billion for Natural Gas Production
A recent Wall Street Journal article reports that Barclays PLC has bought natural gas production in Texas from Chesapeake Energy Corporation, which was willing to sell it because of debt. Betting that natural gas prices will jump upward, Barclays purchased $1.15 billion in “Barnett shale natural-gas production,” from Chesapeake (WSJ). The Barnett shale is a massive natural gas reserve that covers over 5,000 square miles and 20 counties in Texas. It could contain as much as 40 trillion cubic feet of natural gas (BSEEC).
Chesapeake has been selling production like this to lower its debt load. This is all in hope of increasing investment in the company from the market. Ultimately, this move is still in recovery from the recession, which hit Chesapeake hard. The most interesting part of this article is that each company in the deal has a very different strategy. Barclays is betting that prices will rise or stay steady in order to sell at a profit. They hope that gas demand rebounds and that drillers slow so that supplies shrink and prices increase (WSJ). Chesapeake is trying to grow while the natural gas prices stay low. To demonstrate how low prices have gone for natural gas, Barclays paid 20% below the market price for this massive amount of gas. However, this price is still higher than the average market price this year for similar assets (WSJ). Overall, the price of natural gas has declined this year because of increased production.
This is a rather simple article, but I think it holds some interesting lessons. First, it shows how companies can be motivated to pursue a deal like this. Clearly, both Barclays and Chesapeake have different ideas about what the price of gas will do. It just goes to show how an acquisition, whether of a company or some sort of production mechanism, is just a bet. This article also demonstrates what we have been discussing in the blog: natural gas. It reinforces our convictions that prices of natural gas are currently low and that it is a growing industry. I do not have any problem with this deal at all. It just underscores our belief that natural gas is a growing industry.
"Facts About Barnett Shale." Barnett Shale Energy Education Council. Barnett Shale Energy Education Council. Web. 6 Oct 2010.
Day, Matt. "Barclays Makes Big Bet on Shale." Wall Street Journal (2010) Web. 6 Oct 2010.
IBM Contributes to Energy
Two energy companies, Alstom and Ikerlan-Ik4, are investing in IBM’s high tech wind turbine control systems. These state of the art wind turbines consists of electronic sensors developed by IBM. The sensors play a key role in determining the wind direction, speed, temperature, and any other dynamics that contributes to the efficiency of the wind turbine. The central control systems keep track of each individual turbine and manages the power produced. They also record data from each turbine to have available. The central control system is also what attracts companies such as Alstom and Ikerlan-IK4 because it keeps them organized in what is going on with their power production. They also favor the turbine technology offered by IBM because they are able to customize the turbines according to the geographic location and climates.
I believe it is great that IMB is expanding their business in order to contribute to helping the Earth. Apple contributes by recycling electronics, but IBM contributes by applying their technological innovations to renewable energy. These innovations can really help in making alternative energy more effective and also help the world’s transition into renewable energy more quickly. Though I am impressed by IBM’s contribution, I am not surprised by this innovation. I had already believed that wind turbines in general were originally connected to a central system wirelessly. So this innovation does not surprise me, but it could just be a small step to something greater that IBM has in mind.
http://wind.energy-business-review.com/news/ibm-collaborates-on-wind-energy-technologies_061010
California to Get Two Solar Plants on U.S. Public Land
The world nowadays is looking for alternative energy sources to compensate the future oil shortfall. Oil peak is a theory predicting that oil will reach a point of maximum production, consecutively oil production will head for a steep downturn as the world's oil reserves are going to be consumed. Ventures nowadays are looking for several alternatives of oil including green energy sources with a minimal impact on the surrounding environment. If proved efficient, energy sources such as thermal, geothermal and solar will replace the dependance on oil as a main source of energy.
Chevron one of the leading oil corporations in association with the Irish green energy developer NTR PLC. proposed the construction of two solar power facilities in california on public land. Recently the U.S provided approval for this huge leap in the energy industry. Both facilities are the first to be approved by the U.S on public land. It is expected that both facilities will eventually double the solar power generation in the United states. Going deep, both facilities are solar and will apply the use of large curved mirror dishes which absorb energy and transmit it into a converter which transforms solar energy into electrical energy.
Both projects will be environmental friendly. In addition, the solar facilities will bring 1 billion dollars into the economy in California and will proved 950 jobs. Governor Arnold Schawarzenegger in a brief discussion said that both solar facilities will provide electricity for more than 500,000 homes. The federal reserve bank is providing energy companies financial grants for constructing alternative energy sources. This venture by the FRB will expire in one year. All of this aims to comply with the 2006 California climate law to cut down green house emissions.
Tuesday, October 5, 2010
Iraq's First Oil Reserves Report In A Decade
According to a recent WSJ article, Iraq has released its first report on it's oil reserves since 2001. This report raises the estimate more than 24%, placing them as the number three reserve holder in the world (WSJ). The number went from 115 billion barrels to 143. However, this report raises many questions as to its legitimacy and purpose. Some feel that the oil minister has inflated this number without having actual evidence to back it up. These skeptics claim that they haven't had the time or resources to fully conduct surveys that would provide accurate numbers. Another concern is that they put out such a high number to boost national confidence in the still unstable Iraqi government. Despite these concerns, many international oil firms have made the investment in Iraq. These companies include BP, Exxon, Shell, and Lukoil (WSJ). One of the main things that challenges this operation is that the country has been war-torn for the past decade and it's infrastructure is severely damaged. However, the government has high hopes that with these international deals, it can boost it's output from 2.4 million barrels a day to 12 (WSJ). It surely has the reserves for this but not the infrastructure, yet. Regardless of all these obstacles, most feel that within a couple years the country can have this industry back in full swing, given new technologies and production techniques.
This will have a huge impact on the energy industry. With this country having been a war zone for the past nine years, it hasn't been able to produce on a level to compete with the world. Now that the war is ending, many new opportunities are arising. Not only is this an excellent way for them to rebuild their country, it is an excellent way for the investing companies to gain large profits and greatly expand their businesses. The fact that these oil figures are questionable does not seem to be stopping giants like Shell and Exxon from getting involved. Currently they are conducting research of their own and regardless of whether or not these numbers are inflated, there is money to be made on oil in Iraq. One fact that isn't questionable is that they have reserves greater than most countries in the world, so it will be a safe bet. I am hoping that they truly use this opportunity to their advantage and use the profits to rebuild their country. However this plays out, it is a huge sector of the oil industry that is being renovated here and it will doubtlessly have a severe impact on the energy industry.
http://online.wsj.com/article/SB10001424052748704631504575531513360536600.html?KEYWORDS=iraq+lifts+position+as+oil+player
This will have a huge impact on the energy industry. With this country having been a war zone for the past nine years, it hasn't been able to produce on a level to compete with the world. Now that the war is ending, many new opportunities are arising. Not only is this an excellent way for them to rebuild their country, it is an excellent way for the investing companies to gain large profits and greatly expand their businesses. The fact that these oil figures are questionable does not seem to be stopping giants like Shell and Exxon from getting involved. Currently they are conducting research of their own and regardless of whether or not these numbers are inflated, there is money to be made on oil in Iraq. One fact that isn't questionable is that they have reserves greater than most countries in the world, so it will be a safe bet. I am hoping that they truly use this opportunity to their advantage and use the profits to rebuild their country. However this plays out, it is a huge sector of the oil industry that is being renovated here and it will doubtlessly have a severe impact on the energy industry.
http://online.wsj.com/article/SB10001424052748704631504575531513360536600.html?KEYWORDS=iraq+lifts+position+as+oil+player
Wednesday, September 29, 2010
Van Jones: The Green Man
I attended a speech by Anthony “Van” Jones, who was President Obama’s Special Advisor for Green Jobs for brief period in 2009. Van Jones, as he’s better known, was in Time magazine’s 100 Most Influential People of 2009.
His vision is a greener and a more economically sound America. He sees green-collared jobs as an untapped reserve from which hundreds of thousands of jobs can be created by retrofitting buildings, building green power plants (solar, hydro, or wind), and by creating new research and development teams. Since Van Jones is also a civil rights activist, he values the low skilled jobs created as equally as important as the environmental benefits. He sees these jobs as a way to keep people out of the jails and stimulate the economy. He also said that the U.S. is far behind many other countries and has much catching up to do. He placed the burden on today’s generation of students, saying that his generation “failed” to make any progress in energy. And, he argued that it would be entrepreneurship, not government, that would head the charge. Government just needs to provide the proper grounds for the green economy to grow, he advises.
I thought Van Jones was one of the best speakers I had ever seen, but at the same time, I recognized his background. He was Yale Law School graduate, who knew the right buttons to push. He also treaded very softly when forced to pick a side. In essence, he talked like a politician. Regardless of how he said it, I still believe his message is urgent. But, I believe his plan will take entirely too long. His vision that American energy companies will grow in a green-friendly business environment is true. But aren’t there already enough incentives and grants going out to these companies? It is taking too long! It is my belief that the government, not business, will get us out of this carbon addiction; it will get us out of this mess like it did when a space shuttle (also publicly funded) got us out the gradational pull of the earth and landed on the moon. As he said, we are already far behind other countries. Do we really want to risk falling behind even more? Corporations are known for taking nibbles before bites. Government has the resources and no investor or bottom line to attend to. It can act unilaterally and with great impact, not the slow and sometimes backwards steps we have seen from corporations. To keep things even, it was business that built the skylines, not the government. Tell me what you think. Should government do the job or let others do it?
His vision is a greener and a more economically sound America. He sees green-collared jobs as an untapped reserve from which hundreds of thousands of jobs can be created by retrofitting buildings, building green power plants (solar, hydro, or wind), and by creating new research and development teams. Since Van Jones is also a civil rights activist, he values the low skilled jobs created as equally as important as the environmental benefits. He sees these jobs as a way to keep people out of the jails and stimulate the economy. He also said that the U.S. is far behind many other countries and has much catching up to do. He placed the burden on today’s generation of students, saying that his generation “failed” to make any progress in energy. And, he argued that it would be entrepreneurship, not government, that would head the charge. Government just needs to provide the proper grounds for the green economy to grow, he advises.
I thought Van Jones was one of the best speakers I had ever seen, but at the same time, I recognized his background. He was Yale Law School graduate, who knew the right buttons to push. He also treaded very softly when forced to pick a side. In essence, he talked like a politician. Regardless of how he said it, I still believe his message is urgent. But, I believe his plan will take entirely too long. His vision that American energy companies will grow in a green-friendly business environment is true. But aren’t there already enough incentives and grants going out to these companies? It is taking too long! It is my belief that the government, not business, will get us out of this carbon addiction; it will get us out of this mess like it did when a space shuttle (also publicly funded) got us out the gradational pull of the earth and landed on the moon. As he said, we are already far behind other countries. Do we really want to risk falling behind even more? Corporations are known for taking nibbles before bites. Government has the resources and no investor or bottom line to attend to. It can act unilaterally and with great impact, not the slow and sometimes backwards steps we have seen from corporations. To keep things even, it was business that built the skylines, not the government. Tell me what you think. Should government do the job or let others do it?
Pennsylvania Tax On Natural Gas Making Progress
According to a Wall Street Journal article written on September 29, 2010, Pennsylvania is coming closer to passing a bill that will tax the extraction of natural gas. Pennsylvania is the only state that produces large amounts of gas without a tax. The debate over provisions to include in this bill is very divided. The governor of Pennsylvania, Ed Rendell, wants the gas companies to pay for environmental protections and infrastructure improvements, and “replenish the state’s depleted coffers” (WSJ). On the other side of the argument, Republicans are resisting the bill. Many of their favored policies include allowing companies to use mineral rights in an area if a certain percentage of people has agreed to it, and a lower tax than the democrats are proposing, at least in the beginning. At this point the bill has passed in the house, but politicians are expecting difficulty because the senate is Republican controlled.
This current event is not entirely political, though. It also shows a lot about the growth of the natural gas industry. Again, according to the Wall Street Journal Article, Pennsylvania’s output of natural gas has quadrupled since 2009. This is a massive increase in only a year. The house’s bill would tax 39 cents per thousand cubic feet of gas. This would raise $120 million in 2010 and $326 million in 2011-2012 (WSJ).
The main objective of this bill, I believe, is to pay for more state projects like infrastructure. I do not mind the Pennsylvania government taxing these gas companies so that it can pay for the environmental protections and infrastructural improvements. However, I believe that this measure crosses the line when the Governor hopes that this tax revenue can “replenish the state’s depleted coffers” (WSJ). It seems wrong to have gas companies paying for budget shortfalls of the government. Not only does it seem wrong, but it will, without a doubt, drive up the cost of natural gas. This industry is growing rapidly, but this could be happening because of the relatively low price of natural gas. Overall, I am for a bill that will tax natural gas in Pennsylvania. These companies should pay for their environmental protections and pay their fair share. I just would prefer that the government does not tax this young industry too heavily so it can continue its rapid growth.
Day, Matt. "Pennsylvania House Passes New Natural-Gas Production Tax." Wall Street Journal (2010) Web. 29 Sep 2010.
Germany Aspires For Longer Energy Lifespan
Yesterday in Berlin, the cabinet discussed several tactics to make energy plants throughout Germany more eco – friendly with a longer lifespan. Their focus is to cut greenhouse – gas emissions while achieving over 50% of renewable energy use with in 40 years. Through providing a longer lifespan of renewable energy plants, they are expecting that this will serve as a “bridge” to the next energy trend. They describe this “bridge” as a short-term trend until the next big energy invention comes out. They also explain how renewable energy is not the future but just the pathway to the future inventions.
The cabinet exposed that after 2030, the energy plants will need to be replaced and that is why they are talking about investing in newer plants that last longer. Replacing and upgrading these plants will cost Germany over € 19 billion. In addition, it is imperative that Germany upgrades their grid system so that they may provide energy to as many consumers as possible.
I think it is great that Germany has such high aspirations in reducing greenhouse-gasses and using as much renewable energy as possible. I am not surprised by these aspirations though because they have the most extensive recycling program in the world, which many citizens help to partake in. If any country is confused on where to start for being more eco-cautious, they should look up to Germany for their goals and achievements in going green. I must agree with Germany that renewable energy is only a trend to what is coming up in the future because there are always new inventions and more efficient ways of production as time goes on, but why spend and invest in so much money in a 40 year plan if there is going to be something new? Why don’t they invest that money into new inventions and research teams? Though these questions consume my thoughts, I have no doubt that Germany will succeed in their green aspirations.
http://online.wsj.com/article/SB10001424052748703882404575519493309998222.html?mod=WSJ_Energy_leftHeadlines
Monday, September 27, 2010
Bob Dudley & His Difficult Task
In a recent WSJ article, Bob Dudley's new role and difficult task are discussed. First, the article raises the question as to why no other companies, like Exxon Mobil and Royal Dutch Shell, haven't made any advances toward the company, especially with stock prices so low. Then, it goes on to tell of the difficult task that lays ahead for the new CEO, Bob Dudley. It talks of his career path and how he got to where he is, with his start at Amoco, then move to BP when they acquired the company in the late nineties. He is the first CEO at BP that is not British, which further raises expectations. In 2003, he left BP to lead their venture in Russia. There, he saw the company go from nothing to one of Russia's leading producers. After much controversy with the Russians, he was forced to leave and in return was given a position on the board of BP. With the Deepwater Horizon incident and Tony Hayward's public mistakes, he was given the chance in the big chair. In front of him lies the task of reforming BP and restoring their faith in the American public.
I can't help but wonder, after 102 years of a British CEO, was hiring an American the first step in restoring American's faith (WSJ Art)? However, Dudley has all the credentials that could be asked of any CEO. The controversy with Russia strikes me as a little odd, as it went as far as the Russian's investigating the whole ordeal (WSJ). Although, this means that Dudley has experience with scandal. The job ahead of him is quite an extensive one. He has to fully reshape the company and reinstate that they are using ethical practices. I feel he is the best hope they have right now, as the company's stock prices still suffer the consequences of the Deepwater Horizon disaster. I, too, am wondering why no other companies haven't taken the chance to acquire BP, as Exxon and Shell are certainly poised to do so. The energy industry as a whole is completely affected by how BP recovers from this and it is all in the hands of Bob Dudley. Personally, I wish him success in this task because many jobs and companies are on the line here, as BP's reach is that of a spider, a little bit in every sector.
http://online.wsj.com/article/SB10001424052748703793804575511791844265192.html?mod=WSJ_Energy_leftHeadlines
I can't help but wonder, after 102 years of a British CEO, was hiring an American the first step in restoring American's faith (WSJ Art)? However, Dudley has all the credentials that could be asked of any CEO. The controversy with Russia strikes me as a little odd, as it went as far as the Russian's investigating the whole ordeal (WSJ). Although, this means that Dudley has experience with scandal. The job ahead of him is quite an extensive one. He has to fully reshape the company and reinstate that they are using ethical practices. I feel he is the best hope they have right now, as the company's stock prices still suffer the consequences of the Deepwater Horizon disaster. I, too, am wondering why no other companies haven't taken the chance to acquire BP, as Exxon and Shell are certainly poised to do so. The energy industry as a whole is completely affected by how BP recovers from this and it is all in the hands of Bob Dudley. Personally, I wish him success in this task because many jobs and companies are on the line here, as BP's reach is that of a spider, a little bit in every sector.
http://online.wsj.com/article/SB10001424052748703793804575511791844265192.html?mod=WSJ_Energy_leftHeadlines
Thursday, September 23, 2010
Native Energy
NativeOne, a renewable energy developer and member of the Mission Indians, has joined forces with the LeeChee Chapter of the Navajo Indians to build a solar power plant on Navajo land. This plan only highlights the trend to build alternative energy plants on Native American lands. Not only are these lands expansive (Navajo’s are big as West Virginia), but some are ideal for the alternative energy markets. Most of the land is in the west. This land used to be seen useless, for it has limited trees, water, and metals. But it does have an abundance of wind and sun, and it is located closely to the now highly populated southwestern part of the United States. Therefore, transmission lines will not be as expensive, and, oftentimes, they are already there. Native American’s, with their special status in the States, also have the ability make it much easier on investors to avoid regulations and other barriers. This is possibly the most appealing aspect to investors.
Now you might be wondering why the Indians would allow these companies to tarnish their land with these monstrous power plants. Predictably, the answer is money. The LeeChee will not charge for the land but will receive a cut of the revenue until NativeOne pays off its investment and receives tax credits. Then, it will hand the plant over to the LeChee, who will then have to operate and maintain the plant. Another reason for the massive amount of interest from Indians is the expansion of gambling. Governments are allowing for more casinos. Therefore, competition is created. Tribes fear a decline in casinos and also see jobs being made in the construction of these new power plants.
If this NativeOne’s vision does come to be a reality, it would set the precedent for many more green power plants to be built. Since Indians will be mutually benefiting off of other Indians this vision might not be so farfetched. It will be interesting to see if bigger players are able to enter. Given the lack of green power plants in the States, this niche market could change the game.
http://www.greentechmedia.com/articles/read/native-americans-a-new-player-in-renewables/
Now you might be wondering why the Indians would allow these companies to tarnish their land with these monstrous power plants. Predictably, the answer is money. The LeeChee will not charge for the land but will receive a cut of the revenue until NativeOne pays off its investment and receives tax credits. Then, it will hand the plant over to the LeChee, who will then have to operate and maintain the plant. Another reason for the massive amount of interest from Indians is the expansion of gambling. Governments are allowing for more casinos. Therefore, competition is created. Tribes fear a decline in casinos and also see jobs being made in the construction of these new power plants.
If this NativeOne’s vision does come to be a reality, it would set the precedent for many more green power plants to be built. Since Indians will be mutually benefiting off of other Indians this vision might not be so farfetched. It will be interesting to see if bigger players are able to enter. Given the lack of green power plants in the States, this niche market could change the game.
http://www.greentechmedia.com/articles/read/native-americans-a-new-player-in-renewables/
Wednesday, September 22, 2010
A New Company With A New Plan
Through the split of Encana Corporation, Cenovus Energy was developed in 2009 as an independent oil company in Canada. They mainly focus on increasing oil production by taking strategic measures in developing plans and relying on technology. Cenovus also focuses on meeting consumer’s needs by providing untapped oil. This untapped oil is extracted from the earth’s mantel and has never been touched before providing only the best quality. Technology is also very important to Cenovus because it helps with the reduction of water, steam, natural gas, and electricity making oil extraction more efficient and less harmful. Technology also helps with production, making extraction an easier process.
In the north of Bonnyville, Cenovus Energy is developing a three-phase two billion dollar expansion plan. This plan not only benefits the company’s goals in production, but also it offers 1,000 jobs for the public. The first phase is already under construction, and is expected to operate during 2014. The other two phases are anticipated to operate between 2016 and 2019. The purpose of this three-step plan is to increase production by supplying more oil to consumers. The first phase of the plant is estimated to supply 210,000 barrels of oil per day as opposed to the 100,000 barrels per day offered in the original plant. The next two phases will raise the amount of oil extracted by bringing in 235,000 barrels. After the phases are complete, Cenovus expects to reduce their prices and also reduce the amount of energy put into extracting the oil for their consumers.
Now that this new company has emerged into the Energy industry with a comprehensive expansion plan, it presents a challenge for other Energy companies. The challenge is that now these companies have to figure out a way to increase their oil production. If Cenovus is producing and supplying more oil, their consumer rates will increase and other Energy companies will lose consumers. As a result, companies are challenged with finding a way to provide more oil or come up with another invention that will win back their customers.
http://www.vancouversun.com/business/oilsands+expansion+approved/3551215/story.html
http://www.cenovus.com/operations/index.html
Quantum Energy Buys Into Utilities Market
According to a September 22nd Wall Street Journal Article, Quantum Energy Partners, an energy firm run out of Houston, Texas, is starting a new company called Quantum Utility Generation LLC. The new energy company is to be run by Larry Kellerman who now works for a power generation company owned by Goldman Sachs. Quantum Energy Partners is collecting $500 million from investors and raising $500 million of its own funds to start this project. In doing this, they are entering the market of asset deals when prices are low. A market of asset deals is where assets like power plants are bought. This lull in the market exists because there is a lot of shifting going on in this part of the industry. As the article states, sellers are trying to get out of the business quickly and buyers are trying to acquire facilities like power plants for low prices. To emphasize this point, in the last month and a half PPL Corp. decided to sell plants to LS Power and Blackstone Group LP bought Dynegy Incorporated. All of these are major acquisitions.
This might seem like an unimportant article about another acquisition, but the interesting part is Quantum Energy Partners’ goal. They believe that coal power plants are on the way out because of increased environmental regulation. Therefore, they plan to build newer, more efficient, natural gas, solar, and wind plants. This could represent a new trend for the power production industry. Companies will have no choice but to begin investing in cleaner technologies when the government makes the old, less efficient ones much more expensive.
In many cases I would be happy to see this sort of article. I am pleased that Quantum Energy is taking a risk by going into this market and I like that they are investing in cleaner energy. However, I do not like that their motivation seems only to be government policy. The article states that they are going into cleaner energy because states are enacting clean energy requirements that will promote solar and wind. Yes, there should be incentives to move into newer technologies, but I would prefer the government taking a more passive role in this regard. That is not to say that they should step out. But it does not seem right that any sort of government determines which technologies are developed in such an important industry, especially when there are such strong options as nuclear power.
Peters, Mark. "Quantum Energy to Form New Company." Wall Street Journal (2010): Web. 22 Sep 2010.
http://online.wsj.com/article/SB10001424052748704129204575506000363635496.html?mod=WSJ_Energy_leftHeadlines
California Regulators Approve 370-Megawatt Solar Power Plant
The energy industry is the largest industry in the world. This industry includes extracting, producing and marketing products. Products in the oil industry mainly include Oil and Gas. Peak Oil is a term used to describe the the point were the global petroleum extraction is reached. It is estimated that by the ear 2020 petroleum extraction will reach the peak. This issue is widely worrisome, after the oil peak it is evaluated that global petroleum production will rapidly fall where all Oil wells are going to be depleted. Scientists worldwide are extremely worried and are looking for alternative sources of energy to compensate future oil depletion. Focuses nowadays are around efficient alternative sources which could be slightly comparable to petroleum efficiency.
One of the most efficient sources of energy is the solar thermal energy. Solar thermal energy is often referred to a technology harnessing both solar and thermal energy sources. One of the main aspects of Solar Thermal energy is its cost effective efficiency. Research is ongoing globally in order to adapt this highly effective energy technology.TU Delft (Delft University of Technology) is the main axis of research to improve the efficiency of this technology. This research tackles the improvement of the efficiency from 7% to 9%.
On wednesday, the california regulators approved the construction of a 370 Megawatt solar-thermal power plant. over 9 facilities that will double the United States solar power generation capacity. The solar thermal power plant is going to be located in the mojave desert in california in three parts. This construction is privately owned by BrightSource Energy Corp. However, this project still requires the approval of the Unites States Bureau of land management as the land on which the project is going to be constructed is owned by the government, a federal land. The department of treasure along with the department of energy granted BrightSource a 1.4 billion dollars loan in order to facilitate the financing of the project.
http://online.wsj.com/article/BT-CO-20100922-713910.html
http://www.alternative-energy-news.info/economical-solar-panels-more-energy/
9/22
Tuesday, September 21, 2010
3M Takes On Energy
With the energy industry taking on such significant changes and produces the best profits, many large corporations are looking to make the move into energy. This idea attracted giant, 3M, into creating its own energy division. In early 2009, they announced the creation of it's Renewable Energy Division, which is aimed at reaching into every aspect of the industry. “The products within the new division will include products currently sold to the industry, new-to-the-world products invented for the renewable energy market, and products adapted from existing technologies” (3M Press Release). According to the press release, they plan to separate this new division into two units, one focusing on generating new ideas and managing products currently available to the market and another on spreading these things throughout the market and handling deals already place. 3M is envisioning new innovations in wind and solar energy. Also, they want to create new geothermal and biofuel products that will reduce costs. They hold big ideas for this endeavor.
Being as the energy industry is becoming a key factor in the world market today, it comes as no surprise to me that 3M is entering the industry. They are a giant company and it only makes sense. However, competition from these companies should not be overlooked by the already key players in energy. 3M has the ability to significantly change the landscape and this could hurt companies like Shell, Chevron, and Exxon. Yes, they possess a good portion of the industry, but companies like 3M won't have trouble finding the resources to accomplish their goals. Their new Renewable Energy Division should prove to be nothing but successful in my opinion, being as they hold much success in many of their other ventures. The energy industry is rapidly changing and growing and I feel this could be a good thing overall. It will take away the power held by the current key players. Although, I'm not to sure if adding other giants to the mix will just shift the power in their direction as apposed to dividing it evenly.
3M Press Release
http://solutions.3m.com/wps/portal/3M/en_US/Renewable/Energy/Resources/Press_Releases/?PC_7_RJH9U52308NR50I0NISNKB32G3_assetId=1180612441603
Being as the energy industry is becoming a key factor in the world market today, it comes as no surprise to me that 3M is entering the industry. They are a giant company and it only makes sense. However, competition from these companies should not be overlooked by the already key players in energy. 3M has the ability to significantly change the landscape and this could hurt companies like Shell, Chevron, and Exxon. Yes, they possess a good portion of the industry, but companies like 3M won't have trouble finding the resources to accomplish their goals. Their new Renewable Energy Division should prove to be nothing but successful in my opinion, being as they hold much success in many of their other ventures. The energy industry is rapidly changing and growing and I feel this could be a good thing overall. It will take away the power held by the current key players. Although, I'm not to sure if adding other giants to the mix will just shift the power in their direction as apposed to dividing it evenly.
3M Press Release
http://solutions.3m.com/wps/portal/3M/en_US/Renewable/Energy/Resources/Press_Releases/?PC_7_RJH9U52308NR50I0NISNKB32G3_assetId=1180612441603
Worth Mentioning
THIS IS NOT MY POST FOR THE WEEK, however I felt it was worth mentioning on here. I saw an ad in the WSJ that says that ExxonMobile, Chevron, Shell, and Conoco Phillips are teaming together to work on a containment plan that will trap oil in the Gulf of Mexico should anything like the recent spill ever happen again. This was very intriguing to me. Also, I found it interesting that BP was not involved in this when all the other big players are. I am wondering if this was a strategic move on their part or if BP opted out, which I doubt in their state.
Friday, September 17, 2010
Refiners Fight Emissions Law
Global warming is one of the main concerns of nations worldwide. California governor Arnold Schwarzenegger signed in 2006 the Global Warming Solutions Acts. This act implies the reduction of greenhouse gases by 25% in California. Recently, several energy companies and refineries are standing against the Global Warming Solutions Acts and are spending millions of dollars to support proposition 23. it is an overall refineries campaign to support proposition 23 which demands the suspension of the California environmental law. Refineries such as Tesoro Corp and Valero spent 4.5 million dollars of financial support of proposition 23.
For thousands of people this is an issue of ethics, numerous environmentalists and clean energy companies gathered to oppose proposition 23. However, environmentalists are dominated by the Oil industry regarding contributions matching large companies such as Royal Dutch Shell. On the other hand, other large oil companies took the corporate social responsibility initiate and remained neutral, companies such as Exxon, BP and Chevron.
focusing on the consumers effect, the Global Warming Solutions Act also known as AB 32 if implemented would negatively effect the consumer. AB 32 requires the reduction of Green House gases emitted, this reduces the economic activity of such refineries and this will escalate the price of oil. both camps decided to meet in an economic summit in order to finally decide whether AB 32 is going to be implemented according to votes.
In my opinion, I find it an extremely controversial issue. the implementation of the Environmental Law would definitely effect the economic status of the united states which is already vulnerable. on the other hand, the environment is already in jeopardy. If AB 32 was overruled, this would make things worse and contribute negatively towards the environment and global warming.
http://online.wsj.com/article/SB10001424052748704394704575495902377602556.html?mod=WSJ_Energy_leftHeadlines
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