I think one of the major consequences of the events in Japan will be the "death" of the nuclear power industry. Not only will new plants not be built, but operating plants may be shut down. The most obvious beneficiary of this will be the Natural Gas industry; you know, NG, the stuff that is plentiful, cheap and domestic. Got gas? If not, Missash's recommendation is to get some.
Missash, I agree with your comments about Nuclear plants. So far, the oil/gas royalty trusts are also selling off. So if natural gas is the solution, the market does not recognize it. For example, Cross Timbers Royalty (CRT) gets 69% of its revenues from natural gas. It is down about 20% in the last few weeks and about 4% today. This is pretty close to a pure play in natural gas. Maybe this is a buying opportunity?Thanks,Yoda
Actually, there are a large number of new permit requests for nuclear reactors in various stages of approval in the US. And, the Republican House majority leader has made it clear that there will no delays in approval process because of the events in Japan. Real estate valuations in the area of nuclear reactors might might be more impacted than permits for new reactors.
And, the Republican House majority leader has made it clear that there will no delays in approval process because of the events in Japan. >>>>> If he said that, imo he's totally out of touch with reality; ought to be institutionalized.
YodaOf course we don't know how low it is going to get so, as they say, be careful of trying to catch a falling knife. I think the usual advice is to wait until it bounces back up about 10% before buying, but everyone to their own poison.brucedoe
Sometimes you gotta feel some sympathy for politicians. Recently I wrote a piece called Snake Bit http://stopcontinentaldrift.blogspot.com/2011/03/snake-bit.h...To incorporate a saying by Rummy "It is what we don't know that we don't know that bothers me." They are also the things that control a presidency.brucedoe
Of course we don't know how low it is going to get so, as they say, be careful of trying to catch a falling knife. I think the usual advice is to wait until it bounces back up about 10% before buying, but everyone to their own poison.I just sold pretty much everything except some preferreds. I'll wait for the smoke to clear (unfortunately not a figure of speech), then maybe tiptoe back in by writing puts.
From the nuclear aspect of this disaster, I agree that natural gas could be a winner. Natural gas prices have been depressed for about two years now. Another possible winner are the merchant generators such as DYN and GEN, but there are a lot of issues with these stocks such as ongoing regulatory issues with some of their older plants and their finances. Add Icahn's potential takeover or non-takeover with DYN and these two have a lot of major potential plusses and minusses. As of a few minutes ago, DYN was about the only stock that I had up for the day and GEN was unchanged for the day, so the market thinks the nuclear issues will be positive for these stocks.
So if natural gas is the solution, the market does not recognize it.>>>>>>>>>>>>>>>> Yoda; the "Market" is currently mostly traders and momentum players, imho. I'm trying to think ahead to when the dust settles( no pun intended)....Like CRT, all the NG types I monitor and/or own are down. If Mr. Boehner really said what one poster has reported I hope they site a nuclear plant just to the West of his Ohio home.....I cannot see how NG will not benefit from all that is going on, not only in Japan, but also in the very unsettled situation in the Middle East....with the prospect that oil supplies could be disrupted at any time.
I think nuclear power plants may well be well be fairly safe compared to coal mines, drilling rigs, etc. I don't think it matters. After this, the public, most politicians, many banks and insurers will steer clear.The world has great supplies of natural gas coming on stream. Shale gas can be produced in many places. LNG plants are under construction. The prospect of prolonged depression of gas prices was a real concern. Now I see profits for producers through increased volume, as well as for industries participating in the contruction of new gas fired plants.We talked about it a bit over here:http://boards.fool.com/who-will-build-the-japanese-power-pla...
missashI think you are a bit over-concerned about nuclear power plants. It wasn't the 5th largest earthquake on record that damaged the nuclear power plants, it was the tsunami that put out the backup systems.Not only is a magnitude 8.9-9.0 earthquake impossible in Ohio, but it would take one heck of a large tsunami to reach it since it is, what, 800 mi. from the ocean.Actually, Ohio might actually be the best place to have nuclear power plants as they have just about the lowest exposure to natural hazards of any kind for anyplace in the U.S.But you may be right because the American public is hysterical about anything atomic. As I am sure you know, they had to drop the word nuclear from Nuclear Magnetic Resonance Imaging (NMRI) to just Magnetic Resonance Imaging (MRI) because Americans are conditioned to fear anything that they think might be radioactive, and this involves the word nuclear. I think if you asked 95% of Americans if they knew that an MRI just wiggles the nucleus of atoms, they would say, "Huh?" The only reason Americans will take an MRI is because they don't know that it involves the word nuclear.brucedoe
dwermeI don't know about shale gas a a real savior. Each frac consumes millions of gallons of water. The production per frac is greatest at the beginning and tapers off afterward. They also use some highly toxic chemicals which I am not convinced really do anything. So far as I am concerned, this is not an ideal solution. I'm also not clear how much cleanup of the gas is needed to remove hydrogen sulfide (H2S) and carbon dioxide (CO2), etc. Probably varies all over the place.What I would like to see is that shale gas production receives NO subsidies to make it economic and see what happens.brucedoe
Bruce, it is not just earthquakes and tsunamis that create a hazard re: nuclear power plants. In this day and age of increasingly powerful weapons in the hands of increasingly crazy people(aka "terrorists",aka radical Muslims),and with increasingly available alternative fuels, I see no reason that NG will not be used in favor of nuclear....Missash, spoken with the bias of being rather heavily invested in various NG "plays".
<<<<<<<Each frac consumes millions of gallons of water. >>>>>>> Ah, Bruce, you have given me the opportunity to "pump" one of my "fun money" investments. GasFrac is a company that uses a propane gel instead of water as the fracking fluid; thus, vast amounts of water are not needed and problems with what to do with the wastewater are eliminated. GFS.V//GSFVF.PK is HQ in Calgary, has been rapidly growing in Canada, and is just entering the U.S. in a Texas shale area.
>Not only is a magnitude 8.9-9.0 earthquake impossible in Ohio, but it would take one heck of a large tsunami to reach it since it is, what, 800 mi. from the ocean.Regulations only require reactors to be built to withstand expected seismic activity for the LOCAL region. There was significant damage in Ohio caused by 1811-1812 earthquakes on the New Madrid fault (toppled chimneys in Cincinnati and destroyed cabins), which was not severe due to low population at the time. Were the Ohio reactors were designed for such large quakes? Also, Ohio has tornadoes, which are considered a risk to reactors. And Ohio has several reactors near major populations with safety ratings in the bottom third...
In one sense, safety comparisons are like any other decision tree. You list the conceivable outcomes. Then you value each potential outcome in some numerical terms (dollars, lives, whatever is appropriate). Finally you multiply that number by the probability of that outcome occurring (as best as you can estimate those two numbers). The choice with the highest product, in general, wins.We all know that people die yearly while drilling for oil; I'd guess that - on average - more will die digging for coal; and very large numbers very infrequently from nuclear power plant explosions. We know that because we can count them pretty well. They also make for justifiably compelling television that has its own effects on voters and politicians will react. There is less agreement on how to measure the environmental costs - resulting in sickness and even death - from coal emissions, from oil and other fossil fuels. I may believe that coal emissions kill a lot of people world wide, I may believe that gasoline and coal auto emissions are raising the cost of food worldwide with very tough consequences for poor nations now and richer ones soon, but I make no claim to being a scientist. There is much risk inherent in the storage facilities full of nuclear waste, and in some countries it may be leaching into the water table but certainly the picture of a silent cement structure does not make for good sound-bite television.I live near Boston and years ago had dealings with the Boston Edison Company at a fairly high level when they were first operating the Plymouth nuclear reactor. Their logo featured the icon symbol for nuclear power but frankly these were not men I would have chosen to arm with a nuclear device. I don’t know whether present management at Plymouth is any better. I do know we have no way as yet or likely soon to deal with nuclear waste, and to bring the issue a bit closer to finance for almost the whole history of nuclear power no single nuclear pant could have been financed without government assistance, limits, and guarantees on liability. No imaginable consortium of insurance companies would have provided similar casualty insurance to that required by any apartment building mortgage lender I ever dealt with. The cost of insuring any single major nuclear disaster is simply more than any insurer can afford to buyIn the case of the Japanese plant disaster, the odds of a tsunami of that magnitude is reportedly one in 300 years, but the costs of that calamity would have bankrupted any insurance syndicate I ever heard of. The regulators frown on single bets that can take down the whole company regardless of how low the actuary says the probability of payout may be.There is one thing you can be sure of, it is seeing Congressmen sitting around large polished tables on television - and reporters in trench coats standing in front of colonnaded public buildings portentously saying "Time will tell".In the interim all of this, delays in new energy sourcing, higher costs of financing fossil and nuclear plus the need for Japan to over-burden its citizens with even more national debt, China and India requiring investment capital, and the rest will inevitably put pressure on long term financing costs.Most good quality REITs are delivered enough by now to absorb that particular hit without collapsing, but it’s just gotten a lot harder to figure out how we can get employment growth to the point where rents will be robust enough to plan on much significant dividend growth any time soon.I do know that today the Daily Beast rated the 65 US nuclear plants for safety: the Seabrook plant 40 miles north of Boston is rated the 11th riskiest, the Plymouth plant 40 miles south is 20th. I have no way of judging the quality of the Daily Beast’s research but if someone wants to plant a new nuclear plant anywhere nearer to me next month I promise you that they will have a fight coming. Does that make me a modern-day Luddite? You may well think so, but I might possibly disagree.
Bruce---What subsidies does natural gas production have? Depletion allowance is about it. Not so different from depreciation on real estate. Then in many states you have severence taxes. Compared to the subsidies solar wind biofuels etc have, gas stands on its own very well. Shale gas costs are coming down fast, frac technology will keep up with whatever regulations spring up, and the stuff is everywhere. We've increased production and reserves tremendously in the US, and other countries are just starting to look at it.I've been in the energy business for thirty years, and I've never seen anything as game changing as the last three. I think cheap gas was going to wipe out nuclear without this event.
<It wasn't the 5th largest earthquake on record that damaged the nuclear power plants, it was the tsunami that put out the backup systems.>From what I have read, the design of the backup system lacked a key feature. The backup generators and/or their fuel source were housed in an area where the waters from the tsunami were able to easily knock them out. I don't know if the generators and/or the fuel sources were swept away or if the generators were simply made inoperable due to being swamped with debris. The design should have been set up to house the backup components in a safe building. Lacking that, it could have been upgraded over the years. The design was not set up to withstand a 9.0 earthquake, but it in fact did. So your point about Ohio being so far away from a potential tsunami is well taken. Unfortunately, points like that get ignored.Sadly, the media coverage has been close to hysteria with commercials offering the teaser "are we in danger from any fallout?". Each report says we are not, yet they keep repeating the question. Reports of Americans wiping out supplies of iodine from store shelves are given lots of airtime. Instead of focusing on how we can help and honor the victims of the quake and tsunami, 98% of the attention has been on the nuclear issue. I sense that the attention, while newsworthy up to a point has a distinct agenda of trying to turn people on the nuclear power. Since we are unable to drill in Alaska or off the west or east coasts, paranoia over the nuclear industry only adds to our lack of ability to meet our energy needs for ourselves. There are some harsh realites that we face as a country. There are clearly consequences among the choices we make. Speeches for green energy do not help us today. We have poured hundreds of billions into the development of alternate energy sources. While technological improvements have made many products more energy efficient, there are no alternate fuels ready to take over on the scale we need. The free market would attract plenty of capital if it sensed a big payoff on their investment. Their general absense tells us that these things are only good on the margins or for companies whose plan is to be profitable only with lots of government help.I have heard individuals sound off against oil drilling, nuclear power and even natural gas. If you take their desires to their logical conclusion, we would be driven back into the days before the industrial revolution. Tellingly, their arguments fail to consider what will replace the things they want to shut down. Personally, I am all for new energy sources and technologies. In the meantime, I am also for us maximizing the use of all available energy sources. One of the arguments against drilling in the Alaskan wilderness a decade ago was that it would be a good 10 years before we reaped any major benefit from it. Well, 10 years have passed and we don't have anything flowing from that source and are no closer to producing enough energy to meet our needs.Oh, and all of this has been tough on our REITs, although the preferreds have held up well. B
Gurdison:Great post! The key sentence (for me) in your post was....."I have heard individuals sound off against oil drilling, nuclear power and even natural gas."Let me add to your list of objectionable energy forms (by one group or another).....coal, dams for hydro-electric power, and wind energy...YES wind energy! Three years ago or so, I went to a town hall by T Boone Pickens because I had nothing better to do and I wanted to see what he had to say. Turns out, the town hall was mostly touting his plan for using natural gas to power "over the road" trucks and battery power for cars (where batteries can provide adequate power). Guess what, protestors came to the town hall to protest his plans to put up large wind farms in or near the Texas Panhandle. I doubt if it had much to do with the protests but I believe T Boone did in fact "kill" the wind project. The bottom line is.....I was truly amazed. I'm pretty sure that there is not a single energy form that is not objectionable to at least one group or another!Batteries for electric cars have their evils....and by the way some fuel source has to be used to generate the electricity to charge the batteries. I believe I also remember reading that the manufacture of solar panels generates lot of hazardous chemical waste (similar to all semi-conductor manufacturing processes)Gurdison also said...."If you take their desires to their logical conclusion, we would be driven back into the days before the industrial revolution."I think its worse than that. If we observe the compliants of every group, we'll be driven back to the dark ages! (no pun intended)MHO is that we/our government needs to keep spending large sums of money trying to develop the perfect energy source. Until we invent that "magic bullet" we need to keep using the best energy sources and technology available. As of right now, MHO is that a large share of the best energy source will continue to be oil and natural gas for the forseeable future.I've made my living in the oil industry for 20 years. Nothing would make me happier than to be put out of work by some new environmentally perfect, low cost alternative energy. Until then, I'll keep showing up for work.
missashI believe you own, or did own, some electric utility stocks. Hope you are careful that you didn't pick any that uses nuclear power. Many of them do.brucedoe
missashPropane gel sounds like it could be flammable to me, although probably not badly so in the gel form. If so, I'm not sure it is better than water, although I guess it eventually evaporates away what isn't recovered for the next well.brucedoe
Prophet43MI'm sure you are right. Even burning wood would have its detractors. In fact deforestation in Brazil is a significant contributor to the CO2 in the atmosphere. Now let's see, there are candles.brucedoe
<<Propane gel sounds like it could be flammable to me, although probably not badly so in the gel form. If so, I'm not sure it is better than water, although I guess it eventually evaporates away what isn't recovered for the next well.brucedoe >>Bruce, you should stop guessing on fracs and post on what you are sure about. There are all sorts of frac options. Water fracs are available which use no chemicals other than corn starches. The propane fracs are great for wet gas production, where facilities to strip the long chain hydrocarbons are already present.Once under pressure, the gel changes state from a liquid to a gas. When the pressure is released, this gas travels out the bore head and is easily collected. This process generally takes less than 24 hours.The recovery of this propane gas is done along with the same pipeline used to collect the natural gas. The separation of the propane from the natural gas is a process that already has to be done since there is a certain amount of propane present in natural gas. So the additional cost of this separation is minimal.Sorry to get off topic, but this is a subject I can contribute, as opposed to REITs, where I mostly listen.
Gurdison states:"I have heard individuals sound off against oil drilling, nuclear power and even natural gas. If you take their desires to their logical conclusion, we would be driven back into the days before the industrial revolution. Tellingly, their arguments fail to consider what will replace the things they want to shut down."OK while we're on this rave, let me post this quote I ran into: http://rossmckitrick.weebly.com/uploads/4/8/0/8/4808045/eart...Earth Hour: A Dissentby Ross McKitrickIn 2009 I was asked by a journalist for my thoughts on the importance of Earth Hour.Here is my response.I abhor Earth Hour. Abundant, cheap electricity has been the greatest source of human liberation in the 20th century. Every material social advance in the 20th century depended on the proliferation of inexpensive and reliable electricity.Giving women the freedom to work outside the home depended on the availability of electrical appliances that free up time from domestic chores. Getting children out of menial labour and into schools depended on the same thing, as well as the ability to provide safe indoor lighting for reading.Development and provision of modern health care without electricity is absolutely impossible. The expansion of our food supply, and the promotion of hygiene and nutrition, depended on being able to irrigate fields, cook and refrigerate foods, and have a steady indoor supply of hot water.Many of the world’s poor suffer brutal environmental conditions in their own homes because of the necessity of cooking over indoor fires that burn twigs and dung. This causes local deforestation and the proliferation of smoke- and parasite-related lung diseases.Anyone who wants to see local conditions improve in the third world should realize the importance of access to cheap electricity from fossil-fuel based power generating stations. After all, that’s how the west developed.The whole mentality around Earth Hour demonizes electricity. I cannot do that, instead I celebrate it and all that it has provided for humanity.Earth Hour celebrates ignorance, poverty and backwardness. By repudiating the greatest engine of liberation it becomes an hour devoted to anti-humanism. It encourages the sanctimonious gesture of turning off trivial appliances for a trivial amount of time, in deference to some ill-defined abstraction called “the Earth,” all the while hypocritically retaining the real benefits of continuous, reliable electricity.People who see virtue in doing without electricity should shut off their fridge, stove, microwave, computer, water heater, lights, TV and all other appliances for a month, not an hour. And pop down to the cardiac unit at the hospital and shut the power off there too.I don’t want to go back to nature. Travel to a zone hit by earthquakes, floods and hurricanes to see what it’s like to go back to nature. For humans, living in “nature” meant a short life span marked by violence, disease and ignorance. People who work for the end of poverty and relief from disease are fighting against nature. I hope they leave their lights on.Here in Ontario, through the use of pollution control technology and advanced engineering, our air quality has dramatically improved since the 1960s, despite the expansion of industry and the power supply.If, after all this, we are going to take the view that the remaining air emissions outweigh all the benefits of electricity, and that we ought to be shamed into sitting in darkness for an hour, like naughty children who have been caught doing something bad, then we are setting up unspoiled nature as an absolute, transcendent ideal that obliterates all other ethical and humane obligations.No thanks.I like visiting nature but I don’t want to live there, and I refuse to accept the idea that civilization with all its tradeoffs is something to be ashamed of.Ross McKitrickProfessor of EconomicsUniversity of Guelph
What form of energy causes the most fatalities each year? Does not coal cost over 10,000 lives, what about oil (and the wars we fight over it), N/G etc. Seems to me nuclear is one of the safest?
but this is a subject I can contribute>>>>.Dwerme, do you have an opinion about GasFrac in particular or the fracking technology they use, in general.......I have gotten very interested and invested in the NG sector.....if anyone feels this is too OT, we'll take the discussion to an email exchange......
dwermeI much appreciate you comments.brucedoe
Well of course he is correct, including the comment of the air being cleaner in spite of the production of more electricity. Of course this didn't naturally happen. It took regulation. In the U.S. one of the things we did to reduce acid rain was in invoke cap and trade in SO2 emissions which seems to have worked pretty well and cost less than projected. I suspect few are aware of cap and trade in SO2 emissions, but they have been in force for something like 20 years. See: http://en.wikipedia.org/wiki/Acid_Rain_ProgramOf course other things were used too to reduce SO2 emissions, like scrubbers, among others.brucedoe
I should add, that I always tell people that oil companies are not inherently bad, they are just sort of like opportunistic bacteria. They will produce oil and gas, and keep us supplied. If we let them dump toxic frac fluid all over the place, they will. If we tell them they need to find a cleaner, safer way to conduct opperations, they'll do that. No way do I advocate the "get out of their way and let them get the job done" view. The need a framework in which to conduct their free enterprise, or the results will be ugly.
<They need a framework in which to conduct their free enterprise, or the results will be ugly.>I think most fair minded people would agree with that. Yet as a country we have often eliminated very tangible sources of energy without ever considering tapping them with very reasonable safeguards put in place. The anwar area in Alaska was deemed untouchable, even though a very small percentage of the land would have been impacted. The hysteria was as if they were considering setting up operations in the middle of Disney World. I have every confidence that a decent amount of oil could be extracted without causing any LT harm to the environment. Further, Anwar is not exactly a tourist destination. Another argument against it was that it alone would not solve our shortage of self produced energy. It was also put forward that it would take a good 10 years to see any meaningful flow of new oil. Both points were true. So what? When we as individuals get into a tight spot, we look at both sides of the equation. We look for ways to boost our income while simultaneously looking to cut back on expenses. If something helps us along, but does not solve the entire problem for us, we do not discard it. Cumulatively, we don't drill in anwar, off the west coast, off the east coast or in shallow waters in many places in the gulf. While there are many rigs out in the Gulf, a lot of them are not active. The owners of them tend to go where they can make money from their people and equipment. Being idle for large blocks of time is not profitable. It is nice in theory to say we will keep an area in pristine condition. Yet there is a price to be paid for doing so. Brazil has many new drilling projects going on off their shores. I have no idea how strict their structure is, but they are doing it and benefitting from it. That is much more the norm than what we do (or don't do).Every energy source has its share of negatives attached to it. Risk management is a basic for any successful business or person. Instead of saying NO so often, we should strive to maximize the use of our natural resources while also ensuring that we do so as safely as possible. But for some reason, the policy discussions are seldom framed that way. There are what almost 7 billion people in the world? At some point certain resources and the demand for them can reach flash points. Technology can help by allowing us to get more results from fewer resources. Yet the sheer number of people in the world should ensure that we will have a hard time staying ahead of the curve.B
MHO is that we/our government needs to keep spending large sums of money trying to develop the perfect energy source. Until we invent that "magic bullet" we need to keep using the best energy sources and technology available. As of right now, MHO is that a large share of the best energy source will continue to be oil and natural gas for the forseeable future.****************************If I am not mistaken the US is spending $60+billion to underwrite nuclear energy. Could we possibly be better off spending that kind of money on some other technology?
Professor McKitrick sure does a great job of beating up that strawman.Anyone who doesn't like electricity please reply.
gurdisonA few caveats to your post.Approval was granted to start giving licenses to drilling the Atlantic shelf. This was screwed up by the BP disaster in the Gulf.The first permit to resume deep-sea drilling in the Gulf was made several weeks ago, so permitting is resuming if very slowly: http://articles.latimes.com/2011/mar/01/nation/la-na-deepwat... You have to remember that the MMS was crucified for taking companies' word on EIS statements. What would you do after that?I whole heartily agree that ANWAR should be explored, but you don't know how much oil is there until it is brought in. For example, originally the favored drilling locality was thought to be in the eastern part of ANWR, but subsequent studies showed the reservoir rocks to have been heated too hot for oil to remain, and it is probably gone. This was also the caribou calving area so now they wouldn't be disturbed. Now the favored locality if farther west. Exploratory drilling would have minimal impact on ANWR. Companies are willing to drill in the winter using ice roads and ice drilling pads instead of gravel. They can whipstock many holes for miles in any direction from a single pad.A few words on caribou. In Prudhoe Bay (West of ANWR), the caribou like to walk on the roads because it keeps them out of the summer vegetation and the mosquitoes. They also like to stand next to the Alaskan pipeline in the winter to get the warmth generated by the flowing oil. I believe estimates are that the caribou heard in Prudhoe Bay are bigger than before development: http://www.anwr.org/features/pdfs/caribou-facts.pdf Although I am a "tree-hugger" environmentalist, I don't have to worry about trees in ANWR because there aren't any to "spoil" the view. I grant that Prudhoe Bay was sloppily developed, but AWNR would be much better regulated. I haven't been there, but pictures I have seen of ANWR look very much like some taken on the Moon.Incidentally, there is what is thought to be a moderate-sized oil field that butts up against ANWR called the Sourdough Field. A couple of holes were drilled many years ago with oil showings. If this field is developed, some oil will be withdrawn from under ANWR without drilling there. Development of this field was delayed because of an argument between Gov. Palin and Pres. Bush over how much royalties would go to the U.S. government for oil withdrawn from under ANWR. Subsequently it has become a big legal issue: www.law.duke.edu/shell/cite.pl?19+Alaska+L.+Rev.+393+pdfI have discussed some aspects of oil production in the U.S, under my pen name at: http://stopcontinentaldrift.blogspot.com/2010/03/bakken-form...brucedoe
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