No. of Recommendations: 1
On 17 Dec, Denny wrote:

>> but there were no takers.

I was and still am one of the "no takers." Without a doubt the idea is very interesting. If memory serves, the Chinese were actually working on the idea of very small units that could be used locally in energy deprived areas. The reason I was not interested in it as an investment idea is that the "event horizon," to misuse a term, is far in the future, if ever. No known investable entity is working on it. There is a rising mistrust of atom power, warranted or not, it does not matter. And new since your earlier efforts to promote thorium, shale oil has become a reality releasing millions (billions?) of barrels of previously not accessible fossil fuel.

People have a terrible error in their understanding of "reserves." Proven reserves is not the oil and gas underground, it is only the portion of it that an be extracted at current costs and prices. Proven reserves go up and down all the time. Down with extraction and with price reduction. Up with successful exploration, technological advances in exploration and production methods and price increases.

Currently the outlook for fossil fuels is additional supply from shale oil and gas which will drop prices which harms any and most other sources of competing energy. Thorium is likely to be put on the back burner once again. Oil has the nasty habit of rising to get people to invest in alternative fuels only to drop in price to kill those adventurous investors. I know from personal experience (not a profitable one) having had an interest in the field for several years. <<

Honestly, I sympathise with the viewpoint. No doubt, the new technologies to extract hydrocarbons from tight, impermeable formations is making a huge difference in energy supplies, and will continue to do so.

However, my take differs a bit. Specifically, I see the following countervailing factors:
1) Tight formation hydrocarbon extraction is actually quite expensive relative to conventional produciton. I expect long term breakeven prices around $4+/mmbtu for gas and $60+/bbl for oil. This leaves some room for alternate energy sources if they can be made chaep enough.
2) I suspect people underestimate demand. ASian nations are quickly ramping up the incomae scale, and energy usage is following western trends. Even reaching half the per capita energy intensity of European nations (not even comparing to per capita usage in North America or Australia!) will demand more new energy supplies than can be produced by hydrocarbon resources. There is room in the market for more than one type of producer.
3) Climate change. Although moving in fits and starts, I expect governments to increasingly try to price hydrocarbon externalities, mostly (although not exclusively - cf. coal Hg emissions in the US) focused around climate change. This willl inevitably increase teh cost of hydrocarbon energy, and open the economic window for alternatives a bit.

To be sure, I don't expect a collapse, or even decline, in hydrocarbon source of supply. Instead, I simply envision a future where the rate of hydrocarbon supply increase is slower than the rate of increase in demand, creating a gap to be filled by alternatives.

I bring this up now because of a pair of articles regarding thorium in today's press:

http://www.telegraph.co.uk/finance/comment/ambroseevans_prit...

http://blogs.the-american-interest.com/wrm/2013/01/09/a-revo...

There are technical issues to work out, and Denny is correct when he comments on the lack of investable entities in this technology space. Nevertheless, keep an eye on thorium as a future nuclear source. Things seem to be moving quite positively, and I would not be surprised to seem some money being made with this technology within a decade.

Brian
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