Saturday, September 24, 2005

Items of interest. Oil sands players eye nuclear option.


"The companies that are talking about it are talking very quietly," one person in Calgary said yesterday.

But with the soaring price of natural gas, key to some oil sands operations, such as the kind run by EnCana Corp., the nuclear option is looking increasingly inevitable, industry players say. As gas remains at record highs, everybody in Calgary is scrambling to figure out ways to ease their dependence.

Calgary-based EnCana has most of its focus today on reducing the amount of steam it needs to extract viscous bitumen from the oil sands, trying to inject other solvents into the ground to aid recovery and ease natural gas needs. But nuclear is among the other options.

"We monitor what the nuclear potential could be but it's not something we're actively pursuing," said Alan Boras, an EnCana spokesman.

Alberta Premier Ralph Klein said yesterday he wants all other options explored first, including coal-fired power.

Companies such as Nexen Inc. and OPTI Canada Inc., both of Calgary, are using new technology that is something like a perpetual motion machine, with some of their oil sands production used to power the whole process. The two companies recently announced a massive expansion of their project.

MarketWatch: Refiners rule?


Blue Chip Emerging Growth letter is among the most successful of those followed by Hulbert. (See my July 4, 2005 column)

Blue Chip's technique is a variant of the Modern Portfolio Theory -- or, to put it another way, a form of relative strength approach. This means it supposedly picks its stocks based on a purely technical assessment of their performance.

But I've said before, Blue Chip makes a surprising number of fundamentalist noises.

In a recent promotional pitch, Navellier was positively evangelical about oil -- albeit first tantalizing his readers with the specter of a short-term correction. He wrote:

"Investors who are selling their oil stocks -- or worse, selling them short-in anticipation of a collapse are going to be in for the shock of their lives!

"Shocked as oil prices correct slightly and skyrocket higher... Shocked as they see oil profits explode again... And, perhaps worst of all, shocked as they miss out on the next-and most profitable-phase of the oil boom, as visionary investors make a decade's worth of profits over the next two to three years...

"For the past 18 months, as I've been telling my readers how oil stocks would continue to rise higher, my readers have grown significantly richer in a handful of select oil companies.

"However, even these great gains pale in comparison to what lies ahead as the next phase of the oil boom shifts to reward a new set of companies."

I'm surprised to see the scholarly and even geek-like Navellier pounding the pulpit like this.

The Boston Globe: Care to place a bet on oil?


Mutual funds specializing in energy and natural resources are spouting huge gains for a third consecutive year, and few managers in Boston have done better in that field than Dan Rice of BlackRock Global Natural Resources fund. That $1.1 billion fund, which earned 60 percent in 2003 and 47.6 percent last year, is up more than 53 percent so far this year.

Rice's message about energy stocks: Don't get scared off. There's still plenty of room to climb. ''People remember the dot-coms and think the energy market will be no different," he says. ''There's a huge difference."

His calculations don't depend on today's price for a barrel of oil. He looks at what the prices of energy stocks imply about the long-range cost of energy itself, then compares them to his own expectations and those of people buying futures contracts for delivery of oil and other energy resources years into the future.

The stock prices suggest a long-term oil price in the low to mid-$40s per barrel, according to Rice and brokerage analysts. Crude oil for November delivery cost $66.90 yesterday. Long-term futures contract price oil in the low $60s as far as six years out.

Though Rice thinks prices won't remain as high as current levels, he believes a long-term price of a barrel of oil will probably be in the $50s. Energy company stocks currently trading at prices implying an oil price in the $40s could appreciate by about 40 percent if oil climbs to his longer term forecast, Rice says.

The same kind of price gap exists for stocks working with natural gas and coal as well, he says.

The Christian Science Monitor: Driving 55 m.p.h. is looking pretty good.


But Mr. Bush has shown weak leadership on a more lasting step: Using the White House pulpit to urge Americans to turn down their thermostats this winter, save gasoline by buying high-gas-mileage vehicles and, most of all, to drive smarter.

One energy analyst, John Dowd of Sanford C. Bernstein & Co, told a Senate panel this month that "if, as a country, we were to obey speed limits for the next two months, we would probably conserve more fuel than will be lost by the refinery outages. Reducing speeds from 70 m.p.h. to 60 m.p.h., for example, improves fuel efficiency by 15 percent. If Americans want to know what they can do to limit gasoline price inflation, the answer is simple: slow down."

Consuming oil is so integrated into daily lives that it can be difficult to alter individual habits for a collective benefit. Since the 1970s, the nation has achieved much in energy conservation. But wisely taking such steps as avoiding many car trips, using air conditioning less frequently, and not accelerating a car so quickly are actions that still need to become habits.

As a former oil man, Bush must be more forceful on energy conservation, both to ease the current price crisis and to place energy efficiency at the forefront of energy policy. The era of staking the nation's future on a massive dependency upon one energy source needs to end - long before the oil runs out.

These latest disruptions in oil and natural-gas supplies should serve as a wake-up call that energy policy can't be business as usual.

World Energy Monthly Review: Why Simmons Is Wrong about Saudi Oil.

MarketWatch: Fuel to the fire - Alternative energy is risky play on hot sector.