Micro and small nuclear reactors

Very intereresting; full site is here and it leads with the text below:

More than 50 new small and medium size reactor designs were developed and are being considered by research groups around the world in 2006.

There are a number of small and medium nuclear reactors that are in funded development.

Toshiba has designs for a micro nuclear reactor that generates 200 kw for 40 years

The 200 kilowatt Toshiba designed reactor is engineered to be fail-safe and totally automatic and will not overheat. Unlike traditional nuclear reactors the new micro reactor uses no control rods to initiate the reaction. The new revolutionary technology uses reservoirs of liquid lithium-6, an isotope that is effective at absorbing neutrons. The Lithium-6 reservoirs are connected to a vertical tube that fits into the reactor core. The whole whole process is self sustaining and can last for up to 40 years, producing electricity for only 5 cents per kilowatt hour, about half the cost of grid energy. It has dimensions of 20 feet by 6 feet.

Toshiba expects to install the first reactor in Japan in 2008 and to begin marketing the new system in Europe and America in 2009.

Mammoth tusks show up meteorite shower

Fossils could provide a new gold mine for micrometeorite hunters.

Rex Dalton


Bullet-like pieces of what is thought to be an ancient meteorite shower have been found embedded in mammoth tusks and bison bone.

The discovery of the 2–5 millimetre holes left by meteorites opens a window into a impact event thought to have happened over Alaska and Russia tens of thousands of years ago. And it could provide a whole new way to chart impacts from space.

Click above for the whole story

The $1mm Personal Jet

Eclipse Concept Jet. Nice toy for sure.

http://www.youtube.com/watch?v=bxOOX8oMnfw

Map that named America is a puzzle for researchers

Interesting puzzle.

By David Alexander Mon Dec 3, 12:19 PM ET

WASHINGTON (Reuters) - The only surviving copy of the 500-year-old map that first used the name America goes on permanent display this month at the Library of Congress, but even as it prepares for its debut, the 1507 Waldseemuller map remains a puzzle for researchers.

Why did the mapmaker name the territory America and then change his mind later? How was he able to draw South America so accurately? Why did he put a huge ocean west of America years before European explorers discovered the Pacific?

"That's the kind of conundrum, the question, that is still out there," said John Hebert, chief of the geography and map division of the Library of Congress.

The 12 sheets that make up the map, purchased from German Prince Johannes Waldburg-Wolfegg for $10 million in 2003, were mounted on Monday in a huge 6-foot by 9.5-foot (1.85 meter by 2.95 meter) display case machined from a single block of aluminum.

The case will be flooded with inert argon gas to prevent deterioration when it goes on public display December 13.

Researchers are hopeful that putting the rarely shown map on permanent display for the first time since it was discovered in the Waldburg-Wolfegg castle archives in 1901 may stimulate interest in finding out more about the documents used to produce it.

The map was created by the German monk Martin Waldseemuller. Thirteen years after Christopher Columbus first landed in the Western Hemisphere, the Duke of Lorraine brought Waldseemuller and a group of scholars together at a monastery in Saint-Die in France to create a new map of the world.

The result, published two years later, is stunningly accurate and surprisingly modern.

"The actual shape of South America is correct," said Hebert. "The width of South America at certain key points is correct within 70 miles of accuracy."

Given what Europeans are believed to have known about the world at the time, it should not have been possible for the mapmakers to produce it, he said.

The map gives a reasonably correct depiction of the west coast of South America. But according to history, Vasco Nunez de Balboa did not reach the Pacific by land until 1513, and Ferdinand Magellan did not round the southern tip of the continent until 1520.

"So this is a rather compelling map to say, 'How did they come to that conclusion,"' Hebert said.

The mapmakers say they based it on the 1,300-year-old works of the Egyptian geographer Ptolemy as well as letters Florentine navigator Amerigo Vespucci wrote describing his voyages to the new world. But Hebert said there must have been something more.

"From the writings of Vespucci you couldn't have prepared the map," Hebert said. "There had to be something cartographic with it."

MISGIVINGS ABOUT AMERICA

Waldseemuller made it clear he was naming the new land after Vespucci, describing how he came up with the name America based on the navigator's first name.

But he soon had misgivings about what he had done. An atlas Waldseemuller produced six years later shows only part of the east coast of the Americas, and refers to it as Terra Incognita -- unknown land.

"America has gone out of his lexicon," Hebert said. "(No) place in the atlas -- in the text or in the maps -- does the name America appear."

His 1516 mariner's map, on the same scale as the 1507 map, steps back even further, showing only parts of the new continents and reconnecting the north to Asia. South America is labeled Terra Nova -- New World -- and North America is labeled Terra de Cuba -- Land of Cuba.

"Essentially he's reconnecting North America to the Asian mainland, suggesting a continual world of land mass rather than separated by those bodies of water that separate us from Europe and Asia," Hebert said.

Why the rollback? No one knows.

In writings accompanying the 1516 map, Waldseemuller comes across as if he "has seen the better of his error and is now correcting it," Hebert said.

He speculated that power politics played a role. Spain and Portugal divided the globe between them in 1494, two years after Columbus, with territory to the east going to Portugal and land to the west to Spain.

That demarcation line is oddly absent from the 1507 Waldseemuller map, and flags marking territorial claims in South America suggest Portugal controls the region's southernmost land, even though it is in Spain's area of influence. On the later map, the southernmost flag is Spanish, Hebert said.

"It is possible one could say the 1507 map is influenced strongly by Portuguese sources and conceivably the 1516 map may be influenced more by Spanish sources," he said.

Although the map conceals many mysteries, one thing is clear: it represents a revolutionary shift in the way Europe viewed the world.

"This is ... essentially the beginning or first map of the modern age, and it's one that everything builds on from that point forward," Hebert said. "It becomes a keystone map."

Ethanol/Alternative Fuel FAQ

Good resource on biofuels:

http://i-r-squared.blogspot.com/2007/08/ethanolalternative-fuel-faq.html

Fill 'er Up with Corn, for a Full Tank of Food Inflation

By Brad Zigler

The U.S. government is supporting ethanol production in the hope of increasing supply fivefold by 2017. So much acreage has been given over to government-subsidized corn production now that fully one-third of the domestic corn harvest goes to fuel production.

More fuel, less food.

There's been a notable ripple effect felt here and overseas. The price of food has gone up. BIG TIME. Been to the grocery store and seen the price of milk or eggs recently?

Click here for whole article

How Low Can the US $ Go?

Financial Times, Published: December 3 2007 02:00 | Last updated: December 3 2007 02:00

What would be the effect if commodities including oil were priced in a currency other than the dollar?

David Woo: The impact on the US dollar would be negative. The fact that the dollar is the main transactional currency for global trade means that the world has to maintain minimum dollar balances to facilitate international payments. If these dollar balances are no longer required, it will be clearly harmful for the dollar. That said, we think the risk that the pricing of Opec oil will soon move to a system based on a basket of currencies is low. For one thing, such a move will necessitate an overhaul of the existing pricing system, given that Opec crudes are currently priced in terms of dollar adjustments from dollar-denominated benchmarks. The absence of non-US dollar alternatives would therefore require moving away from current market mechanisms and setting up a brand new pricing system, which we do not think is feasible right now.

click here for the whole article

George Carlin: education and the owners of America

Some good observations by George Carlin:

http://www.youtube.com/watch?v=AMqJvhmD5Yg

Canaccord vice-chair quits, blames governments

Things are going right off the rails. Are we heading towards a future like Children of Men?

'2008 Looks Bleak'

Claudia Cattaneo And Jon Harding, Financial Post Published: Wednesday, December 12, 2007

CALGARY - Veteran energy investment banker Rick Grafton, one of the pioneers of Calgary's bustling financial community, has resigned as vice-chairman of Canaccord Adams Inc., blaming Alberta and federal government policies for drying up investment in the country's junior oil-and-gas sector.

Mr. Grafton, 54, helped build the city's competitive energy investment business, including Canaccord's global energy practice, but is walking away in frustration because he expects 2008 to be bleak for both energy brokers and oil and gas producers and service companies alike.

Investors are so turned off they won't even meet with anyone from the oilpatch, he said.

"It took us 30 years to build a worldwide institutional [investor] following in the Alberta energy business, one cold call at a time, and these governments have put a very serious dent in a very short period of time," Mr. Grafton said in an interview yesterday, a day after quitting his job.

Vancouver-based Canaccord is Canada's largest independent brokerage firm.

"It's time to go to the sidelines and map out a new plan, until the governments come to their senses, and I believe in the next two years they will. But 2008 looks very, very bleak," said Mr. Grafton, who plans to devote the next year to investing in Alberta oil companies active globally.

Mr. Grafton said Ottawa's decision last year to tax income trusts and Alberta's recent royalty review and subsequent increases to royalties have combined to destroy oil entrepreneurship in Canada.

"There is no reason to start an oil company because it would be nothing but 10 years of hard work, and you never know what decisions the government will make," Mr. Grafton said in a rare display of candor in a sector that tends to be guarded to avoid spooking investors.

"Now they have a [royalty] structure in place, that when you risk dollars, the risk is on the company and the upside is for the government."

Mark Maybank, president of Canaccord Capital Corp., Canaccord Adams' parent company, said Mr. Grafton "has been a phenomenal partner and a cornerstone of our success in Calgary. My only regret is that I'm not able to join him on the golf course in Phoenix."

Some of Mr. Grafton's industry counterparts agreed the business is in a free fall, particularly since Ed Stelmach, Alberta's Premier, announced in October a new framework for royalties that will take effect in 2009.

Jim Davidson, chief executive of FirstEnergy Capital Corp., one of the largest energy specialist dealers, said it has become difficult to raise money.

Unlike previous cycles, in which the sector's fortunes were tied to commodity prices, this time the big hit came from policy decisions, he said.

"In the provincial government's defence -- and they don't have a lot to be defended on here, frankly -- governments worldwide are grabbing more," he said. "It's not like this government is standing out alone and moving in a different way."

George Gosbee, chairman of Tristone Capital Inc., another top energy investment dealer in Calgary, said any remaining interest in Canadian energy has gravitated to Canadian-based companies active globally.

According to the brokerage, its own financings of international companies have more than tripled in value so far this year relative to 2006, while the value of financings for companies active in Canada is down 50%.

"The federal government decision, the provincial decision and our traditional cycle have aligned to make investors focus on the big exploration and production companies with opportunities elsewhere, and on international juniors," Mr. Gosbee said.

"You can see it in the share-price performance," said Mr. Gosbee, noting that juniors and intermediates with assets in Alberta are down collectively 19.6% since Sept. 17, the date of the royalty review panel report, while their U.S. counterparts have risen almost 17%.

Canaccord's Calgary office is headed by former oil and gas trust analyst Bruce Mc-Donald, managing director and global head of energy investment banking.

U.S. Stocks Fall After Fed Cuts Benchmark Rate by Quarter Point

Stocks are supposed to go UP in response a rate cut. Good illustration of the world going topsy-turvey.

By Eric Martin

Dec. 11 (Bloomberg) -- U.S. stocks tumbled the most in a month as investors speculated the Federal Reserve's quarter-point interest-rate cut will fail to prevent a recession.

Click here for the whole story

Senate drills Bush official over oil prices

Indeed; why add to storage during a period of high prices? Probably because prices are expected to get even higher.

By Steve Hargreaves, CNNMoney.com staff writer

December 11 2007: 5:16 PM EST

NEW YORK (CNNMoney.com) -- A Senate panel grilled a key government energy expert Tuesday over why the Bush administration plans to continue adding to the nation's oil reserve as the price of crude spikes near $100 a barrel.

Click for the whole story

Mars rover finds signs of microbial life

By Katie Franklin and agencies

Last Updated: 2:41am GMT 12/12/2007

Nasa says its Mars rover Spirit has discovered "the best evidence yet" of a past habitable environment on the planet's surface.

Microsoft's mind reading patent

As if kid's toy ads on the TV aren't bad enough:

Could a worrying patent application from Microsoft point to the future of advertising?

15 November 2007

The art of predicting customer behaviour has become increasingly sophisticated, as technology companies have improved their data mining algorithms and added ever-greater processing power to the number-crunching machines. This has allowed organisations to build detailed profiles of their customers, their buying habits and interests, often without the consumers knowing they were being tracked.

Now one company believes it can take the concept of customer profiling one step further: it wants to literally read its customers’ minds.

In August 2007, software giant Microsoft filed a patent application for a system that would allow it to access thoughts. The patent describes pattern-recognition techniques that can be applied to electroencephalograph (EEG) signals – a measure of electrical activity in the brain – to determine what cognitive state the subject is in.

Microsoft’s intention is ostensibly to use EEG testing to measure the effectiveness of its own user interfaces. “It is possible to determine the effectiveness of a user interface by analysing a user’s brain states before, during, and/or after a user performs a task using the user interface,” the company asserts in its patent application.

But it is hard to believe that Microsoft will stop there, if it does effectively hone and patent EEG techniques. For one thing, its presence in the computer games market opens up intriguing possibilities: it could use brainwaves as a control mechanism.

There are other possibilities too. Microsoft has an avowed commitment to taking on search engine giant Google in the lucrative online advertising market. Now that is one area where a little mind reading could go a very long way.

The Story of Leaded Automobile Fuels

The Ethyl-Poisoned Earth

Written by Alan Bellows on December 8th, 2007 at 12:56 pm

At the turn of the twentieth century, as the age of automobiles was afoot, the newfangled gasoline-powered internal combustion engine began to reach the limitations of the fuel that fed it. As higher-compression designs were tried, an engine-wrecking condition known as "knock" or "ping" would invariably develop. Though they didn't know it at the time, the noisy destruction was caused when the the increased heat and pressure prompted the air/fuel mixture in the cylinder to detonate all at once as opposed to an orderly burn. In spite of this problem, there was a demand for high-compression designs since they provided increased horsepower and fuel efficiency. The latter was particularly appealing in light of America's forecasted fuel famine.

Click here for the whole story

Alberta House Price Developments

A report from the Edmonton Journal.

“Edmonton home prices dropped an average of 6.5 per cent in November from October. Edmonton house prices now are down $50,000 from their May peak of $426,028. The volatile mixed category of duplexes and rowhouses plummeted 15.4 per cent to $311,193. ‘The current market is very price-sensitive,’ Carolyn Pratt, president of the Realtors Association of Edmonton, said today. ‘If property is not priced right for this market, it may languish in the listings.’”

“Edmonton-area housing starts fell to 1,091 units in November 2007, down 42.1 per cent from November 2006. ‘Builders have been reacting to concerns about the size of new and resale inventories and their impact on prices,’ said Richard Goatcher, senior market analyst at Canada Mortgage and Housing Corp., which released the figures.”

“‘Overall, the Canadian housing sector continues to outperform expectations, and is in stark contrast to its U.S counterpart where the recession in the housing sector continues unabated,’ said TD Securities strategist Millan Mulraine.”

“However, the signs of economic strength and optimism were released as Bank of Canada governor David Dodge was warning that the credit crunch has intensified, adding to the risk posed by the weakening in the U.S. economy, of an economic downturn.”

“‘These tighter credit conditions have come as financial market difficulties have intensified over the past few weeks and as bank-funding costs have increased globally,’ Dodge said. ‘At the same time, there is an increased risk attached to the prospects for demand for Canadian exports because the outlook for the U.S. economy, particularly the U.S. housing sector, has weakened.’”

From the Calgary Sun:

“Despite a plunge in housing starts in the region, experts say Calgary’s economic boom is far from over. The federal housing agency, the Canada Mortgage and Housing Corporation, reported a 48% drop in housing starts between last month and November, 2006.”

“Total housing construction in Calgary is so far down by 17% this year over last. Last month, 776 homes were started in the Calgary area, down from 1,497 the previous November.”

“Even so, the pace of construction remains hectic, said Deep Shergill, president of the Calgary Region Home Builders Association.”

“‘Most of the builders are still building at or near capacity,’ said Shergill, adding the sector’s labour squeeze continues. ‘There’s just no way we could maintain that kind of pace we’d seen.’”

“Multi-family housing starts in the city dropped a whopping 76% last month compared to November, 2006.”

“Lai Sing Louie, a senior analyst with the CMHC, said some of the overall slowdown is caused by more used listings diverting buyers. ‘There’s still lots of supply in the re-sale market,’ he said.” “In Alberta’s seven largest centres, housing starts in November, 2007, were down 38% from the same month last year.”

>$90/bbl and land bonuses in Alberta at 5 year record lows

Bonus From Single Alberta Auction Hits Lowest Level Since November 2002

Wednesday’s Alberta land sale brought in the lowest overall bonus since November 2002 as the total, including bidding on four oilsands parcels, brought in just $15.38 million.

The last time Alberta collected less than $16 million from an overall land sale was the Dec. 11, 2002 auction that collected just $15.78 million, including rights to one Metis parcel. The lowest total of 2002 was the $10.29 million collected in the Nov. 27 auction of that year.

Wednesday’s land sale drew just $15.38 million overall or about $218 per hectare for rights to 70 689 hectares. According to Daily Oil Bulletin records, the per-hectare price on Wednesday was the lowest since the April 21, 2004 auction, when the average was just under $197 per hectare.

Rights to conventional leases on 26 401 hectares brought in just $9.16 million or an average of about $347 per hectare in Wednesday’s sale. Conventional licences on 43 264 hectares attracted just under $4.72 million or an average of $109 per hectare. Four oilsands parcels drew just $1.5 million or an average of $199 per hectare for rights to 1 024 hectares.

From Nickle's Daily Oil Bulletin

Nuclear Power Touted As Steam Source For SAGD

By Elsie Ross, from Nickle's Daily Oil Bulletin

Small-scale high temperature gas nuclear plants could potentially replace natural gas to produce the steam required for SAGD (steam assisted gravity drainage projects) in Alberta, an oilsands conference heard Tuesday.

Two German-designed Pebble Bed Modular Reactors (PBMR) could support 100,000 bbls per day of bitumen production in addition to generating electricity, said Reiner Kuhr, a mangement consultant promoting the technology. The size of the reactor tends to match increments of SAGD expansions of 50,000 bbls per day, producing as much steam as two or three conventional gas-fired generators, he said.

However, before any nuclear plant is built in Alberta there is a need for a regional energy policy and support from industry and government, Kuhr and Ashley Finan, a graduate student in nuclear engineering at the Massachusetts Institute of Technology (MIT) told the Canadian Institute conference. "Right now there is no stability with respect to nuclear so that someone coming in asking to build a nuclear plant has no idea what the policy is or how the province will react," said Finan who recently was part of study that looked at the potential for nuclear power in the Alberta oilsands.

The 500-megawatt thermal PBMR is similar in scale to two 70A gas turbines, said Kuhr, a senior executive consultant Shaw Stone & Webster Management Consultants. "Whatever you can do with two 70As you can do with one PBMR reactor by putting the right equipment on the back-end to make steam or power."

For SAGD, the reactor could produce high-pressure steam that would require only the reactor and some heat exchangers and boilers. At a relatively high temperature of 720 C. for the helium gas, PBMR reactors can run super critical steam cycles, very high efficiency cycles and produce about 200 megawatts of electricity, he told the conference.

The PBMR plant also includes passive safety features which are a step-change over Canadian-made CANDUs and other light water reactors, said Kuhr. A major advantage is that this enables them to be located very close to other industrial facilities such as pipelines or upgraders compared to the CANDUs which require a large exclusionary area, he said.

The PBMR reactor requires a very small amount of material that must be dealt with in terms of fuel production and ultimate disposal, the conference heard. Each of the fuel spheres is about the size of a billiard ball and holds about 20 megawatt hours of energy compared to about one kilowatt hour of energy from a pound of coal or petroleum coke.

In terms of economics, starting with $7 per mmBtu gas and an escalating price over 30 or 40 years, a nuclear reactor could represent net present value savings of $1 billion to $2 billion in natural gas, said Kuhr. There also is value in the CO2 displacement which at the current value of $15 per tonne would amount to about $200 million, said Kuhr.

While the PBMR reactor would be less expensive than a $5 billion or $6 billion CANDU because it is smaller, "the nuclear industry really requires a lot more than a business model, it requires some kind of market pull and public acceptance," he said.

Kuhr was to meet today in Calgary with some industry players to discuss what the industry needs and their reaction to the potential opportunity.

However, even with support from government and industry, the earliest plant construction could begin would be 2013-2014 with 2017 start-up date, he said. That means that any new nuclear reactor would serve a new generation of oilsands projects rather than those already in the planning stages

Replacing natural gas with nuclear energy for oilsands projects offers a number of benefits, including significant reductions in carbon dioxide production while preserving gas for exports, said Finan.

In addition to the PBMR reactor, the MIT study included the Advanced CANDU Reactor (ACR), the next generation reactor which Energy Alberta wants to build at Peace River to provide electricity, and the Enhanced CANDU 6 reactor (current technology). Nuclear power would provide greater price stability for oilsands developments because the price of uranium accounts for a much smaller proportion of the total cost than does natural gas, said Finan. Uranium is also a Canadian resource, she noted.

The study looked at the use of nuclear power to provide steam and electricity for SAGD, and steam, electricity and hot water for surface mining and upgrading.

The most interesting potential application for the CANDU reactors is in the Athabasca oilsands carbonates where there has been discussion about using electrical heating to recover the resources, said Finan. "That would require a lot of electricity and the CANDU is a better size for that."

A CANDU reactor also would be about the right size for a 200,000 bbl per day surface mine with an upgrader and 250 megawatts of electricity on the grid. It would not provide hydrogen for the upgrader.

In analyzing the economics of nuclear power in comparison to natural gas for steam production, the study found that based on available cost information, nuclear energy is in the ballpark with a break-even gas price of $6.75 per mmBtu. Electricity from nuclear power is more expensive which is to be expected given the capital costs for plants, becoming competitive with natural gas plants at gas prices of between $10 and $13 per mmBtu. "We were happy just to be in the ballpark," she said.

The main environmental advantage would be the reduction in CO2 emissions with a savings of about three million metric tonnes per year and about 131 million metric tonnes over the lifetime of a 100,000 bbl per day SAGD facility.

A major challenge for nuclear power in Alberta is public opinion, especially considering the fact there currently are no plants in the province as it has been found persons familiar with nuclear power tend to be more supportive of it, she said.

Ethanol Craze Cools as Doubts Multiply

The burgeoning Alberta Ethanol Pork-Barrel is already tired, not wired! Biofuels are already "so yesterday". Click below for the whole article.

Ethanol Craze Cools as Doubts Multiply

Claims for Environment,Energy Use Draw Fire;Fighting on the Farm
By LAUREN ETTER
November 28, 2007; Page A1

Little over a year ago, ethanol was winning the hearts and wallets of both Main Street and Wall Street, with promises of greater U.S. energy independence, fewer greenhouse gases and help for the farm economy. Today, the corn-based biofuel is under siege.

In the span of one growing season, ethanol has gone from panacea to pariah in the eyes of some. The critics, which include industries hurt when the price of corn rises, blame ethanol for pushing up food prices, question its environmental bona fides and dispute how much it really helps reduce the need for oil.

Converting a Conventional Car to Electric Power

How come auto manufacturers can't market something like this? Click below for the whole story:

The Post Peak Car

It is always a shock when people understand that peak oil is about to arrive (or that it has already arrived). Reactions vary from utter despair to groundless optimism. Some people immediately jump to the conclusion that the great dieoff is just around the corner. Others, instead, are sure that some technological marvel will save us. In both cases, the bottom line is that there is nothing that can be done: either we are doomed, or someone will come up with the miracle solution at the last moment.

But passivity is never a good strategy. We can adapt; and if there are no perfect solutions for the incoming petroleum scarcity, there are at least some that may be good enough. That is why we built our retrofitted, battery powered Fiat 500. We don’t claim it is the first retrofitted vehicle in the world, nor that it is the solution to all problems brought by peak oil. But we do believe that it is an example of a way for maintaining some low cost transportation for the troubled times ahead. It is a true “post peak car” that has the additional advantage that it can be used for focussing people’s attention on the reality of the incoming peak oil

The Fallout Continues

CNRL layoffs announced today. No official word on the number. This was sent to CNRL employees this morning:

From: Allan Markin
Sent: Wednesday, November 28, 2007 11:11 AM
To: Exchange Users
Subject: From the Desk of Allan Markin

Good morning, We regret to inform you that this morning Canadian Natural released a small number of employees and contractors.

We are sure you can appreciate that we are operating in a quickly changing economic environment. Natural gas prices, which represent a significant portion of our business, have declined over the past year and are not expected to improve much over the coming year. The rising Canadian dollar has meant we have received less for our products since they are priced in US dollars. Pressure on the cost of goods and services, on general and administrative (G&A) expenses, and on the cost of capital projects has further challenged our industry. Adding to this, the royalty structure within Alberta will be changed, further reducing the profitability of many of our investments.

These are the realities which we face, much of which we have little to no control over. But we will not sit back and let events over take us.

Today’s decisions were difficult, but necessary to adjust our business to these economic challenges, and are intended to ensure we are staffed appropriately to move into the future. Our Management Committee takes no pleasure, at any time, in making these kinds of decisions. But when it is necessary, I can assure you that we do it right, and with integrity.

We remain very confident in our success, and in the opportunities ahead of us. We are better positioned than any of our peers to develop and grow our business for many years to come. We have the right people, the right projects, and the right plans to continue building Canada’s most successful exploration and production company, despite the previously mentioned challenges facing the entire oil and natural gas industry.

$70US Price Floor?

Note this study is based on old royalty regimes; and likely relatively light on current capital costs. They are escalating so rapidly using data only six months old would make for a considerably more optimistic case than reality.

The results are shocking, but I think true. Amazing that an industry that was doing OK only a few years ago at $30/bbl needs over twice that much now.

Oil, gas explorers feeling pressure of new price floor

Claudia Cattaneo, Financial Post Published: Wednesday, November 28, 2007

CALGARY - Oil and gas explorers around the world need US$70 a barrel oil on a sustained basis to make the returns they were making only a couple of years ago with oil prices at US$30, according to a study by international energy research firm Wood Mackenzie.

Rising costs for equipment, lack of access to many basins and more challenging plays have elevated prices needed to earn a return of 15% on exploration, Andrew Latham, vice-president of exploration service, said from Edinburgh, where the firm is based.

"Things have changed quite quickly," he said. "What we are seeing is the equivalent of a new price floor for explorers, and the US$30 that worked two or three years ago certainly doesn't work anymore."

The higher floor price is contributing to the higher price of oil, he said.

The study, based on an analysis of conventional exploration in 400 basins around the world, found the cost of drilling alone has risen by 60% since 2004. Mr. Latham said the basins hit hardest are those in deep waters, such as the Gulf of Mexico, offshore West Africa and Brazil, where there is a shortage of all types of equipment, from drilling rigs to floating production facilities.

With governments around the world nationalizing their oil industry, exploration companies have access to a relatively minor fraction of the undiscovered oil and gas potential, he said.

That means they're being pushed into more challenging plays in areas that are accessible but that take more technology, more money and more time to develop, he said.

Still, Mr. Latham said he doesn't see oil and gas companies backing off on exploration because they lack alternatives.

Oil and gas companies "are going to have to get used to achieving relatively modest returns, even though the oil and gas prices are very high, … because the alternatives are pretty challenging as well," Mr. Latham said. "If you are looking to develop discovered resource, which involves negotiating with the host governments, the terms of those deals are much tougher than they used to be."

The study included exploration activity in the Canadian Arctic and in Newfoundland's offshore, but not in Western Canada, where the oil-and-gas industry tends to be focused on resource plays that have a high chance of finding hydrocarbons, rather than exploration where the chances of success are small.

The study doesn't factor in changing fiscal terms under way around the globe that have yet to impact on explorers' revenues and will continue to push up the floor price needed by the sector.

"The majority of recent exploration is based around licenses which were negotiated in the 1960s, with fiscal terms more favourable than could be negotiated today," Mr. Latham said.

ccattaneo@nationalpost.com

$800 mm ATB Bailout

Remember the recent decision to contribute another $2 billion to bail out the ATA's pension shortfall? This was on top of the previously agreed amount of over $4 billion.

And now this. Note the article suggest that the $800mm quiet bailout might not be the end, either.

In any other province a government throwing money around like that might create a some waves. Not in Alberta though.

Cracks show in people's bank

Finance minister fumes over investment woes of Alberta Treasury Branch

Tuesday, November 27 2007

By NEIL WAUGH, EDMONTON SUN

ATB Financial's CEO Dave Mowat calls it a "major bump in the road."

Alberta Finance Minister Lyle Oberg - who should be Mowat's boss, but isn't allowed to be under some goofy Alberta Tory legislation - is a little less optimistic.

He branded the $1.2-billion hole in the government-owned financial institution's books revealed this week as a "liquidity crisis".

And as such, Alberta finance has quietly pumped in $800 million to paper over the cracks in the people's bank, which is a holdover from the old Social Credit funny money days.

While Mowat insists the provincial government "has full confidence in ATB's board of directors and management," it's pretty clear that Oberg is not a happy camper.

Especially when he confessed how Alberta Treasury Branches brass got themselves into such a mess with our money by investing in dubious financial instruments called "asset-backed commercial paper."

"This is all part of the subprime," Oberg said about the U.S. real estate crash and the financial meltdown it's creating in its wake.

"It's wrapped up in the commercial paper."

And while management told Oberg that the junk paper, which presently has no market, is "some of the best," ATB is part of a group called the Montreal Accord that has agreed to a "standstill period" until Dec. 14 while they try to figure out what to do with the stuff.

"I questioned them significantly exactly where they are at," Oberg said after ATB took a $79.6 million write-down, which Mowat described as a "serious financial event."

"I don't want them coming back and saying we've had to do another write-down."

IS HE LOW-BALLING?

Even though the depositors' losses that ATB are admitting to so far are only 6.9%, Oberg fears Mowat may be low-balling the red ink after some Canadian banks made provision for write-offs of 25%.

"We have a relatively clean set of holdings," the ATB report insisted. Which are "almost entirely free" of subprime content.

Instead, Mowat and his Tory-appointed board sunk the peoples' money into "third-party" paper for car loans, credit card receivables and credit default swaps.

Now that's blue chip.

And ATB brass admitted they did it because the paper had the "added benefit" of higher returns than bank-backed commercial paper.

I wonder why?

"I wouldn't say I was alarmed," Oberg winced. "But I was surprised."

And then there's the Alberta Treasury Branches' own "principle of diversification."

Mowat's question-and-answer discussion admits that would "contradict investment advice ATB would give to its own clients."

That's considering that "a third of ATB's liquid assets" are tied up in this fiasco.

"What was not anticipated was that the entire market for ABCP (asset-backed commercial paper) would cease trading," the ATB document sputtered.

Of course, ATB is also about to take an unspecified financial bath in the Ranchers Beef collapse, which was propped up with $100 million in loans, mostly from government agencies, in what former president Tony Martinez described as a "government policy."

'AN EXCELLENT YEAR'

"ATB Financial continues to have an excellent year," Mowat blustered in his second quarter financial report.

Alberta NDP leader Brian Mason isn't about to take the CEO's word for it.

Mason spat, "It smells like we've got a number of problems coming home to roost.

"As a result of the patronage appointments of the Conservatives to the board exposed the ATB very substantially."

"There's maybe over a billion dollars of exposure here," he continued.

"I think it would be worthwhile for the auditor general to take a look at this situation."

Mason described the ATB as a "wonderful organization."

But he reminded Oberg: "It was built with the hard work and sweat of Albertans, not by Tory patronage appointments.

"People put their hard-earned money into the treasury branch," he continued.

"Like any financial institution, they deserve the very best stewardship of that money.

"I would like to have a second opinion," Mason winked.

It's time for Alberta's favourite fireman - Auditor General Fred "Get 'er" Dunn - to pay a little visit to the ATB Tower.

Financial Markets "So Damned Weird"?

More than 'sheets' hitting the fan

By The Mogambo Guru

People want to know why things in the financial markets are so damned weird, and I answer that there are many reasons, all of them concerned with greed.

150 MPH Car - Production to start in 2009

http://www.autoblog.com/2006/02/27/loremo-debuts-150-mpg-concept-car-in-geneva/

US Mortgage Meltdown Accelerates

This is a very bad omen:

Freddie Mac shares tumble 26%

MARCY GORDON

The Associated Press

November 20, 2007 at 11:24 AM EST

WASHINGTON — Freddie Mac, the No. 2 buyer and guarantor of home loans in the U.S., lost $2-billion (U.S.) in the third quarter and said Tuesday it must raise fresh capital to meet regulatory requirements. Its shares fell more than 26 per cent in early trading Tuesday.

The quarterly loss was the largest ever for Freddie Mac which, like its larger government-sponsored competitor Fannie Mae and a number of large investment banks, has been slammed in recent months by rising defaults on home mortgages.

The mortgage financier said it is “seriously considering” cutting in half its dividend in the fourth quarter and has hired Goldman Sachs Group Inc. and Lehman Brothers Holdings Inc. as financial advisers to help it examine possible new ways of raising capital in the near future.

Freddie Mac said it set aside $1.2-billion in the turbulent July-September period to account for bad home loans, reflecting “the significant deterioration of mortgage credit.”

Executives said Tuesday there was little to be optimistic about in the fourth quarter and told investors to brace for more of the same, sending shares on the greatest one-day plunge since public trading began for Freddie nearly two decades ago.

Losses widened from $715-million during the same period last year. The report sent shares tumbling $9.89 to $26.37 Tuesday.

The company posted negative revenue of $678-million, as it sustained losses under generally accepted accounting principles of $3.6-billion in the quarter. The revenue compared with positive revenue of $91-million a year earlier.

The $2-billion third-quarter loss for McLean, Va.-based Freddie Mac worked out to $3.29 a share, compared with $1.17 a share in the third quarter of 2006.

Losses far exceeded Wall Street analysts expectations of a 22 cent per-share loss, according to a poll by Thomson Financial.

The results for Freddie Mac, together with a recent report by Fannie Mae, heighten investor anxiety over the government-sponsored companies, which had been considered less vulnerable in the housing crisis because they have had less exposure to high-risk, subprime mortgages.

Freddie Mac's regulatory core capital was estimated to be just $600-million in excess of the 30 per cent mandatory target capital surplus directed by the Office of Federal Housing Enterprise Oversight.

If dividend cuts and other actions aren't sufficient to help the company reach its government-mandated level of capital held in reserve as a cushion against risk, Freddie Mac said it may consider other measures such as limiting its growth, reducing the size of its mortgage investment holdings or issuing new stock.

That could put additional strain on a housing market suffering the worst slump in more than 15 years.

Freddie Mac has traditionally funded the mortgage market when other banks pull back because of risk.

An inability by Freddie Mac to fill that role could hinder a return to equilibrium in the mortgage market and possibly intensify the housing downturn.

“Without doubt, 2007 has been an extremely difficult year for the country's housing and credit markets and, as our third-quarter financial results reflect, we have been impacted by the deterioration in these markets,” company Chairman and CEO Richard Syron said in a statement. “We recognized the challenges facing the mortgage markets, however, and have taken further steps to address them.”

So far this year, Freddie Mac has recognized $4.6-billion in pretax credit related items.

Buddy Piszel, chief financial officer, said Freddie Mac is moving to stem losses.

“We have begun raising prices, tightened our credit standards and enhanced our risk management practices,” Mr. Piszel said. “We also continue to improve our internal controls.”

“We were getting thin” in terms of excess capital, and Freddie Mac decided it needed to bolster its capital “to manage through this credit cycle,” Mr. Piszel said in a telephone interview. That cycle isn't expected to improve until 2009, he said, with home prices projected to register a 5 per cent to 6 per cent decline nationwide.

Moving To Houston After The Royalty Review?

From the November 20th edition of the Daily Oil Bulletin:

Another Shitty Biofuel Concept

Stupidest damned thing I've seen on late:

Quebec company aims to turn stinky diapers into cost effective diesel fuel

MONTREAL - If a Quebec company has its way, dirty diapers normally destined for landfills will soon be transformed into a cost-effective, synthetic diesel fuel.

It's not such a stretch, says engineering and project management company AMEC, which is working on behalf of an as yet unnamed client to build a facility in the Montreal area that would use a process known as pyrolysis to convert diapers to diesel.

The concept has been around for ages and is continually changing, said Luciano Piciacchia, an engineer and vice-president with Amec's Quebec office.

``But some of the issues that come up with (the process) is the consistency of the material you're putting through,'' he added.

Enter diapers, which are in plentiful supply in area hospitals and consistent in their composition. The company is considering a collection system to ensure it gets the volume it requires.

``If we try to take municipal waste and run it through a system like this, it would be too variable and you'd get all sorts of nasty surprises you'd have to deal with,'' Piciacchia said.

``One of the beauties of the diaper is that it is going to be a very consistent input.''

The initial plan is to convert about 30,000 tonnes of diapers, about one-quarter of the diapers that end up in landfills in Quebec yearly. Piciacchia says that number of diapers will translate into about 11,000 tonnes of diesel fuel. The preliminary economic analysis pegs the cost of the fuel at 50 cents per litre.

Pyrolysis, also known as thermal cracking, involves heating up the diapers up in a closed, controlled environment at temperatures of up to 600C without air, essentially breaking them down thermally.

``Then you're bringing it to the next level which is breaking the carbon chains down ... and (in the end) they will resemble the fuels which are what we're going to end up producing,'' Piciacchia said.

The so-called diaper diesel can be used in just about any industrial application, but probably won't be suitable for use in an automobile, Piciacchia said.

``The other beauty of it is because this whole thing works in a closed system, there are no emissions,'' he added.

David Bressler of the University of Alberta says pyrolysis is a ``very hot area of research right now'' as industry looks for ways to further develop biofuel production technology.

``There is a lot of good things about this class of technology, there aren't a lot of negatives,'' Bressler said. ``Right now, they're just figuring out how to make the process cost-efficient ... that's really the catch in the bio-industrial side.''

Piciacchia says there are plenty of companies looking at other potential feedstocks.

One of his company's clients is looking at car fluff - the non-metallic parts in a car - while another is looking at roof shingles as a potential source.

With fingers crossed, Piciacchia says a diaper diesel plant could be in operation in the Montreal area within the 18 months.

Bressler says the science is sound, but there will be some bumps along the way as they attempt to turn it into a profitable industry.

``You kind of have to hit the ground to get going and then once you're at that scale, you can go back and gain the efficiency you need to be long-term competitive,'' Bressler said.

Don Smith, a professor in the plant sciences department at McGill University, says with the process improving, diapers could certainly fly.

``Economically, you're turning a waste stream into a resource stream, and that works pretty well,'' Smith said. ``It could fly and it would be good if it did fly. There are a lot of these diapers going to landfills and it would just be great if we could convert these into something useful.''

7 Incredible Natural Phenomena you've never seen

Way cool

http://www.oddee.com/item_91568.aspx

Long-Term Oil Gloom Spreads In Houston

Energy Angst: Long-Term Oil Gloom Spreads In Houston

HOUSTON – Saudi Arabia has more oil, Amsterdam more tankers, New York more money, but Houston has the heart of the global oil industry. These days, it is not beating well. Study after study, executive after executive, and analyst after analyst is warning that there are rough times ahead for oil supply.

Here, oil news is analyzed, sorted and shelved. But in 37 years of writing about energy, in boom and bust, I have never found the kind of fatalism that now grips the oil patch.

Click on link above for whole article, well worth reading.

Just When You Thought You Were Safe

Damn. Just when I thought I was safe. I had it all figured out. I thought if I stayed out of the Vancouver airport the chances of me getting a 50,000 Volt electric chair sans chair was minimal. And then I saw this piece of unpleasant news:

Canadian police commissioner says airport officers reassigned after Taser death

Yeah, the stupid buggers could be anywhere now. Would have been better to leave them in place, at least then we knew where they were. But no, they had to reassign them. You could now be "hit" by a mad zapper from St John's to the Queen Charlotte Islands.

A good link on the whole issue, including the video tape which proves the initial RCMP statements of the incident were lies, is here:

http://www.cbc.ca/canada/british-columbia/story/2007/11/14/bc-taservideo.html

Subsequent to the video coming out I heard the interview below with the RCMP on "As It Happens". The officer interviewed gave one of the worst interviews I've ever heard; absolutely blew it. They've got a lot of explaining to do. If anyone else did what they just did they'd be in jail for many, many years. Or in the case of Texas, executed.

2007-11-15 As It Happens Daily

Accountability. The R.C.M.P. and Vancouver's Airport Authority react to the release of a video showing a man being lethally Tasered by police.

Right click to Download 2007-11-15 As It Happens Daily
[mp3 file: runs 19:42]

Greater Than 50 Percent Probability?

According to Gregory Peters, head of credit strategy at Morgan Stanley:

There's a greater than 50 percent probability that the financial system will come to a grinding halt. You have the SIVs, you have the conduits, you have the money-market funds, you have future losses still in the dealer's balance sheet in the banks [..]

Click on the link below for much more:


Holy alarming prognosis, batman...........

Oops............ OPEC

Saturday, November 17, 2007

OPEC blunder reveals debate on weak dollar

RIYADH, Saudi Arabia — The accidental airing of a closed OPEC session Friday provided a surprise glimpse into a sensitive debate over the weakening U.S. dollar, with Saudi Arabia's foreign minister warning that even talking publicly about the currency's decline could further hurt its value.

The high-profile blunder ahead of a rare OPEC summit revealed the debate as Iran attempted to convince other member countries to express concern over dollar depreciation in the meeting's final declaration.

Oil is priced in dollars on the world market, and its depreciation has concerned oil producers because it has contributed to rising crude prices and has eroded the value of their dollar reserves. Cartel officials have resisted pressure to increase oil production to ease prices.

"The reality is that we have this problem. I think we should draft the declaration to reflect our concerns," Iranian Foreign Minister Manouchehr Mottaki said during a pre-summit meeting here with fellow ministers from the Organization of Petroleum Exporting Countries.

But Saud al-Faisal, foreign minister of U.S. ally Saudi Arabia, came out against the proposal with unusually frank comments.

"In my feeling, the mere mention that the OPEC countries are studying the issue of the dollar is itself going to have an impact that endangers the interests of the countries," he said.

"We all should be worried if any action that we take will lead us to do some injury to our returns on our product," al-Faisal said. "Nobody wants to have less money than more money. I am sure that we all agree on that."

Broadcast accidental

The closed meeting was accidentally broadcast to journalists and after about 40 minutes, an official rushed into the press room and yanked the television cable out of the wall.

A public declaration by OPEC expressing concern about the falling value of the dollar could send the currency even lower, putting at risk the vast dollar holdings oil producers have generated as crude prices have soared to record levels.

Iran and Venezuela have proposed trading oil in a basket of currencies to replace the historic link to the dollar, but they have been unable to generate enough support from fellow OPEC members.

After the meeting, OPEC Secretary General Abdalla Salem el-Badri said the group had decided not to mention concern over dollar depreciation in the declaration.

"We discussed it among ourselves, but I will tell you, you will not see it in the final declaration," he said. "I told you ... many times that we are concerned, but this is a member-country policy."

Saudi Foreign Minister al-Faisal suggested during the meeting that OPEC analyze the impact of dollar depreciation without documenting its efforts or concern.

"This is not new. We have done this in the past, decide to study something without putting down on paper that we are going to study it so that we avoid any implication that will bring adverse effect to our countries' finances," al-Faisal said.

Not everyone agreed with the Saudi foreign minister in the meeting. Nigerian Finance Minister Shamsuddeen Usman suggested accommodating Iran's proposed addition.

"While underlining our concern for the continued depreciation of the dollar and its adverse impact on our revenues, we instruct our finance ministers to study the issue exhaustively and advise us on ways to safeguard the purchasing power of our revenues, of our members' revenues," Usman suggested the statement should read.

Production speculation

Although the issue of dollar depreciation took center stage on the eve of the upcoming summit, which starts today, the run-up to the meeting was also dominated by speculation over whether OPEC would raise production after recent oil-price increases that have closed in on $100.

The record oil prices prompted U.S. Energy Secretary Samuel Bodman to call on OPEC to increase production earlier this week, but cartel officials have said they will hold off any decision until the group meets next month in Abu Dhabi, United Arab Emirates.

The Tories don't seem to believe in agreements. Witness how it has treated the petroleum industry, the biggest employer and industry in the province.

I guess Stelmach must figure if he isn't bound to an agreement, why should anyone else be?

The ATA and the province agreed to split $6.1 billion dollars of unfunded pension liabilities; the province was generous and agreed to pay two thirds the cost while the ATA agreed to pay one third the cost, which was $2.1 billion.

To head off a potential teacher's strike that may interfere with the upcoming election, the Stelmach government generously absorbed the ATA's 1/3 of the unfunded pension liability. This was a $2.1 BILLION dollar give away by the province. At the stroke of a pen, Stelmach reallocated $600 from each Albertan to 30,000 teachers.

All to buy the teachers off from striking for five years.

For every teacher, this is the equivalent to $15,000 per year for five years; or a one time bonus of $90,000. It also results in an instant gross increase in pay of 3.1%; which will probably be a net increase of about 5%.

I agree that teachers strikes should be illegal. Many parents depend on being able to take their children to school to be able to work. If the school is shut down due to a strike, the people can't work. I think it should be easy to define teachers as an essential service which isn't allowed to strike.

Actually, I think any public service strike should be illegal. The private sector can have strikes because presumably the only affected parties are the workers and owners of the company affected. Public sector strikes affect everyone in the public, not just the employer and employees so in my view should be banned.

Teachers reach pension deal with province
Jason Fekete, Calgary Herald
Published: Friday, November 16, 2007

Premier Ed Stelmach bulldozed through potentially his largest political barrier to electoral success on Thursday, announcing a multibillion-dollar deal to cover the teachers' unfunded pension liability in exchange for five years of labour peace.

Spending watchdogs, however, assailed the government for "selling out Albertans," while opposition parties said the deal was struck for political expediency, not because it's the right thing to do for nearly 30,000 teachers who could go on strike.

The tentative deal between the province and the Alberta Teachers' Association will see the government swallow the teachers' $2.1-billion portion of the unfunded pension liability up to 1992, on top of the $4.3 billion owed by the province -- for a total of $6.4 billion.

But the agreement is contingent upon all 62 publicly elected school boards and local teachers' bargaining units ratifying the deal by the end of January. If they don't, nearly 30,000 teachers from 54 boards could be on strike in the new year -- possibly in the midst of an expected spring election campaign.

"The challenge now is one of time," Stelmach said in Edmonton, insisting the agreement balances the needs of teachers, students and taxpayers. "It's just a huge -- not necessarily a burden -- but off the shoulders" for teachers, his government and all Albertans, the premier added.

Indeed, the government might be breathing the biggest sigh of relief.

An agreement with teachers would prevent a province wide strike in early 2008 that could cripple the Tory government in an election campaign, argued David Taras, political analyst at the University of Calgary.

"It's very convenient for the government. It's the preemptive strike," Taras said. "It's part of clearing the decks and making sure there's labour peace, so it doesn't become an issue during the election."

The unfunded pension liability has been a thorn in the side of Tory governments for years. The former Klein government failed in repeated attempts to strike a deal.

Since it was created in the 1930s, the teachers' pension fund has been underfunded by both the government and the ATA. The liability currently totals $7.1 billion, including $6.4 billion up to 1992 -- when both sides agreed to increase their contributions -- as well as $700 million since then.

Currently, 3.1 per cent of every teacher's salary is deducted to cover the pension liability, including new teachers who weren't working when the deficit was generated. The new deal would allow teachers to keep the cash that's being allocated to cover the unfunded liability.

"I'm quite confident this will be greeted warmly by the teachers," said ATA President Frank Bruseker. "This is a real positive move . . . What this will mean is labour peace in the education sector."

If school boards and teachers' ratify the deal, it will eliminate any possibility of strikes or lockouts until September 2012.

Stelmach said the deal is critical because the current funding structure of the pre-1992 liability could have cost both sides upward of $45 billion to eliminate it over the next 52 years.

While his government has committed billions in cash, the premier said he's not sure where all the money will come from and how quickly the province will burn the pension liability.

"We're going to be working through a number of scenarios," Stelmach said, noting a pact with teachers has been a priority since he first took office.

But the deal was immediately assailed by the Canadian Taxpayers Federation. The group suggested covering the $2.1-billion teachers' portion will cost $600 per Albertan and simply amounts to a "payoff" designed to keep the Tories in office.

The government could have achieved labour peace and saved billions in the process by simply banning teachers' strikes, said Scott Hennig, Alberta director of the taxpayers federation.

"Stelmach sold out taxpayers on this for political expediency," Hennig charged. "This is not a move to help teachers or students. This is a move to help the Stelmach government avoid a teachers' strike during a provincial election."

Opposition parties welcomed the deal but accused the Tory government of only agreeing to it now because a provincewide teachers' strike in the new year could sideswipe them on the campaign trail. "This very clearly takes us one step closer to an election," chimed Liberal finance critic Rick Miller.

But even Miller recognized the agreement is politically savvy on the government's part and steals ammunition from the Grits and other parties.

"Our policy platform just got a page shorter," he said.

NDP Leader Brian Mason said the proposed agreement looks positive, but insisted it took a looming provincial election campaign to force the government to do the right thing.

"The government is prepared to spend a considerable amount of money in order to solve a major political problem," Mason said.

Alberta Alliance Leader Paul Hinman said he's worried about the final price tag and what it could do to provincial coffers.

"It's a good day for the teachers. It sounds like a good day for the government," Hinman said. "But is it a good day for the taxpayers?"

jfekete@theherald.canwest.com

Brad Peak Lets Premier Ed In On Research in the Real World

This letter was written in response to this note, previously posted.

Stelmach - Response Letter from GP

Many times when i get an email like this i just sit back and read it, and wonder just who really wrote it and what was their motivation for doing so. Being the little knowledge freak I am, I decided to do some investigating of my own, in the back yard of GP and area based on the content of the letter. Many of you know I have a Small Oil and Gas company of my own (150 BOE/D) and try to stay in tune with the political issues that affect me based on my current size of production and costs. I also like to stay in tune with larger players and the way changes affect them so that I may look forward and plan my continually evolving business model.

I contacted via telephone a senior member of CNRL's team in that area. We used to work together in Rainbow Lake for many years and have both went on in separate directions to become strong friends and strong business people, excellent technical people (both hands on mechanical/instrumentation and paperwork and people skills). I guess thats why we are friends, we think the same ways, and face many of the same challenges. We talked personal for awhile, then things let to the royalty review, actual operations and current projects, and the impacts we expect to see from each our perspectives. I mentioned this letter. He asked me is that the one from the rental guy in GP. Yes it is I respond. Yes I know that guy he says. So we discuss what's in the letter about the canceled projects, I am wondering if these rigs actually folded up and went home or not. I got the answer.

I've never actually seen this, rig moves are not cheap at all, but sometimes cutting a loss is the best outcome you could foresee. He said yes we did cancel those wells. One of the rigs we talked about was just in the process of setting up for spacing and prep'ing to stand for drilling, and the word came down to rack it all up and send it back to yard. So yes this is a true case story, not just some letter from a disgruntled taxpayer who needs to go on a holiday and chill out for awhile.

I asked what was it that lead to that choice to rig out before you're finished rigging in. That must have been a hard decision to make I responded with. He said it was not what they wanted to do, what they wanted to do was to drill the wells. But when you are embarking on a D&C (drill and complete) project that will run between $5,000,000.00 and $20,000,000.00 and the rules change in the middle of the game, you sometimes have to modify your game plan. With a D&C cost like that, and with a risk of capital of that magnitude (of which the citizens of the Province of Alberta do not participate in), where the original rule book gave a royalty exemption until payout to recover capital costs of that size, the risk was slightly offset and a projected ROI would be 3 to 5 years if the project did not go bust completely, but there is still risk attached. He indicated that now this royalty exemption is gone and the risk remains the same, the anticipated ROI is now forecast to be 8 years. And thats IF what the target is, gives it to you, to move you toward any ROI at all.

I'm starting to see it now. The citizens that had Ed demand their "fair share" were never sharing in the risk before, and now even more so. So I can see why one would elect to not drill a well, even when the rig is in the process of setting up. Now there is no well. The risk of capital has been removed. There is no asset to apply any royalty to, even if it would have been 3 years down the road. Now there is nothing to apply any royalty to. When ill-informed people send regulators to send you a message that sums up like this:

- You take all the risks
- You pay all the costs

- We want our share first
- We will not share in any risk though, you will assume all risks yourself
- If you go bust thats too bad
- If you find production we want our "share" first
- We don't care what your ROI is or if there is one at all.

THAT......kills industry and all the people it would have employed just to drill these wells, not including tie ins, pipelines, facilities, operating, etc. It takes over 75 people to drill just one of these wells. Now there is no well. No taxation of corporate or personal income because there are no services provided for 14 of these wells at $5 - $20 million dollars a pop. No royalty revenue because there is no well. No decent land sale bonus to the crown for offset sections because no one will want to lease crown P&NG rights anymore, because its all different now.

To the citizens of the Province of Alberta who insist that they are overdue to get their fare share.......get ready for it, because here it comes. I don't care what the rate is, any rate times zero is = ZERO. Thats grade one math. To these citizens and the cronies who gave in to get greedy.....are either of you smarter than a fifth grader? I would say, No they can't be. But....I know one man who is...he saved his capital, he may soon need it to move to Saskatchewan, and I'm right in his footsteps. I actually started evaluating Saskatchewan yesterday, one day before receiving this letter.

This is just starting, we haven't even seen the ramifications of this yet. Its just getting started. That's too bad, it's gonna hurt a lot of people really bad in a somewhat geographical way. Rental company or completely otherwise.

You may forward or send this to whoever you want. It doesn't matter now, it's not a disgruntled letter, its just a true life example.


Brad Peake

New Method to Make Hydrogen

New Method Converts Organic Matter To Hydrogen Fuel Easily And Efficiently

ScienceDaily (Nov. 13, 2007) — Hydrogen as an everyday, environmentally friendly fuel source may be closer than we think, according to Penn State researchers.

"The energy focus is currently on ethanol as a fuel, but economical ethanol from cellulose is 10 years down the road," says Bruce E. Logan, the Kappe professor of environmental engineering. "First you need to break cellulose down to sugars and then bacteria can convert them to ethanol."

Logan and Shaoan Cheng, research associate, suggest a method based on microbial fuel cells to convert cellulose and other biodegradable organic materials directly into hydrogen.

The researchers used naturally occurring bacteria in a microbial electrolysis cell with acetic acid -- the acid found in vinegar. Acetic acid is also the predominant acid produced by fermentation of glucose or cellulose. The anode was granulated graphite, the cathode was carbon with a platinum catalyst, and they used an off-the-shelf anion exchange membrane. The bacteria consume the acetic acid and release electrons and protons creating up to 0.3 volts. When more than 0.2 volts are added from an outside source, hydrogen gas bubbles up from the liquid.

"This process produces 288 percent more energy in hydrogen than the electrical energy that is added to the process," says Logan.

Water hydrolysis, a standard method for producing hydrogen, is only 50 to 70 percent efficient. Even if the microbial electrolysis cell process is set up to bleed off some of the hydrogen to produce the added energy boost needed to sustain hydrogen production, the process still creates 144 percent more available energy than the electrical energy used to produce it.

For those who think that a hydrogen economy is far in the future, Logan suggests that hydrogen produced from cellulose and other renewable organic materials could be blended with natural gas for use in natural gas vehicles.

"We drive a lot of vehicles on natural gas already. Natural gas is essentially methane," says Logan. "Methane burns fairly cleanly, but if we add hydrogen, it burns even more cleanly and works fine in existing natural gas combustion vehicles."

The range of efficiencies of hydrogen production based on electrical energy and energy in a variety of organic substances is between 63 and 82 percent. Both lactic acid and acetic acid achieve 82 percent, while unpretreated cellulose is 63 percent efficient. Glucose is 64 percent efficient.

Another potential use for microbial-electrolysis-cell produced hydrogen is in fertilizer manufacture. Currently fertilizer is produced in large factories and trucked to farms. With microbial electrolysis cells, very large farms or farm cooperatives could produce hydrogen from wood chips and then through a common process, use the nitrogen in the air to produce ammonia or nitric acid. Both of these are used directly as fertilizer or the ammonia could be used to make ammonium nitrate, sulfate or phosphate.

This research is published in the Nov. 12 issue of the Proceedings of the National Academy of Sciences online.

The researchers have filed for a patent on this work. Air Products and Chemicals, Inc. and the National Science Foundation supported this work.

The Slowdown Begins

I was recently reading a typically uninformed article; they are still trickling into the mainstream media.

This quote caught my eye:

Of the controversy surrounding the royalty review, one argument is related to a slowdown in the economy due to a tightening up on the energy sector.
"As for the prospect of a slowdown in the Alberta economy because of higher royalty rates, that may well happen and that would not necessarily be a bad thing," said Hepburn. "In September the year-to-year rate of inflation in Alberta was 4.6 per cent, according to Statistics Canada, the national average was 2.5 per cent.

Well, looks like the slowdown is coming, apparently as the fool quoted in the article wanted. Signs of this? All over the place.

Bonnet's is selling its fracturing division. Understand that this new fracturing company had some of the best people in industry with it, brand new equipment, and was on its way to being a serious company. All built from scratch. Now all the equipment has been bought and it is heading to......... Russia. So much for the jobs in Alberta that existed, let alone the ones that would have been created.

This item too, which speaks for what is happening in GP.

I heard that Nexen has released 15 rigs on its long lake oilsands project. And CNRL released five rigs for its oilsands projects too.

I've heard a lot of equipment is moving south to the states, no quantification.

Producers too are moving to the states. How couldn't they be? A bit of business investigation indicates it is clearly a better place to be. It is no accident that Encana has been growing their business dramatically in the US over the last seven or eight years. Obviously barriers of entry for Canadian companies to go do it; clearly at least some companies are willing to step up and do it.

Baytex Energy Trust Announces Opening of Denver Office and Executive Appointments

CALGARY, ALBERTA--(Marketwire - Nov. 12, 2007) - Baytex Energy Trust (TSX:BTE.UN) (NYSE:BTE) is pleased to announce that we have established an office in Denver, Colorado to conduct oil and gas exploration and development activities in the United States.

Biofuels Facing Crash

Here is where our brave provincial PC leaders are taking us:

Biofuels bonanza facing 'crash'

By Roger Harrabin

Environment Analyst, BBC News, Valencia

Mr Steiner warns that Indonesia palm oil may never be sustainable

The biofuels bonanza will crash unless producers can guarantee their crops have been produced responsibly, the UN's environment agency chief has said.

Achim Steiner of the UN Environment Programme (Unep) said there was an urgent need for standards to make sure rainforests weren't being destroyed.

Biofuel makers also had to show their products did not produce more CO2 than they negated, he told BBC News.

Critics say biofuels will lead to food shortages and destroy rainforests.

They point to the destruction of Indonesia's peat swamps as an example of biofuel folly.

The swamps are one the richest stores of carbon on the planet and they are being burned to produce palm oil.

Mr Steiner implied that because of Indonesia's inability to police its land use, biofuels from palm oil grown by the nation might never be deemed to be sustainable.

But he said some biofuels could be considered sustainable. He highlighted ethanol production in Brazil, and a dry land crop called jatropha, which is resistant to pests and droughts.

Mr Steiner urged investors not to turn their backs on developing second or third generation fuels that would use non-food crops and burnable waste.

He feared that beneficial biofuels might be lost as part of a consumer backlash.

Mr Steiner made his comments in response to criticism from a group of independent scientists who said they had written to the Intergovernmental Panel on Climate Change (IPCC) complaining that the climate body's comments on biofuels have been naive.

The independent scientists pointed to two phrases in reports by the IPPC, of which Unep is a co-sponsor, which the scientists said could not be substantiated.

One stated that biofuels were an effective solution in at least a number of countries, while the other suggested that biofuels in the transport sector would generally have positive social and environmental benefits.

False economy

One of the scientists, Tad Patzek from University of California Berkeley, US, said: "In the long-run, the planet cannot afford to produce biofuels because we're going to run out of the land and water and environmental resources.

"In addition, because of the land use changes, drying up peat-swamps, burning tropical forest, these biofuels involve up-front enormous emissions of greenhouse gases that will never be recouped by their later use," he told BBC News.

Professor Patzek also doubted Mr Steiner's confidence in Brazilian ethanol. "The [IPCC] description of Brazilian sugar-cane ethanol production as 'highly advanced' and 'a model' is somewhat of an exaggeration.

"It's neither good nor a model," he said.

Brazilian producers are adamant that their bio-crops are not grown on rainforest land - but the environmental group Friends of the Earth Brazil claim that peasant farmers - dispossessed by biofuel conglomerates - are moving to the Amazon to seek new land.

Biofuels: next generation

Mr Steiner said Brazil had enough land to ensure that biofuel cropping could be sustainable.

The group of scientists said their letter to the head of the IPCC, Professor Pachauri, had not been answered.

BBC News has not been able to obtain a comment from Professor Pachauri, though this may be hardly surprising given that the final summit on the IPCC Fourth Assessment Report (A4R) is currently underway in Valencia, Spain.

Mr Steiner said Unep had set up a high-level task force to study the life-cycle implications of all biofuels. The group is expected to publish its findings next year.

By then much of the Indonesian peat swamps - one of the most valuable stores of carbon in the world - will have been torched.

The only way of stopping may not be through the UN or the Indonesian government, but through one or more private philanthropist with a burning desire to own an Indonesian swamp.

Canadian Natural Response

Canadian Natural shifts gas focus out of Alberta

DAVID EBNER

November 2, 2007

CALGARY -- Oil patch giant Canadian Natural Resources Ltd. has responded to Alberta's new royalty regime with a kick and a hug.

The company created and controlled by billionaire Murray Edwards is radically cutting plans for natural gas drilling, saying it will move production to British Columbia, West Africa and the North Sea. But it will stay the course for most of its oil sands investment plans, which amount to more than $20-billion and are the future of the company.

Yesterday, CNQ prominently declared it would cut its gas drilling in 2008 by about 40 per cent because of higher royalties to be imposed in Alberta starting in 2009. The cut is less than the 67 per cent that the company had previously said it would make but still a major blow to the sector as it begins its winter drilling season.

For more click on the text above.

Manning Emerges

All that it will take to throw out the PC's and put a new ruling party into Alberta is for some leader of note to step forward and gather the angry voters under an umbrella. This might be happening before our eyes:

Video

Text report

Manning hammers Alberta's energy royalty plan

Updated Sun. Nov. 4 2007 3:16 PM ET

CTV.ca News Staff

Reform Party founder Preston Manning has slammed the Alberta government's new energy royalty plan and questioned Premier Ed Stelmach's competence.

During an appearance on CTV's Question Period, Manning urged Alberta's government to address "big-picture issues." The new plan creates uncertainty for energy consumers, producers and environmentalists, he said.

"I don't think you can talk about royalty policy without talking about tax policy, continental energy security and environment or vice versa," Manning said Sunday.

As Alberta emerges as one of the world's significant energy producers, Manning said Stelmach has yet to demonstrate his capacity to lead on major energy issues.

"I think the big question with Premier Stelmach and the administration is one of its competence. Does it have competence to deal with these big-picture issues?" Manning asked.

"Alberta is a big player, not just in the energy picture, but in the continental picture."

The new royalty plan is set to take effect on Jan. 1, 2009 and will collect $1.4 billion more in royalties by 2010 than the current system.

Under current calculations, royalties from the energy sector will put about $10.5 billion into Alberta coffers representing about one third of the provincial government's total annual revenues.

The Stelmach government modified some of the recommendations and rejected others made by the province's Alberta Royalty Review Panel. The panel had recommended an increase of about $2 billion annually in it's September report.

"(The government is) creating uncertainty because there will have to be an election before these things come into power," Manning said.

"The big picture just hasn't been spelled out, that's where I see the problems."

The new royalty plan effectively nullifies contracts with two of Alberta's largest oilsands players, creating uncertainty for investors and employees. Stelmach said he wants those negotiations wrapped up within the next 90 days, prompting criticism that his timeline is unrealistic.

The provincial government has yet to determine how the new royalty plan will directly affect energy-sector employment or the quality of life for the average Albertan.

Manning added it's becoming increasingly unlikely that Stelmach and the Conservatives will win another election unless the "government demonstrates a capacity it hasn't shown thus far."

"I don't see votes going to the Liberals or the NDP, I think their biggest danger is another 150,000 people staying home who voted Conservative the last time," he said.

Stelmach defended the plan shortly after it was announced on Oct. 25, saying knee-jerk negative reactions will dissipate as details of the plan are cemented.

"Change is never comfortable," he said during a speech to Conservative delegates last month. "We need a bigger pie to create new jobs, new opportunities and to build for the future.

"As future generations look back on this decision, I'm confident they'll see we were fair and reasonable. Not greedy and short-sighted."

Stelmach maintains the royalty revisions will provide Albertans with the "fair share Albertans rightly expect from the development of their resources."

A Small Business Owner in GP Packs for the US

Dear Ed,

We have a small oilfield rental business in Grande Prairie; we've been in business for 5 years. We have 3 children and are very concerned with your recent decision on raising the royalties. We lived through the national energy program nightmare in the early 80's and witnessed many devastating consequences to the federal decision and feel that you have done exactly the wrong thing at the wrong time. Allow me to explain my side of the story.

The dollar is too high to attract US investment; the commodity price is too low and unstable as natural gas is all over the map. The storage reserves are too high to stimulate new gas drilling along the foothills. The price of labor and services is through the roof as the last seven year flurry of activity has driven costs up dramatically. The US lumber exports are dropping and will continue to stay down as the "Baby Boomers" retire and sell out/downsize their living accommodations.

Weyerhaeuser is shutting down the OSB side and will lay off 130 employees. Ainsworth in GP is also shutting down for a period. Calf prices are in the toilet over the US dollar and feed prices are rising, thus we can kiss the Ag industry goodbye for a while longer. In summation, our diverse and boisterous economy is losing ground in the Ag, Forestry, and now the oil & gas exploration/production industry due to your recent push for "Alberta’s Future".

The opportunity to ask the oil & gas sector for a raise is not when they are handing you your lay off notice, the time was 2 years ago when natural gas was $14, oil was $60 and the dollar was $.80. My point is, when the farmer was being beaten down, at least he could get a job working a rig, pipelining, driving cement truck to rigs, seismic work, service rigs, endless service companies, maintenance, lease construction, hotshot driver, mechanic, Kal Tire… hopefully your getting this. When the log truck driver needed a job due to soft wood lumber disputes with the US, he too could find employment in any number of the aforementioned fields. The reason I know this is not from a book or study or any review panel, but from personal experience as a farmer /rancher, class 1 driver, derrick man of 11 years (that’s on a drilling rig in case you don't know), environmental consultant, production tester, small business owner that used to employ 4 people. I know this as I've laid off the guys that did work here before you were so bold as to take on the big bad oil companies.

Your timing could not have been worse, the mishandling of the decision making process was unbelievable, why were the decisions not made behind closed doors before getting the entire industry ready to bolt out of the province, did I mention that CNRL shut down 10 rigs in GP in a single phone call, or the 7 in one day in Edson. I understand that Ralphy gave too much for too long and that sucked for all of us, but now wait... we are debt free, lots of money in the account, jobs galore (3% Unemployment) Canada's golden goose that gives lots in transfer payments to other provinces because we seem to have an excess of cash, some of the largest and newest finds in the oil sector throughout the world, let alone what could have happened in Peace River if you would have stayed the course, or did I mention the activity that was planned for Grande Cache south to Rocky Mtn House....not so much now.

In second summation, you say Alberta's future is your priority; my future consists of the 3 kids I have to take care of. The bank will let me miss 3 payments, Daimler Chrysler has a thing about there money as well and there's $3000/mth that they want consistently. After that short future, I'm pretty much done as are the rest of the service companies, car dealerships, drilling contractors...etc, all in the name of Alberta = having more money 3, 4, 5 years from now, or maybe not even then.

By the way, what is the plan with this windfall you were hoping to get from royalties? Should we use it to bail out the farmer/rancher going down or the lumber industry, certainly it won't go to the oil & gas worker or maybe it will be in the form of a UI cheque. No that’s the Fed's problem. Maybe we can build an 80 million dollar aquatics center in GP that mayor wanted so bad, and we can all go for a swim at $15 admission per adult $12/ teen and $10/youth.

I hope through my snide comments that you, your staff, your buddies (advisors), review committee members, professors of economics and party members, etc will realize you've made a grave error in how you went about handling the affairs of the public which you represent. That’s right, did you forget, you work for me as a public official not the other way around! We now are looking at refinancing everything and moving to Colorado or Wyoming for work now as GP is going down. Please advise me on this issue of where the future money is going, and if you say it's for the teachers union, bleeding heart lobbyists, cabinet member raises, campaign expenses, or anything of that nature, you should probably watch your "political back".

Where the hell is Ralph anyway?

Marshall Abbot, CEO of Sabretooth's Letter

As a born and bred Albertan, I am embarrassed by the royalty review panel's recommendation to change existing agreements. I have been raised in this business and instilled in me over 25 years has been the credo that a "deal is a deal". Having spent $14 million at Alberta Crown land sales in the last two years, do I get to apply to the Crown for refunds? The economics we ran to justify our bid levels will be changed drastically. Three-quarters of our recently bought acreage is now uneconomical and will not be drilled.

Over 25 years, I have endured the NEP, $10 oil, $1 gas, 100-per-cent increases in service costs year to year and broken federal promises on the taxtation of income trusts. Our a small company is overwhelmed by challenges from mother nature, both above ground and below. Pools are smaller, costs are higher and access to capital has dried up in the past year since the income-trust ruling. Penalizing high volume gas wells removes incentive to pursue prospects of value in Alberta.

British Columbia, here we come. A record land sale in Saskatchewan earlier this month is a sign of capital redistribution that is occurrin now as company budgets are designed for 2008.

I was marketing my company in Eastern Canada and the Northeastern U.S. when the panel's report was made public. I had meetings cancelled with four well-heeled institutions in the U.S. who have been shareholders for upwards of 15 years. Capital flight occurred before my eyes and will not return anytime soon.

The panel's report was flawed and full of erroneous assumptions as pointed out by numerous institutions and even admitted to by one of the panel's members. It is quite apparent that none of the panel members has ever had to make a capital investment decision in the oil and gas business. Brandishing PhD's of panel members as any kind of justification for a flawed analysis is insulting. I do not know of many PhD's who have been successful in the business that is the main economic engine of the province. (Jim Buckee of Talisman is an exception, and his view of the report is well known.) They are fine teachers and should stick to what they are good at and what they are trained for.

I have operated in foreign jurisdictions (Indonesia, Trinidad and Australia) during my career. Fiscal regime contracts in these jurisdictions are treated as unbreakable. During an intense round of negotiations with the Indonesian National Oil Company (Pertamina) in 1997 it was emphasized to me that once a contract is signed, the rules will not change. They pointed out our ill-conceived national energy program as an example of how flawed our contracts were. I defended Alberta's regime at the time because it was competitive, incentive-based and stimulated entrepreneurship. Sadly, that will no longer be the case and, unfortunately, they were right.

Hopefully, in two years Albertans will understand why we have returned to deficit budgets, why home values have dropped materially, why bankrupted junior oil and gas companies are dominating the headlines, why land sale revenues are a fraction of what they were, why service company unemployment is at an all time high, why charitable groups are drastically underfunded. Hopefully, in two years, the panel members will have the fortitude to finally admit that perhaps they were off the mark and in over their head, as it were.

Marshall Abbott, CEO, Sabretooth Energy Ltd

Montana woos disgruntled Alberta oil companies

Last Updated: Tuesday, October 30, 2007 | 1:02 PM MT

CBC News

'Come on to Montana. You'll be welcome.'—Brian Schweitzer, governor of Montana


The governor of Montana is marketing his state as an alternative for energy companies unhappy with the recent royalty increase in bordering Alberta.

"Our tax rate and regulatory environment is better in Montana than Alberta," Gov. Brian Schweitzer told the Calgary Chamber of Commerce Tuesday morning.

"When you drill in Montana, you don't even pay the tax for the first 12, 18 months. We have a tax holiday."

Schweitzer's pitch comes less than a week after the Alberta government announced it plans to charge energy companies $1.4 billion more in royalties for the right to develop the province's oil, gas and oilsands.

"So if some of you considered that with this new additional tax, you may move some of your dollars someplace else, come on to Montana," the governor said. "You'll be welcome."

In his speech, Schweitzer also suggested to the audience of energy executives that new refineries could be built south of the border.