“Slow Volcano” — collected Geothermal writeups

By Travis Johnson, Stock Gumshoe, August 30, 2008


Best estimates from the Gumshoe are that roughly 1% of my readers will be online this weekend and actively keeping up with the exciting Gumshoe news … so while I love you all, and most especially adore the faithful readers who sit in their seats at Gumshoe University even on Labor Day weekend, I must admit to a certain reluctance to throw my all into a new sleuthing job that no one will get around to reading.

But I have noticed a huge surge of interest in geothermal stocks again, on the back of another big email campaign using the “slow volcano” term — this is from the Energy and Scarcity Investor newsletter from Byron King at Agora, and it is among several ad campaigns based on geothermal stocks that we’ve seen here in the past year. So today, a list of all those firms that we’ve looked at or written about:

Most recently, we’ve seen crop up a few times the ad touting a company that is supposedly making Saudi Arabia quake in its boots — this ad is from the Oxford Club, and it touts Raser Technologies as the leader of the “post oil” future. That stock has been pretty bumpy, it was around $10 when this campaign lifted off, and the ad ran for much of the Summer, eventually enjoying some spikes up to over $11, but the shares are well off those highs now.

A few months before that, Raser Technologies was also being hyped by Trinity Research, for much the same reasons.

The original Slow Volcano Power teaser ad, though it’s running hot and heavy now, actually started appearing last November (the main stock was and is Western Geothermal, and there are also a slew of other stocks mentioned) — from what I can see, this ad hasn’t changed much in nine months.

And Greg Guenthner at Bulletin Board Elite was touting Western Geothermal well before that.

Before that, it was the teaser for US Geothermal by Green Chip Stocks — that pick was the strongest of the Geothermal touts, and remains a solid performer even though it’s way, way off its highs of last Fall (it also got a listing on an exchange later on and no longer trades over the counter, the ticker is now HTM if you’re looking for it).

So far, the only consistent thing about these stocks is that they’re all down pretty significantly over the last six months to a year, or are otherwise well off their highs. Those highs for geothermal stocks seem to be driven by media attention and these email ad campaigns, and probably also by natural gas and oil prices to some degree. Most of the firms are at a very early stage in developing geothermal plants or technology, those plants are big, slow-moving, capital-intensive projects, and they don’t have much cash flow to show for their efforts just yet (the existing geothermal plants in the US are largely owned by big utilities, and have been around for years).

I love the idea of geothermal energy, but the barriers to really wide adoption seem pretty high, unless Raser’s most optimistic projections are realized and lower-temperature geothermal generation becomes really feasible (if you need a real geologic hotspot for geothermal generation, like the Geysers or like Iceland, there aren’t all that many in the US). That doesn’t mean that these companies can’t make any money or be successful, but they’re not making much just yet.

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Mike
Mike
12 years ago

My guess is that there will be over 100 replies by Monday.

Wayne
Wayne
12 years ago

Thank you, Travis. I have been wondering for some time if I was missing something by using the ‘Delete’ button so much with these geothermal teasers.

A lot of all this is obviously about cost and Return On Investment. The basic idea of Geothermal is too easy. Some of the problem is the standard existing Infrastructure. An aircraft multi-kilowatt generator is only a foot or so in diameter, 3 (?) feet long, a couple of hundred pounds. It operates, however, at 400 cycles/3 phase. A very good argument can be made for all power systems to be changed over to 400 cycle/3 phase except for the need for a 100% start-from-scratch infrastructure and of all devices using the new power. Anyway, drill a 2 foot hole with liner down far enough to reach a steady 500 to 1K degrees F, inner liner 18 inches in diameter (think high-strength ceramics and Nano-Technologies), drop a turbine and generator down far enough that water fed into the outside part could turn to steam, flow back up through the inner conduit and the turbine and generate electricity. Then the steam/hot water be fed back into the outside to go around again. New water added to replace losses. Costs would be initial construction and maintenance, so inefficiencies could be tolerated. Use direct geothermal electricity to turn 400 cycle motors that would then power 60 cycle generators?

Lots of engineering efforts need to actually make it work well, but if the need is sufficient, why not? Of course you and I need to be able to buy stock in the companies building the systems and in the utilities selling the electric power created!!

Hope you and all others who read this have a wonderful holiday weekend!!!

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oneinamill
oneinamill
12 years ago

Wayne I like your thinking. growing up in the country with many relatives who are farmers you have to make things yurself to solve problems so my mind is thinking all the time when a problem arrives. just widh I could get oooooat least on item to market.
I saw a program on the history chanel about alternative energy they had many great ideas including wave power, and they alluded to a a paint used to turn the whole side of a building into a large solar cell.
I even saw a version of an idea I thought up over 15 years ago wish I had got thatone to market.

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WALTER O'ROURKE
12 years ago

THANKS FOR ALL OF THE GOOD RESEARDH EVERYDAY AND WEEKENDS AS WELL, HOLIDAYS WHAT MORE CAN WE ASK?

jerome
jerome
12 years ago

count me in 1% faithful

Ron
Ron
12 years ago

Hey Gummy One, seems you have more then 1%. With all the replies. Really enjoy reading you stuff.

Paul Twelker
Paul Twelker
12 years ago

The Hawaii geothermal area includes the Puna Geothermal Venture, which is located about 21 miles south of Hilo on the Lower East Rift Zone of the Kilauea Volcano on the Big island. Geothermal fluid is brought to the surface through closed-loop production wells, which tap into the resource at a depth of almost a mile. The steam, along with its non-condensable gases, is routed to the power plant and used to produce electricity through a two-stage system that recycles the left-over steam/water back into the earth through re-injection wells.

The Department of Energy (DOE) contributed over $8 million while the State of Hawaii and others contributed over $2 million. The cost exceeded the estimates by about 25%. Ormat Technologies, Inc., which sold equipment to the project, purchased the plant in 2004, and has spent millions upgrading the facility for efficiency and safety. Ormat has been recognized as a leader in the field of “green” technology and for making its operations more efficient and environmentally sound. Ormat power plants generating more than 900 megawatts have been constructed in 23 countries. They are the third largest geothermal producer in the United States.

The Puna project produces about 30% of the energy needs of the Big Island, although it could produce 100% if allowed to. Chances are it will never achieve this goal. Local Hawaiians together with environmental groups have succeeded in limiting the plant.

Geothermal energy is touted as clean, but during development a series of valve failures caused blowouts The chemicals in the steam are so caustic that the valves have to be replaced frequently. Further, there is some evidence that the portion of the hot spot responsible for energy production suffers significant cooling. For this reason, the plant is designed to be portable so it can be moved to a hotter section of the rift zone. Since the rift zone is geologically active, and lava could flow at any time, portability seems well-advised!

Review this article (http://www.chron.com/content/chronicle/nation/h2s/hawaii.html) for some history of the anti-geothermal sentiment on the Big Island. If you talk with residents, they are convinced that the plants cause illness and plant loss. If you talk with the scientists, they are convinced that the technology had advanced to the point that its potential liabilities are minimized. The two groups seem as far apart as they were at the first blowout.

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John
John
12 years ago

I’m afraid you over-rate us.
We are more like the 2% club.
Keep up the good work.

joey
joey
12 years ago

1% club here and present …thanks for your timely overviews ….money never stops and never sleeps…so ya gotta keep on keeping on ……diligence by moonlight ….get all the info ducks in line for the next day’s trades ….
I thank you for being dedicated .

BNI Guy
BNI Guy
12 years ago

Well I’m not a 1% just new here. Subscribed to Penny Sleuth and saw Chris Mayers name bouncing around, not sure how much of it was scam or truth did some digging and here I am.

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Myron Martin
Myron Martin
12 years ago

BEING LABOUR DAY I ACTUALLY “LABOURED” hard that is, and now after dark i am trying to get caught up on all my Agora e-mails! As a lifetime Reserve member i seem to average between 30-50 per DAY, but I always read the gumshoe first.
Began digging my potatoes and have never seen anything like it in over 40 years of gardening. Two plants had yields of 30 and 36 individual potatoes of edible size, should have weighed them, some monsters were easily over a lb, not bad for the short growing season in Canada.
On geothermal I am not as bearish as everyone else seems to be, granted it may take several years for most small companies to achieve major profitability but I already had a TRIPLE on my first geothermal investment and others vary from slight increases to small lossses, hopefully temporary. I believe the trend is POSITIVE but like everything else in the market has its ups and downs. Choose solid well financed companies, preferably with contracts for electricity already in place and pick a good entry point and you should do well over time!

Have considered buying ORMAT but the price seems a little high even though it is arguably the primary beneficiary of heightened interet in geothermal. But then I thought GOOGLE and RIMM very over valued and never got on the bandwagon, so what do i know.

One thing i do know, there must be MORE than 1% of the gumshoe readership who place a high value on the gumshoes guidance as regular weekly contributions rarely attract this many responses. Cheers, Myron

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realself
12 years ago

Gumshoe,

thanks to you there’s a 1% to be a part of. Happy Labor (or non-labor?) day to you for all you do. Great writing and you should branch out into comedy, the subtle kind (but you’d have to write screenplays for foreign directors, no?). Geothermal is a loooong term play, I think ocean power is going to be more active in the short run, but an alternative to gasoline (think LNG) is going to be very serious business in the very short term. Nuff said.

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Indya
Indya
12 years ago

I’m relatively new to the Gumshoe but he’s my last resort after all the hype from the other services in my inbox. Don’t even think of quitting.

Gravity Switch
12 years ago

Just as an added note, I noticed that they’re still sending out the “tiny company puts OPEC and Sheik Kalifa on notice” email about Raser Technologies (RZ) … though now they’re adding a “you must act within 24 hours” notice. Apparently the special 24 hour urgency was for some kind of deal on the newsletter that expired on August 31 (though the email was sent to me most recently on Sept. 2).

RZ did just close a financing deal for a geothermal plant, so perhaps that’s newsworthy — it’s not doing anything for the stock, however, and the company released earnings almost a month ago, so I have no idea if there’s any urgency here, other than the urgent need of the Oxford Club to fill their coffers.

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Olaf Olafsson
12 years ago

Geothermal energy is a great blessing to us here in Iceland (but despite the name we do not get the really cold winters like in the US Midvest or Siberia) and we are a bit surprised how limited the use of it elsewhere, especially for heating.

I know one Canadian listed company that the main geothermal company here has a big share in and that is Western Geo Power (WPG on the TSX) but I think I will put my “next” money into GE.

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Olaf Olafsson
12 years ago

I think GE is still promising (paying good dividends) and still getting over the loss of that overrated Jack Welch, GE is set in the right industries I think like water and energy.

And all my army gear is purchased the right way !

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