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Today's IssueAlert Sponsors:=20 <http://www.energyventurefair.com/<; We are seeking 75 of the most promising energy-based technology and service= companies to present at Energy Venture Fair II, January 29 & 30, 2002, Hou= ston, TX-the follow-up to the explosively successful Energy Venture Fair I = held in Boston in June. If you are a Senior Executive from one of these com= panies, and are interested in having a platform to present your vision and = business plans before a national audience of investors, please contact Nann= ette Mooney at (818) 888-4445, Ext. 11, for more information, or via email = at nannettem@energyventurefair.com <mailto:nannettem@energyventurefair.com<= . APPLY TODAY - SPACE IS LIMITED.=20 <http://www.energyventurefair.com<;=20 <http://secure.scientech.com/rci/wsimages/scientech_logo_small.jpg< <http://secure.scientech.com/rci/wsimages/IssueAlert_Logo_188.jpg< October 5, 2001=20 Shell Foresees the End of the "Hydrocarbon Age"=20 By Jon T. Brock Director, Strategic and Competitive Intelligence=20 <https://www.secure.scientech.com/rci/wsimages/j_brock_photo.jpg< [News item from Reuters] Big Oil must prepare itself for the end of the hyd= rocarbon age as alternative energies win over consumers in coming decades, = chairman of the world's No. 2 energy firm Royal Dutch/Shell said on Wednesd= ay. Oil giants from the last century will have to look to their laurels if = they are not to be unseated as motorists move toward hydrogen-powered vehic= les, and renewable energies, such as wind or solar power emerge Shell Chair= man Phil Watts told reporters.=20 Analysis: It seems that "Big Oil" is beginning to look at scenarios that ha= ve alternative energy sources to oil and gas. At least two of the three "Bi= gs" are prominently playing alternatives into their long-range planning. Br= itish Petroleum (BP) has an aggressive campaign on alternative energy sourc= es, while others like Exxon have continued to be focused solely on oil and = gas.=20 Wednesday in New York, Watts spoke to reporters about Shell's scenario plan= ning. This long-range outlook of world energy has oil shrinking from 40 per= cent of the world's energy source to 25 percent by 2050. Oil will still be = the leader, with gas coming in at 20 percent in 2050. However, it is still = quite a drop.=20 From Oil to Gas=20 "One thing I am convinced of is that the next 50 years is not going to be m= ore of the same. An energy company had better make sure it has the necessar= y expertise and knowledge," Watts said at the launch of Shell's 'Long Term = Energy Scenarios'. Referring to one of Shell's scenarios, Watts said, "We c= ould see an evolutionary progression, the so-called carbon shift, from coal= to gas, to renewables, or possibly even to nuclear."=20 One could argue that the U.S. is already seeing the shift from coal to gas.= The Energy Information Administration (EIA) has estimated that at the fore= casted rate of electricity consumption, 1,300 new power plants will be need= ed over the next 20 years. The majority of these plants are fueled by natur= al gas. According to the energy profile of the U.S. released by the EIA in = April of this year, the U.S. has proven natural-gas reserves of 167 trillio= n cubic feet (Tcf), 3.2 percent of world reserves, and currently consumes n= atural gas at a rate of 22.8 Tcf per year. From a long-term perspective, ho= wever, natural gas is very limited in supply. In the United States, the rem= aining natural gas resource is expected to be near depletion within 50 year= s. Coal is clearly the nation's greatest resource, representing approximate= ly 90 percent of our fossil energy reserves.=20 Calpine is certainly capitalizing on the near-term future of natural gas-fi= red generation. They announced a purchase of 35 7FB and 11 7FA gas-fired tu= rbines from General Electric in April of this year and 27 Siemens Westingho= use steam turbines just last month. The purchase announcements are a part o= f Calpine's five-year strategic plan to have 70,000 megawatts of generation= online by the end of 2005.=20 The U.S. imports only (net) 3.6 Tcf of natural gas, largely from Canada. Na= tural-gas wellhead prices averaged over $6.00 per thousand cubic feet (mcf)= during the first quarter of 2001, up sharply from $3.62/mcf seen in 2000 a= nd nearly triple the 1999 average price of $2.08/mcf. The price increases a= re attributed to a decline in U.S. gas production during the 1990s because = of low prices, the increase in demand driven by new power generation, and g= as storage levels dropping below normal. Recently, gas prices returned to t= he $2/mcf level after a mild summer, but NYMEX futures contracts for late 2= 002 deliveries are trading above the $3/mcf level indicating the expectatio= n that gas prices will rise in response to the anticipated increased demand= .=20 Canadian imports are also expected to expand substantially through 2020 res= ulting from additional gas-fired electric power plants. This anticipated in= creased consumption requires expansion of gas pipeline and storage capacity= -$1.5 trillion over the next 15 years according to the National Petroleum C= ouncil. Duke Energy certainly has recognized this trend and has capitalized= quickly by announcing the purchase of Westcoast Energy, Inc., a Canadian-b= ased utility engaged primarily in natural-gas gathering, processing, transm= ission, storage, and distribution, as well as electric power generation, in= ternational, financial, information technology, and energy services busines= ses.=20 From Gas to Renewables=20 According to one of Shell's scenarios, at some point we will move from gas = to renewables. Shell lists those options as solar and wind energy and has b= acked up its claim with a $500-million to $1-billion spending package over = the next five years, focused primarily on-you guessed it-solar and wind. If= a large oil company announced that it had up to $1 billion to invest in so= lar and wind, who would begin to show up on the radar screen? Let's take a = quick look at a few likely candidates.=20 AstroPower, Inc. 461 Wyoming Road, Solar Park Newark, DE 19716-2000 www.astropower.com=20 Technology: Photovoltaics Start date: 1983 AstroPower produces a complete line of photovoltaic solar cells, solar modu= les and complete systems packages for residential, commercial and industria= l applications as well as turnkey power plant solutions for utilities in th= e newly deregulated energy market. They originally received a $2.3-million = investment from the Department of Energy (DOE) and have since IPO'd and can= be found on the NASDAQ at symbol APWR.=20 Big Frog Mountain 100 Cherokee Blvd., Suite 321 Chattanooga, TN 37405 www.bigfrogmountain.com=20 Technology: Alternative energy sources Start date: 1999 Big Frog Mountain is a private company that designs and supplies renewable = energy equipment to businesses, industry and private residences. The altern= ative energy equipment supplies power using micro-hydro, solar panels and w= ind turbines.=20 Bergey Windpower Co., Inc. 2001 Priestley Avenue Norman, OK 73069 www.bergey.com=20 Technology: Wind turbines Start date: 1979=20 Bergey Windpower is a private firm that designs and manufactures wind gener= ators in sizes of 850, 1,500 and 10,000 watts. They claim to have seen an i= ncrease in home wind energy systems as a result of the California energy cr= isis.=20 Worthy of noting here is the fact that Shell competitor BP has already ente= red into the renewable arena and has recently formed a new division known a= s BP Solar. Based in Linthicum, Md., they produce high-efficiency silicon c= ells and modules, custom-designed batteries, power control electronics and = where appropriate, load equipment in the solar industry. Fueling Shell's in= terest may be some of the recent successes that BP Solar has enjoyed.=20 In March of this year, BP Solar announced that over 400,000 residents of th= e Philippines would benefit from a deal signed between them and the Spanish= and Philippine governments to bring solar power to 150 isolated villages i= n the Philippines. Led by the Philippine Department of Agrarian Reform (DAR= ), the $48-million contract-the largest solar energy project ever-is financ= ed by the Spanish government and will be implemented in two phases, the fir= st scheduled to begin just last month.=20 In April of this year, BP Solar announced plans to build a solar-module ass= embly plant in Hamlin, Lower Saxony, Germany. With a total investment in Ha= mlin of $12 million, the plant will have an annual production capacity of 2= 0 MW and create more than 100 new jobs.=20 The Hamlin plant was soon surpassed by the announcement of an Australian fa= cility in June. Opening in Homebush Bay in Sydney, the new plant will manuf= acture BP's high-efficiency solar panels, bringing valuable export dollars = to the country with over 60 percent of the panels to be exported around the= world. BP invested over $20 million to build the plant that is providing o= ver 200 high tech jobs. The new facility houses all of BP Solar's Australia= n manufacturing, design and market support facilities. Cell annual output c= apacity will reach 25MW in 2001 and the plant has the capability for possib= le further expansion.=20 Do Renewables Include Fuel Cells?=20 Shell also mentioned multiple scenarios under their long-range planning eff= orts, one of which included an increase in the fuel cell industry. Accordin= g to the fuel cell scenario, rapid growth in fuel cells-which produce elect= ricity from hydrogen and cut harmful emissions-could shift the energy busin= ess dramatically away from oil long before oil becomes scarce. Today's fuel= cells typically create hydrogen by reforming natural gas, so they do not f= it the definition of being a renewable resource. Rather, fuel cells hold gr= eat promise to reduce air pollution emissions when compared to combustion t= echnologies. Fuel cells produce near-zero emissions and highly pure water w= hen converting a hydrogen-rich source into electric energy.=20 I am impressed that two of the three largest oil producers are beginning to= look at their mainstay business as being limited in the long run. Radical = changes that are possible in the energy business means that the industry pa= rticipants which dominated the last century such as Exxon, BP and Shell can= not afford to assume they will dominate for the next 100 years. In the word= s of Shell Chairman Phil Watts, "that would be a very complacent view. Long= evity in corporations is not the norm." Chairman Watts reminds me of an exe= rcise performed in many business schools around the country today. Look at = the New York Stock Exchange 100 years ago and try to find companies that ar= e still in the "mix." Surprisingly, it is difficult to find many. Those tha= t are still in existence have had to change dramatically in order to surviv= e. IBM used to be a typewriter manufacturer. Today they are the world's lar= gest computer company. Where will the oil companies be in 50 years? Will th= ey still be strictly oil and gas? If Watts executes his scenario plans, not= a chance.=20 An archive list of previous IssueAlerts is available at www.scientech.com <http://secure.scientech.com/issuealert/<;=20 We encourage our readers to contact us with their comments. We look forward= to hearing from you. Nancy Spring <mailto:nspring@scientech.com< Reach thousands of utility analysts and decision makers every day. Your com= pany can schedule a sponsorship of IssueAlert by contacting Jane Pelz <mai= lto:jpelz@scientech.com<. Advertising opportunities are also available on o= ur Website.=20 SCIENTECH is pleased to provide you with your free, daily IssueAlert. Let u= s know if we can help you with in-depth analyses or any other SCIENTECH inf= ormation products. If you would like to refer a colleague to receive our fr= ee, daily IssueAlerts, please reply to this e-mail and include their full n= ame and e-mail address or register directly on our site.=20 If you no longer wish to receive this daily e-mail, and you are currently a= registered subscriber to IssueAlert via SCIENTECH's website, please visit = <http://secure.scientech.com/account/<; to unsubscribe. Otherwise, please se= nd an e-mail to to IssueAlert <mailto:IssueAlert@scientech.com<, with "Dele= te IA Subscription" in the subject line.=20 SCIENTECH's IssueAlerts(SM) are compiled based on the independent analysis = of SCIENTECH consultants. The opinions expressed in SCIENTECH's IssueAlerts= are not intended to predict financial performance of companies discussed, = or to be the basis for investment decisions of any kind. SCIENTECH's sole p= urpose in publishing its IssueAlerts is to offer an independent perspective= regarding the key events occurring in the energy industry, based on its lo= ng-standing reputation as an expert on energy issues.=20 Copyright 2001. SCIENTECH, Inc. All rights reserved. <http://infostore.consultrci.com/spacerdot.gif?IssueAlert=3D10/5/2001<;
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