Magellan Petroleum Corp. (MPET)

[crookedneck]

MPET News 1/27/12:

Magellan Petroleum Corporation Announces a New Pool Discovery in the East Poplar Unit and an Update for the Palm Valley Gas Field
Fri January 27, 2012 12:18 PM | about: MPET

NEWS PROVIDED BY:
PR Newswire

PORTLAND, Maine, Jan. 27, 2012 /PRNewswire/ -- Magellan Petroleum Corporation (MPET) (the "Company") (NASDAQ: MPET) (ASX: MGN) through its wholly owned subsidiary, Nautilus Poplar, LLC has completed its EPU 117 well within the East Poplar Unit as a new pool producer in the Amsden formation at a depth of approximately 4800 feet. The well has just recently been completed and is currently producing approximately 106 barrels of oil per day with no appreciable water on a 10/64th choke with a flowing tubing pressure of 95 psi. This is the first production from this formation within the Unit. This well will be closely monitored to determine its ultimate commercial viability.

Tom Wilson, President and CEO, said: "We are pleased to announce this new pool discovery. This Unit on the Poplar Dome has produced for decades, and continues to provide outstanding opportunities in a variety of different intervals. While it's still too early to make definitive statements regarding this well and this formation and their ultimate productivity, it is nevertheless an exciting discovery and reminder of the potential of this Unit."

The Company also announces that its Australian subsidiary has commenced work in the Palm Valley Gas Field located in the Amadeus Basin of the Northern Territory to retrofit existing production and compression facilities to allow gas to be delivered from this field to a new purchaser, with deliveries to this new purchaser expected to begin on or before February 1, 2012. These deliveries will be pursuant to an interim gas sales agreement currently being finalized that will remain in effect until the completion of a long term (multi-year) sales agreement. The long term agreement is expected to be completed after the closing of the previously announced transaction between Magellan Petroleum (N.T.) Pty Ltd and Santos QNT Pty Ltd and Santos Limited. This transaction is expected to close prior to the end of the current quarter pending receipt of necessary governmental and industry approvals, which are in the process of being obtained. These gas sales from the Palm Valley Gas Field under either the interim or long term agreement replace a portion of the sales lost upon the expiration of the twenty five (25) year agreement with PWC that expired by its terms on January 16, 2012. When fully operational, the long term contract is expected to take the full existing production capacity of the Palm Valley Gas Field.

Tom Wilson, President and CEO, stated: "This interim agreement with a new gas purchaser will limit the disruption to our production and revenue receipt from the Palm Valley Gas Field while we await the completion of our transaction with Santos and the institution of the anticipated attractive long term sales arrangement."

FORWARD LOOKING STATEMENTS
Statements in this release which are not historical in nature are intended to be, and are hereby identified as, forward-looking statements for purposes of the Private Securities Litigation Reform Act of 1995. These statements about the Company and its subsidiaries may relate to their businesses and prospects, revenues, expenses, operating cash flows, and other matters that involve a number of uncertainties that may cause actual results to differ materially from expectations. Among these risks and uncertainties are: (i) whether the recent well activity for the EPU 117 well will continue or diminish materially; (ii) whether the Santos transaction will close as anticipated; (iii) whether the anticipated gas sales agreements pertaining to the Palm Valley Gas Field will be consummated as anticipated; and (iv) those set forth in the Company's Risk Factors section of its most recent 10K filed with the SEC.

ABOUT MAGELLAN
Magellan is a US-based energy company principally engaged in the acquisition, exploration, development, and production of overlooked crude oil and "stranded" natural gas reserves. Magellan's strategy involves the exploitation of already discovered oil and natural gas properties worldwide into non-traditional, growing markets. The company's properties and exploration acreage are located primarily in Australia, the United Kingdom, and the United States.



SOURCE Magellan Petroleum Corporation

[JJL]

This looks undervalued to me. Am I right?

[MinnieM]

GLTY also. ;)

[hellcatjr]

IMO hold out for lower... if history repeats itself - you may be able to ride it down to .65 range and snag some before the run up again.

I'm only basing this on a brief view of the chart over a five year period.

[biomanbaba]

I like How Mr Wilson thinks;


"As we move forward, my focus will be on realizing the value of our existing assets and operations, since I believe very strongly that they offer the surest path to generating outsized shareholder returns in the near term. Today our shares trade at a valuation approximately equal to our cash balance (including the Santos asset swap proceeds). This is nonsensical and implies our extensive asset portfolio has little to no value. Based on our acreage, our proven reserves, our existing production (including the soon to be completed Markwells Wood well in the UK), and our long-term GSA at Palm Valley (greater than $100 million over 17 years), we should enjoy a significantly higher share price than we do currently. In addition, there is considerable option value embedded in our assets, such as from the CO2-EOR program or the undeveloped formations at Poplar, or our vast UK shale acreage. Any of these alone could change the order of magnitude of our valuation. I discuss these assets and activities in more detail below:"

SOUNDS LIKE TIME TO LOAD THE BOAT

[$King]

MPET @ 1.07

[arpro]

Hi all just picked up some MPET.....GLTA

[MinnieM]

Magellan Petroleum Corporation Announces Resolution of Outstanding Issues Related to Termination of Evans Shoal Transaction

http://ih.advfn.com/p.php?pid=nmona&article=48561029&symbol=MPET

Magellan Petroleum Corporation (the "Company" or "Magellan") (NASDAQ: MPET) (ASX: MGN) and Santos have now finalized discussions regarding an appropriate resolution of all remaining issues relating to the non-closure of the Evans Shoal transaction. The Company and Santos have agreed that $10 million of the sums deposited in connection with the Evans Shoal transaction will be returned to the Company and that the Asset Sale Deed should be terminated.

The process of unwinding the Evans Shoal transaction has allowed the Company and Santos to look at their joint operations in the Northern Territory, Australia. This has lead to productive discussions towards rationalizing and more efficiently exploiting their respective interests in the Amadeus Basin, and creating new commercial opportunities. The Company is working with Santos to satisfactorily conclude these discussions in the near term.

About Magellan

Magellan is a US-based energy company principally engaged in the acquisition, exploration, development and production of crude oil and "stranded" natural gas. Magellan's strategy involves the exploitation of already discovered oil and natural gas properties worldwide into non-traditional, growing markets. The company's properties and exploration acreage are located primarily in Australia, the United Kingdom, and the United States.

Forward Looking Statements

Statements in this release which are not historical in nature are intended to be, and are hereby identified as, forward-looking statements for purposes of the Private Securities Litigation Reform Act of 1995. These statements about Magellan may relate to their businesses and prospects, revenues, expenses, operating cash flows, and other matters that involve a number of uncertainties that may cause actual results to differ materially from expectations. Among these risks and uncertainties is whether Magellan and Santos can successfully rationalize and more efficiently exploit their respective interests in the Amadeus Basin and create new commercial opportunities. Any forward-looking information provided in this release should be considered with these factors in mind. Magellan assumes no obligation to update any forward-looking statements contained in this release, whether as a result of new information, future events or otherwise.

SOURCE Magellan Petroleum Corporation

[mlkrborn]

Karin; I noticed it too . You beat me this time! LoL.
GL

[MinnieM]

MPET - Magellan Petroleum Corporation Begins Bakken and Deeper Formations Development Effort

http://ih.advfn.com/p.php?pid=nmona&article=48476813&symbol=MPET

Magellan Petroleum Corporation (the "Company" or "Magellan") (NASDAQ: MPET) (ASX: MGN) signed a letter of intent ("LOI") with Vaalco Energy Inc. ("VAALCO") (NYSE: EGY) to begin work on developing the Bakken formation and deeper horizons within the East Poplar Unit and Northwest Poplar Field in Roosevelt County, Montana ("Poplar").

The LOI terms remain subject to closing on a definitive Purchase and Sale Agreement ("PSA"). The LOI contemplates a farm-out to VAALCO of an operating working interest in all of the approximately 23,000 net acres of oil, gas and mineral leases covering the Bakken and deeper formations at Poplar.

VAALCO has agreed to acquire 65% in return for cash consideration and for bearing 100% of the cost to drill three wells by the end of 2012. Parties would then move forward together as 65% / 35% owners respectively to further develop the prospects.

Magellan will retain its current ownership for all formations above the Bakken, including the currently producing Charles and Tyler formations where all Poplar proved and probable reserves are located.

William Hastings, President and CEO commented, "After conducting evaluation drilling, coring, and petrography work, we remain very encouraged about a number of prospective horizons at Poplar. Our new partnership with VAALCO is another step, with a strong and experienced partner, toward monetizing this asset and accelerating near-term development and production, not only from the Bakken but also from the Three Forks, Red River and associated deeper formations there in Montana. Given existing oil and gas infrastructure, our summer recompletion/infill program, our shallow gas plans, and, now, our Bakken partnership, we will continue efforts to add value, and perhaps extend, our position in Montana.

About Magellan

Magellan is a US-based energy company principally engaged in the acquisition, exploration, development and production of crude oil and "stranded" natural gas. Magellan's strategy involves the exploitation of already discovered oil and natural gas properties worldwide into non-traditional, growing markets. The company's properties and exploration acreage are located primarily in Australia, the United Kingdom, and the United States.

Forward Looking Statements

Statements in this release which are not historical in nature are intended to be, and are hereby identified as, forward-looking statements for purposes of the Private Securities Litigation Reform Act of 1995. These statements about Magellan may relate to their businesses and prospects, revenues, expenses, operating cash flows, and other matters that involve a number of uncertainties that may cause actual results to differ materially from expectations. Among these risks and uncertainties are, the extent of the recoverable reserves in the formations and at Poplar in general, the ability to close and implement the PSA to the parties mutual satisfaction and the ability of Magellan and VAALCO to monetize the formations and accelerate near-term development and production. Any forward-looking information provided in this release should be considered with these factors in mind. Magellan assumes no obligation to update any forward-looking statements contained in this release, whether as a result of new information, future events or otherwise.

SOURCE Magellan Petroleum Corporation

[mlkrborn]

Interesting oilfield exploration update news today! yet down a bit :$1.65

[MinnieM]

Excellent! ;)

[OilStockReport]

Heads up on some insider buying going on here!

[OilStockReport]

Going to wait for it to come down a bit? I will prob be holding mine for while.

[MinnieM]

It's looking ugly lately. Thankfully, I'm not holding a lot. But, I'm wondering at what point to add a bit for the long term?

[OilStockReport]

Looks like Magellan Petroleum has some potential. Called that one in November!

Continuing with the overall energy theme, Magellan Petro (MPET) is a very speculative oil and natural gas play with a base forming to run up from. The current setup is near two support levels, with the key level at $2.35, so you know where to place your stop losses. Above that, we have significant upside potential and already cracked two resistance levels earlier before volume slowed down and settled near even on the day. Since the drop was due to lowered bids, not sellers pushing down the bulls, that is a bullish theme for a low volume speculative stock like MPET.

[MinnieM]

Most recent press:

http://finance.yahoo.com/q/h?s=MPET+Headlines

[biomanbaba]

the run to 3 happened to fast....slope of the trend line was unsustainable.........having said that....SP is getting attractive again......dont think we see any shares cheaper than 2.50

[biomanbaba]

profit taking in the 280s

[biomanbaba]

great story

http://seekingalpha.com/article/246119-impact-of-100-oil-identifying-the-winners-and-losers?source=email_watchlist

[Jcheno]

Any news on how the floods are affecting the Amedeus project?

[biomanbaba]

Alaska DOWN
http://news.yahoo.com/s/nm/20110110/us_nm/us_oil_pipeline_alaska

[biomanbaba]

Northern Petroleum is an oil and gas explorer and producer, operating in areas of low risk. The Company strategy is to obtain and develop concentrated licence positions holding high quality prospects.

Through undertaking geological, geophysical and engineering work Northern adds and realises value from these licences for shareholders. Northern has an established track record with major industry partners and government authorities as a trusted manager of both onshore and offshore projects acting with high integrity and is recognised for its skillful technical team.

Northern is listed on AIM in London.

[MinnieM]

MPET Partner list:

http://www.magellanpetroleum.com/Content/Partners.asp

[MinnieM]

Map of Activities: Includes North America, England, and Australia

http://www.magellanpetroleum.com/PhotoGallery/default.asp

[biomanbaba]

welcome..........here we have a new strong mgmt team, a new business plan, and oil in general rising

[biomanbaba]

you and I and nine others are paying attn.......must be the mutual fund mgrs buying these shares

[MinnieM]

Thank you for telling me about this one. I got in under $2. ;)

[biomanbaba]

nice pop today

[MinnieM]

MPET Chart:

[MinnieM]

I'm holding a small position here, but, haven't started that book yet. I'm debating on which ebook reader to get and will get it once I make that decision. ;)

[biomanbaba]

mgmt here has a plan to bring home the bacon........did you get started reading twilight yet?

[OilStockReport]

Without a doubt I will take this one all the way to the bank :)

[MinnieM]

This is one I'm just happily sitting on... getting a little here and there. ;)

[OilStockReport]

I especially liked the most recent one. I am excited to see how the testing does on the next well in 2011.

[MinnieM]

Company Presentations:
http://www.magellanpetroleum.com/Content/Company_Presentations.asp

[OilStockReport]

OT: I am looking at BQI as a bottom play from here. They have good upside potential as prices are bullish and will get play accordingly. They just finalized a financing and have a good position going forward if you ask me. Posting DD over on that board.

[OilStockReport]

Thanks I will be sure to do more reading of Matt's writings. I am always looking at new perspective and energy information. I don't doubt that about the Saudis times are changing and quickly.

[biomanbaba]

loved BQI for years....posted on their board back when I thought they had bottomed

[biomanbaba]

the guy belongs on my reading list.......thanks
BTW when you get thru reading Twilight in the Desert you will know that the Saudis are scraping the bottom and using extreme measures.....their time of importance is ending

[OilStockReport]

I agree the upside with small cap stocks is considerably stronger then what the majors will do. I am always looking for opportunities like MPET to get vested into for the new year. Any opinion on these high speculation small caps? BQI & CFW

[OilStockReport]

I'm going to check out more about Matt Simmons. He is a new one to me. Thanks for the information.

[OilStockReport]

Here are some notes from a very interesting video.

Jeff Rubin comments on how world oil prices are set to be trading around the $200 US dollar mark in the future. Rubin, the former Chief Economist of CIBC World Markets warns that higher oil prices are a result in a lack of affordable, extractable global world oil, which has now passed the easy peak oil extraction year of 2005.

Jeff Rubin is not an oil alarmist—he doesn’t think that the world’s supply of crude will run out and cause resource wars and food shortages of apocalyptic proportions. In fact, he doesn’t even think the world’s supply of crude is running out at all. Rubin made this clear as he addressed the Business of Climate Change Conference in Toronto last September, opening his keynote address with the statement, “The world’s not running out of oil.” However, after milking the pause for a second or two, Rubin went on: “But it has already run out of oil it can afford to burn.”

Rubin, former head economist at CIBC World Markets, is often referred to as Canada’s top economist, largely because of his bold and accurate economic predictions: in 2000, he forecast that the price of crude would hit $50 per barrel within five years (it broke the $50 mark in 2004) and foresaw the huge price spike of 2008. He recently predicted that the price of crude would hit $100 again by the fourth quarter of this year.

Video on Jeff Rubin speech regarding oil prices at The Business of Climate Change conference in January 2010.

http://turnkeyoil.com/2010/08/31/jeff-rubin-on-higher-future-oil-prices-we-are-not-running-out-of-oil-but-we-are-already-out-of-cheap-oil/


(In full disclosure this is a link that is posted to our website.)

[biomanbaba]

Found Mr Rubins forcast here
http://www.theglobeandmail.com/report-on-business/commentary/jeff-rubins-smaller-world/expect-a-new-peak-for-oil-next-year/article1517154/

MPET could easily double while the majors only move 10% if he is correct

[biomanbaba]

Havent read Mr Rubin....you can link me on him
Matt Simmons is one of my heros......this one opened my eyes
http://www.twilightinthedesert.com/

[tommer]

this was such a hot stock for a while what happened?
I still like it for any oil run =)
gl
tom

[OilStockReport]

Nice recovery after weak results. This should allow for some adding on dips over the next few sessions or so. Operations appear strong and I am counting on a solid return on investment in 2011 from MPET.



Operational Results From Latest 10q

Australia

Production volumes, net of royalties, were 0.183 BCF of gas and 12,659 Bbls of oil for the quarter ended September 30, 2010 or 84% less total gas production and 69% less total oil production compared to the quarter ended September 30, 2009.

Mereenie: There were no natural gas sales at Mereenie this quarter due to the term end of the Mereenie Sales Agreement and there will be no gas sales for the foreseeable future. Mereenie continues to produce at or above 500 barrels of oil per day gross which is consistent with the production during the four quarters ended June 30, 2010.

Palm Valley: The Palm Valley Darwin contract expires in January 2012. The Company is making strong efforts to dedicate remaining natural gas to area buyers under "life of remaining reserves" agreement(s).

Evans Shoal (NT/P48): Magellan is working towards the completion of the Evans Shoal acquisition with a payment of AUS$85 million to Santos due on or before December 25th, 2010. Evans Shoal's production will supply a proposed methanol facility in Darwin Australia and, possibly, floating facilities offshore. Discussions with potential off-takers and financial partners are active and positive.

NT09-1: In March, Magellan accepted an offer from the Commonwealth – Northern Territory Offshore Petroleum Joint Authority for the grant of an exploration permit for petroleum over Area NT09-1 offshore Northern Territory. The area is located 220 kilometers (137 miles) northwest of Darwin. The permit covers 6,305 square kilometers (2,434 square miles) and is a good fit with Magellan's stated gas development strategy.

Montana

MPC's Poplar Fields oil production was 16,107 bbls net to Magellan at an average price of $65.80/bbl for quarter ended September 30, 2010.

Poplar Fields:

Magellan owns a total effective ownership average working interest of 83.7% in the East Poplar Unit and Northwest Poplar Fields. Magellan is seeking to acquire and consolidate additional interests within the field to increase its working interest ownership.

Magellan has started a drilling and development program on East Poplar Unit, Roosevelt County, Montana. East Poplar Unit (EPU) #119 spud on September 20, 2010 and reached a depth of 7,137 feet on October 18, 2010. Further completion operations to the deeper Nisku/Duperow formations are pending in early November with a separate completion rig. Well results to-date, while under further evaluation, yielded a broad stack of hydrocarbon-bearing formations from 692 feet all the way to current depth. Nautilus, the operator was also able to successfully recover the planned Charles and Bakken cores.

A two-well program had been planned for Montana this autumn. However, given the results and volume of development data/potential from the EPU#119 well, we will defer the second well in favor of a broader and deeper development program next year. We also will initiate a new shallow gas / oil shale analysis program later this year (subject to rig availabilities and timing). Funding for these projects will primarily come from bank financing.

Magellan continues to work with an intermediary to farm-out a share of our 23,000 acres. Bakken position within the Poplar fields. There has been external interest in a farm-in program and the discussions are ongoing.

United Kingdom

The UK Project is being drilled by Northern Petroleum in West Sussex, United Kingdom. Magellan holds a net 40% working interest in the well. After existing farm-out agreements are taken into account, Magellan's obligation will be 20% of gross drilling and completion well costs.

The Markwells Wood operator, Northern Petroleum, is undertaking final risk analysis work in preparation for the well spudding. The work is being conducted at the main drilling contractors offices along with all other contractors involved with the UK project. The drilling rig is moving to the Markwells Wood site and well spud is expected in the latter half of November.

[OilStockReport]

Financial Results From Latest 10q

For the quarter, Magellan recorded a net loss of $3.4 million on total revenues of $3.7 million. The following items impacted our first quarter earnings and cash flow for fiscal year 2011 as compared to 2010:

Gas Sales decreased 92% to $0.4 million due to the term end of the Mereenie Sales Agreement

Oil Sales decreased due primarily to the sale of the Cooper Basin and Nockatunga assets

Production Costs decreased by 45% primarily due to cost reduction efforts at Mereenie and Palm Valley and pipeline repairs at Mereenie in prior year offset by the costs associated with the addition of the Poplar assets in Montana

The net loss in the first quarter is attributable to the term end of the Mereenie Sales Agreement. We believe that the residual gas reserves at Mereenie and in the Dingo field remain valuable assets to the company. Gas reserves can, ultimately, be worked into the feed stream for new industrial development in the Darwin area, be it Magellan's industrial development plans or those of third parties, including expansion of existing assets there and/or supplements for operational shortfalls.

Magellan has begun new development within the Poplar Fields in Montana. The first of several new wells spud in September 2010 pursuant to a drilling and development plan at Poplar. This first well was also designed to provide data via logs, cores, and petrography analysis of a number of hydrocarbon pay zones extending from near 700 feet in depth all the way, in intervals, to 7,400 feet.

Magellan is planning for, and will likely incur, substantial capital expenditures for Poplar field development and for the remainder of the Evans Shoal acquisition and subsequent development in coming years. We are working toward the scheduled completion of the acquisition of a 40% working interest in the Evans Shoal Gas Field. Both of these properties have significant upside and, with investment, provide material growth opportunities to shareholders.

Additionally, the increased development brings with it the need to increase Company staff in both management and technical roles. The Company is actively discussing partnerships with experienced, knowledgeable partners toward the development of both fields. We have also enlisted various market participants, particularly for the Evans Shoal opportunity, to help monetize and secure a unique market development opportunity.

Further, and to address the long-term structure of the Company moving forward, the Company is seeking shareholder authorization for an amendment to our Certificate of Incorporation to permit the future issuance of various forms of new equity. These are authorizations only and any incremental issuance of shares pursuant to the authorizations will be conducted in a separate Board approved transaction.

It is important to note that the assets to be acquired by the Company are far larger than any the Company has held in the past and so, equally, the authorizations for the issuance of new equity are larger as well. Given that the Company share price has already increased to the current level at a compound annual growth rate of 88% from December 2008 to November 2010, we believe that the new share authorizations will help us continue this trend and give us the flexibility to build the Company into a substantial entity along the lines of what has already been described. For this reason, we see new share issuance as accretive rather than dilutive. The intent is to create value and issue new shares, when needed and approved, at higher price levels rather than at lower price levels. This can only be done with a good asset base backing and we believe we have built that.

Along the same lines, as mentioned, Magellan's operational personnel base will grow requiring an expanded Stock Incentive Plan base which can be used to incentivize and compensate new staff. This has also been proposed for shareholder approval at the upcoming annual meeting.

Lastly, the Company believes that most companies restructuring within a development phase, like Magellan, would seek to establish an authorized class of Preferred Shares under their charter documents, if they do not already have such a class of Shares authorized. Again, we are seeking only authorizations rather than actual share issuance. Having a Preferred Share class in place and authorized allows Magellan to broaden its structuring scope and to properly respond to the market-based "offers" that might be attractive but which involve a "preferred" element. Any such proposal would be approved by the Board as a value-adding transaction.

An example of our growth efforts on an accretive basis would be the YEP Securities Purchase Agreement (see Note 2) that is expected to be implemented on or before December 25, 2010, with the proceeds to be used to cover operating and financing expenditures associated with the purchase by MPAL of the 40% interest in the Evans Shoal. The placement involves the issuance and sale of up to 5.2 million new shares of the Company's common stock to YEP and/or one or more of its affiliates in return for $3.00 per new share issued and sold. The $3.00 share price for this transaction is indicative of our largest stockholder's confidence in the Evans Shoal acquisition and our other projects, as the Company continues with its efforts to build substantial stockholder value. However, the Purchase Agreement provides that the obligations of YEP to complete the purchase of the Shares are subject to closing conditions, including a condition that the progress and status of the Evans Shoal transaction shall be satisfactory to YEP (see Note 2).

[OilStockReport]

Very good article. I really agree with the three points it makes:

So the world needs to come to a common understanding that:

1. Alternative energy is not mature enough to completely replace fossil sources any time soon.
2. Energy security means a diversified and balanced portfolio inclusive of every bit of resource, fossil, as well as renewables, just to meet the projected demand.
3. Real "green" energy is easier said than done.

I have done quite a bit of research into "Peak Oil" and find the most accurate assessment from Jeff Rubin where the main point is that we are not running out of oil (with new technology and shale findings) but that we are already out of cheap oil.

Whichever is the most likely doesn't really matter when it comes to the supply/demand equation. Costs are going up to recover and demand continues to thrive. If I am not mistaken I saw a chart the other day showing China's oil / energy consumption is supposed to have doubled by 2013 or so from 2000.

All in all we are investing heavily into oil projects, equities and funds. With triple digit oil coming next year and the likelihood of all new highs this is going to be one of the biggest bull sectors (second maybe to gold).

All in my opinion of course but I am very bullish MPET among a basket of others.

[biomanbaba]

New papers on OIL

According to a new paper by two researchers at the University of California – Davis, it would take 131 years for replacement of gasoline and diesel, given the current pace of research and development; however, world's oil could run dry almost a century before that.

The research was published on Nov. 8 at Environmental Science & Technology, which is based on the theory that market expectations are good predictors reflected in prices of publicly traded securities.

By incorporating market expectations into the model, the authors, Nataliya Malyshkina and Deb Niemeier, indicated that based on their calculation, the peak of oil production could occur between 2010 and 2030, before renewable replacement technologies become viable at around 2140.

The estimates not only delayed the alternative energy timeline, but also pushed up the peak oil deadline. The researchers suggest some previous estimates that pegged year 2040 as the time frame when alternatives would start to replace oil, could be “overly optimistic".

As I pointed out before, despite the excitement and hype surrounding a future of clean energy, a majority of the current technology simply does not make economic sense for regular consumers and lacks the infrastructure for a mass deployment….even with government subsidies, tax breaks, and outright mandates.

In addition, the supply chain of renewable technologies is not as green as people might think. Most alternative technologies rely on rare earths for efficiency. However, the radioactive waste produced by rare earths mining process makes oil sands look like a green energy. This overlooked (or ignored) fact just now received some attention due to the sudden shortage caused by China’s embargo and export quotas on rare earths.

Another case in point – In China, the city of Jiuquan in Gansu province needs to build 9.2 gigawatts of new coal-fired generating capacity as backup power of the 12.7 gigawatts wind turbines due to be installed by 2015. More wind farms would need more coal-fired power plants, with little or possibly no carbon reduction.

Capitalism means investment naturally flows to the more profitable proposition....and vice versa. With more data and information becoming available, not much could go unnoticed by the markets, particularly in a relatively new sector such as renewable energy. And this harsh reality is clearly reflected in this new study.

Now, in its latest long term outlook, the International Energy Agency (IEA) predicts that oil demand, prices and dependence on OPEC are all set to continue rising through 2035, and that global oil supplies would be near their peak in 2035 as China, India and other emerging economies keep on trucking.

So the world needs to come to a common understanding that:

1. Alternative energy is not mature enough to completely replace fossil sources any time soon.
2. Energy security means a diversified and balanced portfolio inclusive of every bit of resource, fossil, as well as renewables, just to meet the projected demand.
3. Real "green" energy is easier said than done.

Furthermore, the increased rare earths dependency, and the latest food vs. fuel debate when the food industry slapped a law suit against the EPA over E15 ethanol, underline some of the unintended (we hope), yet nasty consequences that often come with ill-informed and poorly-planned policies. (In the case of E15, the EPA is an easy mark considering one in eight Americans is on food stamps.)

All this requires a balanced and unbiased government policy to guide exploration and development of technologies to unlock the new fossil fuel reserves, expanding the R&Ds of emerging technologies, while effectively practicing and promoting energy efficiency and conservation.

Otherwise, we may literally witness $300 a barrel oil before the electric vehicle could even make one percent market penetration. Unfortunately, there's no easy fix, and the clock is seriously ticking.

Disclosure: No positions
About the author: Dian L. Chu
Dian L. Chu picture
M.B.A., C.P.M. and Chartered Economist with a syndicated financial blog regularly published and quoted by media outlets worldwide, including Standord GSB Jackson Library, NASDAQ.com and Houston Chornicle. My Social Network: http://unhub.com/asiablues ??? ?????, ????,... More