Intrepid Tech & Resources (fka ITRP)

[silverfox1155]

From: "Vicky E. Kenoyer" <[e-mail]>
To: [e-mail]
Subject: Intrepid Technology and Resources Inc. President's Message 12 Dec 07
Date: Thu, 13 Dec 2007 13:02:38 -0700
PRESIDENT’S MESSAGE

PRESIDENT’S MESSAGE

12 Dec 07

A MAJOR MILESTONE !!



We have been notified that yesterday’s (11 Dec) gas samples will be the last required by GTI to complete the gas testing protocol. These should arrive in the GTI labs in Chicago today for analysis and once those results are compiled, GTI will produce a formal report for Intermountain Gas Company. We expect that with the holidays fast upon all of us (including GTI and IGC), that official report will not be ready until after the first of the New Year, but we have already been told on a 3-way call among ITR, GTI and IGC that we have not only met, but in fact, exceeded the Federal Energy Regulatory Commission (FERC) standards for pipeline gas quality and have done so consistently since the first physical sample was drawn and shipped on 24 July.



We are very pleased – deservedly so – and this marks a tremendous accomplishment that needs to be appreciated in its true context. No other biogas producer we know of anywhere in the country – or elsewhere for that matter – has ever completed such a rigorous and thorough testing protocol, let alone come through with such flying colors. We have just set a pretty high benchmark for others to attempt to achieve and have rightly earned the bragging rights of being “the first”. But beyond bragging rights, this now opens the door to our being able to sell our gas to virtually anyone without restriction and without question as to its purity and acceptability as fully-qualified natural gas.



But before you ask the obvious question, let me answer it by reminding you that in my Nov President’s Message I said we made a business decision that while awaiting formal certification by GTI we would start trucking Whitesides gas over to the WestPoint plant for use in the heat exchange system during start-up operations in lieu of bringing in much more expensive propane. This would also allow us to avoid the expense of having to switch out burners to accommodate the propane. We have been cycling our two gas trailers between the two plants for the past 3 weeks; one filling at Whitesides and one emptying at WestPoint. It’s been working out very well and we are learning a lot about loading, transport, and offloading in the process – knowledge and experience that will pay dividends once we start doing this for a living.



We will need to continue this process until early February when WestPoint gas production levels should be high enough that we can “wean” the trailers away and the plant will be self-sustaining.



Speaking of production levels, I understand that there are rumors and even suspicion about production levels at Whitesides. Some have even accused us of willfully withholding information. I am sorry that such a misperception exists. I will tell you that we are currently at about 65% of where we hope to be based on our experience with the original 2-tank system at Whitesides and that the trend is continuing to rise, albeit slowly. At the same time, I will once again remind you all that we have been trying to get the message across that these bugs we are dealing with are not exactly your “A” students and they do not fit the “now-generation’s” immediate gratification mold. They, in fact, occupy the last three slots on the food chain and if their energy levels were any lower, they wouldn’t even be on that chain. As I also shared with you in an earlier message, we brought in expert microbiologist consultants who did a very thorough evaluation of our system and bugs and their take-home message to us was that our biggest problem was our lack of patience.



There are also a lot of rumors circulating about a cattle feed supplement based on an ionophore called “monensin” being the reason our bacteria growth is so slow. Monensin is the active compound in Rumensin, a more familiar brand name of one of the feed supplements available. I will not attempt to explain how it works, but if anyone is interested, you can google it up. The bottom line to this story is that it is frankly immaterial at this point as to whether monensin is the cause of our slow increase in production or not. This product is in WIDE use throughout the dairy and beef cattle industry and its popularity is most definitely on the rise. And no wonder. With the potential to increase milk production by 1-4% and reduce the overall feed bill by as much as 6%, it is likely here to stay. However, if it is affecting us in that way, then it is affecting ALL anaerobic digestion processes – regardless of technology employed – in the same way. We can cry about it, or we can learn to deal with it. ITR has chosen the latter path – all the more reason to concentrate on developing as many different product lines as we can off the digester residuals.



That’s the gas situation.



Regarding fiber, you already know we sold our first load at $16 per yard – a better price than our initial proforma were based on. We continue to stockpile and cure fiber during this low demand season in anticipation of more attractive marketing opportunities after the first of the year when nurseries begin ordering in their spring stock.



Carbon offset credits are a hot topic of late, and we have attracted considerable interest in the form of several competing offers for those we have accumulated to date and those we will generate going forward. The protocols used to “verify” such credits are tightening up under increased scrutiny and the desire for US generated credits to be competitive in the global carbon trading market place. As a result, if you qualify under the tighter protocols, the numbers of credits go down, but the price goes up. During this time of flux in the ongoing protocol refinement period, we continue to document methane burned at our plants (credits can be sold retroactive) and work to negotiate the best overall “deal” among our various suitors. Once we select the best horse to saddle, we will move forward with the verification process and get on with selling the credits. Verification will be done by the eventual buyer and is a much shorter and less painful process than what we had to do for gas testing – but still takes a little time to get done as it requires a physical on-site visit by an independent verification team. Meanwhile, the credits continue to build.



With the above in mind, we are, in fact and at last, producing saleable commodities and revenues are in sight on all three fronts: gas, fiber and carbon credits (or Voluntary Emissions Reductions or “VERs” in the still evolving vernacular).



Best wishes to you all for a wonderful Christmas and New Year Season…and here’s to 2008 being a great year for us all!



Jake





Intrepid Technology and Resources

501 W. Broadway, Suite 200

Idaho Falls, Idaho 83406

Phone: [phone]

Fax: [phone]