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July 29th, 2014

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editorials

 
21st Century Energy Centers Could Take the Bakken by Storm
Emerging Growth LLC  Jul 25  

Iraq Breaks Down, Oil Surges
Chris Martenson  Jun 18  

The Next Billion (Barrels of Oil)
The Energy Report  Jun 13  

An Unwelcome Note on European Natural Gas
Ferdinand E. Banks  Jun 12  

China Leads the World in Green Energy, Gaming and Gambling Markets
Frank Holmes  Jun 11  

»» more editorials in the archives

market data


Ux U3O8 Price (Uranium)July 21st, 2014
$28.50 +$0.15 www.uxc.com

»View Commitment of Traders.

expert analysis & newsletter briefs

Mart Resources Inc.

"Mart Resources Inc. is a good mid-cap name that pays a dividend. It is producing oil in Nigeria. It has experienced significant pipeline losses due to a lot of theft: Its current pipeline is in a swampy area that is difficult to monitor for theft. But in August, the company plans to switch pipelines. Using the new Royal Dutch Shell pipeline will allow Mart to avoid high pipeline losses while increasing production. Importantly, Mart has some wells under development that are not producing at the moment, but that will be tied into the new pipeline when they come on line. . .Mart has access to Shell's new pipeline. Once it starts flowing product through that pipeline, its net production should increase materially. Mart has very aggressive plans for increasing production in the near term. Most of Mart's wells are verticals, which produce 23 Mbbl/d, but it has drilled a horizontal well that should produce significantly more than the vertical wells, and increase its overall production. The results on the new horizontal well will be released in the near term." (7/24/14) - The Energy Report Interview with Steve Palmer

Mart Resources Inc.

"Mart Resources Inc. is a good mid-cap name that pays a dividend. It is producing oil in Nigeria. It has experienced significant pipeline losses due to a lot of theft: Its current pipeline is in a swampy area that is difficult to monitor for theft. But in August, the company plans to switch pipelines. Using the new Royal Dutch Shell pipeline will allow Mart to avoid high pipeline losses while increasing production. Importantly, Mart has some wells under development that are not producing at the moment, but that will be tied into the new pipeline when they come on line. . .Mart has access to Shell's new pipeline. Once it starts flowing product through that pipeline, its net production should increase materially. Mart has very aggressive plans for increasing production in the near term. Most of Mart's wells are verticals, which produce 23 Mbbl/d, but it has drilled a horizontal well that should produce significantly more than the vertical wells, and increase its overall production. The results on the new horizontal well will be released in the near term." (7/24/14) - The Energy Report Interview with Steve Palmer

Enterprise Group Inc.

"In a recent interview with The Energy Report, I highlighted one of my favorite companies in the energy sector, Enterprise Group Inc. . .the company is one way to play this booming oil and gas space, which may take North America to energy independence by 2015. . .big money is investing in Enterprise, as the company has raised over $27M for acquisitions." (7/23/14) - Jeb Handwerger, Gold Stock Trades

Fission Uranium Corp.

"On July 21, Fission Uranium Corp. announced assay results from eight holes drilled at its wholly owned Patterson Lake South property. . .six of eight holes returned substantial high-grade assays." (7/22/14) - David Kratochvil, Euro Pacific Canada

Enterprise Group Inc.

"We continue to rate Enterprise Group Inc. a Buy. . .a combination of tuck-in acquisitions to complement the organic build of existing subsidiaries, expected synergies and cross-selling beginning with the consolidation of E One and 2015E liquefied natural gas upside supports our positive outlook on the company." (7/22/14) - Steven Salz, M Partners


featured companies

Avanti Energy (TSX-V : AVN.V)
Enhancing Oil Production in Brazil and Colombia
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Pan Orient Energy (TSX-V:CAN)
Canadian junior oil and natural gas company based in Calgary, Alberta.
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Quantum Energy (QEGY.PK:OTC)
Development stage publicly traded diversified holding company with an emphasis in oil field development trading
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Super Nova Minerals Corp. (SNP:CNSX, OTC:SNOVF)
Oil & gas exploration company focused on developing the Millford Bakken property
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The Energy Report ()
Investment ideas for saavy investors
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Torchlight Energy (NASDAQ: TRCH)
Oil Drilling and Working Interest in Oil Projects
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from the publisher
  Robert J. Moriarty

Welcome to 321energy.



Peak Copper

Roland Watson
December 16th, 2005

If oil is the most important commodity, then copper cannot be far behind. Being used extensively in electrical power cables, electrical equipment, automobile radiators, cooling/refrigeration tubing, heat exchangers, artillery shell casings, optical fibre, water pipes, drain pipes, plumbing and even jewellery, this reddish-brown metal is a commodity that the world can ill afford to be in short supply of.

But the fact of the matter is that copper is yet another metal that is in a mining deficit that was predicted to be 700,000 tons in 2004 by the USGS 2005 summary. That would be about 5% of the estimated 14.5 million tons produced worldwide. As a result, stockpiles have reduced and prices have increased to over the $2 a pound mark recently.

Against this backdrop, I was nevertheless surprised to read recent comments by Ross Beaty, the chairman of Pan American Silver and Lumina Copper, that global copper production was approaching its own version of "Peak Oil" or shall we say "Peak Copper"?

His remarks can be found in this article. But his main points centred on such facts as:

Only 56 new copper discoveries have been made in the last 30 years. He predicts Chilean copper output to peak about 2008 (Chile is the world's main producer). A lack of smelter and refinery supply is creating another bottleneck. 21 of the 28 largest copper mines in the world are not amenable to expansion. Many large copper mines will be exhausted between 2010 and 2015.

Does not all this sound familiar to the arguments of the Peak Oil debate?

New oil discoveries of the last 30 years are dwarfed by those of previous decades. Saudi Arabia, the world's main oil producer may peak soon. A lack of refining capacity is causing bottlenecks in gasoline, etc. Many of the super giant oil fields in the world cannot have their production expanded or even maintained. Supergiants such as Ghawar, Cantarell, Burgan and others will be well on the decline path by 2015.

When we look at the comparative reserve numbers for oil and copper we also get a sense of an impending dual peak scenario. Worldwide economic reserves of copper are stated to be 470 million tonnes by the USGS 2005 summary for copper. If the 2004 mine production figure of 14.5 million tonnes is held steady into the future, copper would be exhausted within 33 years.

If we also assume about 1 trillion barrels of oil remains to be economically recovered worldwide with a current annual production of 30 billion barrels then we come out with a similar reserve lifetime of 33 years. Coincidence? Not if we realise that increased energy consumption means increased metal consumption. The two go hand in hand.

When might this peak come around? That is probably a little easier to calculate than oil since secrecy about copper reserves is much less prevalent. But the shocking news that Chile, which produces one third of the world's copper, may begin to decline irreversibly in 2008 suggests that as Chile goes, so goes the world.

When Chile peaks, the world peaks.

Sounds a bit like the peak oil mantra "When Saudi Arabia peaks, the world peaks".

However, if you believe that reserves are purely a function of price, you may take comfort in the recent USGS suggestion that the total reserve base of copper (economic and uneconomic) is not the 940 million tonnes of its 2005 summary but a whopping 1.6 billion tonnes! Sadly, some reading between the lines of that statement reveals a more sobering truth that half of that estimated tonnage does not appear to have been discovered yet!

Perhaps the USGS is indulging in the same over-optimistic numbers that we have seen it display in its estimates for crude oil. We think so and will continue to work on that assumption.

In conclusion, what are the ramifications of copper supply diminishing in the face of potential increased demand? The answer is far higher prices to begin with. The second answer is substitution of applications using aluminium, titanium and plastics - depending of course on how strained their resource base is.

There is one hope for those consumers who yearn for lower copper prices. When Peak Oil finally arrives, we'll probably enter a severe economic crisis that will kill demand for copper. Then they'll have their lower prices and unlike gold and silver that will see fevered demand as safe haven investments, nobody is going to fly to copper as a store of value.

Roland Watson

email: newerainvestor@yahoo.co.uk

Roland Watson writes the investment newsletter The New Era Investor that can be purchased for an annual subscription of $99. To view a sample copy of the newsletter, please go to www.newerainvestor.com and click on the "View Sample Issue Here" link to the right.

He invites comments and questions at: newerainvestor@yahoo.co.uk.



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July 29th, 2014

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