Qi BioEnergy

SolaGen Incorporated introduces the new HDF-LI Stoker.

This unit is ideal for shelled corn and biomass pellets under commercial and light industrial applications. Its performance is unsurpassed in its ability to handle high ash content fuels with low ash fusion temperatures. The product line starts with the HDF-LI-0.5 that has a maximum input rating of up to 500,000 Btu/Hr. The stoker can be assembled as a complete system with Bulk Fuel Infeed, Firebox, PLC Controls, Hot Water or Steam Boiler, or Process Heat Exchanger.

Pellets can be stored in standard silos, hauled
in standard rail cars, and quickly delivered in truck
containers. They are made to be safe, reliable and
highly transportable.

As the world moves forward to manufacture ethanol for its energy needs, or to make its soil yield a greater harvest, the role of natural gas could increase dramatically. Subsequently, the floor for natural gas prices could begin escalating as has been found with many other commodities.

China plans to annually increase grain productive capacity by 0.65 percent within five years – and hopes to decrease planted grain acreage by 0.18 percent. The state planning commissions will be forced to improve yields. Hence, we expect an increased reliance upon nitrogen fertilizers to realistically achieve the country’s target.

But China is faced with a significant problem while maintaining an annualized 7.5-percent GDP growth rate during this time. How will China obtain sufficient natural gas to reach this target?

Earlier this month, a senior adviser to the National Development and Reform Committee [NDRC] announced, “We are seeing difficulties importing gas.” China has been stymied in meeting its annual LNG import target of 20 million tons by 2015. The country has been attempting to reduce its dependence on imported oil by increasing use of natural gas.

Fertilizer prices have more than doubled over the past 15 years, and there is no respite in the near-term. A recent Energy Information Administration outlook forecasts benchmark natural gas prices rising by 9.2 percent in 2007 and increasing another 3.7 percent in 2008. World demand for fertilizers grew by 13 percent between 2001 and 2005, according to The Fertilizer Institute. After China and India, the U.S. is the world’s third largest nitrogen producer.

Some 90 percent of the cost of manufacturing nitrogen fertilizer depends upon the price of natural gas. The more fertilizer produced, the more natural gas is utilized and the higher both eventually cost. And according to widely followed natural gas commentator Phil Flynn of Chicago-based Alaron Trading, “Ethanol plants are going to require natural gas consumption to produce electricity.”

We asked Flynn if the ethanol mania would have any impact on natural gas prices. “Absolutely,” he responded, citing that increased corn planting would require natural gas for the nitrogen-based fertilizers and to power the 130 or more ethanol plants on the books. Flynn pointed out natural gas prices would benefit from the ‘front and back end’ of the ethanol boom.

Only four years ago, producers were celebrating a 20-per-cent increase that lifted the 2004 contract price for a tonne of steelmaking coal to $51. UBS Investment Research reported on Tuesday that the Australian coal giant had reached a deal with the world’s largest steelmaker, Arcelor Mittal, at $305 US a tonne, for the contract year that began April 1.

“I think the only thing we can say, and certainly not in regard to the negotiations side, is that we are seeing the market come to terms with the flooding in Australia and the tightness of the demand that existed even before the supply disruptions,” said Colin Petryk, investor relations director for Fording Coal Canadian Trust, in a telephone interview.

The Fording Canadian Coal Trust, which operates five major steelmaking coal mines in southeast B.C., is a price-taker rather than price-maker, and is staying tight-lipped while it awaits the official outcome of Australian negotiations before settling with its own buyers.

But a company spokesman suggested that new prices reflect a number of supply-related issues in the market, including flooding of Australian coal mines in January coupled with a tightening world supply of the commodity.

Coal prices could begin to push up the price of electricity, food, imports and other products that directly or indirectly rely on coal-burning power plants. (Coal supplies 40 percent of the world’s electricity and roughly 50 percent of the U.S.’s electricity.) Demand is growing so fast that China in fact imported more than it exported in the first half of 2007 last year. Oil has already contributed to rising prices.

Thermal coal prices at Australia’s Newcastle port, where much of the coal from that nation gets shipped, rose to $125 a metric ton in January, a 143 percent increase from a year ago, according figures from globalCOAL cited by the WSJ. Central Appalachian coal futures on the New York Mercantile Exchange have doubled in the same period.

The situation has been exacerbated by cold winters in some areas, mine floods, mine shut down and other non-recurring events. But there’s no doubt demand is rising. Last week, we interviewed Greg Boyce, CEO of Peabody Energy, the world’s largest coal mining company.

“Coal demand has just been extremely strong. The globe is short of energy and we serve every coal market in the world through our trading platform or producing platform,” Boyce said. “Demand is far outstripping supply, prices have gone up over the last year in most major markets and it looks like it’s going to be here for a while.”

What are some of the other impacts? Profits will rise for coal miners, and clean coal companies like GreatPoint Energy and CoalTek will see increased attention.