By Marin Katusa, Chief Energy Investment Strategist
A cheap, clean, efficient, and limitless source of energy – such a discovery would change our world. No longer would we be enslaved to oil nor chained to coal; no more would we struggle to power our societies without destroying our environment.
It is nothing less than today's Holy Grail. And just as thousands of people in years past spent their lives searching for the chalice that held Jesus' blood and bestowed unspeakable powers to its holder, so too do thousands of people today dedicate themselves to the search for this ideal energy source.
Nothing yet fits the bill. Oil, coal, and gas are relatively cheap, but are dirty and limited. The clean sources – such as wind, solar, and geothermal – are expensive and inefficient. Nuclear power is abundant and efficient, but the startup costs are very high, the accidents are scary, and the waste products are long-lived and dangerous.
From there we move into the fringes of energy science, into the weird and wacky world of cold fusion, abiotic oil, and scalar energy. Are these tenable? Leagues of people certainly think so. If there's any chance that one of these oddball options could actually offer a solution to the biggest challenge facing our world today, it is certainly worth a little investigation.
So that's what we will do today: take a tour through the extremes of energy looking for a development with real potential. I like to say that my team leaves no rock unturned in our search to uncover, understand, and assess the wide world of energy.
Underneath these rocks, however, live some pretty strange creatures.
Nuclei are powerful little things. Busting them apart in nuclear fission reactions already provides us with the world's most efficient source of energy – nuclear power.
While fission is the science of breaking large nuclei apart, nuclear fusion is the science of joining two small nuclei together. Both processes generate incredible amounts of energy, but fusion has one key advantage over fission: neither the original reactive material nor the products are radioactive in most fusion reactions.
Nuclear fusion is real. It happens in the core of every star in the sky. In our sun, hydrogen atoms combine to create helium. The power generated in these reactions is astonishing: the fusion reactions amongst the nuclei in just one milligram of hydrogen churn out as much energy as 300 pounds of TNT!
Of course, it also happens in a very high-energy situation. These hydrogen fusion reactions occur in the core of the sun, where the temperature is more than 8 million Kelvin. All that extra energy is needed to overcome the incredibly strong repulsive force between two positively charged nuclei, known as the Coulomb force.
Here on earth, scientists have come up with three different setups that reliably generate fusion reactions – but all three require the incredibly high temperatures and pressures found in the core of the fusion-fired stars of the night sky.
That's where cold fusion hits the first of many snags.
To explain all those snags, let's step back a bit. Cold fusion gained notoriety in 1989, when Stanley Pons and Martin Fleischmann – then one of the world's leading electrochemists – reported that their tabletop fusion experiment had generated heat. They also reported detecting small amounts of nuclear-reaction byproducts, including neutrons and tritium.
The byproducts indicated that a nuclear reaction had occurred, but the heat generation went against all accepted nuclear knowledge. A fundamental tenet of science is that total energy in a closed system is constant: energy can change form, but it cannot arise out of nothing nor simply disappear. Fleischmann and Pons seemed to have observed an increase in heat energy in a system with no additional energy input. The higher temperatures could only have resulted from an unaccounted term in the energy-balance equation – a new energy source.
Breathless media reports on the discovery quickly raised hopes of a cheap and abundant source of energy. But every other scientist who tried to replicate the result failed. Then it became apparent that their instruments were not properly calibrated, suggesting that the readings were perhaps not reliable.
And when their nuclear reaction by-product numbers didn't add up – they reported 4,000 neutrons per second plus traces of tritium, but the branching ratio for fusion reactions that produce tritium says the reaction would have shot out 1012 neutrons per second, a lethal dose – Fleischmann and Pons admitted they had not actually detected either byproduct.
Cold fusion became the laughingstock of the scientific community. Regardless, the lure of figuring out how to catalyze a fusion reaction under reasonable conditions and capture the immense energy released is so tempting that researchers around the world continue to chase the cold fusion dream.
However, more than two decades after the failed 1989 experiment, cold fusion researchers still haven't been able to generate a single theoretical model or a single experimental method that can produce replicable results. A few groups have reported success in tabletop fusion experiments, but even the strongest proponents of cold fusion assert that the experiments, for unknown reasons, are not consistent or reproducible.
That hasn't stopped one researcher from marketing his cold-fusion product. According to Andrea Rossi, a bit of ordinary nickel and $50 worth of heavy water can supposedly create enough energy to supply the average American for a lifetime. Oh, plus a "secret" catalyst – because the man with the only developed cold-fusion system in the world refuses to tell anyone how it works.
Rossi regularly gives impressive but inconclusive demonstrations of his E-Cat system – inconclusive in that Rossi provides little explanation, and the demonstration does nothing to remove doubt about what's going on and whether the E-Cat actually generates more energy than it uses.
E-Cat supposedly combines ordinary nickel powder with hydrogen gas under modest pressure. A few electric currents are shot through the chamber, along with the "secret mix" of catalysts. And according to Rossi, bam! – we have cold fusion between the nickel and the hydrogen to produce copper!
A container of water that heats to near-boiling during the process is supposed to provide evidence that the reaction generates energy. And by the end, the initial pile of nickel powder has become 90% nickel, 10% copper.
Except that it is undoubtedly all a big fake. Theoretical astrophysicist Ethan Siegal has written a great, in-depth explanation of why the E-Cat cannot work. The short version is this:
First, so much energy is required to overcome the tremendous Coulomb barrier that these nickel-hydrogen fusion reactions do not even take place in the center of the sun. Even though there is abundant nickel and hydrogen in the sun, these reactions simply don't happen.
But let's pretend they were taking place in Rossi's low-pressure, low-temperature dream machine.
The claimed reaction would produce five isotopes of copper, all of which are unstable and immediately radiate their excess energy. Three of the copper isotopes, representing 95% of the initial nickel, degrade back into nickel, releasing positrons, gamma rays, and neutrinos. The other two emit their excess energy in the form of gamma rays and remain as copper.
So theoretically, these reactions could produce some copper, if you could get over that massive Coulomb barrier in the first place. But if they were happening, these degradation reactions would be spitting out positrons and gamma rays – a lot of both – which are lethal to soft beings like us. That's why large fission reactors have massive shields.
The E-Cat has two inches of lead shielding, which would block 96% of the gamma radiation. The problem is that the other 4% would kill you, Rossi, and everyone else in the room. In addition, the gamma rays would be easily detectable, even with primitive equipment, but guess what? Even with highly sensitive equipment, no gamma radiation was detected near the E-Cat while in operation.
And finally, all of the copper in the universe comes from another mid-star fusion reaction, this one between hydrogen and neon that produces magnesium plus a free proton. That free proton attaches to a nickel nucleus, creating unstable isotopes that decay into the only two stable isotopes of copper in the universe. This very specific set of reactions produces the copper-isotope ratio that we find on earth: 70% copper-63 and 30% copper-65.
Can you guess what the ratio of isotopes was in the copper "created" by the E-Cat? Yup: 70-30, exactly as in nature. Impossible from the supposed reactions and suspicious to the point of being completely unbelievable.
Fusion reactions emit energy. If we could convince two nuclei to shack up despite their tremendous repulsive force, the energy released could be the Holy Grail we seek: abundant power created efficiently and cleanly from minimal inputs.
But it just is not happening. Cold fusion is many things – including a mental exercise for theoretical physicists and a hoax from Andrea Rossi – but legitimate is not one of them.
I would start with a description of what scalar energy is… but aside from words like "hogwash" and "drug-induced dreaming," I know not what to say. Instead, I'll let Bill Morgan, one of scalar energy's louder proponents, do the describing for me. This is from an article titled Scalar Energy – A Completely New World Is Possible.
"The greatest scientific discovery in the history of the world has happened over the last few decades and it has gone largely unnoticed because of the great secrecy with which it has been held by all who know of it. It is the discovery of a completely new kind of electromagnetic waves which exist only in the vacuum of empty space, the empty space between the atoms of our bodies as well as the empty space we see in sky at night. All of empty space.
"These waves constitute a kind of ocean of infinite energy, and it has now been discovered that this abundant energy can be coaxed to pour into our 3-dimensional world from their 4-dimensional realm, to be used to do work, provide electricity, power all transport, and even heal the body of almost all disease. This is the new world of scalar electromagnetics, the zero-point energy, the energy of the absolute nothingness which existed before the world began."
Morgan goes on to explain that scalar energy is comprised of "longitudinal" electromagnetic (EM) waves , a new kind of EM radiation that is completely separate from the transverse EM waves that we use to connect mobile devices, transmit television signals, and heat leftovers in microwave ovens. Transverse EM waves modulate in three dimensions, but these fancy new longitudinal EM waves modulate "in the direction they are going, accordion-like, that is, along the axis of time, the 4th dimension."
At this point, Morgan admits that the significance and meaning behind all of this remains a mystery even to him. Thank goodness – here I thought I was the only one who was confused.
Apparently, matter is compressed energy, and scalar energy is compressed time, and both are compressed by a factor of the speed of light squared. And because Einstein once used c2, the entire concept is legitimate.
Oh, and the supposed father of scalar energy – one Nikola Tesla – was apparently paranoid about others stealing his ideas, so he rarely wrote any of them down, and upon his death the government swooped in and confiscated any notes he had made, and now Big Oil is making sure those secrets stay locked away. Right.
(I should note: Telsa was without a doubt an absolute genius. He was father of numerous inventions that are the foundation of our modern society, many of which were credited to others for various reasons. Check out what is perhaps the greatest version of Tesla's résumé ever created. However, inserting Tesla's name into the scalar energy argument lends zero legitimacy to this nonsense. Sorry!)
If only the government would admit the existence of scalar energy, apparently we would have a cure for cancer and AIDS, be able to manufacture UFOs, develop machines capable of mass mind control, earn a Ph.D. in a few months, and of course be free of the oil curse. Oh, and the secret government testing of scalar-energy devices explains crop circles and glowing orbs of light moving through the night sky.
The third item on our top-three list of fringe solutions to the global energy crisis is abiotic oil. Abiotic-oil proponents believe that oil does not come from buried, rotting vegetation and busy bacteria, but from CO2 and H2 gas rising through the deep layer of the earth's crust and happening upon some zirconium, which prompts the gases to join together into the long-chain hydrocarbons we know as oil.
Were it true, the abiotic oil theory would mean that oil is a sustainable, replenishing resource. In fact, abiotic oil enthusiasts believe deep pools of crude oil will slowly refill all the world's oil fields.
Oil as a renewable resource, continually manufactured in the depths of the earth – not hard to understand why this is a popular theory. Too bad it's completely wrong.
The debate about oil's origin has been going on since the late 19th century, and from the start there were two camps. On one side sat those who contended that oil was either primordial – that it dated back to earth's origin – or was created through an inorganic process. The other side was populated by those arguing the biogenic line: that oil is produced from the decay of living organisms that proliferated millions of years ago and were buried under ocean sediments in fortuitous circumstances.
By the late 20th century, the vast majority of scientists had lined up on the biogenic side. A small group of scientists, mostly Russians but including a handful of Westerners led by the late Cornell University physicist Thomas Gold, held out for an abiotic theory.
They argued that hydrocarbons existed at the time of the solar system's formation and are known to be abundant on other planets where no life is presumed to have flourished in the past. It all meant oil had to be abiotic, seeping upward from nearly limitless pools near the center of the planet.
If only oil companies would drill in the right places, they would discover these deep pools – or so went the argument.
Well, the Swedes took that challenge to heart. Under Gold's direction, a Swedish group drilled in search of a deep, abiotic pool of oil for six years… and all they came up with was 80 barrels of sludge, which was likely their own drilling residue.
I'd call that a fail.
Meanwhile, Big Oil has been using the biogenic theory as the practical basis for their successful exploration efforts for the past few decades. It is now very clear who was correct, and who wasn't. Sorry, Dr. Gold.
Cold fusion, scalar energy, and abiotic oil are not the solutions to our energy crisis. They aren't even theories – they are dreams, fantasies imagined by people who want to revel in the glory of weaning the world off oil without doing the hard work that is necessary to generate a real solution.
There are lots of people out there doing that hard work today, developing efficient, effective ways to tap into solar, wind, tidal, and geothermal energy. These inventions will one day wean us off oil, but that day is still a long way off. The methods we have today to tap into these natural energy sources are inefficient, expensive, and often unreliable.
And while we await that day, we will continue to rely on oil, the price of which will continue to climb and climb.
Unless one of you happens to have figured out a perpetual-motion machine.
While cold fusion, scalar energy, and abiotic oil are illusory sources of power, what's all too real is the escalating competition for recoverable crude. As a result, we expect demand for "black gold" to ignite the greatest bull market of the 21st century.
Interview with Amir Adnani (YouTube)
Amir Adnani is the president and CEO of Uranium Energy (NYSE.UEC), a company I have recommended to my subscribers several times. Amir is one of the main reasons I stand behind the company – he is smart, savvy, and works tirelessly for his investors. His efforts and successes landed him on my Casey NexTen, a list of the top-ten rising superstars of the energy sector. All under the age of 40, these honorees have already shown they have what it takes to become the next set of resource titans, replacing Ross Beaty, Lukas Lundin, and Frank Guistra atop the list of spectacular resource investors.
In the Cambridge House interview linked above, Amir discusses nuclear energy, uranium supply and demand, and entrepreneurship. It's well worth a watch.
Saudi Oil Well Dries Up (Telegraph)
If Citigroup is right, Saudi Arabia will cease to be an oil exporter by 2030. Saudi domestic oil consumption is rocketing, with much of it going to air conditioning and water desalination. Saudis are now using more oil per capita than Americans, even though their industrial base as a share of GDP is much smaller. Changes are under way that should help, including plans for 80 GW of nuclear power and several big solar farms. But in another point for Peak Cheap Oil, this report is a strong reminder that the Saudi oil hose is definitely not gushing the way it used to.
Chávez 101: How to Run an Oil Company into the Ground (Globe and Mail)
Hugo Chávez's cash pump is running on empty. Troubled state-owned oil company PDVSA was just given authority to pay its suppliers with IOUs instead of cash, not a surprising turn of events given that Chavez has squeezed PDVSA systematically for years to finance his massive social-spending programs. More generally, PDVSA is a lesson in oil-wealth mismanagement.
Plains Exploration & Production will borrow $7 billion – more than its current market value – to buy BP's stake in several deepwater wells. The $5.5-billion deal will more than triple the company's production of crude oil, but PXP shares fell nearly 10% on the news, as investors worried about the steep price of the deal and the debt load. As for BP, the deal helps the British oil major shed smaller, older assets to focus on a smaller number of more lucrative wells in the Gulf, while also helping the company reach its goal of raising $38 billion from asset sales to pay for damages from the massive 2010 oil spill in the Gulf.