Super Hot Tathacus Resources May Be Full of Hot Air
September 21, 2000
StockHouse News Desk
By Warren Shiau (wshiau@stockhouse.com)
Toronto, ONT, September 21 /SHfn -- Tathacus Resources [V.TTC] is riding the momentum of a red-hot fuel cell sector. But at the moment, there appears to be little substance backing-up the spectacular share-price gains. Tathacus' "hydrogen generator" is aimed at markets that are unlikely to accept it, and the validity of the technology for fuel cell use is questionable.
Even after dropping significantly from their highs, Tathacus shares are up more than 600% since they resumed trading September 15. The stock had been halted since October, 1999 pending approval by securities regulators of Tathacus' change-of-business plan.
The hydrogen-generating technology is owned by a privately held company called Xogen Power, of which Tathacus owns 20%. With approximately 6.3 million Tathacus shares outstanding and a late-afternoon Wednesday price of $9.75 a share, investors appear to think that Tathacus' 20% share is worth $60 million.
For several technical and marketing reasons, Tathacus' goals for its "hydrogen generator" technology may prove unrealistic. The company has said it hopes this technology will lead to partnerships with fuel cell companies. It also hopes to develop a hydrogen-burning home furnace based on the technology. However, it is unlikely the company will see significant profits from such initiatives.
Tathacus claims its technology produces "commercial volumes of clean burning hydrogen gas from nothing but tap water." This claim is unproven but not outrageous; many high school students have "generated" hydrogen from tap water in chemistry class. But generating hydrogen from tap water is a different matter entirely from going on to sign partnerships with fuel cell companies and developing a commercially viable hydrogen-burning home furnace.
The fuel cell technologies that are closest to market are based on fossil fuel sources. The hydrogen for the fuel cell reaction is obtained from a fossil fuel such as natural gas, methane or propane. The big fuel cell commercialization efforts backed by major oil and auto companies are centered on how the hydrogen is used, rather than on replacing the hydrogen source.
To clarify, the problem isn't obtaining hydrogen. The problem is with how the hydrogen is used within a fuel cell to produce a power reaction. Tathacus' hydrogen-from-tap-water technology does not address this issue.
Phosphoric acid fuel cells (PAFCs) are nearest to commercial availability. PAFCs use natural gas as their hydrogen source. An issue with the PAFC design is the use of extremely high pressures to force its power-producing fuel cell reactions.
An alternate design, molten carbonate fuel cells (MCFCs), does not require high pressures to force its reactions. But MCFCs work at very high operating temperatures--up to 650 degrees Celsius--which causes problems with heat dissipation.
It is extremely difficult to see how Tathacus' technology fits into the above fuel cell technologies or addresses their design issues. When asked, Tathacus vice president Leigh Clarke said: "We're not about fuel cells, we're just a hydrogen supplier.…We believe our technology is very efficient and will be picked up and then incorporated into other applications that need hydrogen as a feedstock."
Tathacus' plan to develop a hydrogen-burning home furnace could bear fruit, but many things will have to go the company's way for this to happen. Hydrogen is much more expensive than natural gas--a hydrogen-burning furnace makes little sense unless the hydrogen is cheaply available. Hydrogen generated from "tap water or salt water [using] only modest amounts of electricity" as Tathacus claims, seems to fit the bill.
However, electricity is expensive. The bill for a homeowner to generate hydrogen for Tathacus' furnace could end-up being higher than the bill to simply heat with natural gas. The Tathacus furnace itself may be prohibitively expensive--furnace manufacturing is a volume business. Companies sell at low prices with low margins and offset this with high volume. Tathacus has no furnace manufacturing experience; it is doubtful whether its furnace can be brought in at the required price point for mass construction acceptance by big residential developers.
Even if it were, a hydrogen-burning furnace will potentially have to go through years of regulatory approval after the final commercial version is produced. Then engineers will have to be convinced to specify the product, trades will have to learn to install it and homebuyers will have to demand it. A tough task because homebuyers in general only go for features that maintain or add to resale value--features like nice kitchen cabinets and whirlpool tubs. Despite their relatively small extra cost, energy saving features such as heat pumps, triple-glazed windows and insulating beyond minimum building code requirements do not add to resale value, so they don't sell in mass volume. A hydrogen-burning furnace probably wouldn't either. |
