Russ, I sure appreciate your recent posts here.
Your investment style is impressive, one of planning ahead, patience, and execution. Can't go wrong with that.
I'm watching NG here as well, but exercising patience. Maybe I'm being too patient. The demand side of the equation still looks 'not good' to say the least.
I personally don't put that much stake in 'maintenance' issues. I've never worked in a nuclear plant. Except for the reactor however I'm quite familiar with all the other equipment. All the other equipment except for the main turbine/gen train should be adequately spared. So this leaves the reactor and possibly the turbine/gen train. Wouldn't think the reactor would have to come down very often. Turbine/gen trains can likewise go a long time, between shutdowns. It is usual today to extend the times between outages, due to recent changes in operating and maintenance philosophy. These extensions can be impressive.
Last year we heard all over the boards about the gas fired only turbines, and that this was going to save NG. Didn't happen. I don't work the power industry, directly. But I do know a little about gas turbines. They can be switched easily enough, if there are good reasons. I'm fairly certain some probably did, and now they've switched back. There are some enviro issues involved as well.
The reasons for all the new gas fired turbine power are various. The new turbine fired cogen plants are quite efficient. So a part of what has been going on is merely replacement (or displacement) of older plant power, with more efficient new plant power. A lot of these older plants - nuclear, coal fired boiler, gas fired boiler, distillate fired boiler, etc. can operate a long time yet, if desired and/or necessary. Just a matter of economics.
I guess the bottom line in my opinion is that one has to try and look at supply and demand. Gas, coal, oil, and nuclear power all compete in a finite market place. To my knowledge there is still a lot of power plant construction going on, and most of it is probably gas fired turbine cogen. Capital investment is generally less and efficiency is tops. At the same time we're in a recession and overall demand has fallen off. Over building will probably be the result.
I remember last summer I thought about shorting GE, and then didn't follow through. I should have. I think the power side of GE's business is going to face some tougher going.
At some point things will go the other way, as always. What really makes NG smoke is when power is in short supply, because NG fired turbine power can be put on line very quickly. This is due to lower build times for industrial turbine cogen plants, and to recent advances in large aero-industrial gas turbines. Just a few years the options that are now available, weren't. But, in general any of these turbines can be fired on liquid fuels, if absolutely necessary. The changes required to convert are not that extensive. In some cases I would suspect the turbines are installed with dual fuel capability. This infers that NG will always have to compete with liquid and other fuels.
Maybe all this infers continued volatility and shorter up/down cycles in the investment end of things.
IMHO. |
