Weatherman
05-11-2010, 10:44 PM
This interview covers geothermal, other energy, peak oil, metals, geopolitical risk, and more. It is a good read.
Snip:
Interview: Ross Beaty's 100 Year Energy Plan
In early 2008, Mr. Beaty founded Magma Energy Corp. to focus on international geothermal energy development. Magma Energy currently owns the Soda Lake geothermal plant in Nevada and interests in two large geothermal plants in Iceland, as well as 31 other geothermal properties in the USA, Iceland, Nicaragua, Chile, Peru and Argentina.
HRM: Thank you for taking the time to speak to us today. Mining and metals seems quite different from green energy. What prompted you to go into green energy?
Ross Beaty: Over the past 25 years, I've started 8 public companies, of which 7 have been sold (4 copper companies, a gold exploration company, a platinum exploration company, and a gold mining company). Only Pan American Silver remains. In 2008, I retired from Pan American (though I am still non-executive Chairman) and sold the last of our copper companies, so I was looking at either retiring or doing something new. I like change and I am also a bit of a closet environmentalist so I decided to build a new green energy company focused on geothermal power. Magma Energy is the result. We're now just 2 years old and I think we have a very bright future ahead of us.
HRM: What made you start Magma Energy?
Ross Beaty: When I looked at who is out there developing geothermal power, I saw that there was no real industry leader. Nobody was really trying to do this in a big way-to really build a world-class company as we had done with Pan American Silver. I felt we could do exactly the same thing in geothermal power. So, in 2008 we started with the modest mission of building the world's preeminent geothermal power company. We think we can achieve that mission in exactly the same way as Pan American Silver was built: by exploring, developing, operating, and acquiring. If we do those well, we can make people a lot of money, have a lot of fun and succeed in our mission.
HRM: Are you interested in other areas within green energy, for example, wind or solar energy? Are there specific reasons why you choose geothermal energy?
Ross Beaty: When you build a successful company you really have to focus. I chose geothermal because it is a sub-surface business, so a lot of the skills and knowledge I have built up over my career are very applicable. It's a global business like the mining industry; you work in many of the same countries, in the same rocks and you deal with many of the same development issues.
I just love geothermal power. Anybody can do wind or solar. All you have to do is put your finger up and, if it's windy, you might be able to put a turbine up on your property. Geothermal is the cleanest of all electricity sources and is also one of the cheapest when you include all costs (capital, operating, maintenance and fuel). It's a far superior form of electricity generation because its baseload; it operates all the time. Wind and solar only work when it's windy or sunny and they're much more expensive in terms of the net result in generated electricity.
Geothermal is also an area where discovery is a big part of the value proposition. If you can discover a geothermal resource by drilling, it's kind of like a discovery in mining or oil and gas. A good team can make something out of nothing, but a bad exploration team will simply waste money on dry holes. So geothermal is an area where human resources really count in terms of value creation.
HRM: Are you saying that a geothermal business has superior upside potential, compared to wind or solar, because of the discovery aspect?
Ross Beaty: Yes, geothermal has better wealth creation potential for a good management team and it's also lower-cost electricity and much more assured than wind or solar. Geothermal is powered by the heat of the earth. It's free and permanent. You don't have to rely on something ephemeral like wind or solar or, in the case of hydro power, water. When you look at the total cost over 20 or 25 years, geothermal is the least expensive form of electricity generation.
HRM: How did the timing of getting into geothermal, in 2008, come about?
Ross Beaty: The timing of my going into geothermal was because it was time for me to do something new. I thought geothermal was a great business and it also is very popular, in terms of incentives offered and as an alternative to fossil fuels based electricity generation.
It had nothing to do with the financial meltdown. We would have been farther along had that not happened, although we may not have had opportunities that we took advantage of. For example, going into Iceland was strictly something that could only have happened because Iceland had a calamitous financial meltdown in 2008.
HRM: Geothermal certainly is supported by the U.S. government in terms of grants and tax incentives, but I wonder if it will fall out of favor. How would that affect Magma Energy?
Ross Beaty: Geothermal is a successful business in 28 countries of the world, producing 11,000 MW from almost 500 plants operating worldwide. It's a business that certainly doesn't need incentives, but if you've got them it enhances your profit margins. We are not building our business model around incentives. If you're in the wind or solar business you must do that.
HRM: I understand Magma Energy is about 2 years old now.
Ross Beaty: Magma Energy, of course, is my main effort. I'm putting a tremendous amount of time into the company and it's working: we are really growing quickly and I expect that growth to continue. We have a tremendous management team. We have 3 essential platforms today: Nevada, Chile and Iceland.
In Nevada, we are exploring and developing our land position, which is the largest in the industry. We have one operation near Reno called Soda Lake, which generates 8 MW of power and we are expanding this to 16 MW now. The Soda Lake operation sells all electricity to NV Energy Company in two 30-year power purchase agreements. Once our 16 MW plant is up and running we hope to undertake another expansion to take the plant to 25 or 30 MW. We are also working actively on a number of our other Nevada properties where we hope to discover and develop other operating geothermal plants in the next few years.
Much more at: http://www.321energy.com/editorials/hera/hera050810.html
Snip:
Interview: Ross Beaty's 100 Year Energy Plan
In early 2008, Mr. Beaty founded Magma Energy Corp. to focus on international geothermal energy development. Magma Energy currently owns the Soda Lake geothermal plant in Nevada and interests in two large geothermal plants in Iceland, as well as 31 other geothermal properties in the USA, Iceland, Nicaragua, Chile, Peru and Argentina.
HRM: Thank you for taking the time to speak to us today. Mining and metals seems quite different from green energy. What prompted you to go into green energy?
Ross Beaty: Over the past 25 years, I've started 8 public companies, of which 7 have been sold (4 copper companies, a gold exploration company, a platinum exploration company, and a gold mining company). Only Pan American Silver remains. In 2008, I retired from Pan American (though I am still non-executive Chairman) and sold the last of our copper companies, so I was looking at either retiring or doing something new. I like change and I am also a bit of a closet environmentalist so I decided to build a new green energy company focused on geothermal power. Magma Energy is the result. We're now just 2 years old and I think we have a very bright future ahead of us.
HRM: What made you start Magma Energy?
Ross Beaty: When I looked at who is out there developing geothermal power, I saw that there was no real industry leader. Nobody was really trying to do this in a big way-to really build a world-class company as we had done with Pan American Silver. I felt we could do exactly the same thing in geothermal power. So, in 2008 we started with the modest mission of building the world's preeminent geothermal power company. We think we can achieve that mission in exactly the same way as Pan American Silver was built: by exploring, developing, operating, and acquiring. If we do those well, we can make people a lot of money, have a lot of fun and succeed in our mission.
HRM: Are you interested in other areas within green energy, for example, wind or solar energy? Are there specific reasons why you choose geothermal energy?
Ross Beaty: When you build a successful company you really have to focus. I chose geothermal because it is a sub-surface business, so a lot of the skills and knowledge I have built up over my career are very applicable. It's a global business like the mining industry; you work in many of the same countries, in the same rocks and you deal with many of the same development issues.
I just love geothermal power. Anybody can do wind or solar. All you have to do is put your finger up and, if it's windy, you might be able to put a turbine up on your property. Geothermal is the cleanest of all electricity sources and is also one of the cheapest when you include all costs (capital, operating, maintenance and fuel). It's a far superior form of electricity generation because its baseload; it operates all the time. Wind and solar only work when it's windy or sunny and they're much more expensive in terms of the net result in generated electricity.
Geothermal is also an area where discovery is a big part of the value proposition. If you can discover a geothermal resource by drilling, it's kind of like a discovery in mining or oil and gas. A good team can make something out of nothing, but a bad exploration team will simply waste money on dry holes. So geothermal is an area where human resources really count in terms of value creation.
HRM: Are you saying that a geothermal business has superior upside potential, compared to wind or solar, because of the discovery aspect?
Ross Beaty: Yes, geothermal has better wealth creation potential for a good management team and it's also lower-cost electricity and much more assured than wind or solar. Geothermal is powered by the heat of the earth. It's free and permanent. You don't have to rely on something ephemeral like wind or solar or, in the case of hydro power, water. When you look at the total cost over 20 or 25 years, geothermal is the least expensive form of electricity generation.
HRM: How did the timing of getting into geothermal, in 2008, come about?
Ross Beaty: The timing of my going into geothermal was because it was time for me to do something new. I thought geothermal was a great business and it also is very popular, in terms of incentives offered and as an alternative to fossil fuels based electricity generation.
It had nothing to do with the financial meltdown. We would have been farther along had that not happened, although we may not have had opportunities that we took advantage of. For example, going into Iceland was strictly something that could only have happened because Iceland had a calamitous financial meltdown in 2008.
HRM: Geothermal certainly is supported by the U.S. government in terms of grants and tax incentives, but I wonder if it will fall out of favor. How would that affect Magma Energy?
Ross Beaty: Geothermal is a successful business in 28 countries of the world, producing 11,000 MW from almost 500 plants operating worldwide. It's a business that certainly doesn't need incentives, but if you've got them it enhances your profit margins. We are not building our business model around incentives. If you're in the wind or solar business you must do that.
HRM: I understand Magma Energy is about 2 years old now.
Ross Beaty: Magma Energy, of course, is my main effort. I'm putting a tremendous amount of time into the company and it's working: we are really growing quickly and I expect that growth to continue. We have a tremendous management team. We have 3 essential platforms today: Nevada, Chile and Iceland.
In Nevada, we are exploring and developing our land position, which is the largest in the industry. We have one operation near Reno called Soda Lake, which generates 8 MW of power and we are expanding this to 16 MW now. The Soda Lake operation sells all electricity to NV Energy Company in two 30-year power purchase agreements. Once our 16 MW plant is up and running we hope to undertake another expansion to take the plant to 25 or 30 MW. We are also working actively on a number of our other Nevada properties where we hope to discover and develop other operating geothermal plants in the next few years.
Much more at: http://www.321energy.com/editorials/hera/hera050810.html