Seeking Alpha

Alter NRG Changes Course to Build Up Cash Flow
by: FP Trading Desk October 22, 2008 | about stocks: [1] ANRGF.PK

FP Trading Desk

In a new strategy to weather the financial credit crisis and build up its cash flow, Alter NRG Corp. ([1] ANRGF.PK) is changing course, putting on the back burner two of the company’s main engineering and construction projects, the Bruderheim IGCC power and Fox Creek coal-to-liquid facilities.

Fraser Mackenzie Ltd. analyst John Safrance wrote in a research note:

….Trading as high as C$6.75 in May of this year, Alter NRG shares have been decimated in the global sell off over the past few months. So much so that after losing another C$0.10 in trading Wednesday morning, the stock now valued at C$0.90 is trading below Mr. Safrance’s estimated cash value for the company of approximately C$56-million or C$1 per share….([3] Full Story)

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It seems that the possibility of receiving government grant money for carbon capture and sequestration (CCS) is a major motivator for the construction of Alter NRG’s Bruderheim power plant.  However, it appears that the Alberta Government’s generositywill be stressed somewhat on account of the current market price of crude oil (in the order of $70) falling seriously short of projections that were based on estimates of an anticipated price of $115 per barrel.

CCS for the Alter NRG Bruderheim power plant is a bit of a red herring.  [4] CO2 is neither a pollutant, nor is it proven to be the cause of global warming.  The major pollutant that would be produced by the Bruderheim power plant is a massive amount of water vapour that, with the prevalence of common temperature inversions layering during the winter, would quite likely produce massively dense fogs in the Bruderheim area, fogs that are now often already so dense that they frequently make driving extremely hazardous.

In the absence of government grants for CCS, the viability of the sales of electric energy to be produced by Alter NRG, given that initially it would depend on relatively expensive and rapidly depleting natural gas, is somewhat at risk in an energy market that will quite possibly see shrinking demand due to the escalating financial world crisis.