There is a small stock. Carbon Sciences Inc. (CABN.OB), that is developing technology at the forefront of transportation fuels production from natural gas. In a recent announcement Carbon Sciences, the company said it was addressing the "low lying fruit" in this industry first. It announced it has developed a new catalyst that will allow natural gas to hydrogen producers to decrease the ratio of steam to carbon from 3 to 1 to 1.5 to 1. The company says this will save a steam methane reforming plant producing 44,000 metric tons of hydrogen per year approximately $3.7 million per year. Currently world hydrogen production is 75,000,000 metric tons with a market value of approximately $2000 per metric ton. The company thinks this opportunity represents $6.3B per year ((75,000,000 tonnes / 44,000 tonnes) * $3.7 million). Plus world wide demand for hydrogen is expanding rapidly. Progress is being made in hydrogen powered fuel cells for transportation. The company thinks this hydrogen market may be a $150B market with the possibility of becoming a $1T market. Carbon Sciences recently announced that its steam reforming catalyst performed successfully with high and stable conversion to hydrogen at 850 degrees Celsius (and also at 900 degrees). The tests also provided data which should help the company further improve the catalyst. The near term goal is to produce a "drop-in" replacement catalyst for most of the world's natural gas to hydrogen plants. The company now believes it is close to achieving this goal.
The company also thinks it may be able to make many of the high carbon dioxide content (greater than 10% carbon dioxide) natural gas fields economical. Currently it is too expensive to separate out carbon dioxide from natural gas in fields with high carbon dioxide content. Carbon Sciences has conducted a test in which it was able, using its catalyst, to convert a stream of carbon dioxide, methane, and steam at elevated pressure and 900 degrees Celsius temperature to syngas with 99% efficiency. The resulting 2 to 1 ratio syngas (a hydrogen and carbon monoxide mixture) can then be used by existing gas to liquids processes to produce liquid transportation fuels such as gasoline, diesel, and jet fuel. Carbon dioxide captured from power plants can also be used to add to low content natural gas to produce transportation fuels by the above processes. Such applications are yet another market for Carbon Sciences. They are possibly profitable way of cleaning up power plant emissions.
The bad news is that Carbon Sciences is not the only company working on such technologies. Many of the major oil companies have been working on these same technologies. Shell claims it learned much from its experiences building the Qatar gas to liquids plant. It has developed a new generation of catalysts. Virtually all of the major energy companies believe that natural gas is one of the solutions for the future. The large natural gas purchases recently by such companies as Chevron (CVX), Exxon Mobil (XOM), and BHP Billiton (BHP) are testament to this belief. Shell (RDS.A) has forecast a doubling of the overall world energy demand in the first half of this century. Renewables are expected to be a huge part of the growth, but fossil fuels are still expected to comprise roughly 60% of all energy resources. Natural gas in one form or another is expected to play a big part in the supply chain. The technologies of companies such as Carbon Sciences may turn out to be important parts of the energy puzzle.
The two year chart of CABN.OB lends some technical direction to this trade.
The chart for CABN.OB shows it is in a downtrend. The latest announcements could add some impetus for an up move. However, the EU economic problems are about to be officially declared a recession. The Greeks are now rebelling against the austerity that has been forced on them. The French have recently elected a pro-growth president in Francois Hollande. Spain, with 24.44% unemployment, is increasingly resistant to austerity. Spanish 10-year bond yields are on the rise again. At this writing the yield stands at 6.344%. Not surprisingly Spain has declared it needs new growth instead of more austerity. Japan may soon re-enter a recession. Many are grousing about both China and Australia. With all of this in mind, it seems likely that a low volume, micro cap stock ($10.88 million in market cap) such as CABN.OB may fall in price in the near term. Still the company does seem to be making real progress toward a viable and profitable product. Plus the possible future of its marketplace may be huge. If you are interested in this technology, you could take a flier on this stock. Logically it is a sensible speculative investment of a very small amount of your portfolio. It could possibly fade into oblivion. However, it appears to have made legitimate progress toward a very viable product. Averaging in may be a good strategy. Some might prefer to wait until later this summer or fall to buy it. A down move in the overall market would likely move the stock down further. You should be aware that your investment could become a complete loss. However, it could very well become a ten-bagger or more just as quickly.
Good Luck Trading.
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in CABN.OB over the next 72 hours.