Beach party

Gains in technology are accelerating. We live at the most technologically advanced time in human history. It should come as no surprise that as a society we have a strong belief in the ability of scientists and researchers to solve every problem humanity faces. What happens when they can’t?

Science has answers for most of our challenges, but not all. Advances in jet packs and drone technology indicate that at some stage in the not so distant future individual humans will fly. However, travel through time presents a barrier that we are presently unable to cross. Then there are the problems that can be solved theoretically, but not practically.

Green hydrogen appears to be a good example. Theoretically, using excess electrical energy produced at times of bright sunshine and strong wind to produce hydrogen, then using that hydrogen to produce electricity on dark, still days, is possible. However the recent abandonment of green hydrogen projects by key players here and around the world strongly indicates that the process is not financially feasible.

This leaves Australia in an energy hole. The Federal government’s national energy roadmap is based on a huge commitment to renewable energy generation, firmed by hydroelectricity and hydrogen. The largest hydro project, Snowy 2.0, is billions of dollars and years behind budget. There are concerns about whether it can be completed, given the operational difficulties. Electricity dispatch systems need to constantly balance demand and supply to remain stable. Without a firming agent or process, the government’s plan will not work.

There are only two immediately available sources of power that could plug this gap. They are coal and gas. While the economics and the science are clear, the politics of using oil or gas is highly charged. However, high energy bills are also a source of political friction, and adding in rolling black-outs during a scorching summer may shift the political needle.

The east coast of Australia appears the most vulnerable to electricity shortages as it’s coal and gas generation is retired without any viable relacements. There are still state based restrictions on gas exploration and mining in Victoria and New South Wales.

So, is there a gas company that has east coast (or Bass Strait) operations that could supply into any shortages, and reap the benefit of the higher prices that increased demand may bring? That has Cooper Basin operations, and potential kickers in West Australian gas, and shale production?

This is a daily chart of Beach Energy’s (BPT) share price. Note that the share price has bounced from the recent low to back above the $1.235 support level. Beach meets all of the conditions above, and most of its reserves are forecast to have ten years or less of production remaining, meaning investors are not paying for production off into the future.

These fundamental supply and demand factors are worth attention. More cautious traders may wait for a break above $1.335 as a sign that an uptrend is resuming. Investors may decide to buy now, with a stop loss below $1.235, looking for a test of highs around $1.75, then $1.90.