Intrepid Technology and Resources, Inc. (ITR) (OTC Bulletin Board: IESV), a renewable energy and soil amendment company, announced that it has signed its firstindustrial customer for renewable methane gas.
An industrial user near the company’s Whitesides plant has entered into a fixed price contract to purchase ITR’s biomethane to replace propane for the upcoming 2008 production campaign which is expected to be underway by the end of March.
This contract provides an attractive discount to the user over the cost of propane (currently at $25 per million BTU’s) resulting in savings to the industrial customer but at the same time providing a substantially better price to ITR than can be obtained through sales to traditional natural gas customers, ITR said.
Contractual terms were not released, but ITR said the agreement price will dramatically alter all financial models using previously released contracts and projections and greatly accelerate Intrepid’s emergence into profitability and as a major component in the burgeoning alternative energy industry.
By way of comparison, ITR’s current pipeline contract ties the price of gas to the Rocky Mountain Natural Gas Index, which is currently at about $8 per million BTU’s, or roughly one third the price of propane on an energy equivalent basis.
Industrial plants that do not have access to natural gas lines have historically been forced to use propane. While the price of natural gas has doubled in the last four years, propane prices have tripled. ITR said this put them in a unique position to offer an energy source alternative to these "stranded" industrial propane users due to the company’s investment in compressed natural gas trailers which allow it to truck to industrial facilities.
Jake Dustin, ITR President stated, "Our ability to market our product in this way is a direct benefit obtained through the extensive Gas Technology Institute testing we recently completed. We have conclusively demonstrated that we not only meet the FERC pipeline quality standards, but we are also able to pass the even more stringent and restrictive DOT gas transport standards. No one else has been able to clear that bar, making us the only biomethane producers in the country who can haul their product over the open road and deliver direct to customers. That’s a pretty significant advantage."
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