Author Archives: Anil

Vehicle Electrification – by Guest Blogger Anil

April 3, 2010

PhotobucketTransportation is a major cause of carbon emissions, so much so that it accounts to the north of 20 percent. The US, being at the forefront of industrial development, has its fair share in overall emissions. But the federal government in the states is pushing vehicle electrification in its bid to reduce dependence on foreign oil. President Obama has set a target of one million electric and plug-in hybrid vehicles on the road in the United States by 2015.

Steven Chu, Secretary of the US Department of Energy (DOE) claims, “Plug-in hybrid electric vehicles could revolutionize personal transportation and cut our dependence on foreign oil, not to mention give us cleaner air and less carbon pollution.” Read More »

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Shale Natural Gas vs. Renewable Energy — Continued — Guest Blogger Anil

March 17, 2010

PhotobucketHere’s more about shale natural gas:

Pundits in the US natural gas industry have revised supply estimates in last few years. In effect, some companies claim to be able to increase sustainable production over the long term.

Exxon is a big player in energy by any standards and the company’s halo effect is likely to bring about the positive change for the market participants including natural gas explorers, producers and transporters. The deal has overnight changed the sentiments for shale natural gas. In a recent deal, Carrizo Oil & Gas sold some of its stake in a Texas shale project to Sumitomo Corporation for US$15.7 million.
Onshore produced shale gas with lower transportation costs is likely to be used in electricity generating plants (replacing coal), heating and cooling our homes and power automobiles. However, it would be wrong to conclude that natural gas is the sure shot remedy to all our energy issues. ExxonMobil has some synergies to justify a 25 percent premium on XTO Energy. Besides being an oil giant, ExxonMobil has a chemical business and thus can use the feedstock in any of its chemical facilities.

In the US, shale gas resources are very large and relatively evenly distributed over several states unlike oil. Some analysts claim that the shale gas could contribute up to half of the US total gas production by 2020. Such a scenario would be highly satisfying for US with reduced dependence on not just foreign oil, but also from greener sources which are highly dependent on specific countries for key components (Read rare earth metals in China and lithium supplies in Bolivia).

A recent run-up in the stock prices of shale gas companies warrants for a caution. Like other times, it appears that Wall Street has underestimated the real cost of shale gas, and overestimated how fast its production can be expanded. Some studies point towards the overestimation of shale gas supplies by some companies. Also, there are some concerns regarding the long term viability of shale gas extraction in a lucrative manner.

Empirical data tells us that the production in shale formations drops off rapidly after two to three years of high production. However, it will be too early to write off this option only on the basis of high price, that also when a lot of other energy sources are getting federal grants for relatively expensive technologies. The competitive landscape is expected to become clear in next two to five years after the production of shale gas starts on a mass scale. In due course of time, we’ll come to know if all this hype is real or just fizz.

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Shale Natural Gas vs. Renewable Energy — Guest Blogger Anil

March 15, 2010

PhotobucketWhether it is head scratching politicians in Copenhagen or industry analysts predicting that peak oil has already happened in one of the past decades, the pointers aim towards a fundamental shift – the process of doing away with carbon-based fuels and looking for renewable sources of energy. The changes are partly triggered by environment concerns and largely by fear of all industrial progress achieved so far coming to a grinding halt.

Needless to say, renewables aren’t trouble-free. Two of the major renewable sources, wind and solar both cost more than gas or coal. Prices are coming down with advances in technology, but intermittent nature of the energy production from renewable sources adds another dimension to the problem and puts the total cost of generating one unit of energy way compared with the fossil fuels. Wind speed becomes optimum for operating turbines at the height of around 800 meters, but creating a tower that high isn’t feasible. Furthermore, current wind turbine installations require around ten times concrete and steel that is required for generating the same amount of nuclear power.

Similarly, solar energy isn’t always available and the solar energy to electricity conversion ratio is just around 25 percent in most efficient crystalline silicon technology. Thus, instead of just focusing on renewables, options including a blend of fossil fuels with renewable sources or less polluting fossil fuels are being considered.

And good-old fossils aren’t letting us down. Although considered most benign of the pack, natural gas only emits around half as much as coal. On a grid level, probably it makes more sense to promote natural gas instead of counting on renewable as instruments to knock coal. Natural gas turbines can accommodate round the clock electricity generation unlike renewable thus helping in bridging the supply and demand gaps.
Last year witnessed a rare confluence of triggers resulting in a year with one of the lowest economic activity since Second World War. Quite predictably (in the hindsight), manufacturers ran high inventory levels with significantly less demand. As it turned out, Solar panel prices nosedived and so did the prices of natural gas. Natural gas prices are still depressed with futures currently trading at around 60 percent below last year’s high in US.

However, looks like the sector is in for a makeover. Apparently, ExxonMobil is betting big on natural gas. The oil giant has made a US$31 billion bid to acquire US natural gas player XTO Energy in an all stock deal. In addition, the company will assume debts amounting to US$10 billion. XTO Energy is an unconventional natural gas play. XTO has rights to large reserves of natural gas in shale, coal bed methane and tightly compressed sands. Shale gas is natural gas contained in shales, a type of sedimentary rock with low porosities and permeability.
But the extraction of gas is both difficult and costly. The extraction process includes drilling of several thousand feet and horizontally drilling through the shale. The process also involves large quantities of water up to 2 -4 million gallon along with sand and chemicals to break open the rock and release the gas.

However, technological advancements such as formation fracturing and horizontal drilling have made it possible to extract gas in an economic manner. The market’s first brush with new technology came in 2004 when natural gas giant Range Resources drilled the first modern well in the Marcellus Shale, spread across Pennsylvania, Ohio and West Virginia.

More on this soon.

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Making bio-fuel from Algae – by Guest Blogger Anil – Continued

March 14, 2010

To continue the discussion on biofuels, there have been a number of oil companies who invested in algae fuel. The major ones are:

Exxon

The big oil firm was looking for projects with high returns to exploit its industry knowledge and infrastructure. Exxon chose bio-fuels and geothermal energy. The company invested US$600 million in the sector through a partnership with Synthetic Genomics. While the company acknowledges that the real challenge is to create economically viable algae bio-fuel in large volumes which will require significant advances in both science and engineering, it remains positive about the investment.

Solazyme

The company is leading in terms of producing algae fuel at scale. Solazyme was founded in 2003 with US$80 million in venture capital backing. The company had one of the first development deals with Chevron. The company now expects to be able to commercialize its technology by 2012-2013, with a production cost target at US$60 to US$80 per barrel.

Chevron

Chevron announced a collaborative research and development agreement with the DOE’s National Renewable Energy Laboratory (NREL) to study and advance technology to produce liquid transportation fuels using algae. Chevron and NREL scientists are trying to identify and develop algae strains that can be economically harvested and processed into finished transportation fuels.

Shell

The company established a joint venture with bio-fuel company HR Bio-Petroleum in 2007. The joint venture, named Cellana is investigating different strains of algae, by cultivating them in ponds and seeks to process the algae into oil that can be used as a raw material for fuel.

ConocoPhillips

In July 2008, ConocoPhillips signed a US$5 million, multi year research agreement with the Colorado Center for Bio-refining and Bio-fuels (CCBB). CCBB is a joint venture of the University of Colorado at Boulder, Colorado State, Colorado School of Mines and NREL. Together they plan to develop new ways to convert biomass into low carbon transportation fuels.

BP

In February 2007, BP joined hands with University of California, Berkeley, the Lawrence Berkeley National Laboratory (LBNL) and the University of Illinois at Urbana-Champaign. The parties are developing technology to produce bio-fuels, including those made from algae. The collaboration formed the Energy Biosciences Institute (EBI), and BP has announced to support the Institute with a ten-year, US$500 million grant.

OriginOil

The objective of OriginOil is to break down the barriers to algae’s development at all the levels, that is, from plant growth to oil separation. The company has developed a novel, patented process for growing algae that introduces all the inputs — carbon dioxide, water, and nutrients — on a micron level. The company uses electric pulses to break down the algae cells and extract the oil using simple gravitational force. This system could save 90% of the energy used by traditional methods.

There are a lot of companies like the ones mentioned above who have already invested or are ready to invest in algae fuel. It is interesting to see big oil funds diverting towards research and development of an upcoming technology.

However, what’s noteworthy is that this is not the first time the oil companies are trying to wash away their much maligned image. For a long time now, oil firms are aware of the need to diversify the business portfolio as the market is likely to bet on renewable energy sources. Conspiracy theorists would be quick to point the possibility of the investments being made with the intention of sabotaging the technology. Chevron is still best known as the killer of the electric car in some circles by taking exclusive control of Nickel Metal Hydride (NiMH) battery licensing rights back in 1990s.

The principles that hold true for big oil firms as investors are equally true for other investors. Since the technology is in development phase and still not prime for applications in real world, investors putting their money into algae stocks might be risking their investment. The companies operating in this space might be garnering some brownie points such as Valcent Products’ vertical farming technology was named one of the best Innovations of 2009 by Time Magazine last month, but when it comes to hardcore financial numbers, companies don’t have anything else to offer except hopes of hitting it big-time. Some eventually might end up making superior returns, but 9 out of 10 companies look set for a shakeout. Who knows, big guys like Bill Gates and Exxon Mobil might be losing out on their investments in algae startups.

The option of perfecting a technology with long gestation periods doesn’t come without the risks. Almost invariably, the markets have managed to figure out replacements for the materials or technologies crossing their fair value. Algae fuel technology is running this risk and the long gestation period is already evident to be irksome for some investors. Vinod Khosla, one of the prominent cleantech investors maintains that he hasn’t found even one viable algae technology plan after looking at many options. “The economics of algae don’t seem to work” Khosla adds. What happened with the corn based ethanol technologies is matter of public knowledge now. These are still hay days for the technology, but the billions pouring into solar and wind energy could prove to be fatal for algae.

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Making bio-fuel from Algae – by Guest Blogger Anil

March 13, 2010

With time ticking, the world is desperate to switch over to renewable sources of energy. And in a need to create one stable source of energy, all the options are being tried and tested. Thanks to the ongoing research, claims are being made of solutions replacing fossil fuels in one way or another.

In the light of the need to reduce in carbon emissions, there have been lot of attention to bio-fuels, especially those made from algae. There had been a flurry of venture capitalists (VCs), company investments and lots of attention from politics as well. Algae had been quite a promising option for preparing bio-fuels. It is assumed to be a low cost way to transform our current fleet so that they emit less carbon. The government is promoting algae fuel in a hope that it will cut down on the usage of mainstream fossil fuels.

Algae fuel production is a process in which during photosynthesis, algae and other photosynthetic organisms capture carbon dioxide and sunlight and convert it into oxygen and biomass. Up to 99% of the carbon dioxide in solution can be converted in large scale open pond systems.

Recently, the US Department of Energy (DOE) announced that they would offer up to US$85 million in funding for the development of algae based bio-fuels. The funding comes as a part of the funds released from the stimulus package, also known as the American Recovery and Reinvestment Act (ARRA). The objective of the fund is to bring together a group of leading algae and advanced bio-fuels. Scientists and engineers from both universities and private firms are attempting to bring new technologies and fuels to market in an accelerated time frame.

The technology has its share of criticism as well. Researchers argue that algae fuel would not reduce atmospheric carbon dioxide because CO2 taken out from the atmosphere by the algae is released when bio-fuels are burned. However, they eliminate the introduction of new CO2 by displacing fossil hydrocarbon fuels. Algae fuel, due to some high profile investments in the recent past, is now being given utmost attention. However, researchers warn that too much shouldn’t be read into the future as of now. Despite all the efforts, algae fuel lags behind in the economies of scale.

Tomorrow, we’ll look at what some of the major players are doing in this space.

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Is Wind Energy the Real Answer? – Guest Blogger Anil

March 2, 2010

In recent times, there has been a lot of attention being given to usage of green and clean energy. The governments of different nations are bent upon adoption of green and less polluting energy options. The International Energy Agency (IEA), the European Commission (EC) and other national governments back up the economic models of energy policy decisions. In the process, they tend to ignore the risks involved such as fuel price risk, supply risk and political risk.
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Tidal Energy – By Guest Blogger Anil – Continued

February 20, 2010

Continued from yesterday…..

Another drawback of tidal energy is the dependence on location for a successful project. As with most of other water based methods of energy generation, the location plays an essential role in harnessing the potential power source; site procurement costs gets high increasing the cost of the entire project.

Currently there are very few tidal power stations in the world. The largest and oldest is located in northern France at the La France river mouth estuary. The other sites suitable for the utilization of tidal power exist in many places around the world majorly in France, the United Kingdom, Former Soviet Union (now Russia), Canada, and the United States. Before setting up the plant, it is important to have a proper feasibility study.
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