Posts

Arctic Leaf

Ruminations on oil donations, foreign nations and replacement fuels

/in , /by

The “Old Gray Lady,” The New York Times, did it again….its recent article indicating the extent of government funds from foreign countries supporting so-called independent think tanks and universities in the U.S. was enlightening and was also clearly in the public interest. Most of us policy wonks suspected or knew what the Times indicated on September 7. “More than a dozen prominent Washington research groups have received tens of millions of dollars from foreign governments in recent years while pushing United States government officials to adopt policies that often reflect the donors’ priorities…” The money is transforming the once-staid, think-tank world into a muscular arm of foreign government’s lobbying in Washington. And it has set off troubling questions about intellectual freedom — some scholars say they have been pressured to reach conclusions friendly to the government that is financing the research.” In this context, NATO, European, Middle East and Asian nations (e.g., Norway, Germany, Qatar, Saudi Arabia, United Arab Emirates, Japan, etc.) have been visible funders according to the Times and other media..

Before readers become holier than thou about the perception of perversion in foreign governments that link their support to what they want done regarding research and lobbying (implicit, if not explicit), they should know that the grant system in the U.S., in general, is not free of, at times, donor efforts to influence and/or sometimes pressure, whether it involves foreign governments, all levels of government in the U.S, business or foundation grants. Both have been and will remain the way of doing business.

I suspect attempts to influence or pressure research institutions or scholars are sometimes worse in social science research than in the sciences or engineering, where data, analysis and results can often claim at least some visible and quantifiable correlation or causation relationships. A donor’s ideological commitments also may predetermine and lessen the need for donors to try to negotiate the outcomes of grants or gifts. Not many liberal academics will apply for research money from the Koch Family Foundations, not many conservatives will likely go to the George Soros Open Society Foundations (OSF) for money.

Life is complicated for donors and recipients. Free speech and the free flow of ideas are embedded in the U.S. creed and the nation’s constitution. Truth in advertising in research grants and their products, a mythological spin-off, is often muted by the overwhelming influence and importance of money and the need for it, in light of fund shortages. However, the American public, for the most part, cannot easily separate the respected status of the Brookings Institution, the University of California, the Center For Global Development, the Center for Strategic and International Studies, etc. from their willingness to accept what seem clearly donor advocacy grants and subsequently to participate in what appears, to many, to be advocacy research and lobbying. The involved leaders, not always the researchers, of recipient institutions will deny the fact that research money sometimes comes with a price concerning legal, moral and often spoken words in grantor testimonials or contracts concerning obligations to search for the truth and increase wisdom concerning policy and program options.

Oil and oil-related companies and Middle Eastern nations seem now to be among the biggest givers and perhaps receive the biggest “take back” benefits. They fund schools and centers as well as analyses in and at major universities and independent think tanks, both within and outside universities. They have also funded “independent” scholars, chairs and specific RFPs (Request for Proposals) describing general and sometimes relatively specific areas of energy or transportation and fuel-related research. Significant oil and foreign money for policy-related research is also funded through third-party groups, which often mask the source of donations. Donors, understandably, expect benefits from supported research — at least consistency with and, in some cases, advocacy for their economic, social welfare and environmental objectives.

Perhaps one of the more egregious relationships concerning policy or program research involved the Coordinating Research Council (CRC), generally a mouthpiece of and also funded by the oil and automotive industry. Its relatively recent study debunking of E15 reflected the views of their sponsors — again the oil and auto industries. It indicated that E15 significantly harmed engines of many vehicle classes. The study was legitimately criticized by the EPA and others concerning methodology and content. Indeed, it and its implications concerning use of E15, was refuted in part or whole by the EPA’s more extensive analyses, by the National Renewable Energy Laboratory (NREL) and by other respected groups and individuals, some even associated with the auto industry. CRC’s efforts stimulated analyses and similar findings by groups like AAA— again based on even weaker methodology and unknown funding (likely mostly membership dues). Critics have pointed to AAA’s tenuous policy links to members and its long-time support by and of the auto and oil industries. Remember, more cars result in more gasoline use and increased ownership secures more AAA memberships.

Forget the legitimacy or illegitimacy of the proponents and critics of research concerning E15, or for that matter E85. At most times, policy choices and behavior are not based on perfection concerning data and analysis.

What concerns me the most is the predominance of oil and its friends’ money and the lack of transparency concerning funding sources and grant and gift requirements or constraints — both informal and formal.

Like the Times, I am also concerned about the dividing line between education and lobbying concerning grants and gifts provided by oil companies and, foreign nations. Lobbyists are required to register as such. Most think tanks and universities do not see themselves as lobbyists and do not register.

Industry, some foundation and even government-supported research grants sometime come with strings attached. Even if they didn’t, the results of paid research into complex issues are generally not conclusive and can be helpful in stimulating dialogue, if it’s matched by research initiatives funded by donors with different perceptions. Bad, or mediocre research funded by advocates, like speech, shouldn’t be countered by censorship, but by efforts to execute better research and by initiatives to provide to policymakers and the public with countervailing views and analysis to generate dialogue and debate.

I am not a purist. There is no chance in hell that the basic system of what I call advocacy grants and gifts now in existence will end. But public policymakers should insist on transparency as to funding sources and research methodology. Key advocacy studies likely to affect public sentiment and decision maker views concerning replacement fuels and gasoline should be granted, at least some form of even informal refereed reviews. If I could figure out an easy way to do it, I would define alternatives that would provide some reasonable equivalency concerning research funding. They would assure Americans that all key replacement fuel options are examined fully and are compared to gasoline. The research on replacement fuels should not be submerged by foreign nation or internal U.S. oil interest funding. But I don’t get paid enough nor am I smart enough to think this one through, at least until the next column. Maybe you can help me? Paraphrasing my favorite oil scholar, Socrates, unexamined studies funded without independent review, only by the oil industry or its Middle East friends and colleagues, are often not worth having or debating. Peace.

Arctic Leaf

Oregon’s gas prices the most expensive in the lower 48

Source: https://www.google.com/url?rct=j&sa=t&url=http://www.oregonlive.com/business/index.ssf/2014/08/oregons_gas_prices_3rd_most_ex_1.html&ct=ga&cd=CAAYDTIaZjkyZmRiOGI4YWQyMDc3Mjpjb206ZW46VVM&usg=AFQjCNHiTdid0PfkitO8t3kT1QcPnWUGiA
/in , , /by

Our rank: Oregon’s gas prices are third most expensive in the nation for the second week in a row. Only Hawaii ($4.30) and Alaska ($4.06) are more expensive, making Oregon’s prices the most expensive in the 48 contiguous states.

 

Arctic Leaf

Utah grapples with toxic water from oil and gas industry

Source: https://www.google.com/url?rct=j&sa=t&url=http://www.sltrib.com/sltrib/news/58298470-78/danish-flats-ponds-company.html.csp&ct=ga&cd=CAAYDzIaZjkyZmRiOGI4YWQyMDc3Mjpjb206ZW46VVM&usg=AFQjCNGXkQG2jHfiZJ08HK8poJiS4H0tHQ
/in , , /by

A massive stream of wastewater tainted with hydrocarbons has been flowing into Utah from oil and gas mining on Colorado’s West Slope. Evaporation ponds used to process the contaminated water in Grand County have released tons of toxic chemicals into the air since April 2008.

Arctic Leaf

Paul Harvey, the rest of the news and natural gas

/in , /by

Paul Harvey was a conservative icon in radio news during the mid to end of the 20th century. While I often differed with the substance of his commentary, he was a welcome travel partner when driving, particularly on a long trip. What I liked most about him was that he generally articulated his views without being malicious, and his voice was just wonderful. He sounded like a symphonic rap musician, using iambic pentameter.

One of Harvey’s favorite phrases was here’s “the rest of the story.” Remembering it, gives me a wonderful opening for this column.

This week there were several optimistic articles on natural gas growth this past week . One article in particular caught my eye. The piece described the expanded, but still relatively low, market penetration of natural gas as a transportation fuel. Given the cost and environmental benefits of natural gas, I was pleased to read the content and see the numbers and quotations. But in Paul Harvey’s terms it did not tell “the rest of the story”!

Yes, natural gas is making inroads into the trucking industry, even among buyers of new cars, asserts the article. “The boom in natural gas production in the U.S. has ignited a revolution in the auto sector that could reshape the way Americans fuel their vehicles, market participants and analysts said in a week-long special on FOX Business.” ClearView Energy Partners, the Newport Beach, California company that is building fuel stations along major interstate trucking corridors, will likely facilitate the growth of natural gas as a fuel in trucks. It will provide one of the missing pieces that have impeded natural gas’ popularity — fear of running out of fuel. “About 25% of the truck market could convert to natural gas by 2020, according to a report by Citigroup…eight in 10 new trucks Waste Management brought in 2012 were powered by natural gas.” Your friendly bus driver’s bus is increasingly likely to run on natural gas.

“Only a tenth of a percent of natural gas consumed in U.S. last year was used for fuel in vehicles, according to the Energy Department. Of the more than 15.2 million natural gas vehicles on roads across the globe, [only] about 120,000 are in the U.S.” Natural gas clearly hasn’t taken off yet as a transportation fuel in the U.S. Kevin Book, ClearView’s managing director of research indicates that, “I think you look at locomotives, also a very interesting and potentially large market, and also some of the marine applications before you start talking about smaller passenger cars.” I suspect his negative perceptions of natural gas as a competitive fuel in cars stems from the present costs of CNG passenger vehicles and the present absence of CNG fuel stations — a possible temporary problem if ClearView’s commitment to develop a natural gas highway could extend to private automobiles. We have had many successful freedom movements in this country. There would be only relatively marginal costs to extend the capacity of the natural gas highway’s fuel stations to include CNG availability for all consumers of natural gas vehicles and to assure availability of natural gas derivative fuels like ethanol. If you build it, many of the 17 million FFVs now on the road will come and more will follow, given what’s presently on the (near term) horizon.

Here is more of “the rest of the story,” à la Paul Harvey. One of the most innovative programs to stimulate the use of natural gas, CNG, was initiated by Gov. Hickenlooper and Gov. Fallin. Under their nonpartisan umbrella, 22 states have agreed to replace older cars, when they are due to retire, with CNG cars. Their commitment will create a large pool of CNG purchases over the next few years. Detroit has agreed to work with the states and both the governors and carmakers want to use the effort to produce a less expensive CNG car for American households.

But there is more! Two companies, Coskata, Inc. and Celanese have had success in converting natural gas to ethanol and are both striving to commercialize and define strategies to market their product. If they are successful, other companies will follow in light of historical “copycat capitalism.” The result will be a fuel that will be environmentally better and clearly cheaper than gasoline. The result will also be increased demand for fuels like E85, which will generate consumer purchases of FFVs and the conversion of existing, older cars. It may also open up the pockets of investors concerning the support for future E85 pumps. If ethanol becomes popular because of price and environmental objectives, can methanol be far behind (excuse me, Percy)? Freedom to choose what you drive and what fuel you use on the high and bi ways of this nation would be consistent with the American way and creed.

Arctic Leaf

Refinery issues cause gas prices to rise

Source: https://www.google.com/url?rct=j&sa=t&url=http://wane.com/2014/08/11/refinery-issues-cause-gas-prices-to-rise/&ct=ga&cd=CAAYAzIaMWVkY2JkYzVjYTU3YzU0OTpjb206ZW46VVM&usg=AFQjCNGfXnKGpC8t7ZDhpo5AFr3Ns6Ymlg
/in , , /by

Average retail gasoline prices in Fort Wayne have risen 11.1 cents per gallon in the past week, averaging $3.53 a gallon Sunday, Augus t10, 2014 according to GasBuddy’s daily survey of 201 gas outlets in Fort Wayne. This compares with the national average that has fallen 1.7 cents per gallon in the last week to $3.47 a gallon, according to gasoline price website GasBuddy.com which powers wane.com’s Gas Gauge.

Arctic Leaf

Innovation in oil & gas — it ain’t over yet

/in , /by

To read the newspapers these days, you’d think that all the innovation in energy is involved in bringing down the cost of solar panels or building even bigger blades for windmills. But innovation still continues apace in oil and gas, both in pulling them out of the ground and in finding new ways to use them.

“We haven’t been giving the big oil companies enough credit,” said Dominic Basulto in The Washington Post. “ Sure, we may see their print ads or watch as they tout their accomplishments on TV, but deep down, many of us believe that the brightest minds have moved on to something new in energy innovation. But that’s not true.”

That’s important because if we’re going to use our abundant natural gas supplies to wean ourselves off of foreign oil, we’re going to have to be sure the current superabundance of natural gas isn’t just a flash in the pan. Moreover, we’re going to need innovation in making the transition to methane-based liquid alcohol fuels easier as well.

As most people have heard by now, even our best technologies can’t extract more than about 10-20% out of an oil or gas reservoir from the earth. Simply doubling that rate would give us access to huge, new quantities of domestic fuels.

There’s also a concern that fracking wells will have a much shorter lifespan than traditional gas and oil wells. Then there’s all that natural gas being flared off in the Bakken. Ending that conspicuous form of waste will require some new technology.

All these problems are being tackled through innovation, however, and that’s what Basulto is talking about.

Although everybody knows about fracking — the technology of forcing sand and water into the rock to break it up — few realize that the real novelty that makes up the current upturn in production possible is horizontal drilling, which allows access to entire geological strata without making the territory look like a pincushion.

“Today, drilling rigs are so good that they can punch holes in the earth that are two miles deep, turn the drill bit 90 degrees, drill another two miles horizontally, and arrive within a few inches of the target,” said Robert Bryce, author of “Smaller, Faster, Lighter, Denser, Cheaper,” a book about innovation in the energy industry. But horizontal drilling hasn’t stood still. ExxonMobil has developed an “extended reach” technology that can push outward several miles further deep in the earth. “Extended reach reduces our environmental footprint and in offshore applications will limit our presence in the marine environment,” says the company’s website. It may have been developments like this that prompted President Obama to give a green light to exploration off the Atlantic Coast from Delaware to Florida last month.

The same innovations are occurring with natural gas fracking. Innovators have made an improvement called “sleeve technology” that surrounds the drill bit and allows highly accurate placement of stimulation treatments. The result is that wells can be drilled twice as fast as a few years ago, at a lower cost. With increased precision in both drilling and fracturing, wells are being made more productive as well. Erika Johnsen on Hot Air said, “Data from the Energy Information Administration’s Drilling and Production Report shows that a Marcellus Shale well completed by a rig in April 2014 can be expected to yield over 6 million cubic feet of natural gas per day (Mcf/d) more than a well completed by that rig in that formation in 2007.” That’s a huge improvement in the space of seven short years.

All this is good news for the effort of substituting natural gas-based ethanol or methanol for foreign oil in our cars. After all, one of the fundamental considerations is that there will be enough natural gas around to keep the price reasonable. With so many competing proposals for employing natural gas — electrical generation, the industrial revival, LNG exports, etc. — it’s crucial that we keep expanding production.

So it’s encouraging to hear the news from Clean Energy Fuels, T. Boone Pickens’ baby, which has been building a “CNG Highway” across the country to service long-haul tractor-trailers. CEF has just completed the first leg of this nationwide network, connecting Los Angeles and Houston.

But much of the nation still lies outside the reach of natural gas pipelines and CEF is figuring out a way to serve them, as well. Last month the company opened a filling station in Pembroke, New Hampshire that will be served by a “virtual pipeline” of high-tech tractor-trailers making round-the-clock deliveries. This will allow the station to pump 10 million gasoline-gallon-equivalents (GGE), twice the volume of CEF’s largest existing station. More important, it will open up large areas of the country that have not had access to CNG. This natural gas-based substitute will sell for 30% less than gasoline.

Technology never stands still. Sometimes it forces us to give up things that have become familiar or even seemingly permanent. But as Robert Bryce said, the new technology is usually “faster, smaller, lighter, denser and cheaper.” And in the case of methane-based liquid fuels, it will mean freeing ourselves from foreign oil as well.

Arctic Leaf

Is E85 the Solution to the Ethanol Debate?

/in , /by

Professor Bruce Babcock, of the Center for Agriculture and Rural Development at Iowa State University, believes he has a simple solution to the corn ethanol mandate problem – encourage people to fill their tank with fuel that is 85 percent ethanol instead of the current 10 percent.

“There may be a few good reason for cutting back on our consumption of corn ethanol,” says Babcock, who holds the Cargill Endowed Chair for Energy Economics. “But the reason the EPA is giving sure isn’t one of them.”

In case you haven’t been following, the Farm Belt is in an uproar over Environmental Protection Agency’s recent decision to cut back on the ethanol mandate from 14.4 billion gallons to somewhere around 13 billion for 2014. Iowa Senator Chuck Grassley blames “special interests” – meaning the oil companies – while Governor Terry Brandstat has talked darkly about a “war on corn.”

But dissatisfaction with the corn ethanol mandate extends well beyond the oil companies and the refineries. In December a coalition of liberals and conservatives – led by California Democrat Diane Feinstein and Oklahoma Republican Tom Coburn – introduced a bill to do away with the corn mandate altogether. “I strongly support requiring a shift to low-carbon advanced biofuel,” said Feinstein, “but corn ethanol mandate is simply bad policy,” “This misguided policy has cost taxpayers billions of dollars, increased fuel prices and made our food more expensive,” added Coburn.  “The time has come to end it.”

What’s the problem?  Well, the mandate – adopted by Congress in 2007 at the behest of President George Bush, Jr. – has fallen out of sync with the “blend wall” – the theoretical 10 percent mark where ethanol starts harming car engines. The mandate pushed up to 14.2 billion gallons last year while gasoline consumption actually dropped to 135 billion gallons last year from 142 billion gallons in 2007, pushing it way past the 10 percent benchmark.

Faced with this dilemma, refiners were forced to buy “credits” in the form of “renewable identification numbers (RINS),” which give them bookkeeping credit for consuming ethanol. But the pressure on the market pushed the price of RINs from pennies per gallon to $1.40 last August, pushing up the price of gasoline. Hence the rebellion and President Obama’s apparent instructions to the EPA to cool it on the mandate for 2014.

Professor Babcock says this is all a result of the artificial barrier limiting ethanol content to 10 percent. “E85 [a blend that is 85 percent ethanol] is selling all over Iowa at 15 percent less than gasoline,” says Babcock, who is originally from southern California. “That actually makes it a little more expensive than gasoline because you only get 80 percent of the energy.  But last August E85 was selling 25 percent below gasoline and it was a bargain.  The notion that cars can’t tolerate mixes of more than 10 percent ethanol is purely fictional.”

The 10 percent blend wall is based on the premise that putting more ethanol in your tank can harm your engine. Several years ago the auto companies have announced they will not honor warrantees on older cars that use more than 10 percent ethanol. The EPA has approved E15 (15 percent ethanol) for cars built after 2001, even doing elaborate tests to prove it could work, but no one has paid much attention. “The automakers say, `We didn’t build those older cars for E15 and we don’t want them running on E15,’” says Babcock.  “As far as they’re concerned, that’s the end of it.”

Without much fanfare, however, both Ford and GM are now manufacturing close to half their cars for “flex-fuel” – capable of burning any mix of gasoline and ethanol – or even possibly methanol, which has not been tested yet. “There’s a little embossed insignia on the back of the car but it’s easy to miss,” says Babcock.  “There are now 17 million flex-fuel cars on the road, although most people who have them don’t even realize it.”

Adjusting older vehicles to flex-fuel isn’t that difficult, either.  On the oldest models, it involves only replacing a few rubber fuel lines with aluminum, which a good mechanic could do it for less than $200 – if it weren’t illegal.  On newer models it requires only an adjustment to the software.  New flex-fuel cars sell for the exact same price as ordinary gasoline vehicles.  “GM has done a really good job of figuring out flex-fuel technology,” says Babcock.  “All their trucks are now designed for it. Chrysler is coming around as well but the Japanese cars have stayed away from it.  They’re putting all their bets of hybrids, hydrogen and electric vehicles.  They’re not at all interested in biofuels.”

Babcock’s proposal, outlined in a paper released earlier this month, is for the EPA to sanction E85 so it can start selling somewhere else besides Iowa, where ethanol remains popular and corn is aplenty. “It just doesn’t make sense to have all the stations concentrated in the Midwest,” says Babcock. “The real place for these cars should be on the East and West Coasts.”

Who would pay for upgrading all these stations to handle E85?  Babcock’s answer is the oil refineries. “The cost would be about $130,000 per station or 20 cents for each additional gallon they could expect to sell,” he says.  “If the price of RINs becomes too high, the refiners will have to do something.  People call me naïve to think they will spend all that money building new pumps but they’re already done it in several instances. I’m not some wide-eyed academic economist.”

But the refineries do have another option and that is to go to Congress and the President and insist that the mandate be lowered – which is what they’ve just done. And with a rebellion against ethanol brewing in the non-farm states, it isn’t likely the mandate will be reinstated any time soon – at least until the Presidential candidates start trooping to Iowa again.  On the other hand, Babcock’s proposal for approving E85 so that the 17 million flex-fuel cars already on the road can start using it makes perfect sense.

At this point, the “blend wall” may more of a mental barrier than a physical one. Once we break through it, ethanol, methanol and a lot of other things become feasible.

Arctic Leaf

Who Says Cars Have to Fill a Parking Space?

/in , /by

You’ve seen them zipping around city streets or squeezed into some illegal-looking space between a normal car and a fire hydrant.  At first you might have thought they were some kind of joke. Who would drive such a thing?  But the new mini-electrics are catching on and may be on the way to revolutionizing urban driving.

There is now a whole menu of them – the Chevrolet Spark, the MINI E, the Toyota IQ, the Fiat 500. Oddly, many of them are available only in California. That seems like a mismatch because they’re obviously better suited for the densely populated cities of the Northeast than California freeways. But those are the vagaries of state incentives and government mandates.

Most of them have a highly limited range.  125 miles is good and some are as low as 75. (A regular gas-powered vehicle can go 400 miles on a full tank.)  But they’re a niche model, obviously suited for running around town and finding a parking space in the vehicle-choked precincts of places like New York City. They can get up to the equivalent of 125 miles per gallon and with some newer accessories don’t take up to seven hours to recharge. Most important, they are getting down into a price range where they are accessible. Leasing prices are impressive (some of them are only available by lease) and with the incentives that the Golden State is offering, people in California can say they are getting a really good deal.

Here’ a list of some of the contenders:

  • Chevrolet Spark.  Originally produced as the Daewood Matiz by GM’s Korean division, the all-electric Spark went on sale in California and Oregon in 2013.  The car is a 146-inch-long four-door hatchback that sells for $27,000.  With a $7,500 federal tax credit and a $2,500 California rebate, however, it comes in at well below $20,000. The Spark can be leased for $199 a month. With an optional connector, it can be charged up to 80 percent in 20 minutes.
  • Fiat 500e.  An electric version of a car that has been sold in Europe since the 1950s, the 500e went on sale in California last year, selling 645 units. Range is barely 100 miles but it gets the equivalent of 116 mpg. The car is priced at $32,000.  Fiat says it will be available in several more states in 2014.
  • Chrysler’s Smart Fortwo. The Smart Fortwo is a model that looks like you could fold it up in your back pocket or park it in your living room. Manufactured in France, it is barely eight feet long. It sells everywhere in the United States. Previously built for gasoline and diesel, the new all-electric model sells for only $12,000 and leases for $99 a month. You’re starting to see them more and more on the streets of New York City.
  • Toyota Scion IQ. Positioned as a direct competitor to the Fortwo, Toyota’s “city car” sold as a 3-cylinder gasoline engine until the electric version was introduced last year.  Estimated range is only 50 miles with a three-hour recharge, so it’s really limited to city driving. The price is high – $35,000 – and right now it’s only available for fleet purchases and car share programs. The first 30 units were bought by the University of California at Irvine.
  • Mitsubishi i-MIEV EV.  Introduced in Japan in 2008 and soon sold almost everywhere but in the United States, the “i” version was finally brought to these shores in 2011, a slightly larger version with some additional features.  The American version has a range of only 62 miles but was ranked by the EPA as the most fuel-efficient car in America until surpassed by the Honda Fit EV in 2012. It sells for $23,000.
  • Honda Fit EV. Still only available on a lease basis, the Fit EV goes for $259 a month. Introduced only in California and Oregon in 2011, it is now available in New York, New Jersey, Maryland, Massachusetts, Connecticut and Rhode Island as well. The car only has an 80-mile range but is highly fuel efficient.

Getting people to accept the proposition of driving around city streets in something that looks like it could be sold on the floor of FAO Schwarz, of course, is an entirely different matter. In test driving a city car for The New York Times, Jim Motavalli reports a neighbor commenting, “It’s adorable, but I’m afraid it would be crushed by a Suburban.” The idea of weaving in and out of traffic in what amounts to a tin can is certainly not for everyone. But electric vehicles have lots of torque at the lower end of the spectrum and can be easily maneuvered. Plus if nothing else, they are loaded with safety features.

To anyone familiar with the dense urban streets of Athens or Buenos Aires, city cars would be a familiar sight. And of course the more there are of them, the less dangerous driving becomes. The progress of mini-cars is slow but you’re seeing more and more of them. In the end, they may revolutionize urban driving.

Arctic Leaf

There’s Gold in Them Thar’ Flares

/in , /by

Walter Breidenstein may be the only CEO in America who still answers the company phone himself. If his operation is still something of a shoestring, it’s because he’s spent four years trying to duel with perhaps the most formidable foe in the country, the oil companies.

“I’ve been trying to get into North Dakota for four years to show them there’s a way to make money by stopping flaring,” says the 48-year-old who started his entrepreneurial career at 15 by washing dishes. “The oil companies have done everything they can to keep me out of the state and the bureaucracy has pretty much goes along with them. The companies know that as soon as they acknowledge we’ve got a workable system here, they’d have to buy one of our rigs for every well in the state.”

North Dakota, in case you haven’t heard, has become one of the biggest wasters of natural gas in the world by flaring off $1 billion worth a year while producing carbon emissions equal to 1million automobiles.  But oil is what the drillers are after and, as it was in the early days of the oil industry; gas is regarded pretty much as a nuisance. The result is gas flares that make the whole state look like neighboring Minneapolis from outer space.

The flaring has generated a lot of negative publicity, environmentalists are up in arms and landowners have sued over lost royalties. The big guys are starting to move into the state. The New York Times ran an article this week about new pipeline construction, fertilizer factories and GE’s “CNG in a Box,” which will capture flared gas and sell it asnatural gas.

Breidenstein has a different idea.  “Somewhere around 2000 I started reading about methanol technology and realized it was a very undervalued resource,” he says. “Then I read George Olah’s The Methanol Economy in 2006 and that convinced me.  At Gas Technologies we’ve been trying to put Olah’s vision into practice.”

Gas Technologies has developed a $1.5 million portable unit that captures flared gas and converts it to methanol. “It’s a very accessible device,” says Breidenstein.  “You can move it around on a flatbed truck.”  The company ran a successful demonstration of a smaller unit at a Michigan oil well last fall but still hasn’t been able to break into North Dakota.

“The oil companies’ attitude is that money is no problem as long as they don’t have to spend it,” says Breidenstein.  “I’ve been in the business 25 years and I know where they’re coming from. But the problem is no one is forcing them to deal with flaring. And as long as they can keep throwing that stuff into the atmosphere for free, nobody’s going to look for a solution.”

You’d think with a billion dollars worth of natural gas being burning off into the atmosphere each year, though, there’d be some say to make money off it and that’s what frustrates Breidenstein.

“Our rig costs between $1 and $2 million dollars,” he says.  “But by capturing all the products of flared gas, you can make around $3500 per day.  That puts your payback at around three to four years.  But the oil companies don’t think that way. They won’t look at anything that goes out more than six months.

That puts things in the hands of state regulators and so far they have sided with the oil companies. “By statute, the oil companies are allowed to flare for a year it there’s no solution that’s economical,” says Alison Ritter, public information officer for the North Dakota Department of Mineral Resources.  “There’s nothing we can do to require them to buy from one of these boutique firms. Many oil companies have already committed their gas to pipeline companies and they can’t back out of those contracts.”  Still, the pipelines may not be built for years. “You have to understand, the Bakken Oil Field is 15,000 square miles, the size of West Virginia,” adds Ritter.  “It’s hard to service it all with infrastructure. We’re building pipelines as fast as we can.” Of 40 applications for flaring exemptions submitted this year the state has approved two and denied one, with the other 37 pending.  While they are pending, flaring goes on.

Of course if Gas Technologies were to start receiving orders right now, they’d be hard pressed to produce a half-dozen of them let alone the 500 that the state might require. “We’ve had talks with venture capitalists but if you’re not from Silicon Valley, they’re not interested,” says Breidenstein.  “But we’ve got a business model here and we know it can work.”

At least someone has taken notice. This year Crain’s Detroit Business rated Gas Technologies Number One in the state for innovative technology, ahead of 99 other contenders, including General Motors, Ford, Volkswagen, Whirlpool, Dow Chemical and the University of Michigan.  “Because the Walloon Lake company’s patents are potential game-changers, its patents rank high on the value meter with a score of 156.57 (anything over 100 is considered good),” said the editors.

It may not be long before others start noticing as well.