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Oilmen Looking at the Alternatives

There is a New Wind Blowing

Toby Carleton of Midland, Texas, spent over 50 years in the oil business.

Along the way, Carleton held a number of important industry positions and served as AAPG president in 1994-95.

Today, he’s a director and part owner of a company that maintains and repairs large wind-power turbines, machines capable of producing a megawatt of electricity every hour.

Why did Carleton make the move to alternative energy?

“It’s part of the future,” he said simply.

President George W. Bush now apparently wants the United States to slash its dependence on oil imports, calling for a significant switch to alternative energy use.

Other experts see new energy as a necessary supplement to traditional, fossil-fuel energy sources. Growth in the oil-and-gas energy supply won’t come fast enough to keep pace with the world’s rapidly increasing demand, they say.

If we do live in a world where 15-20 percent of future energy use will be supplied by alternative sources, the oil industry itself may see a major transformation.

Steven Koonin, chief scientist for BP in London, looks for organic-feedstock biofuels to stretch the vehicle fuel supply.

And not in just a minor way.

Koonin said biofuels eventually could provide up to 30 percent of vehicle fuel consumption. But he also expects gasoline, diesel and other fossil fuels to be around for a long time to come.

“Liquid fuels are not going to disappear. The energy density is just too good,” Koonin said.

“One statistic I like to quote is that when you fill up your gas tank, you’re wielding 15 megawatts of power. That’s a lot,” he added.

There’s also a proven economic path to market and an established delivery infrastructure for hydrocarbon fuels.

“That value chain has been optimized for 150 years,” he noted, “and we’re pretty good at it.”

So Many Options

What Koonin foresees is a developing value chain for biofuels, based partly on better production methods, and partly on bioengineered plants that will contain more cellulosic material for processing.

He thinks those improvements will put biofuels within economic reach of fossil fuels.

“If we go to cellulosics and improve the efficiency (of processing), we can get down pretty close. It’s not a crazy thing to be doing,” he said.

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Toby Carleton of Midland, Texas, spent over 50 years in the oil business.

Along the way, Carleton held a number of important industry positions and served as AAPG president in 1994-95.

Today, he’s a director and part owner of a company that maintains and repairs large wind-power turbines, machines capable of producing a megawatt of electricity every hour.

Why did Carleton make the move to alternative energy?

“It’s part of the future,” he said simply.

President George W. Bush now apparently wants the United States to slash its dependence on oil imports, calling for a significant switch to alternative energy use.

Other experts see new energy as a necessary supplement to traditional, fossil-fuel energy sources. Growth in the oil-and-gas energy supply won’t come fast enough to keep pace with the world’s rapidly increasing demand, they say.

If we do live in a world where 15-20 percent of future energy use will be supplied by alternative sources, the oil industry itself may see a major transformation.

Steven Koonin, chief scientist for BP in London, looks for organic-feedstock biofuels to stretch the vehicle fuel supply.

And not in just a minor way.

Koonin said biofuels eventually could provide up to 30 percent of vehicle fuel consumption. But he also expects gasoline, diesel and other fossil fuels to be around for a long time to come.

“Liquid fuels are not going to disappear. The energy density is just too good,” Koonin said.

“One statistic I like to quote is that when you fill up your gas tank, you’re wielding 15 megawatts of power. That’s a lot,” he added.

There’s also a proven economic path to market and an established delivery infrastructure for hydrocarbon fuels.

“That value chain has been optimized for 150 years,” he noted, “and we’re pretty good at it.”

So Many Options

What Koonin foresees is a developing value chain for biofuels, based partly on better production methods, and partly on bioengineered plants that will contain more cellulosic material for processing.

He thinks those improvements will put biofuels within economic reach of fossil fuels.

“If we go to cellulosics and improve the efficiency (of processing), we can get down pretty close. It’s not a crazy thing to be doing,” he said.

Koonin divided future fuel needs into two areas: fuels for transportation, and fuels for power generation. Alternative energy sources can have a role in both areas, he observed.

“For power there are really only three things that matter, if you look at generation and heating. One is nuclear. The second is carbon sequestration -- not quite proven yet, but very plausible,” he said.

“The third, smaller in my opinion, is wind. And then you run out of these things that are in economic competition,” he noted.

In that picture, wind power has several advantages over nuclear. For example:

  • It’s readily available.
  • It’s clean.
  • It doesn’t require a billion-dollar reactor.
  • You don’t have to dispose of the waste wind.

Carleton estimated that 3,000 to 3,500 wind-powered turbines are operating within 150 miles of Midland.

It’s a promising development for his company, Global Wind Power Services, which also has worked on wind turbines in California, Iowa, Illinois, Tennessee, Colorado, Nebraska and Minnesota.

“We’re in the heart of the wind-power industry here in Midland, Texas,” Carleton said, “but we’ll service them wherever they are.”

Everyone Knows It’s Wind-y

Carleton got into the service business through a company buyout, when he decided to inject capital into a debt-ridden firm but realized he didn’t have enough cash to make it viable.

However, he found two investing partners -- also oilmen -- to join him in the venture.

“We went into the business thinking there’s a big future in it,” he said. “All of us have been in the energy business for more than 50 years, but that was fossil fuels.”

The company now has 11 employees, including Junior Yanez, a former wind-farm manager who serves as Global’s vice president for operations.

Yanez said the wind-energy business began to boom with the introduction of larger, more efficient second-generation turbines in 1998.

More durable and reliable turbines with microprocessor control appeared a few years later, making wind power an acceptable generation supplement for utilities.

“The more modern turbines came along in the third generation, which were able to produce the reliability that the out-takers were looking for,” Yanez said.

In 2005, the wind energy business grew by 35 percent, adding almost 2,500 megawatts of generating capacity and $3 billion worth of new equipment in 22 states, according to the American Wind Energy Association.

AWEA projects 2006 will be even better, with the industry adding up to 3,000 megawatts.

“Most of the wind farms going in today range from 40 to 120 megawatts with a pretty comprehensive agreement with a utility or out-taker,” Yanez said.

A typical new machine in the Midland area stands almost 290 feet tall and has a blade 110 to 130 feet long, Yanez said. Processors can control the pitch of the blade for wind direction and adjust turbine operation for wind conditions.

“What they really are is a big, giant robot, so they can do everything but fix themselves,” he noted.

In the United States, wind power still receives tax breaks to improve its competitive position.

“One thing that’s made it economic is that there’s an investment tax credit of 1.9 cents per kilowatt hour,” Carleton said. “That’s good for 10 years after it’s granted.”

Also, large turbines require winds in the range of at least 15 miles per hour to operate. Available wind power is proportional to the cube of wind speed, so production falls rapidly as wind speed declines.

And while a 50-megawatt wind farm can be built in less than six months, turbine production has not kept up with demand.

“The market is sold out until about 2008,” Yanez said. “That’s all the companies, like GE, Vestas, Mitsubishi -- all the major companies that produce wind turbines.”

Biofuels First Steps

Compared to wind power generation, biofuels production remains in its infancy.

In January, the journal Science published a review on the future of biofuels and biomaterials. It reflected the studies of a research team led by Art Ragauskas, as assistant professor in the School of Chemistry and Biochemistry at the Georgia Institute of Technology.

“If you look at where we are as a society, we take very few crops -- mostly corn and sugarcane -- and just use a portion of that for ethanol,” he said.

A better idea is to biorefine high-potential crops for a variety of end products, including biofuels, according to Ragauskas.

“The biorefinery is going to operate like an oil refinery,” he said. “You’re going to take out selected parts for selected applications.”

One common response to development of alternative energy sources is, “We tried all that in the early 1980s and it didn’t work.” This attitude truly irritates biochemists, who counter, “We haven’t been sitting on our hands for 25 years.”

A key idea in biorefining is that scientists can modify some plants to produce more mass for biofuel conversion. If that’s true, tomorrow’s genetically altered green plants will be much more useful than today’s crops.

“You should be able to bioengineer the plants to give you more biomass that’s amendable for processing into fuel,” Ragauskas said.

“And you’d do this in part by improving the efficiency of photosynthesis,” he added, because it’s not an especially efficient process.

A 2 percent increase in the efficiency of photosynthesis would create an “enormous” addition to plants’ usefulness for biofuels, he noted.

In biorefining, Ragauskas said, the food component of a plant would be captured first. Then any part of the plant that could be used for value-added chemicals would be recovered.

“Once you have those materials out, the rest of this biomass has to be targeted for biofuels,” he said.

Just as in standard refining, the leftover biomass would be fractionated for reduction. That can happen through either an enzymatic process or a chemical process, Ragauskas noted.

“In reality, I think the two processes will complement each other in the future,” he said.

After refining a plant’s biomass, even the irreducible residue can be put back into the energy-generation system, Ragauskas believes.

“That’s the part that you will probably gasify to get a syngas, and then use that for power generation or further processing for fuel,” he said.

Upward limits for biofuel production would be determined by the amount of biomass available from the genetically altered plants, and the amount of plant material that can be harvested.

“How much biomass do we have to leave on the land to protect the productivity of the soil? I think most people agree that we can’t just strip the land,” Ragauskas said.

Looking at the future development of biorefining, he sees “a multifaceted time frame. What we’re living now is the first generation of biorefineries.”

In five to 10 years, he expects to see a variety of bioengineered plants much more amenable for processing into biofuels.

For instance, plants could be modified to produce the enzymes useful in biorefining, he said.

Like wind-generated electricity, current production of biofuel benefits from government subsidies. Eventually, Ragauskas expects biorefining to become economic without subsidies.

“I think in the end it has to be,” he said. “If you take a longer view, we only have a fixed amount of fuel and our usage continues to go up ... Biofuels will supplement the wedge between the two.”

Koonin sees a future where private vehicles are fuel-electric hybrids, with biofuels a significant contributor to power.

“Hybrid biofuels are where we’re going to end up, I think, probably plug-in hybrids,” he projected.

In that vision, the hybrid owner would recharge the vehicle’s batteries overnight for an electric-power range of 30 miles or so.

If the daily commute is less than 30 miles, no fuel would be used, Koonin said. Overall vehicle fuel efficiency could top 100 miles per gallon.

Looking ahead 20 years, can the United States really reduce its need for imported oil by two-thirds? Can Sweden stop using oil completely?

Development of alternative power sources faces many challenges, making some goals appear out of reach.

Ragauskas had a thought along those lines.

“If you asked 10 years ago, ‘Can you have a remote-controlled rover on Mars?’” he noted, “people would have said, ‘It’s impossible.’”

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