By Andy Serwer, Fortune senior editor
September 21 2006: 10:06 AM EDT
(Fortune Magazine) -- The recent discovery of a massive oilfield under the Gulf of Mexico appears to be a godsend for our crude-hungry country. It's not that simple, however. The new deep-water find is a pointed example of the way elevated oil and gas prices always seem to lead us to new technologies and, eventually, to renewed supplies. But one giant new gusher does nothing to get us off the gerbil wheel of ever more consumption creating ever more demand.
In case you missed it, in early September a consortium of Chevron (Charts), Devon Energy (Charts), and Norway's Statoil announced it had struck oil at the Jack No. 2 well, some 170 miles southwest of New Orleans and 29,000 feet down through water and earth. Geologists estimate that the area contains anywhere from three billion to 15 billion barrels.
If the find comes in at the upper end of that range - and of course the oil whisperers believe that will be the case - it will be the largest U.S. oilfield. (Alaska's Prudhoe Bay, where BP (Charts) recently had some pipeline problems, is currently the biggest, with some 12 billion barrels produced.) The deposits could increase U.S. reserves, now at about 29 billion barrels, by 50%. No wonder the strike added to the downward momentum on oil prices: Since peaking at $77 in mid-July, the cost of a barrel of crude has fallen below $64.
The massive find could boost Devon Energy
If you're looking for a market winner in this news, the best bet is the smallest member of the exploration group, Devon. With a market cap of nearly $30 billion, the Oklahoma driller is hardly a pipsqueak. But it's no $137 billion behemoth like Chevron either. (Devon owns 25% of the Jack project, Statoil has another 25%, and Chevron has 50%.)
The "Jack prospect" appears to validate the aggressive growth strategy of Devon's chairman, CEO, and co-founder J. Larry Nichols. For 35 years, he has focused on opportunistic acquisitions and ambitious drilling projects in the Gulf of Mexico.
"We're smiling, but we aren't celebrating yet," Nichols, 64, told me the other day. "We still need to spend a considerable sum of money and solve some technological issues. It will take years." Nichols couldn't even begin to tell me what the cost per barrel would be, but he insists that the project will be viable.
Before you go gaga for Devon, though, consider this: Yes, after spiking to an all-time high on the news, the stock has now fallen six bucks to $66. But it's up more than threefold over the past five years.
And then there's the real question: Just how big is the field? "Of course this discovery was great news for Devon," says Fadel Gheit, veteran Oppenheimer oil analyst. "But all we know now is that Devon has a fish on the line. Is it 500 pounds or five pounds? It's too early to tell."
New technology drills deeper
Just finding the oil represents a major technological breakthrough. More than five miles below the surface of the gulf, the wells will be the deepest on earth. Less than a decade ago this oil would have been considered untouchable.
But in 2000, new-generation drill ships were launched that allow for exploration in water up to 10,000 feet deep. And the seismic technology that penetrates the thick salt layer that covers this section of the gulf oilfields is also brand-new. "Before that technology you'd just have been drilling blind," says Nichols.
I happen to be reading Matthew Simmons's Twilight in the Desert, which describes how Saudi Arabia in particular and the world in general are running out of oil. This "peak theory" of oil (as in, the world has achieved peak production) would seem to be off base with the discovery of a 15 billion-barrel oilfield. And, as Nichols points out, oil alarmists have been sounding the same bell for decades.
But I'm not sure that we should be so quick to dismiss the peakists. At some point they will be right, and I believe it's important to act as if they already are. Pursuing petroleum at any cost overseas, and even domestically, exposes us to all sorts of risk and merely makes it easier to avoid the tough steps that could reduce our dependence on oil.
So congrats to Larry Nichols and his partners. I hope they get 15 billion barrels out of the gulf and more. But I'll be even more fired up when some engineer builds me an SUV that gets 100 miles to the gallon.
Watch Andy Serwer on CNN's American Morning and In the Money.
Monday, September 25, 2006
A reality check on plug-in hybrids
By Mark Clayton | Staff writer of The Christian Science Monitor
There are hybrid vehicles, whose gasoline/electric engines get great mileage. And then there are "plug-in" hybrids, only about a dozen of them in the US, which have been modified to store more electricity in beefier batteries by plugging in at night to the electricity grid.
Felix Kramer's "plug-in" Toyota Prius gets about double the mileage of a conventional Prius - about 100 miles per gallon. To him, it is the holy grail of cars, zapping pollution, oil imports, and high pump prices all at once.
So, should the whole country jump on the band wagon?
A groundbreaking study released last week sounds a cautionary note to the consumer. Plug-ins do burn less gasoline than regular hybrids - and gobs less than gasoline-only vehicles - but the high cost of their bigger battery packs will probably neutralize even significant savings at the pump, according to a report by the American Council for an Energy-Efficient America (ACEEE).
The study is the first to compare the performance - and the costs - of two hybrid technologies: the conventional versus the plug-in. It comes even as President Bush, energy-security hawks, and many environmentalists are talking up plug-in hybrid-electric vehicles (PHEVs). Dozens of cities, too, have signed on to promote a new Plug-in Partners program, and Toyota and other automakers say they're working on the technology.
"We want government policy based on reality, not overstating what [plug-in technology] can achieve and when," says report coauthor Therese Langer, ACEEE's transportation program director. "We don't want what happened with the hydrogen hype to happen with plug-in hybrids, too," she adds, referring to optimistic assessments of a timetable for shifting to a hydrogen-powered vehicle fleet.
Cleaner skies, in some places
Environmental impacts of PHEV technology, for instance, would vary dramatically by region - benefiting some areas but not others, the report found.
For a plug-in owner in California, where most electricity on the grid is generated by low-pollution facilities, driving a PHEV might cut emissions of carbon dioxide by one-third compared with driving a regular hybrid.
But if the same PHEV were charged in the Midwest, where coal-fired power plants supply the electricity, reduction of CO2 emissions would be nil. Nitrous-oxide emissions (which form smog) would fall slightly, but sulfur-dioxide emissions (which contribute to acid rain) would quadruple.
Still, environmental gains are possible.
Plug-ins would chop CO2 emissions by 15 percent on a national average, compared with conventional hybrid cars, the ACEEE report found. At the same time, the plug-in would emit 157 percent more sulfur-dioxide pollution. The need, plug-in proponents say, is for policies that would clean up the electricity grid so that PHEV technology supplies cleaner skies along with energy independence.
Pricey batteries
The cost of nickel-metal hybrid batteries may also limit the appeal of plug-in hybrids - at least in the short run.
Today's conventional hybrids command a premium price - $2,000 to $4,000 more than their nonhybrid counterparts - and their owners will recover that extra cost in about three years, assuming $3-a-gallon gasoline and 12,000 miles a year of driving, the report found.
For the plug-in, the payback period is longer - 6.4 years for a vehicle that can travel 40 miles exclusively on stored electricity - even under the more optimistic scenario in which battery prices fall sharply, the ACEEE report estimates.
Others, however, say that PHEV technology is crucial for America's energy security and that mass production will bring battery prices down.
"This is an important technology from an energy-security standpoint," says Gal Luft, executive director of the Institute for the Analysis of Global Security, a Washington-based energy-security think tank.
Even so, he agrees that expectations have become a bit overheated. "It's true this technology isn't going to be suitable for everyone," he says,
Felix Kramer's souped-up Prius
As for Mr. Kramer, who is apparently the first of about a dozen people nationwide to have acquired a plug-in hybrid Toyota Prius, the ACEEE report gives him not a moment's pause. Cofounder of CalCars.org, a group promoting plug-in technology, he keeps close track of his mileage and now commutes to work powered almost solely by stored electricity. On a recent 450-mile run, at mixed speeds and terrain, he got 125 miles to the gallon.
Now he's installed solar panels on his car's roof to charge the battery and lower his costs even further.
"In the real world, battery reliability [will improve] and costs are going to come down fast," he says. "My real-world experience tells me they're understating the benefit. I'm doing a lot better than the report."
Full HTML version of this story which may include photos, graphics, and related links
There are hybrid vehicles, whose gasoline/electric engines get great mileage. And then there are "plug-in" hybrids, only about a dozen of them in the US, which have been modified to store more electricity in beefier batteries by plugging in at night to the electricity grid.
Felix Kramer's "plug-in" Toyota Prius gets about double the mileage of a conventional Prius - about 100 miles per gallon. To him, it is the holy grail of cars, zapping pollution, oil imports, and high pump prices all at once.
So, should the whole country jump on the band wagon?
A groundbreaking study released last week sounds a cautionary note to the consumer. Plug-ins do burn less gasoline than regular hybrids - and gobs less than gasoline-only vehicles - but the high cost of their bigger battery packs will probably neutralize even significant savings at the pump, according to a report by the American Council for an Energy-Efficient America (ACEEE).
The study is the first to compare the performance - and the costs - of two hybrid technologies: the conventional versus the plug-in. It comes even as President Bush, energy-security hawks, and many environmentalists are talking up plug-in hybrid-electric vehicles (PHEVs). Dozens of cities, too, have signed on to promote a new Plug-in Partners program, and Toyota and other automakers say they're working on the technology.
"We want government policy based on reality, not overstating what [plug-in technology] can achieve and when," says report coauthor Therese Langer, ACEEE's transportation program director. "We don't want what happened with the hydrogen hype to happen with plug-in hybrids, too," she adds, referring to optimistic assessments of a timetable for shifting to a hydrogen-powered vehicle fleet.
Cleaner skies, in some places
Environmental impacts of PHEV technology, for instance, would vary dramatically by region - benefiting some areas but not others, the report found.
For a plug-in owner in California, where most electricity on the grid is generated by low-pollution facilities, driving a PHEV might cut emissions of carbon dioxide by one-third compared with driving a regular hybrid.
But if the same PHEV were charged in the Midwest, where coal-fired power plants supply the electricity, reduction of CO2 emissions would be nil. Nitrous-oxide emissions (which form smog) would fall slightly, but sulfur-dioxide emissions (which contribute to acid rain) would quadruple.
Still, environmental gains are possible.
Plug-ins would chop CO2 emissions by 15 percent on a national average, compared with conventional hybrid cars, the ACEEE report found. At the same time, the plug-in would emit 157 percent more sulfur-dioxide pollution. The need, plug-in proponents say, is for policies that would clean up the electricity grid so that PHEV technology supplies cleaner skies along with energy independence.
Pricey batteries
The cost of nickel-metal hybrid batteries may also limit the appeal of plug-in hybrids - at least in the short run.
Today's conventional hybrids command a premium price - $2,000 to $4,000 more than their nonhybrid counterparts - and their owners will recover that extra cost in about three years, assuming $3-a-gallon gasoline and 12,000 miles a year of driving, the report found.
For the plug-in, the payback period is longer - 6.4 years for a vehicle that can travel 40 miles exclusively on stored electricity - even under the more optimistic scenario in which battery prices fall sharply, the ACEEE report estimates.
Others, however, say that PHEV technology is crucial for America's energy security and that mass production will bring battery prices down.
"This is an important technology from an energy-security standpoint," says Gal Luft, executive director of the Institute for the Analysis of Global Security, a Washington-based energy-security think tank.
Even so, he agrees that expectations have become a bit overheated. "It's true this technology isn't going to be suitable for everyone," he says,
Felix Kramer's souped-up Prius
As for Mr. Kramer, who is apparently the first of about a dozen people nationwide to have acquired a plug-in hybrid Toyota Prius, the ACEEE report gives him not a moment's pause. Cofounder of CalCars.org, a group promoting plug-in technology, he keeps close track of his mileage and now commutes to work powered almost solely by stored electricity. On a recent 450-mile run, at mixed speeds and terrain, he got 125 miles to the gallon.
Now he's installed solar panels on his car's roof to charge the battery and lower his costs even further.
"In the real world, battery reliability [will improve] and costs are going to come down fast," he says. "My real-world experience tells me they're understating the benefit. I'm doing a lot better than the report."
Full HTML version of this story which may include photos, graphics, and related links
Saturday, September 23, 2006
Clinton Effort Reaps Pledges of $7.3 Billion in Global Aid
NY Times
By CELIA W. DUGGER
Published: September 23, 2006
A Sheraton hotel in Midtown Manhattan was the scene of feverish matchmaking over the past three days during Bill Clinton’s second annual gathering on global problems.
Only those who promised to do something concrete about poverty, disease, conflict or climate change were invited. The entry fee for aspiring philanthropists was $15,000. Hundreds lined up for the privilege.
In cafes, hallways and conference rooms, some of the many rich people Mr. Clinton has gotten to know over the years — and others he has never met or knows only as acquaintances — brainstormed with leaders of nonprofit groups, African health ministers and others who had their own plentiful ideas about how to put that wealth to work.
Kathy Sloane, a real estate broker with a cream-colored Chanel bag dangling on her arm, listened intently at workshops on global warming and religious and ethnic conflict.
A senior vice president of Brown Harris Stevens who helped the Clintons find their homes, she said Thursday that she was torn about which problem to tackle, but later settled on climate change, committing herself to work for energy conservation in the 150 high-rise buildings that her company manages in New York City.
In another packed session just down the hall, former President Jimmy Carter made the case for donations to support cheap treatments of the neglected tropical diseases he has long fought — and got some nibbles.
“I’m not kidding,” Mr. Carter, 81, said with an eager gleam in his eye. “You get the phone numbers to this table, I will call tomorrow.”
The star of this show was, of course, another snowy white-haired Democrat. Each time Mr. Clinton came to the stage of the grand ballroom, a sonorous, disembodied voice asked the crowd to welcome the 42nd president of the United States and inspiring movie theme music swelled at his approach.
Yesterday, Mr. Clinton triumphantly announced the results of this year’s Clinton Global Initiative from a circular stage in a hushed ballroom filled with more than 1,000 people.
“As of now, we have 215 commitments from two times that many people and the value, my staff swears, is $7.3 billion,” he said.
Many of the larger undertakings were announced with great fanfare by Mr. Clinton this week.
Sir Richard Branson, the British entrepreneur, had promised to invest an estimated $3 billion of his personal profits from airlines and a rail company over the next decade in renewable energy sources.
Various individuals, nonprofit groups and corporations — among them John and Jacque Weberg, who prospered as owners of a chain of Midwestern furniture stores, and Citigroup — cumulatively committed to spend over $1 billion on microfinance programs that provide poor people with loans, savings and insurance.
Mr. Clinton yesterday asked Google’s wealthy founders, Larry Page and Sergey Brin, who he said “barely looked old enough to shave,” to stand and accept his thanks for giving free advertising on their search engine to any nonprofit group or charity that made a commitment through the Clinton Global Initiative.
Mr. Clinton has sought to position “C.G.I.” as above the partisan fray. “All we tried to do is create a small piece of common ground in a contentious world,” he said.
On Wednesday, Mr. Clinton rubbed his chin contemplatively and listened attentively as Laura Bush described her husband’s accomplishments on global AIDS and malaria.
Senator Hillary Rodham Clinton of New York was the moderator at a panel yesterday morning on women’s role in development.
Former Secretary of State Colin L. Powell spoke at another of the panel discussions.
And yesterday afternoon, Mr. Clinton boasted about the odd couple supporting his own climate change program, which tries to help dozens of big cities buy products to reduce greenhouse gas emissions.
Barbra Streisand, the liberal singer and actress, donated $1 million and Rupert Murdoch, the conservative media mogul, gave $500,000.
“She says Rupert’s richer than her and should give more,” Mr. Clinton joked as Ms. Streisand went to the stage.
But there was an undercurrent of political ferment at the conference.
To fulfill the requirement that they do something to take part in the Clinton Global Initiative, David and Lisa U’Prichard of Philadelphia said they were looking for a way to help wealthy people calculate how much money they gained from the Bush administration’s tax cut and to encourage them give it away.
Mrs. U’Prichard said laughingly that her husband, now a venture capitalist, “worked in the evil pharmaceutical industry. And I made a bunch of money in the stock market.” She added, “All the guys who opposed the Bush tax cuts for the top 1 percent should donate away at least that much money.”
The speaker who brought down the house was Al Gore, who delivered an extemporaneous riff on global warming and the “planetary emergency.” He was the most explicitly political of the speakers and called for replacing payroll taxes with a tax on pollution. He argued that there are limits to what philanthropy and private undertakings can do.
“I have been extremely impressed at the role played by visionary C.E.O.’s who have provided important leadership in helping to organize the response for the climate crisis,” he said. “And I commend them. But I think it’s time for all of us to recognize that it is government that sets the rules within which business competes. And the rules that are currently in play now send the wrong signals.”
The audience left buzzing about whether Mr. Gore might join the presidential contest along with Mr. Clinton’s wife.
Asked about the speculation that followed his former vice president’s remarks, Mr. Clinton said yesterday morning that better public policies were needed, but there was still much that private action could accomplish.
He said he found it “immensely rewarding” to see Mr. Gore getting such a warm response, recalling the lunches they used to have when they were in office.
“He did me his little carbon chart thing — I know he believes this,” Mr. Clinton said as he strode into the ballroom. “People are always compelling when they follow their heart and head.”
By CELIA W. DUGGER
Published: September 23, 2006
A Sheraton hotel in Midtown Manhattan was the scene of feverish matchmaking over the past three days during Bill Clinton’s second annual gathering on global problems.
Only those who promised to do something concrete about poverty, disease, conflict or climate change were invited. The entry fee for aspiring philanthropists was $15,000. Hundreds lined up for the privilege.
In cafes, hallways and conference rooms, some of the many rich people Mr. Clinton has gotten to know over the years — and others he has never met or knows only as acquaintances — brainstormed with leaders of nonprofit groups, African health ministers and others who had their own plentiful ideas about how to put that wealth to work.
Kathy Sloane, a real estate broker with a cream-colored Chanel bag dangling on her arm, listened intently at workshops on global warming and religious and ethnic conflict.
A senior vice president of Brown Harris Stevens who helped the Clintons find their homes, she said Thursday that she was torn about which problem to tackle, but later settled on climate change, committing herself to work for energy conservation in the 150 high-rise buildings that her company manages in New York City.
In another packed session just down the hall, former President Jimmy Carter made the case for donations to support cheap treatments of the neglected tropical diseases he has long fought — and got some nibbles.
“I’m not kidding,” Mr. Carter, 81, said with an eager gleam in his eye. “You get the phone numbers to this table, I will call tomorrow.”
The star of this show was, of course, another snowy white-haired Democrat. Each time Mr. Clinton came to the stage of the grand ballroom, a sonorous, disembodied voice asked the crowd to welcome the 42nd president of the United States and inspiring movie theme music swelled at his approach.
Yesterday, Mr. Clinton triumphantly announced the results of this year’s Clinton Global Initiative from a circular stage in a hushed ballroom filled with more than 1,000 people.
“As of now, we have 215 commitments from two times that many people and the value, my staff swears, is $7.3 billion,” he said.
Many of the larger undertakings were announced with great fanfare by Mr. Clinton this week.
Sir Richard Branson, the British entrepreneur, had promised to invest an estimated $3 billion of his personal profits from airlines and a rail company over the next decade in renewable energy sources.
Various individuals, nonprofit groups and corporations — among them John and Jacque Weberg, who prospered as owners of a chain of Midwestern furniture stores, and Citigroup — cumulatively committed to spend over $1 billion on microfinance programs that provide poor people with loans, savings and insurance.
Mr. Clinton yesterday asked Google’s wealthy founders, Larry Page and Sergey Brin, who he said “barely looked old enough to shave,” to stand and accept his thanks for giving free advertising on their search engine to any nonprofit group or charity that made a commitment through the Clinton Global Initiative.
Mr. Clinton has sought to position “C.G.I.” as above the partisan fray. “All we tried to do is create a small piece of common ground in a contentious world,” he said.
On Wednesday, Mr. Clinton rubbed his chin contemplatively and listened attentively as Laura Bush described her husband’s accomplishments on global AIDS and malaria.
Senator Hillary Rodham Clinton of New York was the moderator at a panel yesterday morning on women’s role in development.
Former Secretary of State Colin L. Powell spoke at another of the panel discussions.
And yesterday afternoon, Mr. Clinton boasted about the odd couple supporting his own climate change program, which tries to help dozens of big cities buy products to reduce greenhouse gas emissions.
Barbra Streisand, the liberal singer and actress, donated $1 million and Rupert Murdoch, the conservative media mogul, gave $500,000.
“She says Rupert’s richer than her and should give more,” Mr. Clinton joked as Ms. Streisand went to the stage.
But there was an undercurrent of political ferment at the conference.
To fulfill the requirement that they do something to take part in the Clinton Global Initiative, David and Lisa U’Prichard of Philadelphia said they were looking for a way to help wealthy people calculate how much money they gained from the Bush administration’s tax cut and to encourage them give it away.
Mrs. U’Prichard said laughingly that her husband, now a venture capitalist, “worked in the evil pharmaceutical industry. And I made a bunch of money in the stock market.” She added, “All the guys who opposed the Bush tax cuts for the top 1 percent should donate away at least that much money.”
The speaker who brought down the house was Al Gore, who delivered an extemporaneous riff on global warming and the “planetary emergency.” He was the most explicitly political of the speakers and called for replacing payroll taxes with a tax on pollution. He argued that there are limits to what philanthropy and private undertakings can do.
“I have been extremely impressed at the role played by visionary C.E.O.’s who have provided important leadership in helping to organize the response for the climate crisis,” he said. “And I commend them. But I think it’s time for all of us to recognize that it is government that sets the rules within which business competes. And the rules that are currently in play now send the wrong signals.”
The audience left buzzing about whether Mr. Gore might join the presidential contest along with Mr. Clinton’s wife.
Asked about the speculation that followed his former vice president’s remarks, Mr. Clinton said yesterday morning that better public policies were needed, but there was still much that private action could accomplish.
He said he found it “immensely rewarding” to see Mr. Gore getting such a warm response, recalling the lunches they used to have when they were in office.
“He did me his little carbon chart thing — I know he believes this,” Mr. Clinton said as he strode into the ballroom. “People are always compelling when they follow their heart and head.”
Thursday, September 21, 2006
Sequencing of Poplar Genome Could Boost Biomass Production
A newly published research paper documents the first complete DNA analysis of a tree, which could yield new fast-growing trees that are bioengineered for energy production. The paper, published in the September 15th edition of the journal Science, summarizes the efforts of DOE's Joint Genome Institute, DOE's Oak Ridge National Laboratory, and 34 international institutions to analyze the genome of the black cottonwood, or Populus trichocarpa. The poplar's extraordinarily rapid growth, and its relatively compact genome size of 480 million nucleotide units (40 times smaller than the genome of pine), are among the many features that led researchers to target poplar as a model crop for biomass energy production. Poplar is only the third plant to date to have its genome completely sequenced and published. The project identified more than 45,000 protein-coding genes—more than any other organism sequenced to date—and 93 genes associated with the production of cellulose, hemicellulose, and lignin, the building blocks of plant cell walls. See the announcement from the Joint Genome Institute.
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