Wednesday, January 28, 2009

Airlines testing biofuel

Various airlines are looking for an alternative to conventional aviation fuel. The quest is for a secure, stable fuel supply that is not dependent upon petroleum or subject to its price swings.

Airlines also are looking for a fuel that reduces greenhouse gas emissions. The production and burning of biofuels produce far lower emissions compared with fossil fuels.

Continental Airlines successfully completed a test flight on Jan. 7 using a 50:50 mix of conventional jet fuel and biofuel in one of two engines in a Boeing 737-800 jet.

For its demonstration, Continental burned biofuel made from jatropha and algae, both nonedible. Jatropha is a plant from central Africa. Oil is extracted from jatropha seeds.

“We’re looking at 5-year time horizons, not 20-year time horizons,” Continental Chief Executive Officer Larry Kellner told reporters. “This isn’t going to happen in 2010, but it needs to happen before 2020.”

Japan Airlines plans a Jan. 30 test flight using biofuel made from camelina, a plant that some call a weed and others call a grass.

Another option to conventional jet fuel is synthetic fuel. It’s already been tested and is available. Syntroleum Corp. of Tulsa supplied the US Air Force with synthetic fuel for flight testing starting in 2006 (OGJ, Feb. 26, 2007, p. 24).

Rentech Inc. recently announced the Air Force bought synthetic jet fuel from Rentech's plant in Commerce City, Colo., for performance testing and emissions testing in a turbine engine.

I’m uncertain what role the oil industry might play in the future production of aviation biofuel. Sasol Ltd. in South Africa produces synfuel using the Fischer-Tropsch process.

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Wednesday, January 21, 2009

Leasing opponents target air quality

Environmental groups seeking to block drilling on US federal land have turned air emissions into a litigation tactic. They are suing the Bureau of Land Management to either stop the BLM from issuing leasing or to void existing leases in various states.

The gist of these lawsuits is to question if BLM properly quantified greenhouse gas emissions from oil and gas operations and if BLM examined how GHGs contribute to global warming.

The Western Environmental Law Center and other groups made these claims in a recent lawsuit seeking to void or suspend BLM leases in New Mexico’s San Juan basin. Production has not started yet on those leases.

Oil and gas companies are well aware of air emissions. Industry spent an estimated $42.1 billion during 2000-06 on GHG emission mitigation technologies in the US and Canada, said a study prepared last year by T2 & Associates with support from the University of Texas Center for Energy Economics.

This expenditure represents 45% of the estimated $94.5 billion total invested by US companies and the federal government during this period, said the study from T2 & Associates and CEE.

The American Petroleum Institute said GHG emissions from upstream operations and processing can come from natural gas compressor engines. Methane can be vented from tanks, pneumatic devices, well completions and workovers, and gas dehydration and sweetening. Carbon dioxide can be vented from coalbed methane gas.

API members have assembled various techniques for estimating emissions, including the API Compendium of GHG Emission Estimation Methodologies. The compendium, which is more than 400 pages, outlines how to quantify GHG emissions from operations.

The state of New Mexico has measured and analyzed GHGs from oil and gas operations. The states of Colorado, Montana, and Wyoming also have prepared GHG inventories.

Wednesday, January 14, 2009

KNPC to launch sustainability report

The list of oil and gas companies that issue corporate social responsibility (CSR), or sustainability reports, is growing. These are nonfinancial reports issued for stakeholders, potential investors, and other interested parties.

Kuwait National Petroleum Co. announced plans for a 3-year program geared to produce a CSR. KNPC’s first draft is expected to be circulated in 2009. KNPC scheduled an interim report in July 2010 and a final CSR by August 2011.

Farouk Hussain Al-Zanki, KNPC chairman and managing director, calls his company “one of the most environmentally-conscious and socially aware companies in the region and across the wider world.” Ltd., a London company that tracks CSR reports, lists 290 oil and gas companies worldwide. Some of these are national oil companies.

During a quick online search of for existing CRS reports from Middle Eastern oil companies, I found Abu Dhabi Gas Industries Ltd. and Abu Dhabi National Oil Co. listed.

KNPC said it also plans “a more sophisticated web site to reflect the company’s commitment to making the priorities of people and planet as important as project.”
Recently, the Council of Arab Environmental Ministers awarded their 2008 “Cleanest Production” prize to KNPC.

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Wednesday, January 7, 2009

Cleantech investment continues

Despite diminished fourth quarter results, venture capital funding continues in the clean technology category, said the Cleantech Group of San Francisco.

During 2008, cleantech venture investments reached a record $8.4 billion despite the credit crisis and broadening recessions. That total accounted for investments in North America, Europe, China, and India.

It was the seventh consecutive year of growth. Nicholas Parker, Cleantech Group executive chairman, remains optimistic despite the financial crunch.

"Now, more than ever, clean technologies represent the biggest opportunities for job and wealth creation," he said. "In 2009, we're going to see a lot of progress in terms of imagining what's possible, and consensus around the need to really take it up a gear."

Cleantech reports solar accounted for $3.3 billion of the cleantech VC investment last year followed by biofuels at $904 million. Transportation (electric vehicles, advanced batteries, fuel cells) was $795 million, and wind accounted for $502 million.

I wonder if the pattern of spending by major oil companies on alternative energy follow the VC distributions. My hunch is that the majors collectively are spending more on biofuels than on solar. Any comments from industry are most welcome.

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