Nanosolar Update

Happy New Year to all. Still in the U.S. for a few more days, just checking in when I can.

I have been pretty interested lately in what Nanosolar is doing, so this is a timely update from The Guardian (which as I have mentioned before promotes this blog on the front page of their electronic edition):

Solar energy ‘revolution’ brings green power closer

Some excerpts:

The holy grail of renewable energy came a step closer yesterday as thousands of mass-produced wafer-thin solar cells printed on aluminium film rolled off a production line in California, heralding what British scientists called “a revolution” in generating electricity.

The solar panels produced by a Silicon Valley start-up company, Nanosolar, are radically different from the kind that European consumers are increasingly buying to generate power from their own roofs. Printed like a newspaper directly on to aluminium foil, they are flexible, light and, if you believe the company, expected to make it as cheap to produce electricity from sunlight as from coal.

At the moment solar electricity costs nearly three times as much as conventional electricity to generate, but Nanosolar’s developments are thought to have halved the price of producing conventional solar cells at a stroke.

“This is the world’s lowest-cost solar panel, which we believe will make us the first solar manufacturer capable of profitably selling solar panels at as little as 99 cents a watt,” said Roscheisen yesterday.

However, the company, which claims to lead the “third wave” of solar electricity, is notoriously secretive and has not answered questions about its panels’ efficiency or their durability. It is quite open about wanting to restrict access to the technology to give it a market advantage.

Jeremy Leggett, chief executive of Britain’s leading solar energy company, Solar Century, said that it would be “breathtaking” if the technology proved as efficient as projected by the company. “This is a revolution. But people are going to be amazed at other developments taking place in solar technologies. We will be thrilled if this technology is as efficient as the company says. It will not change the direction of solar power in itself. Spectacular improvements are also being made in other parts of the industry,” he said.

I really hope Nanosolar can pull this thing off. It would be a huge step forward.

Vinod Khosla on Plug-in Hybrids

I am in rural Oklahoma with dial-up access currently indicating 50.6 Kbps, but I wanted to get this out there. Odograph pointed this PHEV story out yesterday, but now Vinod Khosla has dropped by and left his comments in the story:

Vinod Khosla blows his credibility dissing plug-ins

Khosla’s comments (which I broke into paragraphs and corrected a couple of typos):

First, bloggers jump the gun without understanding the details of what one is saying. My paper on Biofuels Pathways (www.khoslaventures.com/resources.html ) explains the details.

The key question is how many people will pay $5000 more for a basic hybrid car that reduces carbon emissions by 25% (about the same as corn ethanol by the way) versus a flex-fuel car that costs no more and can reduce emissions by 75% or more when run on cellulosic biofuels?

A plug-in hybrid would cost $15000 more for the average buy and may reduce carbon emissions by a larger percentage today depending upon the location and source of your electricity (how much fossil fuel is used in your power grid). That might reach 100% reduction when we have all renewable power in a region and all cars are fully plug-in, but when might that happen?

Even if we could get 50% of the cars in the US to be hybrids, reducing emissions by an immaterial 10-15%, could we get people in India and China, the fastest growing car markets, to ante up this much additional money when the biggest thrust in volume cars in India is to reduce the cost of the whole car to $2500?

When can we get enough cars on the road? Battery costs will decline and performance increase but once one gets inside the technology one understands that the upside with known chemistries is limited to maybe 2-4x change in cost/performance - not nearly enough to change the hybrid or plug-in hybrid cost dynamic.

Having said that we are investing in batteries to try and enable breakthroughs that might change this. Other technologists are doing the same but the outcomes look very uncertain. We will need 50-80% of the car buyers to pay for these new technology automobiles to make a material difference.

When will that happen and at what cost point in the US? In the world? Add 10-15 years after new car sales to reach these percentages and you have a “low carbon fleet”! long term I still believe we can reach this laudable goals but probably not in the next decade or even two!

The only thing I will comment on at the moment is the assertion that a flex-fuel car run on cellulosic biofuels would reduce emissions by “75% or more.” That’s a projection, but one that nobody in the world has demonstrated. It is based on a number of assumptions that I believe will prove to be invalid once commercial production is underway. Yet it is stated here as a fact. I say that none of the cellulosic plants currently being built will reduce emissions by anywhere near 75%. There are multiple problems yet to be solved, some of which I discuss in the following essays:

Cellulosic Ethanol Reality Check

The Logistics Problem of Cellulosic Ethanol

Cellulosic Ethanol vs. Biomass Gasification

Of course if one is willing to hand-wave away these sorts of problems without extending the same courtesy to PHEVs, then over course cellulosic ethanol vehicles are going to look better.

Grading My 2007 Energy Resolutions

At the beginning of 2007, as I was preparing to move to Scotland, I made a number of resolutions:

My Energy Resolutions for 2007

I updated the story once in Walking the Talk.

Time to look back and see how I did.

1). I resolve to get the most fuel-efficient car I can find in Scotland.

While I could have found a more efficient car, I got a Nissan Micra which gets very good fuel efficiency. The cars that were more fuel efficient would not have fared well on my drive to work.

2). I resolve to search for a house that allows me to take public transport or my bike to work.

I consistently considered the public transport options as I looked for a house, but my work location made this difficult. I ended up getting a house not too far from work (4 miles) but there is no public transport available (unless I want to spend an hour and 2 bus changes getting to work). As far as being able to ride my bike to work, 4 miles would be a piece of cake most places. But on the winding, narrow country road I live on, it would have been a death wish. Most parts of Scotland are unfortunately not conducive to getting around by bike.

3). I resolve to place a very high priority on energy efficiency as I search for a new house.

Done. I rented a house with sky lights, a lot of natural lighting throughout, and a lot of southern exposure. During daylight hours, we never have to turn lights on in the house. Our gas and electric usage have both been very low since moving into our house.

4). I resolve to reduce the meat in my diet (it takes much more energy to produce meat than to produce vegetables).

Done. I have almost cut beef completely out of my diet (much to my father’s chagrin, since he raises cattle). I eat a fair amount of fish and chicken, but I probably eat three times as many vegetables as I did a year ago.

5). I resolve to support local farmers’ markets.

While I think there are some farmers’ markets in the downtown part of Aberdeen, I live in the country. So I never did encounter any farmers’ markets this year.

6). I resolve to continue instilling the importance of energy conservation into my family.

This has been a challenge. My daughter proclaims that she is an environmentalist, and then leaves lights, televisions, etc. on all the time and takes 20 minute showers. (She has been learning a lesson while we are on vacation in Oklahoma, because the hot water only lasts 10 minutes). I point out her energy usage, and ask her - tongue in cheek - why she hates the environment so much. It’s an uphill battle with kids (or adults, for that matter) who just can’t connect the dots of their energy usage to the big picture. But I persevere. I did get into composting this year, and I was able to get the kids involved in that. I think they understand the energy savings from doing this.

7). I resolve to get completely out of debt (easy, since my only debt is a mortgage).

Done. No debt at all.

8). I resolve to talk to at least 1 person a month about Peak Oil and/or the importance of living sustainably.

Done. High oil prices have made it very easy to talk with people about Peak Oil. This is especially true for someone working for an oil company, because oil and gas prices are one of the first things people ask me about. I have had Peak Oil conversations this year in the airport, on a bus, in Walmart, in a restaurant, at work (including one with a member of senior management), and sitting around the Christmas tree.

9). I resolve to preach conservation as something each one of us can do to stretch energy supplies and better prepare for Peak Oil.

Done. This resolution goes hand in hand with the previous resolution. Once people hear about Peak Oil, the first thing they ask is what can be done. I explain that the best thing you personally can do is to get out of debt and tailor your lifestyle toward using less energy. That way, if gas prices go to $5 or $10 a gallon, your budget will be less susceptible to these increases (acknowledging that it is impossible to completely inoculate yourself against escalating prices).

10). Not energy related, but I resolve to read at least 40 books in 2007. I read 48 in 2005 and 34 in 2006.

I fell way short on this one. Between my blog, The Oil Drum, starting a new job, an international relocation, and various other projects, something had to give. It was my reading time. I still managed to read 21, but that was far short of my goal. The five best books I read in 2007 were Neal Stephenson’s Cryptonomicon, Sylvia Nassar’s A Beautiful Mind, Nassim Nicholas Taleb’s The Black Swan, Robert Charles Wilson’s Spin, and Charles C. Mann’s 1491.

Final grade? I give myself a B+. I would give myself an A if I had found a location that would allow me to bike to work. I know it’s only 4 miles, but I chose to live instead.

For 2008, big changes are in store. More on this during Q1 of 2008.

My Top 10 Energy Stories of 2007

First, thanks to all who contributed ideas. You may have an entirely different opinion on the most important energy stories. Feel free to share it. Many of these stories were contributed by various readers. Comments by readers are italicized. If you want to know who wrote what, you can see the entire comment thread here.

Here are my Top 10 Energy Stories of 2007

1. Oil price soars as media becomes Peak Oil aware

One reason I felt pretty safe in making the $1,000 bet on oil prices is that a move from $60 - the price in January - to $100 - the price at which I would lose the bet - would be unprecedented. Of course a worldwide peak in oil production will also be unprecedented, and I expect oil prices to soar when that happens. While I still don’t think we have quite peaked, what did happen is that Peak Oil awareness really hit the mainstream in 2007. I started noticing a great many stories on Peak Oil (and quite a few on Peak Lite), especially following the ASPO Conference in October. This was right in the middle of the sharp run-up in prices. So I believe that a major factor contributing to the fast run-up was the sudden realization by a critical mass of people that Peak Oil is on top of us. In that case, the value of oil will be much higher.

In addition to record oil prices, back in the spring we saw record-high gasoline prices as a result of sustained, record-low gasoline inventories. Conditions are currently favoring new record-high gasoline prices in 2008.

2. Criticism of biofuels mounts

The bloom comes off the biofuel rose. European studies showed oil-palm biodiesel was actually worse for the environment due to tropical rainforest destruction, and US corn ethanol plants lost money because of overbuilding. A general biofuel backlash took root due to higher food prices and other side effects.

While I was criticizing corn ethanol before criticizing corn ethanol was cool, in 2007 the media started asking critical questions about water usage, pollution from industrial corn farming, and the impact of ethanol mandates on food prices.

3. The Chevy Volt is announced

GM has dedicated a full product team and allocated a plant for mass production — the first time in history an electric car has achieved such status.

Years after GM killed the electric car, they are bringing it back in the form of the Chevy Volt. I have long advocated the need for the electrification of transportation as one of the key elements in any Peak Oil mitigation plan. Therefore, I am very pleased to see GM making another effort at electric cars.

4. Nanosolar begins to deliver

Cost-effective solar power would be a very big silver BB in a Peak Oil mitigation plan. Nanosolar has the potential to deliver a game-changing thin-film photovoltaic technology. If you don’t know much about Nanosolar, check out this interview with their CEO: 10 Questions for Nanosolar CEO Martin Roscheisen

However, the potential for cost effective solar power also highlights the desperate need to tackle and solve the problem of energy storage for intermittent sources of energy like wind and solar power. Hopefully we will see some breakthroughs there in 2007.

5. LS9 starts up

For years I have dreamed of a microbe that eats garbage and excretes hydrocarbons. The beauty of such a system would be that the hydrocarbons would just phase out of solution, thus ensuring a low-energy purification step. If you think about it, the concept is not that far-fetched. The human body produces fats and fatty acids that are not too far-removed from the hydrocarbons that make up gasoline or diesel. There is no reason, in principle, that a microbe couldn’t be designed to do just that.

The difficulty lies in understanding the metabolic pathways well enough to modify them to produce the target molecule without severely compromising or killing the microbe. This is exactly what LS9 - the “Renewable Petroleum Company”, is attempting to do. And they have certainly assembled a team that just may pull it off.

6. Range Fuels breaks ground

In November Range Fuels - formerly Vinod Khosla’s Kergy venture - announced the groundbreaking of the first commercial “cellulosic” ethanol plant in the U.S. While I dispute the terminology (as I explained in this essay, it is actually a gasification process, which is not specific to cellulose), the process does have a chance to be a success in the long-run. Short-term, I believe they will remain highly dependent on generous subsidies because the capital costs for gasification processes are so high. But on down the road I think gasification makes a lot more sense than most fermentation processes.

One thing that I would have done differently would have been to produce diesel instead of ethanol. Once syngas is produced in a gasification step, there are many different products that can be made. It is not particularly efficient to produce ethanol in this process, but this is the kind of thing you end up with when the government is picking technology winners.

I do think Range Fuels has a high likelihood of becoming a significant technology. What little information is available certainly sounds promising, including the result from EBMUD that the Klepper gasifier was the most efficient.

7. First application for US nuclear plant in 30 years

NRG announces first application for US nuclear plant in 30 years:

NRG South Texas Nuclear

They propose to use GE’s Advanced Boiling Water Reactor technology.

My personal belief is that we are going to need nuclear power to continue making a significant contribution toward our electricity needs. This will be especially true if electric transport takes hold. Therefore, I think it is a very big story that 2007 saw the first application for a new U.S. nuclear plant in 30 years.

8. Carbon capture & sequestration moves forward

The FutureGen alliance announces the site for its demonstration plant on Tuesday, Dec. 18:

FutureGen Announcement

For those not familiar with it, FutureGen is a clean coal demonstration plant that will include carbon capture and sequestration. There are 4 finalist sites. Two in Illinois and two in Texas. The purpose of the project is to demonstrate commercial scale CCS technology.

FutureGen selected Mattoon, IL for their site.

FutureGen runs a combined cycle instead of the single cycle of existing coal plants. Combined cycle plants can achieve 50-60% thermal efficiency vs. the 33% typical of single cycle, so it’s quite possible FutureGen will deliver more kWh/ton of coal than existing plants.

9. Progress on next generation biofuels

The biofuel spotlight turned to the future. Dozens of startups focused on cellulosic ethanol, gasification and other next-gen processes competed for headlines with “green diesel”, butanol and other biofuel initiatives from the oil majors.

Most of the oil majors have taken a pass on the ethanol craze, but they are looking at other biofuels. 2007 saw announcements from BP that they would team with D1 Oils to produce biodiesel from jatropha; from ConocoPhillips that they would team with Tyson Foods to produce “green diesel” from waste animal fats; and that BP and Dupont would team up to produce bio-butanol. (I wrote a reality check on bio-butanol here).

10. US Navy funds Bussard Fusion

I think you have to include the US Navy funding Bussard Fusion in there:

http://www.defensenews.com/story.php?F=3139619&C=navwar

Bussard died a couple months ago. I had really given up on fusion, but his work actually appears to have a reasonable change to work. Hopefully with more funding his team will be able to make it work.

Yes, Dr. Bussard’s work will be carried on. First step is to construct WB-7 and replicate the results achieved with WB-6. Hopefully by the end of April 2008. If that works, then on to WB-8, and then an actual power generating plant.

The rest of the list (in no particular order), many of which could have easily been in the Top 10 list:

11. King Coal is still king

If we look for the stories that did not attract attention, surely one of the big ones has to be the continued surprising vitality of the international coal industry. King Coal has officially been dead for a long time. Who would have predicted that, 10 years after Kyoto, coal would once more be where it’s at, supplying more Btus to the world than ever before?

12. US Coal Plant cancellations, headlined by TXU cancelling 8 of 11 planned plants.

CO2, the primary driver behind the other half of our top 10 stories, has long played in Europe but will only achieve global influence by spreading through the US into the developing world. 2007’s coal plant cancellations marked the tipping point.

13. Al Gore wins Nobel Prize for work on Global Warming

Gore’s tireless efforts to educate the world on Global Warming was recognized with this year’s Nobel Peace Prize. Tiny Carthage, Tennessee now claims two Nobel Laureates. (Cordell Hull is the other).

14. Shell releases details of their shale oil process

Probably the most important energy announcement was Shell’s release of info on their proprietary in-situ process for generating oil from oil shale. Could open a whole new branch of the oil industry, put a cap on the price of oil from conventional fields, and thereby inject some realism into windy dreams. But it turns out that Shell has been working towards this for about a quarter of a century. “Incremental advances” indeed!

15. Resource nationalization grows

While the seizure of the assets of international oil companies by Hugo Chavez got the most press, many other countries are moving to nationalize their oil resources. Many other countries, and even states like Alaska, are also passing laws to increase their tax revenues from the extraction of oil. The U.S. needs to sit up and take notice, because this will further constrain supplies. We can’t continue to count on a steady supply of oil from countries who don’t like us, yet we lack the political will to reduce our dependence on these countries.

16. New efficiency record for silicon PV - 42.8 percent from sunlight at standard terrestrial conditions

http://www.physorg.com/news104501218.html

The highly efficient VHESC solar cell uses a novel lateral optical concentrating system that splits solar light into three different energy bins of high, medium and low, and directs them onto cells of various light sensitive materials to cover the solar spectrum. The system delivers variable concentrations to the different solar cell elements. The concentrator is stationary with a wide acceptance angle optical system that captures large amounts of light and eliminates the need for complicated tracking devices.

In a way I find the Nanosolar story more compelling since they are actually in commercial production now. Still, the prospect of high efficiency PV without using exotic and/or toxic materials gives me hope.

17. Manpower shortages in the energy sector

Big Oil’s Talent Hunt

From the article:

ConocoPhillips (COP) has grand plans. With demand for oil soaring, the company announced on Dec. 7 that it will boost its exploration and production budget by 8%, to $11 billion, a war chest intended to fund massive projects from Canada to China to the Caspian Sea.

But there’s a potential obstacle to the company’s vision: not enough people to get the work done. Half of Conoco’s employees are eligible for retirement within five years. Unless older workers can be replaced, Conoco’s expansion could be costlier and slower than planned. In an interview with BusinessWeek, CEO James J. Mulva said that the lack of talent is one of the most dangerous threats to his company’s long-term health. “People are a big concern,” he said.

This is not just a big oil story. Lack of workers is hitting all sectors of the energy industry. It seems that college students would rather be lawyers or investment bankers than scientists and engineers.

18. Texas surpassed California in wind energy

This signals a shift in wind from high-cost, subsidized eco-darling to cost-effective energy source. As the low-cost provider, wind now thrives in low bureaucracy states such as former oil-king Texas. Meanwhile high-regulation states such as California lag behind.

19. Potential PV improvement

Potential improvement on PV front

Transparent electrodes created from atom-thick carbon sheets could make solar cells and LCDs without depleting precious mineral resources, say researchers in Germany.

Solar cells, LCDs, and some other devices, must have transparent electrodes in parts of their designs to let light in or out. These electrodes are usually made from indium tin oxide (ITO) but experts calculate that there is only 10 years’ worth of indium left on the planet, with LCD panels consuming the majority of existing stocks.

“There is not enough indium on earth for the future development of devices using it,” says Linjie Zhi of the Max Planck Institute for Polymer Research in Mainz, Germany. “It is also not very stable, so you have to be careful during the fabrication process.”

20. Study analyzes off shore wind in US Northeast

http://www.physorg.com/news89650495.html

The wind resource off the Mid-Atlantic coast could supply the energy needs of nine states from Massachusetts to North Carolina, plus the District of Columbia–with enough left over to support a 50 percent increase in future energy demand–according to a study by researchers at the University of Delaware and Stanford University.

The study marks the first empirical analysis in the United States of a large-scale region’s potential offshore wind-energy supply using a model that links geophysics with wind-electric technology–and that defines where wind turbines at sea may be located in relation to water depth, geology and “exclusion zones” for bird flyways, shipping lanes and other uses.

21. A123Systems mass produces next generation lithium batteries

Shipping in DeWalt’s 2007 line of 36V cordless power tools, these new cells mark the 5th wave of rechargeable batteries (lead-acid, NiCad, NiMH, Li-ion and now advanced lithium). Advanced lithium chemistries from A123 and dozens of other vendors offer the possibility of cost-effective plug-in hybrids as well as applications in the electrical grid.

22. Electricity shortages, particularly in the developing world

Some appear to be related to climate change — droughts that require major hydro cutbacks. Some are clearly due to oil prices/supplies — poor countries that burn heavy diesel in their power plants and can’t afford it at the new world prices. Some are due to bad bets on fuel sources — natural gas generators put in, and the gas supply declining sooner than planned.

23. Solar thermal heats up

For decades the SEGS parabolic trough plant in California’s Mojave desert stood alone as the only large-scale CSP plant on earth, but 2007 saw a rebirth of this technology with the inauguration of the 64MW Nevada Solar One plant and construction of plants in Spain, Australia and elsewhere. California utilities have ordered up to 1750 MW of capacity from dish-Stirling purveyor Stirling Energy Systems and startups such as Ausra are pushing the price/performance barrier with linear Fresnel architectures.

24. First Solar market value hits $20 billion

As the first mass producer of non-silicon thin film PV, FSLR cashed in big-time in 2007. Their $1.40/W manufacturing cost is a huge competitive advantage, yielding fat profits and an eye-popping 200% growth rate. True to their name, First Solar got out of the gate first, but other non-Si players are still in the race. Companies using CIGS, including the much-hyped but yet-to-deliver Nanosolar, promise to break the $1/W barrier.

25. Cooper Pairs in insulators

http://www.aip.org/pnu/2007/split/849-1.html

One of the AIP’s top stories of the year, this discovery may well help us reach a better understanding of superconductivity and insulators both. Superconductivity is of course a holy grail in energy research, and while this discovery doesn’t directly lead to a room temp superconductor, it does add to the fundamental knowledge of material in the solid state.

26. Medvedev slated to take over from Putin

http://en.rian.ru/russia/20071217/92858987.html

Essentially Putin’s Russia will continue, and that has direct implication for all the fossil fuel industry in Asia, regarding everything from global warming to export control to defense postures. Putin’s Russia, one of an energy oligarchy, will continue to express those policies likely for a good portion of the 21st century.

27. Conditions in Iraq improve enough to get the oil industry back online

http://www.rigzone.com/news/article.asp?a_id=54099

Opening the possibility that Iraq just might return to a functioning member of OPEC has direct implications on the availability of oil for import around the world.

28. USAF test flight of transport aircraft C-17 using CTL synthetic fuel

http://www.enn.com/pollution/article/24117

This heralds the onset of CTL and likely portrays our (US) future over the next couple of decades.

29. And now, for my wildcat speculation of the most important news item:

Namibia: Expert Confident About Oil Reserves

Southwest Africa will turn out to be a major oil exporting region over the next couple of decades, slowing the decrease in available net exports of oil.

30. The response of the global economy to the large increase in oil prices

Most people would have probably assumed that $90 oil would have caused mayhem in the global economy a year or two ago. Yet the effect has been relatively muted. I think this says a lot about how effectively individuals, businesses (and hats off to alternative energy firms), and governments have responded to increasing oil prices over the long term. Oil now has a much smaller (I believe around 50%) impact per GDP than it did in the 1970’s in most of the big western economies, including the US.

31. Tesla troubles

A not-positive but nevertheless noteworthy story is Tesla Motors recent troubles with putting the final touches on its long-awaited car, particularly with the transmission failure and the management shuffling.

And I love this suggestion for 2008. What a great idea this would be:

My favorite energy story for 2008 would be — Congress recognizes they cannot pick winners, and instead sets up a multi-billion dollar X-Prize competition for the first three alternate energy sources to supply reliable commercial-scale power at costs competitive with fossils.

So those were the energy stories that I, or various readers thought were significant in 2007. Were there other significant stories that we missed?

Looking back at the list, many (most?) of the stories were not anticipated at the beginning of the year. So, who knows what 2008 will bring. Any thoughts?

Help Brainstorm the Top Energy Stories of 2007

While Platts has done a great job listing all of the major oil company stories of 2007, I am working on a Top 10 list for energy in general. I am about to be offline for a few days, so I thought this would be a good opportunity to gather input on the top energy stories of the year. My short (non-oil company) list of potential candidates would be Nanosolar, the Chevy Volt announcement, the LS9 start-up, the Range Fuels groundbreaking, the BP/D1 jatropha announcement, and the COP/Tyson green diesel announcement. Those are some that spring to my mind.

What else? I am struggling to remember any major developments in wind, tidal, or geothermal power. What about coal? Nuclear? Feel free to debate the list as well. I will check in later on next week and start crafting a post around the list.

Al Gore Makes Amends

Better late than never:

Gore makes Nashville home more ‘green’

NASHVILLE, Tennessee (AP) — Al Gore, who was criticized for high electric bills at his Tennessee mansion, has completed a host of improvements to make the home more energy efficient, and a building-industry group has praised the house as one of the nation’s most environmentally friendly.

The former vice president has installed solar panels, a rainwater-collection system and geothermal heating. He also replaced all incandescent lights with compact fluorescent or light-emitting diode bulbs — even on his Christmas tree.

“One of the things that is tremendously powerful about what the Gores have done is demonstrate that you can take a home that was a dog, an absolute energy pig, and do things to correct that,” Shinn said.

In February, a conservative think tank criticized Gore for using an average of 16,000 kilowatt hours a month for an average monthly bill of $1,206 in 2006. The typical Nashville home uses about 1,300 kilowatt hours a month.

Gore has said the criticism was unfair because the 10,000-square-foot mansion was undergoing extensive remodeling. He said this week that “global warming denier” groups were trying to discredit him because they don’t like the attention he has given to climate change.

“You’re going to have people try to attack the messenger in order to get at the message. They have not been able to succeed,” Gore told CNN from Norway, where he picked up the Nobel Peace Prize for his environmental work.

He still has pretty high electrical usage, but I grant that he probably has numerous people working out of his house:

Electricity usage at the home remains well above regional averages, but Gore’s power consumption decreased by 6,890 kilowatt hours, or 11 percent, between June and August, despite the heat wave.

Gore’s electric use increased again after he had to take his solar panels off-line in August so his new geothermal system could be integrated into the system. But his natural gas use has dropped 93 percent in the three months since the geothermal pump was activated.

At least he is trying to set an example.

Rank the Top 10 Oil Stories of 2007

While I intend to write a post covering the top energy stories of 2007, Platts is asking for reader input on the top oil industry stories of 2007:

The top 10 oil industry stories of 2007

A lot of the listed stories would make both lists. I list my Top 10 below that I submitted to Platts. The first few were easy, but I had a hard time picking between the last three or four.

My top 10 oil industry stories of 2007:

1. Oil soars, reaches close to $100 for WTI
2. Spare capacity dwindles, supply/demand balance tightens; Peak Oil theory gets more attention
3. Climate change rapidly moves up the list of the world’s concerns; US Senate votes for mandatory GHG emission limits
4. OPEC increases production by 500,000 b/d in November, rejects a further increase after that
5. Weakness in demand in developed countries more than offset by strength in developing nations, like China
6. Venezuela takes over former foreign-operated fields
7. Ethanol use soars in the US, but its price plunges
8. Cost pressures lead to some diverted refinery plans
9. WTI plunges below Brent in spring on buildup in Cushing inventories
10. Iraq production slowly begins to recover

I think by far the biggest stories were the supply/demand issues, oil prices, and the fact that the MSM “discovered” Peak Oil in 2007. Ethanol was a big story as well, but I would have put it differently. 2007 was the year that the realization of the downsides of corn ethanol finally reached critical mass. One other thing I think I would have listed among the stories was something around the Congressional hearings, and/or attempts to pass an energy bill.

So, let the debate begin. What else should be on there? What do I have too high? Not high enough?

This Week in Petroleum 12-12-07

Updated: You would think if last week’s large inventory drop was due to fog-induced delays, all of that crude would show up this week. Not so, as another drop in crude inventories was recorded:

U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) dropped by 0.7 million barrels compared to the previous week. At 304.5 million barrels, U.S. crude oil inventories are in the upper half of the average range for this time of year. Total motor gasoline inventories increased by 1.6 million barrels last week, but are near the lower end of the average range. Both finished gasoline inventories and gasoline blending components inventories increased during this period. Distillate fuel inventories decreased by 0.8 million barrels, but are in the lower half of the average range for this time of year.

If gasoline inventories continue to improve, we may yet avoid $4 gasoline in the spring. But I still wouldn’t count on it. More from the report:

U.S. crude oil imports averaged nearly 10.1 million barrels per day last week, up 689,000 barrels per day from the previous week. Over the last four weeks, crude oil imports have averaged 9.9 million barrels per day, or 86 thousand barrels per day more than averaged over the same four-week period last year.

Well, on the other hand the sharp rise in crude imports would tend to support the fog story. Refinery utilization fell, which would help keep crude inventories up, but lower gasoline inventories:

U.S. crude oil refinery inputs averaged nearly 15.3 million barrels per day during the week ending December 7, down 172,000 barrels per day from the previous week’s average. Refineries operated at 88.8 percent of their operable capacity last week. Gasoline production moved higher compared to the previous week, averaging nearly 9.2 million barrels per day. Distillate fuel production fell last week, averaging 4.2 million barrels per day.

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Just as last week’s report was largely overshadowed by the OPEC meeting, this week’s report will come on the heels of the Fed’s announcement on interest rates. (Update: The Fed cut interest rates by a quarter point). Here are the expectations:

U.S. gasoline stockpiles probably rose for a fifth time last week, gaining 1.5 million barrels, based on the median estimate of 10 analysts surveyed by Bloomberg.

Supplies of distillates probably climbed 500,000 barrels, their second gain, while crude oil inventories probably rose 50,000 barrels after dropping 7.9 million barrels a week earlier when the Houston Ship Channel was shut by fog.

Investors will be more focused on the Fed announcement, Excel’s Waggoner said. While a quarter-point cut is a “foregone conclusion” there is a chance the bank may lower rates by a half point, which would weaken the dollar and may slow the decline in oil prices, he said.

I think that if the reason for last week’s large decline in crude inventories was due to delayed offloading of shipments because of the fog, we will probably see a larger increase than 50,000 barrels of crude this week.

However, next week’s report should be interesting, because on Monday an ice storm shut down the terminal at Cushing, Oklahoma - the delivery point for NYMEX crude:

NEW YORK, Dec 11 (Reuters) - The largest crude oil terminal at the delivery point for NYMEX crude oil futures at Cushing, Oklahoma, and two major pipelines at the hub were still shut Tuesday after an ice storm hit the area Monday, a spokesman for the terminal said.

Enbridge Energy Partners LP’s 16.7 million barrel crude oil terminal and the Spearhead and Ozark crude oil pipelines operated by parent company Enbridge Inc were shut Monday, Enbridge spokesman Larry Springer said.

“They went down about 1:00 (Central Time),” said Springer.

Spearhead transports 125,000 barrels per day (bpd) of crude oil from the Chicago area to Cushing. The Ozark line can carry approximately 200,000 bpd from Cushing to Wood River in southern Illinois.

Springer said that the crude oil terminal at the Cushing was also closed due to power outages.

I am all too familiar with the devastation that can be caused by Oklahoma ice storms. I have been through a couple of bad ones. Oil futures are rallying on the news.

Note: As I mentioned a couple of days ago, this is likely to be the last TWIP update from me for the next four weeks.

Pacific Ethanol Woes Continue

I have been a critic of Pacific Ethanol’s (PEIX) business model for a long time. I criticized it a year and a half ago in an article I wrote for Financial Sense, arguing that it would be very difficult for them to compete with Midwestern ethanol producers. Add in the excess ethanol capacity spawned by government subsidies, which in turn drove corn prices up and crushed ethanol margins, and I couldn’t see how Pacific Ethanol would consistently make money.

Today, they announced they were halting construction of their newest ethanol plant:

Pacific Ethanol Halts Plant Construction

NEW YORK (Associated Press) - Pacific Ethanol Inc. said Monday it has halted construction of an ethanol plant near Calipatria, Calif., because of weakened market fundamentals that have hurt the industry in recent months.

Ethanol prices have dropped because of oversupply as the industry expanded beyond demand. At the same time, prices for the product’s key feedstock, corn, have risen dramatically, squeezing profit margins further.

“Given current ethanol market conditions, we feel it is prudent and strategic to suspend construction until the market improves,” Chief Executive Neil Koehler said in a statement. He added that Pacific Ethanol is committed to completing the project and is moving ahead with construction of plants in Stockton, Calif., and Burley, Idaho.

Of course after every bit of bad news (and there has been a lot from them lately), there will be those who think this is a buying opportunity. Take this guy, for example. He was critical of an article I wrote about Bill Gates’ PEIX investment. He thought the plunge was a buying opportunity, and I was an idiot for not recognizing it. But if he acted on it, he is down over 40% since I wrote that article.

Remember, just because the share price had already fallen by 75%, that didn’t mean that it couldn’t fall farther. It could, and it did. And I still wouldn’t touch Pacific Ethanol, even though you might make some money on the volatility. I just don’t think they can be profitable long-term. They certainly don’t enjoy any kind of competitive advantage. They will continue to be, in my opinion, at a distinct competitive disadvantage.

Holiday Travel Plans and a Letter from a Reader

I will be traveling from December 16th until January 13th with intermittent Internet access. During this time, I hope to put up some posts covering the year in energy, my $1,000 bet on oil prices (which I think I will win by the skin of my teeth), finalize my ethanol FAQ, and take a look back at my resolutions for 2007. I probably won’t cover This Week in Petroleum during this time, as I am unlikely to be around a computer when the report comes out. I may also pull up some interesting mail from readers that I have gotten from time to time and post the exchange from a few of those.

In fact, I will go ahead and start off with one of those. I won’t post last names or e-mail addresses. This was an e-mail I received on 11-29-07.

Dear Mr. Rapier,

As one who is interested in “renewable” fuels, I came across your blog regarding “Ethanol: From Panacea to Pariah” on the WSJ. While my arguments differ from yours, I agree that ethanol from grain is not a long term solution.

My questions to you has to do with your comments: “The difficulty in producing ethanol from cellulose is probably an order of magnitude greater than it is for producing ethanol from corn. Therefore, it is highly unlikely that the growth curve for cellulosic ethanol production (presuming it is ever commercially viable) will rival that of grain ethanol.”

While not a chemical engineer (my late father-in-law was a professor emeritus in Chemical Engineering at Berkeley and I avoided the subject like the plague), I do have a MSME from Berkeley and became interested in producing alcohol from cellulose (specifically the piles of old newspapers we were accumulating) while I was at Bell Labs almost thirty years ago. When I realized that the process required using sulfuric acid in the preliminary process before fermentation and distillation, my interest quickly waned. As attention has grown in recent years, I’ve come to realize that the key to the success of the nascent cellulosic ethanol industry will be the identification of efficient and inexpensive catalysts (enzymes). Once development, I believe the industry will take off, and ethanol from cellulose will become a viable substitution for gasoline.

You more than most understand this missing link, so I am curious why you pose the weakness of cellulosic ethanol as ramp up issue rather than a breakthrough issue.

I would greatly appreciate your thoughts on this. My immediate interest has to do with identifying companies that may develop such breakthrough technology for investment purposes.

In the mid-seventies I remember: the gasoline crisis, my father-in-law talking about greenhouse gases and the end of fossil fuel based energy, my most revered mechanical engineering professor saying that the US would have a hydrogen based energy infrastructure before the turn of the century, and my fellow research assistants at the Lawrence Berkeley Lab proclaiming that the polysilicon based solar cells they were developing would make solar competitive within five years. These, along with my personal experience attempting to commercialize CNG in southern California have left me jaundiced to the notion that there will be significant changes to the energy status quo. However, cellulosic ethanol does make sense to me, although I’m no expert.

My last question is, where do you see energy situation going?

Thanks for you input.

Sincerely,

Glen
Long Beach, California

PS While in Scotland, I highly recommend a visit to Dunvegan Castle on the Isle of Skye (rest assured I don’t receive any kickbacks)

My response:

Hi Glen,

Don’t get me wrong, I haven’t written off cellulosic ethanol. In fact, I am working on a cellulosic project right now. (And I did my graduate school research on cellulosic ethanol). I think the current efforts are doomed: Transport a lot of biomass to a central location, convert a small fraction into a highly dilute ethanol mix, and then have to transport all that wet waste back offsite. I have written a number of articles on the severe logistical issues. I once did a calculation that showed it would take 850,000 mature trees a year to support a mid-sized cellulosic ethanol plant. You quickly conclude that this is not going to supply us with a lot of fuel.

There are several technologies that I think are promising. Renewable diesel (not biodiesel) either produced from biomass gasification or from hydrotreating plant oils and animal fats should do well. Electric transport, with electricity supplied from wind, solar, tidal, geothermal - and even coal and nuclear in the beginning - is to me a home run solution. And in tropical countries like Brazil, sugarcane ethanol makes a lot of sense. But cellulosic ethanol has been over-hyped at the moment. It has some serious issues. I am hoping that my current project will address them. We are already significantly better than the technology behind the 6 pilot plants that have been announced in the U.S. [although Range Fuels is really apples to oranges].

I think in the short-term, we may see a real energy squeeze. People will have to adopt more efficient lifestyles to buy us some time. Politicians have got to quit adopting pandering solutions that don’t really address the issues. It’s a sticky situation for them. The citizens need tough love, but they tend to vote out politicians who give it to them. So the politicians promise them cake and lollipops.

Cheers, Robert

This may give you some idea of why I took my e-mail address out of the side bar. I generally feel compelled to answer every e-mail, and it got to the point that I was answering e-mails for 2 or 3 hours a day. On top of that, I was trying to work, make time for family, and write blog posts. But, if I use some of these letters as blog posts, I can kill two birds.

As far as the cellulosic project I am involved with - that will come to light in 2008. I have been chomping at the bit to break this news for 6 months now, and hopefully I won’t have to wait too much longer. It will be the best cellulosic technology in the world, via a completely different approach from all the others.