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Book Review: Oil on the Brain

Oil on the Brain: Petroleum's Long, Strange Trip to Your Tank by Lisa Margonelli

Oil on the Brain by Lisa Margonelli was recommended by Paul Sankey at the 2009 Energy Information Administration Conference as a book that provided great insight into the oil industry. I have had it on my list of books to read, and recently picked it up to read during my travels. I have been traveling a lot lately, and I like to read while I travel, so I knocked it out over the past couple of trips I have taken.

The premise of the book is that a person who doesn’t know much about the oil industry sets out to find out what it is really like on the inside. It reminded me in some ways of Crude World by Peter Maass (which I reviewed here). The biggest difference is that Margonelli was approaching the subject from a pretty basic starting point, and Maass had written quite a bit about the industry when he tackled Crude World.

I guess I never cease to be amazed by what people think the oil industry is like, and what it is really like. People seem to think that the oil industry is a bunch of guys in a smoke-filled room who conspire to set prices. To be honest, that’s probably the way I viewed the industry when I was growing up. And still, my first reaction to my cable bill going up is “Those greedy cable companies are ripping me off.” The big difference with the cable companies, though, is that their profits aren’t thrust in everyone’s faces at the end of every quarter. Every time oil prices do spike up and oil companies show nice profits, people do feel like they have been taken advantage of. But I digress a bit.

For this book, Margonelli embedded herself within various sectors of the oil industry. She spent time throughout the supply chain, hanging out at a gas station in California where she found that the owners made more money on candy and soda than they did on gasoline. She spent a day with a tanker truck driver and his dispatcher, and spent time in a refinery and on an oil rig. She even got inside the Strategic Petroleum Reserve, which is typically off limits to visitors. She traveled abroad to Chad, Venezuela, Nigeria, and even Iran to understand the world of oil and what is has meant to these regions.

Here were what I thought were some of Margonelli’s more interesting observations. She spoke a lot about the indirect costs of using oil. In talking about oil spills, she mentioned that her view of an oil spill had always been dominated by the Exxon Valdez. She had never connected these spills to her own fuel usage, but learned that drivers and boaters spill more oil every year than did the Exxon Valdez. The number she cited was 19 million gallons of oil products spilled each year in our waterways by boaters and auto drivers.

She wrote about the notion that oil companies are in a conspiracy to set prices. A jobber she spoke with – someone who has to buy fuel from the oil companies – said “There are eleven studies which show there isn’t a conspiracy. Chevron, Shell, Exxon – they hate each other. It’s like war daily. For them to collude is insanity, but people believe what they want to believe.”

On that topic, she noted an episode of hypocrisy displayed by Nancy Pelosi. One day in 2006 Pelosi told a group of school children that we hadn’t done enough to reduce our dependence on gasoline, and so demand was high and that’s why the price was high. Then she got in front of the cameras and she cited the conspiracy of big oil and the Republicans working for their interests. But as Margonelli noted, “the myth of conspiracy overwhelms reason, particularly when pump prices and oil company profits are high.” I think the lesson there is “If the talking point is working, keep pushing it.”

She met an old-time wildcatter named Michel Halbouty (now deceased) who complained that the country has not had a coherent energy policy in 30 years. He advocated more promotion of domestic energy exploration, and fears a slow slide into deindustrialization. He noted that the main problem is that “People. Don’t. Care.” As long as they can pull in and fill up, they just don’t care about energy policy.

In China, she met with someone within the government who was involved with energy policy. He noted that it would be a disaster for China to move toward an American way of life, but he says that cars are clearly there to stay in China. On GDP, Margonelli wrote that China requires 4 or 5 times as much energy as Japan per point of GDP. Finally, the minister commented that China needs “a bigger space to survive under U.S. hegemony.” On that point, she also spoke with a European analyst who said that U.S. hegemony is a part of China’s strategy; that if they can get the U.S. to bear the expense of maintaining the energy status quo, they will have the time and resources to retool their economy.

In the epilogue, Margonelli comments that there is no such thing as cheap gas; that there are hidden costs throughout the supply chain. But the population has come to expect cheap gas as a “grand bargain” with the government and the oil companies. When the price goes high, they look to the government to punish the oil companies so prices will come back down.

One weakness in the book is that it really didn’t address the question of depletion. It seemed to take at face value that oil will continue to be available and business will continue as normal for decades. However, I note that Margonelli was at the ASPO Conference this year (along with Peter Maas; I am sorry I missed that) so she got a heavy dose of peak oil information. Some very interesting comments by her can be found at this story covering the conference.

As one might expect, Margonelli emerged from her experience with a radically different view of how the oil industry works. I have to agree with Paul Sankey’s assessment that it does provide great insight into the industry, from a very basic starting point and with a balanced view. As one reviewer pointed out, it could have been titled “The Petro-economy for Dummies”, which is to say it is a book that is easily understood by those with zero knowledge of the industry. This book would be on my short list of books to recommend to people who want to know what the industry is really like.

November 13, 2009 Posted by | book review, China, energy policy, ExxonMobil, Lisa Margonelli, peter maass, Shell | 31 Comments

Merica Acquires Majority Stake in Choren

Today it was announced that my new company, Merica International, has acquired Shell’s stake in Choren Industries. This is something we have been actively pursuing for some time. This transaction gives Merica a great deal more flexibility than we had previously.

The primary reason for the acquisition is that it gives us freedom to pursue the projects we want to pursue. While I have the greatest respect for Shell, our interests obviously would not always align with theirs. We are first and foremost a bioenergy company, and that is not their core business.

Further, if Choren wanted to make any major capital expenditures, it hinged on getting Shell’s agreement. As Shell is in a major cost-cutting mode, a lot of the projects we want to pursue could have been potentially impacted. Shell Fischer-Tropsch technology will still be used in Choren’s Freiberg BTL facility, but future decision-making will be simplified.

Here are excerpts of the story from Reuters:

Shell sells stake in German biofuel firm Choren

HAMBURG, Nov 5 (Reuters) – Oil major Royal Dutch Shell has sold its shareholding in German second-generation biofuels company Choren, Choren said on Thursday.

Choren is building Germany’s first biofuels plant using new generations of non-food raw materials as feedstock and is likely to start initial commercial production in 2010.

Shell had sold its minority shareholding to other shareholders which comprise German vehicles groups Volkswagen and Daimler plus a consortium of investors largely from the Hamburg region, Choren said in a statement.

Merica is within that “consortium of investors”, and is in fact the majority shareholder of the company now.

November 6, 2009 Posted by | btl, Choren, Merica, Shell | 16 Comments

Oil Watchdog on Fuel from Algae

I have gotten out of the habit of visiting Oil Watchdog whenever I want a bit of energy-themed comic relief. They are so ‘over the top’ and transparent that it really hasn’t been necessary to debunk them. As I have documented before, on the one hand they accuse oil companies of not supporting alternative energy or donating any of their profits. Yet where oil companies are funding alternative energy and donating to colleges, they are accused of ‘greenwashing’ and attempting to control university research. You can see some of the articles I have written documenting their intellectual dishonesty and inconsistent ‘reporting’ here. As you can see, they will even take a rumor (“I absolutely can’t vouch for the truth of this story…”) and attempt to spread it.

While it has been six months since I have been there, I thought I would check in to see what kind of negative spin they would put on falling gas prices. I was expecting “it’s an attempt to control the election”, which seems to be a common theme during election years (even though the price also falls in non-election years). Instead, Judy Dugan was again proudly putting her ignorance on display:

Show us your algae!

I was reading up today on research about turning pond scum into biodiesel. One promising thread is that algae can be fed the carbon dioxide emitted by power plants, multiplying their oil production on a waste greenhouse gas. Algae may also thrive on ground garbage. It’s a concept that needs intensive, expensive research to prove if algae are an energy savior, a false promise, or something in between. Then I came across a paragraph in a Science Daily article from a few days ago that stopped me cold:

This was ‘above the fold.’ Below the fold, I knew without even looking what kind of story it must have been to stop Dugan cold. She had obviously made the shocking discovery that oil companies are involved in this research!

“Some of these pragmatic issues may have been tackled already by the various private companies, including oil industry giants Chevron and Shell, which are already researching algae fuel, but a published scientific report on these fundamentals will be a major benefit to other researchers looking into algae biofuel.”

Uh-oh! Time to put on the ‘Big Oil is greenwashing and trying to control our energy supplies’ hat:

If Big Oil is doing this research and keeping even interim results to itself, we can’t trust oil companies with anything surrounding our desperate need for a better energy future.

It’s the same reason that universities shouldn’t be taking big bucks from oil companies in return for letting the companies shroud research results in delay, secrecy and proprietary rights.

So, Dugan wants 1). Oil companies taxed into submission (previous posts); 2). Oil companies to put some of their ‘ill-gotten gains’ into research on new energy supplies; 3). But if they do, she wants the results to be publicly available to all. Now, remind me again what the incentive would be for a publicly traded company to do this research if there was no profit to be gained? And wouldn’t other companies – and other countries for that matter – love to sit back and reap the rewards of Chevron’s research?

Here Dugan puts her ignorance up on a pedestal:

But if Chevron is funding the research, it will control the result and can just as easily bury it, calling the effort a disappointing failure.

I don’t guess Dugan is aware of the U.S. DOE Aquatic Species Program. You can read the 328 page close-out report here. You can also read a guest post from John Benemann, the man who co-authored that report:

Algal Biodiesel: Fact or Fiction?

You see Dugan, despite the ignorance that you seem to wear like a badge of honor, the oil companies don’t have a monopoly in this area. The US government studied it for many years, but concluded in their close-out report that costs were too high, and many technical challenges remain. So if Chevron does decide to shelve it, I am sure that you will conclude that they were ‘burying it’ (after all, you are programmed to put the negative spin on). And in my opinion, they will eventually shelve it, for the very reasons that were laid out in the close-out report.

Despite that, Greenfuel Technologies (not an oil company, Dugan) has been making some pretty big claims in this area (claims that violate thermodynamics, according to Krassen Dimitrov). And because there is so much misinformation around the subject of algal fuels, it isn’t surprising that a massive fraud has already been perpetrated on gullible investors. Sorry, Dugan, no oil companies to blame on that one. But if you know a little about the history of the algal biodiesel program, you could have smelled that fraud coming from a mile away.

August 24, 2008 Posted by | algal biodiesel, Chevron, FTCR, Judy Dugan, oil watchdog, Shell | 31 Comments

Shell Goes Deep

After spending most of my week on Coskata (and actually working at my real job) the energy news has piling up on me. While I still need to clean up some loose ends on Coskata, I also need to clear out some of these other stories.

I have an informative guest post on ocean thermal energy conversion (an under-rated energy option, in my opinion), CNN says that expensive oil is here to stay (regular readers will know that this is my mantra as well), Christina Laun gives us 100 tips and tools on how to enjoy a greener career – Number 31 may save your life someday 😉 – and Shell has gone ultra-deep with their new Perdido platform. I will lead off with Shell, since it has been in my in-box the longest.

I got the following information second-hand from Ignacio Gonzalez, who is a Communication Specialist for Shell. Their new Perdido platform will be the deepest water platform in the world.

—————————

The Shell-operated Perdido Regional Development Spar has arrived in the ultra deepwaters of the Gulf of Mexico and is currently being secured to the seafloor in about 8,000 feet of water. Once completed, the Perdido spar will be nearly as tall as the Eiffel Tower and weigh as much as 10,000 cars. Perdido will be the deepest oil development in the world, the deepest drilling and production platform in the world and have the deepest subsea well in the world.

Positioning the spar into place required carefully-orchestrated maneuvers. Here is a link to a YouTube video of the process, which you may embed as you wish.

Perdido will be a fully functional oil and gas platform with a drilling rig and direct vertical access wells, full oil and gas processing and remote subsea wells. The facility is designed to produce 100,000 barrels of oil per day and 200 million standard cubic feet of gas. The production from these fields will be transported via new and existing pipelines to US refineries.

The Perdido Spar will bring in production from three fields: Great White, Silvertip and Tobago. These fields are located in 10 Outer Continental Shelf blocks in Alaminos Canyon, approximately 200 miles south of Freeport, TX. This development will provide the first Gulf of Mexico commercial production from a Paleogene reservoir. All three fields have been granted production units from the Minerals Management Service and the accumulations are completely in US waters, some eight miles north of Mexico international borders. First production from Perdido is expected around the turn of the decade.

Shell has more info about the project area, as well as maps, here.

And you can follow the progress of Perdido here.

August 22, 2008 Posted by | deepwater drilling, oil production, Shell | 18 Comments

Shell’s Shale Problems

I have been pretty skeptical of the potential of oil shale for a long time. It is very difficult for me to see how they are going to make a go of it, and I wrote as much here:

“Oil Shale Development Imminent”

And:

Oil Shale = Cellulosic Ethanol

In those essays, I was primarily focused on the energy required to run the process, and I talked about Shell’s unique shale process. However, as I was passing through the Denver Airport on Sunday (actually, I ended up spending the whole day there!) – I spotted this story in the Denver Post:

Shell makes run on water

Shale country tends to be dry country, and Shell’s process uses a lot of water. Some excerpts from the story:

In its quest to melt oil out of western Colorado’s shale, Royal Dutch Shell has been buying up land and water rights in anticipation of what is likely to be a thirsty new industry.

Some officials, however, worry that the demands of the oil-shale industry could drain every drop of the region’s remaining water.

“On the upper end, we’re looking at potentially several hundred thousand acre-feet of water — more than people think is commonly available to develop in the Colorado River,” said Dan Birch, deputy general manager for the Colorado River Water Conservation District.

Shell and other energy companies have amassed tens of thousands of acres of cropland, ranches and open space — including a state wildlife area — to gain water that would be needed to power the oil-shale process.

Count me among those who thinks this is a bad idea. We are pulling down aquifers now; I hate to see us accelerate that process to produce oil from shale. The energy return is already going to be very marginal. If it was any better than that for tar sands, they would already be producing oil from shale. But now add the fact that they are going to be using up water in dry areas, and it looks to me like a losing proposition.

While the claims of the oil potential there are pretty huge, so are the water requirements:

The Bureau of Land Management estimates the shale formation in western Colorado could yield as much as 1.8 trillion barrels of oil.

Getting that oil, however, could require three times as much water to operate power plants, according to some estimates.

“The volumes are pretty enormous,” said Bart Miller, water-program director for conservation group Western Resource Advocates.

“The net water requirements . . . were something in the neighborhood of 200,000 to 300,000 acre-feet annually,” Miller said. “To put that in context, that’s the consumption of about 2.5 million people.”

Further, that 1.8 trillion is certainly not a net value. The net value is going to be far less, as it is going to take energy to process the oil. Even if the EROEI was 2 to 1, and I doubt it is, that would mean it would take almost a trillion barrels – all contributing more pollution to the environment – to process the 1.8 trillion barrels.

I remain skeptical. Oil shale has always been just around the corner. I think it will remain around the corner. On the other hand, the people at Shell aren’t stupid. They are buying up those water rights for a reason…

May 8, 2008 Posted by | oil shale, Shell | 21 Comments

Shell’s Shale Problems

I have been pretty skeptical of the potential of oil shale for a long time. It is very difficult for me to see how they are going to make a go of it, and I wrote as much here:

“Oil Shale Development Imminent”

And:

Oil Shale = Cellulosic Ethanol

In those essays, I was primarily focused on the energy required to run the process, and I talked about Shell’s unique shale process. However, as I was passing through the Denver Airport on Sunday (actually, I ended up spending the whole day there!) – I spotted this story in the Denver Post:

Shell makes run on water

Shale country tends to be dry country, and Shell’s process uses a lot of water. Some excerpts from the story:

In its quest to melt oil out of western Colorado’s shale, Royal Dutch Shell has been buying up land and water rights in anticipation of what is likely to be a thirsty new industry.

Some officials, however, worry that the demands of the oil-shale industry could drain every drop of the region’s remaining water.

“On the upper end, we’re looking at potentially several hundred thousand acre-feet of water — more than people think is commonly available to develop in the Colorado River,” said Dan Birch, deputy general manager for the Colorado River Water Conservation District.

Shell and other energy companies have amassed tens of thousands of acres of cropland, ranches and open space — including a state wildlife area — to gain water that would be needed to power the oil-shale process.

Count me among those who thinks this is a bad idea. We are pulling down aquifers now; I hate to see us accelerate that process to produce oil from shale. The energy return is already going to be very marginal. If it was any better than that for tar sands, they would already be producing oil from shale. But now add the fact that they are going to be using up water in dry areas, and it looks to me like a losing proposition.

While the claims of the oil potential there are pretty huge, so are the water requirements:

The Bureau of Land Management estimates the shale formation in western Colorado could yield as much as 1.8 trillion barrels of oil.

Getting that oil, however, could require three times as much water to operate power plants, according to some estimates.

“The volumes are pretty enormous,” said Bart Miller, water-program director for conservation group Western Resource Advocates.

“The net water requirements . . . were something in the neighborhood of 200,000 to 300,000 acre-feet annually,” Miller said. “To put that in context, that’s the consumption of about 2.5 million people.”

Further, that 1.8 trillion is certainly not a net value. The net value is going to be far less, as it is going to take energy to process the oil. Even if the EROEI was 2 to 1, and I doubt it is, that would mean it would take almost a trillion barrels – all contributing more pollution to the environment – to process the 1.8 trillion barrels.

I remain skeptical. Oil shale has always been just around the corner. I think it will remain around the corner. On the other hand, the people at Shell aren’t stupid. They are buying up those water rights for a reason…

May 8, 2008 Posted by | oil shale, Shell | 1 Comment

Shell’s Shale Problems

I have been pretty skeptical of the potential of oil shale for a long time. It is very difficult for me to see how they are going to make a go of it, and I wrote as much here:

“Oil Shale Development Imminent”

And:

Oil Shale = Cellulosic Ethanol

In those essays, I was primarily focused on the energy required to run the process, and I talked about Shell’s unique shale process. However, as I was passing through the Denver Airport on Sunday (actually, I ended up spending the whole day there!) – I spotted this story in the Denver Post:

Shell makes run on water

Shale country tends to be dry country, and Shell’s process uses a lot of water. Some excerpts from the story:

In its quest to melt oil out of western Colorado’s shale, Royal Dutch Shell has been buying up land and water rights in anticipation of what is likely to be a thirsty new industry.

Some officials, however, worry that the demands of the oil-shale industry could drain every drop of the region’s remaining water.

“On the upper end, we’re looking at potentially several hundred thousand acre-feet of water — more than people think is commonly available to develop in the Colorado River,” said Dan Birch, deputy general manager for the Colorado River Water Conservation District.

Shell and other energy companies have amassed tens of thousands of acres of cropland, ranches and open space — including a state wildlife area — to gain water that would be needed to power the oil-shale process.

Count me among those who thinks this is a bad idea. We are pulling down aquifers now; I hate to see us accelerate that process to produce oil from shale. The energy return is already going to be very marginal. If it was any better than that for tar sands, they would already be producing oil from shale. But now add the fact that they are going to be using up water in dry areas, and it looks to me like a losing proposition.

While the claims of the oil potential there are pretty huge, so are the water requirements:

The Bureau of Land Management estimates the shale formation in western Colorado could yield as much as 1.8 trillion barrels of oil.

Getting that oil, however, could require three times as much water to operate power plants, according to some estimates.

“The volumes are pretty enormous,” said Bart Miller, water-program director for conservation group Western Resource Advocates.

“The net water requirements . . . were something in the neighborhood of 200,000 to 300,000 acre-feet annually,” Miller said. “To put that in context, that’s the consumption of about 2.5 million people.”

Further, that 1.8 trillion is certainly not a net value. The net value is going to be far less, as it is going to take energy to process the oil. Even if the EROEI was 2 to 1, and I doubt it is, that would mean it would take almost a trillion barrels – all contributing more pollution to the environment – to process the 1.8 trillion barrels.

I remain skeptical. Oil shale has always been just around the corner. I think it will remain around the corner. On the other hand, the people at Shell aren’t stupid. They are buying up those water rights for a reason…

May 8, 2008 Posted by | oil shale, Shell | 1 Comment

Shell’s Shale Problems

I have been pretty skeptical of the potential of oil shale for a long time. It is very difficult for me to see how they are going to make a go of it, and I wrote as much here:

“Oil Shale Development Imminent”

And:

Oil Shale = Cellulosic Ethanol

In those essays, I was primarily focused on the energy required to run the process, and I talked about Shell’s unique shale process. However, as I was passing through the Denver Airport on Sunday (actually, I ended up spending the whole day there!) – I spotted this story in the Denver Post:

Shell makes run on water

Shale country tends to be dry country, and Shell’s process uses a lot of water. Some excerpts from the story:

In its quest to melt oil out of western Colorado’s shale, Royal Dutch Shell has been buying up land and water rights in anticipation of what is likely to be a thirsty new industry.

Some officials, however, worry that the demands of the oil-shale industry could drain every drop of the region’s remaining water.

“On the upper end, we’re looking at potentially several hundred thousand acre-feet of water — more than people think is commonly available to develop in the Colorado River,” said Dan Birch, deputy general manager for the Colorado River Water Conservation District.

Shell and other energy companies have amassed tens of thousands of acres of cropland, ranches and open space — including a state wildlife area — to gain water that would be needed to power the oil-shale process.

Count me among those who thinks this is a bad idea. We are pulling down aquifers now; I hate to see us accelerate that process to produce oil from shale. The energy return is already going to be very marginal. If it was any better than that for tar sands, they would already be producing oil from shale. But now add the fact that they are going to be using up water in dry areas, and it looks to me like a losing proposition.

While the claims of the oil potential there are pretty huge, so are the water requirements:

The Bureau of Land Management estimates the shale formation in western Colorado could yield as much as 1.8 trillion barrels of oil.

Getting that oil, however, could require three times as much water to operate power plants, according to some estimates.

“The volumes are pretty enormous,” said Bart Miller, water-program director for conservation group Western Resource Advocates.

“The net water requirements . . . were something in the neighborhood of 200,000 to 300,000 acre-feet annually,” Miller said. “To put that in context, that’s the consumption of about 2.5 million people.”

Further, that 1.8 trillion is certainly not a net value. The net value is going to be far less, as it is going to take energy to process the oil. Even if the EROEI was 2 to 1, and I doubt it is, that would mean it would take almost a trillion barrels – all contributing more pollution to the environment – to process the 1.8 trillion barrels.

I remain skeptical. Oil shale has always been just around the corner. I think it will remain around the corner. On the other hand, the people at Shell aren’t stupid. They are buying up those water rights for a reason…

May 8, 2008 Posted by | oil shale, Shell | 1 Comment

Oil to $250 a Barrel?

In case you missed it, there were several stories this week – and of particular note coming from OPEC – that suggested that much higher oil prices may be on the way:

Oil Price May Go Up to $250, Warn Experts

Crude prices continue to baffle analysts and pundits. With the $100-era a well established fact in our daily life, there is now a growing chatter within the energy fraternity that $200 a barrel may not be a far fetched idea altogether. Is another global oil shock now gathering pace?

With limited additional supplies, alternative fuel still some decades away and demand far from collapsing, Deutsche Bank is pointing to a “huge risk” that oil prices would continue to rise in the near to mid-term.

“There is a huge risk that the oil price simply continues to escalate until it gets to some level (possibly $250) when demand finally collapses because ordinary people can no longer afford to burn as much energy as they are burning now,” Adam Sieminski, Deutsche Bank’s chief energy economist, wrote in a report last Friday.

This is why I am still an oil company investor. I am invested in ConocoPhillips directly, and some others via mutual funds (including Brazil’s Petrobras). I have seen various analyses that suggest the oil companies are no longer good investments because they aren’t replacing their reserves. I disagree. As long as oil prices are rising faster than reserves are depleting, they will continue to reap increasing profits (until the government steps in – which I think they will do). This will also give them the cash to get into other energy businesses that look attractive. Who knows, the future may see Shell (for example) as the leading solar power firm in the world.

OPEC is suggesting that even $200 oil won’t cause them to boost production by much. I think you can read the writing on the wall there and know that they simply don’t have the production available. While production from OPEC has been rising – and Saudi’s production is back up to just over 9.2 million bpd (per the article), OPEC just doesn’t have the spare capacity they did a few years ago.

May 2, 2008 Posted by | ConocoPhillips, investing, oil prices, OPEC, Petrobras, Shell | 19 Comments

Biogasoline from Shell

I think the general consensus was that the recent claims of agricultural researcher J.C. Bell don’t appear to be too compelling. However, as I mentioned, the conversion of biomass into oil or gasoline should be technically achievable. And today, Bob Rohatensky sent me a link to a story that would appear to have a little more meat to it than Bell’s claims:

Shell and Virent announce collaboration to develop biogasoline

Shell and Virent Energy Systems, Inc., (Virent (TM)) of Madison, Wisconsin USA, today announced a joint research and development effort to convert plant sugars directly into gasoline and gasoline blend components, rather than ethanol.

The collaboration could herald the availability of new biofuels that can be used at high blend rates in standard gasoline engines. This could potentially eliminate the need for specialized infrastructure, new engine designs and blending equipment.

Virent’s BioForming(TM) platform technology uses catalysts to convert plant sugars into hydrocarbon molecules like those produced at a petroleum refinery. Traditionally, sugars have been fermented into ethanol and distilled. These new ‘biogasoline’ molecules have higher energy content than ethanol (or butanol) and deliver better fuel efficiency. They can be blended seamlessly to make conventional gasoline or combined with gasoline containing ethanol.

The sugars can be sourced from non-food sources like corn stover, switch grass, wheat straw and sugarcane pulp, in addition to conventional biofuel feedstock like wheat, corn and sugarcane.

The companies have so far collaborated for one year on the research. The BioForming(TM) technology has advanced rapidly, exceeding milestones for yield, product composition, and cost. Future efforts will focus on further improving the technology and scaling it up for larger volume commercial production.

“The technical properties of today’s biofuels pose some challenges to widespread adoption,” Dr. Graeme Sweeney, Shell Executive Vice President Future Fuels and C02 said. “Fuel distribution infrastructure and vehicle engines are being modified to cope but new fuels on the horizon, such as Virent’s, with characteristics similar or even superior to gasoline and diesel, are very exciting.”

Dr. Randy Cortright, Virent CTO, Co-Founder and Executive Vice President said, “Virent has proven that sugars can be converted into the same hydrocarbon mixtures of today’s gasoline blends. Our products match petroleum gasoline in functionality and performance. Virent’s unique catalytic process uses a variety of biomass-derived feedstocks to generate biogasoline at competitive costs. Our results to date fully justify accelerating commercialization of this technology.”

This also reiterates what I have said before: Thermochemical processes such as this are an area to watch. There would be multiple advantages over biological processes for producing fuels. Something tells me that Shell will find this more fertile ground than their investments in Iogen.

March 26, 2008 Posted by | biogasoline, Shell, Virent | 22 Comments