Autonomous Vehicle Consultant

The American Petroleum Institute (API) is opposed to raising taxes on the oil and gas industries. According to the API, the preferred approach is increasing access to domestic energy. That would add 530,000 jobs and create $194B in new revenue, according to a recent API TV ad.

The API assumption is that there are accessible oil and gas reservoirs. The fact of the matter is that oil production peaked and then continued on a consistent decline since 1970 in the lower 48 states. Alaskan oil production peaked in 1988 and the Gulf of Mexico oil production may have peaked in 2003. There may be oil residing in the outer continental shelf, but the extent of oil reservoir volumes are uncertain due to absence of modern seismic data. Further, shale gas reservoirs may be considerably overestimated as reported in my recent blog post.

Perhaps the API should explain what oil and gas reservoirs they were considering  that would add 530,000 jobs and create $194B in new revenue.

Yesterday I attended a seminar at Emerson College in Boston on the pursuit of clean energy by the U.S. military. This event, in collaboration with the Pew Charitable Trusts and KEMA, Inc., highlighted the release of Pew’s new report From Barracks to the Battlefield: Clean Energy Innovation and America’s Armed Forces. This report finds that,” DoD clean energy investments increased 300 percent between 2006 and 2009, from $400 million to $1.2 billion, and are projected to eclipse $10 billion annually by 2030. The Pew report documents how DoD is helping to accelerate the development and deployment of clean energy technologies in three key areas: vehicle efficiency, advanced biofuels and energy efficiency and renewable energy at bases.”

Yesterday I attended a breakfast meeting at the North Shore Technology Council. The featured speaker was Dr. Robert C. Dean, Jr., a well known entrepreneur, founder of ten companies, and currently President of Synergy Innovations, Inc. “He is a member of the National Academy of Engineering and a Fellow of the American Society of Mechanical Engineers (ASME). Dean was a recipient of the Tibbett’s Pioneer Award from the US Small Business Administration and the 1998 Entrepreneur of the Year Award from the New Hampshire Technology Council. In 1996, he received the ASME’s highest award, its Gold Medal, for inspiration of fellow engineers and his many contributions to the engineering profession. He also holds 27 U.S. patents.”

In his presentation, Dr. Dean offered many insights about innovation. Here is the gist of some remarks:

• On average, laboratory prototypes will reach the market in about 19 years
• A large fraction of U.S. inventions were created by individuals during the past two hundred years, rather than corporations
• Corporations are less interested in inventions because they are more focused on making money with current technology
• Venture capitalists expect a 5X return on their investment in 3 years and 10X in 5 years
• Although a case can be made for patenting inventions, generally speaking patents should not be pursued because of likely infringement,  especially for ideas with considerable market potential. Legal protection against infringement will be a huge cost burden for many companies without the financial resources of, say, a General Electric. Use of trade secrets may be a better approach with the hope that the competition does not reverse engineer your “secret sauce.”

According to a report from the PEW Charitable Trusts (2010 edition), “…the United States fell to third place among G-20 members, one year after it had lost top billing and slid to second place…For a variety of reasons, the United States’ competitive position appears to be eroding. Stimulus funding that helped the clean energy industry recover from sharp recessionary declines will expire this year, and there is little indication of any significant policies or incentives to fill the gap in the near future. In fact, investors have noted ongoing uncertainty in the United States policy as a key reason that capital is sitting on the sidelines, or looking for certainty and opportunity abroad. Concerns include a lack of clarity on the direction of energy policy, uncertainty surrounding continuation of key financial incentives (e.g., production and investment tax credits) and disproportionate support for century-old fossil energy sources.”

Conclusions: governments support wind and solar energy technologies with various subsidies out of necessity because these technologies are not able to stand on their own in the market place. Only when the levelized cost of electricity (LCOE) for renewable energy technologies is on a par with that of fossil fuel energy generation technologies will the need for government subsidies abate and that may not happen for another ten years. This issue was discussed in one of my previous posts.

British Prime Minister, David Cameron and the French President, Nicolas Sarkozy, visited Libya yesterday in support of the rebel fighters. Both vehemently denied that their visit was connected with Libya’s oil reserves (46 billion barrels).

The British sector of the North Sea produced slightly more than 1 million barrels per day (bpd) in May 2011 and a peak of more than 2.7 million bpd in 1999. UK oil consumption is approximately 1.6 M bpd. French oil production is approximately 20,000 bpd in contrast to their consumption of slightly less than 2 million bpd.

Conclusion: Both the UK and France are consuming significantly more oil than they produce. The same is true for the United States. This situation will only worsen in time and will lead to further international stress until sustainable energy plans can be developed and financed.