Houston: World Capital Of Temporary Energy

[mojeaux131]

Let me start by saying two things. I love Houston. I love it now and I look forward to what it is becoming. I've long been a fan of renderings and imaginings of the future, and it is so often that our idea of the future is illustrated by what we think buildings and cityscapes will resemble. Having said those two things, I wonder how important this forum thinks it is for Houston to retain its status as world energy capital by diversifying our energy industry here.

We already know that the energy capital of our solar system is the sun, but our city was built upon the wealth of fossil fuels--a finite resource. Shall our prosperity and ability to evolve as a city be finite as well? Of course Houston is known for fossil fuel energy, and Texas recently become the top producer of wind power in the United States, but I think it's very important for our city to make moves to secure its future position as capital of what is (at this point) alternative energy.

I've recently seen articles exploring the implications of Halliburton's move to Dubai. Whether or not someone thinks this could be indicative of something serious for our local economy and world status, it's doubtful that diversifying the sources of our "energy economy" would do harm. Quite the contrary. This city already has plenty of experience in commodotized energy, so we would only be improving our lot by diversifying our sources (and thus increasing our supply). Houston and Texas are both currently associated with the "Old Guard of Energy": oil, only oil, and anything else be darned. But if this region is going to sustain itself an eminent American region and establish itself as a progressive, forward looking global city, its people are going to have to look forward into the sunrise (literally) and embrace the development of technologies and industries that utilize true resources, not energy middlemen that are millions of years old.

Anyone who believes that Houston would have difficulty fostering a new industry of solar collection and energy trading hasn't been here. Sorry to digress, but I guess what I wish to express here is that it should be a priority for the entire region to be more proactive in embracing the new energy economy. Otherwise, it'll be just like it was when I was a kid here in the 80s. Except the next time, we won't bounce back. At least, not on energy.

I'm not an environmentalist, I'm a realist. Those who refuse to look forward are depletists. Read the Ecology of Commerce by Paul Hawken. It's good stuff. Remember, no more oil wealth=way less awesome buildings here.

[TheNiche]

My only concern is that widespread political instability will push oil prices up to an unbearably high price for a few years, and that that would be the incentive for a huge investment in alternative energy research, most of which would not occur here, and the fruits of which would likely not locate much economic activity here. Note, by the way, that we don't have a huge coal-related energy cluster...it really is weighted toward oil and gas. So just because something is energy-related doesn't mean that we've got it in the bag. And even if Texas has a lot of wind-driven generating capacity doesn't mean that the hardware is built here, research and engineering is done here, or that the firms installing and profiting from them are located here.

Otherwise, I'd like to see oil at about $45/bbl. as I think that that is the level at which Houston's long-term prospects are the most assured. I've spoken to folks at Exxon that insist that corporate would like to even see it at $35/bbl. Considering that much of the price is attributed to the global risk profile, that China's energy-intensiveness of production is declining, and that backwardization is probable in the long-term for the same reason that it always has been, I don't think that it'd be an unreasonable hope to see $45/bbl oil or an inflation-adjusted equivalent within five to ten years.

As for whether Houston should diversify its economy, it'd be nice, but the level of influence that we can exert on the matter through intervention, for instance in the form of a politically-viable level of subsidy, is pretty minimal. To the extent that other states and cities have incentive programs to attract business in all forms, Houston should be competitive with them, but it should try to bring in jobs and investment as rapidly as possible, regardless of the type. If all we can do is to influence another building boom like we had in the 70's and 80's, then when oil prices come back down again and our energy sector contracts, there will at least be plenty of inexpensive office and industrial space and a generally-low cost of living in a sunbelt city (which are at least two big advantages as compared to Detroit). And then we'll have diversified growth, like in the 90's.

[MidtownCoog]

UH is thinking ahead. Rumor is this new grant is UH's to lose. It would be good for the entire region.

University of Houston makes short list for wind turbine facility

http://houston.bizjournals.com/houston/sto...ml?surround=lfn

[TheNiche]

UH is thinking ahead. Rumor is this new grant is UH's to lose. It would be good for the entire region.

University of Houston makes short list for wind turbine facility

http://houston.bizjournals.com/houston/sto...ml?surround=lfn

It is good, but it is just a drop in the bucket.

[MidtownCoog]

but it is just a drop in the bucket.

I hereby name thee Master of the Obvious.

And I am still thinking of a name for those who think "Energy" is going away.

[lockmat]

Did y'all get a chance to see NBC's story on Nuclear energy and power plants? They interviewed a leading French engineer or scientist (I forget) that deals with the nuclear plants and she said something to this effect, "You have energy from solar and wind power when the sun is out and the wind is blowing. You don't watch tv just when the sun is out and the wind is blowing."

They also talked about how talks of nuclear energy here and elsewhere have become very popular. So it seems as if the real future of energy is in nuclear. Wind and solar are nice, but are their futures iffy?

And could Houston have a place in the production of nuclear energy in the future?

And I am still thinking of a name for those who think "Energy" is going away.

I think people know that. I think what they wonder is if energy will have a future in Houston.

Niche also said, "And even if Texas has a lot of wind-driven generating capacity doesn't mean that the hardware is built here, research and engineering is done here, or that the firms installing and profiting from them are located here." So is the question, does the Houston economy have a spot reserved for energy's future?

[TheNiche]

And could Houston have a place in the production of nuclear energy in the future?

I think people know that. I think what they wonder is if energy will have a future in Houston.

Niche also said, "And even if Texas has a lot of wind-driven generating capacity doesn't mean that the hardware is built here, research and engineering is done here, or that the firms installing and profiting from them are located here." So is the question, does the Houston economy have a spot reserved for energy's future?

It may come across as fatalistic, but we are entitled to nothing.

[lockmat]

It may come across as fatalistic, but we are entitled to nothing.

Exactly, we don't. I wish someone would produce a poll, asking yes or no, are you worried about the future of Houston's economy. I'm pretty ignorant of the situation, but from what I know, I somewhat am.

How dependant is our economy on energy? I know it's got a significant presence, but what would happen to it if energy corporations left?

And Chevron, Shell and all these other places are calling themselves energy companies now because they are developing other methods of energy. Are they oil-related energy resources or alternative energies like wind/solar etc????

[TheNiche]

Exactly, we don't. I wish someone would produce a poll, asking yes or no, are you worried about the future of Houston's economy. I'm pretty ignorant of the situation, but from what I know, I somewhat am.

How dependant is our economy on energy? I know it's got a significant presence, but what would happen to it if energy corporations left?

And Chevron, Shell and all these other places are calling themselves energy companies now because they are developing other methods of energy. Are they oil-related energy resources or alternative energies like wind/solar etc????

Anyone with a vested interest in Houston's growth should be concerned, but that is as true of Houston as it is of any city in which someone has a stake.

Our economy is just shy of half-way dependent upon energy-related business (upstream and downstream). Corporations aren't going to leave; the danger is that they downsize, outsource, or disappear altogether.

I'm not entirely sure how much effort they're putting into alternative energy, or whether it is mostly a PR-related thing. I'm also not sure where their alternative energy research and development facilities are located. For all we know, they aren't even doing the work in the United States, much less Houston.

[lockmat]

Chevron's "Energy Technologies"

"Chevron develops and commercializes advanced energy technologies, including core hydrocarbon technologies, a global digital infrastructure and information technology. The current business development portfolio includes biofuels, hydrogen infrastructure, advanced battery systems, nano-materials and renewable energy applications."

<H3>The trends are in motion.

Energy demand is soaring as never before and driving economic growth. And improved standards of living are requiring increasing amounts of energy. In fact, some say that in 20 years the world will consume 40% more oil than it does today.

I found that info pretty surprising.

http://www.chevron.com/about/real_issues.asp</H3>

[Subdude]

I'm not entirely sure how much effort they're putting into alternative energy, or whether it is mostly a PR-related thing. I'm also not sure where their alternative energy research and development facilities are located. For all we know, they aren't even doing the work in the United States, much less Houston.

Every major is going to have some division dealing with alternative energy technologies, but I do think there is a strong PR-related component. In any event, I'm not aware of Houston having any particular depth in alternative energy technologies. The largest US wind turbine and solar panel producers are I believe in California. We can claim the title of Oil Capital, but perhaps not Energy Capital of the US.

[MidtownCoog]

We can claim the title of Oil Capital, but perhaps not Energy Capital of the US.

Wrong.

[CardboardBox]

For those of you interested here's an article from the WSJ (2/12) that talks about Houston is remaking itself as the energy capital - not just the oil capital - of the world. Enjoy

Texas' New Tea

Houston is determined not to be left behind in the race to a new-energy future

By JOHN M. BIERS

February 12, 2007; Page R10

Houston -- As investment in alternative energy surges, scientists and entrepreneurs throughout the U.S. are trying to brew up remedies for the world's so-called petroleum addiction. While it's too soon to say which of these efforts will thrive and which will wither, energy-industry veterans are increasingly confident they know where at least some of tomorrow's leaders in alternative energy will be: Houston, the home of big oil. In California, Gov. Arnold Schwarzenegger is pushing ahead with efforts to keep his state among the leaders in the development of green energy. The Midwest continues to explore new ways to exploit its competitive edge in ethanol. And Northeastern universities are pumping big money into energy research. But while Houston's economy still sits on a foundation of conventional petroleum, alternative energy is suddenly on the rise here, too.

Major oil companies have stationed key alternative-energy divisions here, newer ventures in wind energy and biofuels are emerging, and Texas universities are pushing hard to develop carbon-free energy. Houston's emergence as an alternative-energy center is partly an outgrowth of the city's role as home to major players in the conventional-energy industry. "There's always been this sort of joke within biofuels, that when these technologies become real, the traditional oil companies will snap them up," says Nathanael Greene, a senior policy analyst with the Natural Resources Defense Council, a New York nonprofit environmental advocacy group. As alternative energy moves "from the margins into the mainstream," the big, established energy companies will make more of a commitment to the market, and Houston "is going to play a role just because of its importance in the oil industry," Mr. Greene says. But Houston also is playing host to newcomers in the energy business, thanks in part to a welcoming regulatory environment and efforts by the state government to encourage the production of alternative energies.

'Stuff Gets Built'

One advantage Houston offers alternative-energy companies is that the approval process for new facilities is far less onerous in Texas than in many other states. "Texas creates a very positive environment to work in," says Jeff Trucksess, executive vice president of Green Earth Fuels LLC, a biodiesel company started a year ago that is based in Houston and is building a production facility along the Houston Ship Channel. "There are strict rules on what you have to do, but it's a very efficient process." The company's Houston site won permits last year and is expected to begin producing biodiesel in July. "In Texas, things happen -- stuff gets built," says Michael Skelly, chief development officer for Houston-based Horizon Wind Energy, which will produce power from seven wind farms in six states, including Texas, by the end of this year. In addition to seven-year-old Horizon, which is a unit of Goldman Sachs Group Inc., emerging players in wind power in Houston include subsidiaries of Babcock & Brown Ltd., BP PLC and Royal Dutch Shell PLC, and law firms like Baker Botts LLP.

Taking the Initiative

The wind-energy business boomed in Texas after the 1999 passage of a state law that requires a certain amount of the electricity sold by utilities in the state to be generated from renewable sources. More recently, the state has again taken the initiative by easing the construction of transmission lines for wind farms, a crucial step if entrepreneurs are to continue to build turbines in the windiest corners of the state. Mr. Skelly enthuses about the new rules, which have set Horizon and other wind companies on a land grab to claim the best spots for turbines.

Houston also is emerging as a home for both start-ups and established energy companies entering the biodiesel business. These producers like the city in part because of its access to the huge Texas consumer market and its location at the center of a nationwide fuel-distribution network, with extensive storage facilities, pipelines and rail and water connections. "Economically, it's always been our opinion that if you're in the heart of the distribution center...that's a great place to be," says Mr. Trucksess of Green Earth Fuels. One unresolved issue with biodiesel is whether the fuel raises emissions of smog-causing nitrogen oxide, which is tightly regulated in Houston and other Texas cities. The state has granted the biodiesel industry until Dec. 31 to show proof the fuel meets Texas standards. The rules may require an additive to the fuel, but Mr. Trucksess doesn't expect the issue to impede the marketing of biodiesel in Houston or elsewhere in Texas.

Lots of Experience

The city also offers easy access to people experienced in every aspect of the energy business. For instance, Green Earth's plants initially will produce fuel mostly from soybean oils, but as different feedstocks come into use the company expects to tap into Houston's expertise in commodity trading, Mr. Trucksess says. "It's already in the DNA of Houston to be energy-oriented," says Rick Zalesky Jr., a vice president of biofuels and hydrogen at Chevron Technology Ventures, a Houston-based unit of Chevron Corp. Chevron is conducting biodiesel research at a couple of laboratories in Houston that have been used for decades in the conventional energy business. And it is a partner in Galveston Bay Biodiesel LP, a start-up that is building a facility in nearby Galveston, Texas.

Houston also is home to research on hydrogen, nanotechnology and other areas that could have a dramatic impact on the energy picture in the years ahead. Research on alternative fuels is being done not only by big energy companies like BP, Shell, Chevron and General Electric Co., but also by nonprofit institutions like the Houston Advanced Research Center and Rice University, which has convened a number of recent conferences on alternative energy.

Promising Venture

One of the most potentially far-reaching research ventures at Rice involves work at the Carbon Nanotechnology Laboratory, the site where the late Richard Smalley, a late Nobel-laureate professor, oversaw landmark research on microscopic materials called carbon nanotubes. Researchers are working on steps to align millions of nanotubes into carbon fibers. The hope is that one day, the fibers can be used in power transmission instead of aluminum, which has high resistance and wastes vast amounts of power. This vision is still years away, Rice researchers say. But the university has garnered some $5 million in federal research funds for the project from a variety of sources, including the Pentagon and the National Aeronautics and Space Administration, says James Tour, the lab's director.

[lockmat]

Seems like good news to me.

[mpbro]

This city already has plenty of experience in commodotized energy

"Commoditized"? Are you implying that the extraction of oil & gas is a simple endeavor, with no barriers to entry? The opposite is quite true. Ask Hugo Chavez why Venezuela's daily production has fallen by 40% since he purged PDVSA and started nationalizing. Or why Pemex, one of the stodgiest and least technologically advanced of the NOCs, seems powerless to reverse the decline at Cantarell or to undertake a serious new exploration program. If you want to know why HAL moved to Dubai, it is exactly what you would expect in a business which is not commoditized! The NOCs in that neck of the woods are losing production, and it is precisely the kind of technology that HAL supplies that will help stem the decline (if not find new resource).

[mojeaux131]

"Commoditized"? Are you implying that the extraction of oil & gas is a simple endeavor, with no barriers to entry? The opposite is quite true. Ask Hugo Chavez why Venezuela's daily production has fallen by 40% since he purged PDVSA and started nationalizing. Or why Pemex, one of the stodgiest and least technologically advanced of the NOCs, seems powerless to reverse the decline at Cantarell or to undertake a serious new exploration program. If you want to know why HAL moved to Dubai, it is exactly what you would expect in a business which is not commoditized! The NOCs in that neck of the woods are losing production, and it is precisely the kind of technology that HAL supplies that will help stem the decline (if not find new resource).

Perhaps my terminology was incorrect. What I meant by "commodotized" was energy trading, like what Enron was so famous for back in the day before the nastiness. Sorry, I'm not an economics guy. I just think it would be easy for a firm here to begin trading and selling energy obtained from alternative sources. Our history in fossil fuel energy should be a jumping off point into new energy industries, not an impediment.

To Niche- no, we don't have it in the bag. That we need to get it into the bag was my point. It should be a priority (where the chamber of commerce is concerned) to attract those sorts of new industries here. It doesn't matter so much that the energy sources be close to Houston, just ask Antwerp and its diamonds, but either way we're in a good position to begin focusing on diversifying the energy industry here. As you said, diversifying the economy is a good thing. That's all I meant, especially given the immutable fact that oil is finite.

I was very happy to see that WSJ article. Thanks, CardboardBox. That's exactly what I was talking about and looking for. Glad to see some people in this city are looking ahead for once.