The Energy Spectator
Will Exxon Get Googled?
While emerging energy technologies offer exciting promise, none of them are about to disrupt the oil industry.
THE IMAGE OF THE OIL INDUSTRY is captured (admittedly, deliciously) by Bruce Willis playing the rough-and-ready character of an oil roughneck in the 1998 Hollywood blockbuster Armageddon— driving golf balls off an oil platform aimed at a Greenpeace ship. Dirty, tough, old-world, almost Jurassic. Oil, in short, is seen as old tech. So yesterday.
Energy in the 21st century surely belongs to the denizens of high-tech Silicon Valley and similar domains from Boston to Bangalore. Many accomplished tech entrepreneurs are hyperventilating over prospects for “disruptive innovation” in the globe’s sprawling energy markets. The promise? To shake up the energy world, most particularly the nearly $2 trillion oil business, as profoundly as computer and Internet companies upended global communications in the late 20th century.
But is such disruption really likely? Will Exxon soon get Googled? Not likely. And likely not ever. The reasons? Well, first, the physics of oil and information are quite different—politics and wishful thinking aside, physics actually matters here. And, without fanfare, the oil industry—Bruce Willis aside—has already morphed into a tech-centric enterprise, assimilating the tools and materials of the digital age. In short, Exxon and Google are already more similar than dissimilar.
But first the physics. The tantalizing phenomenon oil disruptors want to emulate for Pontiacs is the technology that lies behind the Pentium. Today’s cell phones are more powerful than your first desktop computer 20 years ago. Imagine an energy technology that could follow the kind of doubling of computer power that has happened every 18 months, yielding an entirely new constellation of mega- corporations the likes of Intel, Apple, Microsoft, and Google. The problem is that the physics of information just doesn’t translate into the world of energy, at least not in the way popularized.
Here’s why. The essence of digital-silicon technology is that more and more information can be stored and transported in ever smaller, profoundly less energy-intensive ways. Millions, soon billions, of ever tinier information engines (a.k.a. transistors) are etched onto a sliver of silicon. On top of this, software engineers use clever mathematical codes made ever more powerful by microprocessors, to parse, slice, and shrink information itself, compressing it without loss of essence. The combination is powerful. Compared to the dawn of computing, today’s information-moving hardware consumes one million times less energy for a logic operation and can store data in a physical space 100 million times smaller. And progress continues.
But in the world of atoms and aircraft, not bits and YouTube, things tend to expand, not shrink. The energy needed to move a ton of people, or heat a ton of steel (or silicon), is fixed by properties of Mother Nature. Moving 1,000 pounds 1,000 miles at 50 or 500 mph has a specific, knowable, and immutable minimum energy requirement, dictated by laws of gravity, inertia, friction, mass, heat transfer, and the like. An aircraft’s or car’s engine is not about to shrink in size a thousand-fold and be etched onto a sliver of silicon, or increase in power similarly. On top of that, in the physical world there is just no analogue to compression software (mathematical trickery that puts even more information more efficiently into small spaces). Only in Star Trek can you compress people to the size of ants to put more in a smaller space.
And while nothing in our current energy infrastructure operates at the theoretical limits, pretty much everything is within spitting distance of Mother Nature’s hard stop in terms of energy density and efficiency. Of course, there’s room for progress. A 20 to 30 percent gain in efficiency in our national energy bill translates into serious money. Airlines, as well as most businesses, do back handsprings for such efficiency gains. But compared to the efficiency-created disruptions in the digital-info world, 30 percent is chump change. The reality is that we are stuck with limitations imposed by things like, well, Earth’s rotation and distance from the sun, which determine the maximum energy possible from solar power. Or the biochemistry of photosynthesis, which ultimately determines biofuel economics, or the physical chemistry that dictates potential energy per pound of oil, ethanol, or lithium.
So, using fundamental energy metrics, it is easy to understand the relentless pursuit of oil—the challenge in disrupting our “addictions” if you will. Consider how far a Prius-sized vehicle can travel on a highway using two cubic feet of fuel (roughly, a suitcase’s worth): that much volume in lead acid batteries lasts 20 miles; switch to lithium batteries and you get 100 miles; compressed natural gas, 150 miles; ethanol, 400 miles. Fill the same two cubic feet with oil? 700 miles.
OIL IS A REMARKABLE ENERGY SOURCE that is also uniquely easy to transport and store. Keeping up with civilization’s insatiable appetite for this elixir has involved much more than building ever bigger oil rigs and unleashing more Bruce Willis types. The oil industry has quietly and profoundly employed the wizardry of digital technology. Both directly and indirectly, a 21st-century oil well is the physical extension of super-computing. It’s not all that different from the relationship between your PC and printer, connecting the virtual to the physical. It has enabled the deepest offshore oil platform to go from sitting in barely 500 feet of water in 1969 to today’s almost 10,000 feet. Horizontal drilling didn’t even emerge until 1982, going a distance of 2,000 feet then, compared to 30,000 feet now.
Sit in an oil conference today and you will hear about digital technology and software: cloud computing, remote servers, bandwidth constraints, high-speed wireless, terabytes of storage, GPS, laser mapping, virtualization, 3D mapping, virtual-reality caves, satellite imaging, smart sensors, and robotics. You’d be hard-pressed to know whether it was a meeting for Google or Exxon. Companies such as IBM and Hewlett-Packard are intimate and integral parts of the global oil enterprise.
And just as in the info-tech world, while the behemoth companies get the headlines there is a whole host of smaller tech-savvy companies, many the innovation leaders, and most unfamiliar on Main Street. Oceaneering has emerged, for example, as the preeminent (underwater) robot company; Transocean is the hot ticket in offshore drill rigs; and private innovators like Great White Energy Services provide high-tech services on the front lines (where, full disclosure, our fund has an interest).
A lot has happened since NASA put a man on the moon in 1969—I mean, that’s three years before Pong, the first video game—a time when the oil industry had barely progressed beyond its early 20th-century roots. The scope of digital technology now employed on a day-to-day basis, the fusion of steel and silicon in the oil fields and oceans, was inconceivable 40 years ago.
One thing has not changed in 40 years: perpetual-motion-machine-style wishful thinking. While emerging energy technologies offer exciting (essential) promise, none of them are about to disrupt the oil industry. Terrorism, terrible policies, and wars can. Energy tech is the hope to sustain, not disrupt, our oil-dependent economy. The future, to stretch the analogy, is Bruce Willis with a Ph.D. in nanotechnology.
Mark P. Mills, a physicist, is co-founding partner of Digital Power Capital, an energy tech venture fund. He writes the “Energy Intelligence” column for Forbes and is author of The Bottomless Well (Basic Books).
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oldschorz| 1.14.09 @ 9:36AM
A first rate piece on energy. It appears that only folks with a firm knowledge of physics can grasp the facts about energy. A bright young person recently told me with great confidence that the laws of physics would be proven wrong, and that we would be able to innovate our way to energy valhalla. It's too bad that our political scene in overpopulated with glib lawyers and other physics ignorants. The only saving grace is that the scientists and engineers that populate our energy companies will keep innovating around the politicians and keep wheels turning (and lubricated too).
Tim E| 1.14.09 @ 10:37AM
This guy is a massively misinformed idiot. I am cancelling my subscription. Apparently Mark P Mills likes pretending that the sun doesn't exist. Point A: The solar flux in an area the size of New Jersey provides more energy then is currently being consumed by the entire world. Point B: The cost for solar has actually fallen 100x since the 1970s, so a key metric Watts per dollar has actually followed Moore's Law.
dgdc| 1.14.09 @ 10:47AM
A rather poorly thought out analysis of energy and innovation. First, if a disruptive technology were foreseen it wouldn't be very disruptive. The whole point is you don't see it coming. Second, energy density is only one component in analyzing a fuel source. Such factors as mechanical simplicity and efficiency strongly favor electric or even pneumatic powered vehicles.
Currently the calculus still favors gasoline and sending billions to islamists, but clearly things are changing
L. Ross| 1.14.09 @ 12:30PM
Oldschorz: Bravo. Couldn't agree more.
Tim E: Go back to school. Learn something. And please do cancel your subscription. I don't want people confusing you with and intelligent conservative.
Going to your solar flux comment. Let's just address a few of the issues with solar power. Low conversion efficiency (less than 50%), clouds, winter, night. Solar cells won't generate much power under clouds, at off peak hours (10:00 to 2:00), during the winter (sun is lower in the sky, more radiation is absorbed by the atmosphere), and of course, there is than dog-gone rotation of the earth which means there is no solar power at all for at least half the day. Which brings us to the energy storage issue. Where are you going to get all the quasi-rare metals to build the batteries to store the energy you get from covering New Jersey with solar panels? How much environmental damage will their disposal entail? Finally, do you understand the quintessential thing about hydrocarbon energy? It is light-weight, low-volume, incredibly powerful source of portable energy. Absolutely nothing else will take it's place in aviation, and greenie-weenies don't want to build the nuke plants required to go towards a massive switch to even plug-in hybrids.
dgdc: What the hell is a pneumatic powered vehicle?
dgdc| 1.14.09 @ 2:06PM
L. Ross - see http://www.popularmechanics.com/automotive/new_cars/4217016.html
A fascinating technology
Derrick| 1.14.09 @ 4:02PM
Thanks for linking to an article about a hoax car that has missed numerous production date estimations. As one comment states: two scuba tanks of air don't hold a whole hell of a lot of energy.
dgdc| 1.14.09 @ 4:56PM
A hoax would require the car to not exist, since the car does exist it is not a hoax. A couple scuba tanks of air can hold a great deal of energy which can be more efficiently harnesed than gasoline. Not only are the mechanics simplified but where a gasoline engine loses most of the latent energy to heat radiation, a compressed air energy source will pull heat from the environment during expansion.
Further, energy density is only one relativly insignificant element in the calculus.
I don't know if the concept will succeed but being ignorant of thermodynamics and infatuated with internal combustion is a sure way to failure when a disruptive technology does come along.
L. Ross| 1.14.09 @ 5:05PM
dgdc:
Thanks for the link. Unfortunately, I have found Popular Mechanics to be as reliable a source for science and technology as "The Worlds Only Reliable News", The Weekly World News!
oldschorz| 1.14.09 @ 6:15PM
Judging from the comments, 60% of Spectator readers have a clue. I would have thought the ratio would be higher.
Unfortunately the 40% that are clueless seem to be determined to keep their belief, no matter the facts.
Bill C.| 1.14.09 @ 6:18PM
Most of the new innovations in the oil business are coming from privately owned companies, which are becoming few and far between, compared to the state owned monopolies around the world. And liberals would love to tax them out of existance. I, for one, am happy to hear about the oil companies making big profits. Many of their projects turn out to be busts, so it's good to see them hit it big once in awhile. If oil was no longer needed for transportation, I've read that we would still need 5 MBPD for all the other things it's used for.
Derrick| 1.14.09 @ 8:12PM
dg:
I agree with your sentiment. I believe its very possible there are ways to more efficiently power automobiles, but that particular automobile will most likely never reach its purported goals: to reach a range of 125 miles on a double scuba tank charge of compressed air.
They will most likely need to increase the pressure(therefore more energy) to increase the range, which may be impossible with the material they are using.
Paul Milenkovic| 1.14.09 @ 10:19PM
I would not sell Popular Mechanics short. They were out front with the science to refute the 9-11 "truthers."
Popular Mechanics had recently taken a hard and skeptical look at many of the alternate energy systems. To say they are out in front of the New York Times on many questions is perhaps offering faint praise, but how bad can a magazine that Glenn Harlan Reynolds writes for be?
Dexter Bland| 1.21.09 @ 8:55PM
This article captures the complacent mentality of an industry that is about to get smacked from left field. Instead of directly comparing energy densities, instead try asking whether the majority of people have a requirement to transport 1000 kg of metal a distance of 500 miles on a daily basis. Improvements in battery capacity (there is theoretical potential for an order of magnitude improvement in lithium and many novel chemistries being investigated in the lab) , and improvements in design (lighter smaller vehicles better suited to commuter needs and the needs of congested, polluted cities) are all that's needed to displace a significant proportion of oil demand.
I'm sure there will be an ongoing need for oil for some time and it may never be replaced in some applications (though there are feasible substitutes even in aviation). However a significant reduction in demand will mean a lower price for all users and questionable need for new exploration.
ldk| 2.6.09 @ 10:37AM
oldschorz - thank God we have access to someone of your enourmous intellect. We are mere dim bulbs compared to your shining glory.
Justin| 12.31.09 @ 9:09AM
Does anyone remember the Perpetual Motion project Exxon financed back in the 70's? I believe it was named Project Galidae. $250,000,000 was spent to no avail. (Fortune Magazine, spring 82?)
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