April 26, 2005 — If you are a nanotechnology or MEMS entrepreneur, why should you care about the fossil fuel industry? The answer is two-fold. First, fossil fuels will provide much of the world’s energy for the foreseeable future. Second, the fossil fuel industry needs technological innovation and has the ability to pay for those technologies. The key is to identify which technologies the industry needs.
Clean coal technology: Whether we like it or not, coal usage will increase. The world’s largest oil and gas fields were discovered decades ago and are rapidly being depleted. In fact, the petroleum industry already has a difficult time replacing its reserves. The world has more coal than any other fossil fuel. Coal is inexpensive to mine and transport. Importantly, coal is also not concentrated in politically sensitive regions.
Coal power plants produce lots of air pollution and greenhouse gases. Before coal usage can increase, this polluting legacy must change. The $1 billion FutureGen effort by the Department of Energy is an attempt to accomplish this feat. FutureGen is a 10-year program to develop a coal power plant having zero emissions. The success of this project will hinge upon the very innovations nanotechnology can supply including more effective catalysts, advanced separation membranes and technologies suitable for sequestering carbon dioxide.
So how do nanotechnology entrepreneurs participate in FutureGen or in the related Clean Coal Power Initiative? First, they need to familiarize themselves with the technology goals of these projects and identify how they can advance those goals. Then they should contact not only the Department of Energy labs overseeing these projects but, even more importantly, they should establish a dialogue with the industry consortium members involved in the actual demonstration projects.
Refining cleaner automotive fuels: The United States and Europe are requiring lower sulfur levels in automotive fuels. If proposed mandates in California are any indication, these regulations will only become stricter. At the same time, the world’s crude oil supplies are changing from high quality oil to less desirable “sour” oil. The latter not only contains more sulfur, it is also inherently more challenging to refine.
The refining industry needs technological innovation in the form of new catalysts able to withstand prolonged exposure to sulfur and new technologies able to increase the percentage of gasoline or other high value products derived from a barrel of oil.
Nanotechnology companies able to deliver these solutions should closely follow the state-funded clean air and clean fuel research programs in California and Texas. It is also important to communicate directly with the major refiners; all of the latter have the financial resources to fund promising technology solutions.
Accessing new oil and gas supplies: The final frontiers for the petroleum industry include ultra deep wells and the ocean depths. There are very few other places the industry can turn to for large hydrocarbon reserves.
In the shallow coastal waters of the Gulf of Mexico, the oil industry is drilling a well that may reach 35,000 feet and cost up to $100 million. A number of these ultra deep wells will be drilled in the near future. They highlight another key opportunity area open to both nanotechnology and MEMS. These wells will require new metals, coatings, drilling fluids and electronics able to withstand the high temperatures and highly corrosive environments encountered at these extreme depths. In addition, these wells will serve as a proving ground for the next generation of MEMS sensors able to provide continuous monitoring under extreme conditions.
According to some published estimates, there may be over 75 billion barrels of recoverable oil in the deep waters of the Gulf of Mexico. The gulf already has producing wells in 5,000 feet of water and exploration is moving into deeper water. At these water depths, individual wells often cost more than $10 million and entire fields exceed $1 billion. Understandably, the petroleum industry is very interested in technologies for remotely monitoring these valuable facilities. This unmet need represents a significant market opportunity for the MEMS industry.
The petroleum industry continues to consolidate and with every round of consolidation, internal research and development suffers. At the same time the entire industry needs access to new technologies and is increasingly willing to provide funding to outside companies developing promising new technologies. Nanotechnology and MEMS entrepreneurs should heed this trend and establish relationships with not only the large petroleum producers, but also with the service providers in this industry. This industry is spending $100 million on individual wells; it will also fund the technologies to ensure those wells are successful.
At the risk of misusing a famous quote by Mark Twain, it is appropriate to say, “Rumors about the imminent demise of the fossil fuel industry have been greatly exaggerated.”
For entrepreneurs willing to ignore those rumors the rewards are numerous, including strategic relationships, access to large new markets and most importantly, access to the funding needed to complete R&D. Perhaps it is time to re-evaluate the fossil fuel industry.