In 2019, TOTAL co-filed two patents with an airship-technology company, Flying Whales, aiming to lower the logistical costs of moving capital equipment into remote areas. An example is shown above. The LCA60T is envisaged to carry up to 60T of cargo (c4x the capacity of a truck), with a range of 100-1,000km. This short note assesses the opportunity, and whether these new airships could displace trucks, or lower diesel demand. We are most excited by the impact for onshore wind.
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Flying Whales is a French company, originally supported by the French Public Forest Office, to progress transportation technologies that could help evacuate timber. It has since raised €200M, including from BPI and Chinese backers.
Designs for the LCA60T are shown below, from TOTAL and Flying Whales’ patent. The ship is 154m x 68m, constructed from rigid carbon-fiber composite, generating aerostatic lift from 10, unpressurised cells of helium.
Its distributed electric propulsors are similar to those in the flying car concepts that excite us. We recently re-assessed our rankings of different flying car concepts here.
Technical Readiness is at Level 5-6, but rapid progress is foreseen: Wind-tunnel testing in 2019, the first test phase in 2020, the first prototype flight in 2021. Flying Whales company plans to construct a plant in Bordeaux, for €90M, to produce 12 airships per year by 2022, ramping up to €5bn of sales within 10-years, from constructing 150 airships in France and China.
What Advantages?
Airships can rapidly reach places that trucks cannot, particularly in remote areas without naviable roads. They are helped by vertical take-off and landing (VTOL), and a system of a dozen winches, that can lower cargoes.
Airships can also carry large loads, up to 60T, at speeds up to 100kmph. For comparison, a typical truck carries c14T, a Sikorsky S-64 SkyCrane carries 9T and the largest Russian Mil Mi-26 helicopters can carry 20T.
Economics are better than helicopters. Flying Whales estimates that its deliveries could be 20x less expensive than helicopters, which can cost c$1M/day or at least $11,000/hour. The Flying Whales should cost c$50,000/day, which perhaps translates into c$5,000/hour. This is still much more pricey than a truck ($60-200/hour), making Flying Whales best suited to large loads in remote locations. The technology is unlikely to replace trucks on highways.
Wind turbines? Where these capabilities may best come together is in the delivery of wind turbine blades, where the logistics can be notoriously challenging (chart below). All three turbine blades could in principle be delivered as a single Flying Whales Cargo, slashing the c$30,000-100,000 delivery costs per turbine, that can be incurred in the onshore wind industry.
What Energy Economics?
The energy economics of Flying Whales’ airships should be a great improvement on helicopters, but still fall short of trucks, we estimate.
Specifically, the Flying Whales airships consume 1.5MW at peak cruise speeds around 100kmph. This power consumption is equivalent to c100 gallons of diesel per hour, fed into a diesel generator, which in turn feeds the propulsion units. Total fuel economy thus runs at 30 ton-miles per gallon (chart below).
By contrast, we estimate helicopters consume c5,000 gallons of jet fuel per hour, for fuel economies of 1.5 ton-miles per hour.
But trucks consume only c10 gallons of diesel per hour, for a fuel economy of c67 ton-miles per gallon.
Fuel consumption may also be higherfor large airships, during strong gusts of wind. To stabilize the Airships, they will contain 3MW ultracapacitors, to provide bursts of energy.
The most efficient freight delivery method remains via container ships and trucks, according to our data-file (chart below), which now also includes the calculations above for Airships.
We conclude that new airships may help deflate delivery costs in remote locations: particularly for onshore oil and gas, onshore wind and niches in the construction sector. But they are unlikely to displace materialy volumes of diesel demand, which remain in our models of long-run oil demand (chart below).
Source: Kuhlmann, H. F., (2019). Method for Transporting a Payload to a Target Location and Related Hybrid Airship, Patent WO2019092471A1
SuperMajors’ shale developments are assumed to differ from E&Ps’ mainly in their scale and access to capital. Superior technologies are rarely discussed. But new evidence is emerging. This 11-page note assesses 40 of Chevron’s shale patents from 2019, showing a vast array of data-driven technologies, to optimize every aspect of unconventionals.
Page 2 explains how we assessed Chevron’s shale patents, to identify technologies that could support guidance for 900kboed of Permian production by 2023.
Page 3 sets out Chevron’s technologies for shale exploration and appraisal, based on recent seismic patents.
Page 4 sets out Chevron’s technologies for shale drilling, based on recent patents, many of which are co-filed with Halliburton, around a specific innovation.
Pages 5-8 set out Chevron’s technologies for shale completions, through an array of sophisticated, proprietary and increasingly digital technologies. These will not only help in the Permian, but also in de-risking international basins.
Page 8 sets out Chevron’s potential edge in completion fluids. We are particularly excited by the promising results from field-tests of anionic surfactants.
Page 9 sets out Chevron’s data-driven flowback practices, including productivity gains from field tests in the Vaca Muerta.
Pages 10-11 set out Chevron’s technologies for upgrading NGLs into gasoline-, jet- and diesel-range products, using industry-leading ionic liquid catalysts.
Page 11 concludes with implications for the broader shale industry.
It is important for us to practice what we preach. Hence in 2019, we reduced our CO2 by 78% compared with a typical research/consulting firm, and purchased CO2-offsets for the remaining 5.6 tons (chart above). This 9-page note contains granular data on professional service firms’ emissions and opportunities to reduce them.
Thunder Said Energy’s CO2 emissions were 5.6 tons in 2019. 61% was from air travel, 4% from broader transport. 5% was running computers, 5% was data-servers and 3% was other electricity. 13% was materials, 7% was heating/cooling and 2% was shipping/freight (chart below).
We offset these emissions for just $87, purchasing verified carbon credits at $14.5/ton. Offset costs are low (chart below). More companies may choose to offset.
A typical consultant or industry analyst has a footprint of 25 tons of CO2 each year. Compared with this baseline, we saved 8 tons through a leaner organization, 7.5 tons by minimizing air travel (e.g., video conferences), 3 tons by remote working and 830kg by phasing out printed presentations.
For 2020, we also commit to be CO2-neutral. We would like to thank our clients for their support, as we limit our travel, print fewer materials and grow our organization.
Followers not leaders? In a commodity industry, it is important to invest with superior technologies, if you want to generate superior returns. Hence we have been relatively cautious on the Majors’ offshore wind investments. Commoditised, industry-standard technologies yield single-digit returns at best. Model it from a portfolio perspective, and the optimal portfolio allocation to undifferentiated renewables technology is just 5-13% (chart below, note here).
Leaders not followers. 2018 did include some encouraging solar innovations from Oil Majors, as reviewed in our data-file (below). But as we start reviewing 2019’s patent filings, we are looking for examples of Energy Majors developing superior technologies for traditional, offshore wind. Today’s note highlights an example…
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Equinor has patented a new wind monitoring methodology
Yaw misalignment is a challenge in the wind industry, denoting the variation of a wind turbine’s blades from their optimal orientation facing directly into the wind. It reduces turbines’ productivity, and exacerbates wear, shortening a project’s lifetime. It is particularly problematic for fixed and floating offshore wind turbines.
Current methods to orient turbine blades all have limitations.
Anemometers on the turbines’ nacelle can be used to measure wind direction (and strength), however, it is difficult to obtain accurate readings in the turbulent air behind rotor blades.
LiDAR can be measured on turbines, illuminating the target with a pulsed laser light and sensing the reflected pulses. However, LiDar is costly and can only mesaure one turbine at a time.
iSpin uses three ultrasonic sensors on the rotor’s spinner (i.e., the cone-shaped cover at the centre), but this requires expensive instrumentation on the turbine.
Equinor has patented a new approach: a computer vision method, which can identify the orientation of wind turbines’ rotor blade discs from visual images; taken via a UAV (drone), a satellite image or from a suitable fixed platform. Satellite imagery is most discussed in the patent (chart below), adding to our growing list of satellite applications in industry.
The methodology: Each turbine, and each blade disc are identified from the images, based on machine learning (similar to the algorithms used for facial recognition). The disc’s angle to the North line may be determined, and its blade diameter is tabulated. Outliers that are more than 3-, 5- or 8- degrees misaligned may be identified. Remedial action is taken for misaligned turbines, culminating in an O&M plan
Aadvantage of the method are that:
The images are “synoptic”, providing information about the overall state of the overall windfarm, to determine if any any one turbine is misaligned.
On site inspections are not necessary if the data are based off satellite imagery, helping to reduce opex, HSE risks and environmental footprint.
Appropriate flexibility can be incorporated. “Sometimes conditions may be turbulent and so all of the wind turbines may “see” a different wind direction”.
Economic opportunities: what is the impact on NPVs?
Equinor notes the opportunitythat if “all wind turbines can be kept properly aligned, production could be increased by 2%, worth c£8Mpa at a typical wind farm. We have replicated the calculations at our model of a typical US Offshore Wind project, finding a $10M uplift to annual cash flow is possible in a best case scenario, uplifting the project’s levered IRR by c0.5%, creating an additional c$100M of NPV6.
We remain prepared for a slowdown in offshore wind activity in Europe, as renewables are close to reaching saturation in heartland markets (chart below). But as the industry expands into new geographies, we remain hopeful that Energy Majors will be ‘leaders not followers’ as they participate in more projects.
Source:
Source: Keseric, N. & Hall, R. (2019). Wind turbine blade orientation detection. Equinor Patent, GB2568676A.
Investors may suffer if they do not consider the energy transition. But they may suffer more if they consider it, and get the answer wrong. We argue that the best way to drive the energy transition will be to maximise carbon-adjusted investment returns.
Our starting point is the chart below, which focuses on the power of compound interest, “the most powerful force in the universe” (the quote has been ascribed to Albert Einstein). This is not our usual tack — which focuses upon energy technologies, economics or quantifying CO2 — but purely mathematics…
The difference is enormous between compounding at, say, 4% and 12%. It may not sound material in any given year (“it’s just 8%”). But over a thirty year investment horizon, it makes the difference between a $100 initial investment rising to c$300 and $3,000 of value (i.e., a factor of 10x).
How this applies to the energy transition is that we currently observe institutional investors backing away from high-return (10-20% per year), industrial asset classes, which are feared to be high-carbon, towards low-returning asset classes (4-6% per year), which are perceived to be low-carbon.
For oil companies, the spread of opportunites is charted below (note here). Measured over any single year the difference may be imperceptible. But over 30-years it is vast.
By down-shifting from high-return assets to low-return assets, the costs of mitigating climate change end up falling upon the shoulders of institutional investors: endowments, foundations, hopeful retirees; as a hidden cost.
It is not for us to say whether this kind of hidden cost is morally right or wrong. But we can say that it is sub-optimal, in economic terms, because unlike a visible cost (e.g., a direct “carbon price”), it will not change behaviours in ways that actually drive decarbonisation.
No “incremental” energy transition occurs when investors divest from traditonal industrial sectors; and instead, outbid each other to finance the same renewable energy projects. A better alternative is needed.
Investment firms understand the challenge. This week, Blackrock’s CEO, Larry Fink, published a letter to CEOs, stating how climate change will “fundamentally re-shape finance”. What is not being reshaped, of course, is the maths of compound returns. Mr Fink’s letter begins by highlighting “we have a deep responsibility to institutions and individuals … to promote long-term value”. So how can this happen?
Three better alternatives for investors in the energy transition
In order to drive incremental energy transition, it is necessary to attract incremental capital. It must flow towards high-returning technologies and projects, which can drive decarbonization. This is our central tenet on investing for an energy transition. And it underpins the opportunities that excite us most in 2020 (chart below), which should all seek double-digit returns. Seen this way, climate change is not a cost to be passed on to investors, but a positive investment opportunity, to help meet a societal need.
A second alternative is to allocate more capital to companies that offer attractive returns and also have lower carbon contributions than their peers: such as lower-CO2 oil and gas producers, shale producers, refiners, midstream or chemicals companies. On any decarbonized energy model that we can construct, demand for gas will rise and demand for low carbon oil will not collapse. We have reams of data to help you with this screening. Often it is due to superior technologies.
Example: High- and low-CO2 producers ranked in the Bakken, https://thundersaidenergy.com/downloads/us-co2-and-methane-intensity-by-basin/
A third alternative could be to offset CO2directly, as you continue investing in high-returning, industrial companies. This still leaves investors paying for the cost of climate change out of their future returns. But the cost is much lower than if investment returns are sacrificed by divesting from industrial companies and funding renewables.
For example, we recently tabulated the costs of carbon credits, being offered by 15 separate offset schemes. Based on the data, we calculate that an investor could buy a SuperMajor oil company with an average distribution yield of 7%; offset their investment’s entire Scope 1&2 emissions for a drag of just 0.5pp; leaving their “zero carbon cash yield” at 6.5%. (It will be interesting which forward-thinking Super-Major is first to apply this logic and offer up such a “carbon-offset share class”).
The end point is that high carbon companies will see higher capital costs (and our survey work indicates this is already occurring, chart below). But how much higher? In an efficient carbon market, there is an easy answer: high enough so that the extra yield of Investment X (vs Investment Y) can be re-invested in carbon credits to offset the extra CO2 of Investment X (vs Investment Y).
These ‘carbon adjusted returns’ are directly comparable. The higher carbon- and risk- adjusted return equates to the better investment. The higher the carbon price, the higher the relative cost of capital for high-carbon companies; and the higher the relative incentive to lower emissions.
This system, we believe, will be much more sophisticated and effective in driving a full-scale energy transition that the blunt-force strategy of “divest from oil and buy renewables”. It will also not leave investors short-changed, by up to 90%, when they come to meet their budgeting or retirement needs in 2050.
Please do contact us if you have any observations, questions or comments; or would like to discuss some of the “long-term value” opportunities, which we think can help drive the energy transition…
Last year, we appeared on RealVision, advocating economic opportunities that can decarbonize the energy system. The “comments” and reactions to the video surprised us, suggesting the topic of energy transition is much more polarized than we had previously thought. It suggests that delivering an energy transition will need to be driven by economics, whereas polarized politics are historically dangerous.
The fist 50 comments from our RealVision interview are tabulated below. 17 were positive and enthusiastic (thank you for the kind words).
But a very surprising number, 16 of the comments, attacked the science of climate change. It is perhaps not a fully fair represenation, as those with extreme views are more likely to post comments in online forums. But 30% dissent is still surprisingly high. Read some of these comments, and it’s clear that fervent opinions are being expressed. Even moreso on our youtube link.
6 of the comments also challenged the politics behind energy transition, expressing concerns that some politicians are evoking fears over climate change in order to justify policies that are self-serving and only tangentially related to the issue.
These attacks are from an unusual direction. Living in New Haven, CT, we are more used to being criticised for seeing a continued, strong role for lower-carbon and carbon-offset fossil fuels in the decarbonised energy system (chart below).
Indeed, another sub-section of the comments argued that our views did not go far enough. 6 of the comments called for a greater emphasis on nuclear or hydrogen and continued vilification of traditional energy companies. Our economic analysis suggests economics will be challenging for hydrogen, while nuclear breakthroughs are not yet technically ready. But one commentator, for example, dismissed this analysis and said our views must be “ideologically driven”.
Mutual animosity was also clear in the comments section of the RealVision video. One comment reads “you are completely delusional..sorry that you got fed the wrong info by these fraudsters in suits and their little girl puppet. You’ll wake up to reality one day.” Another reads “let our kids and future generations figure it out like we had to from our forefathers!”. At last year’s Harvard-Yale football game, the protesters met any such criticism from the crowd with a chant of “OK boomer”.
Deadlock? Others in the comments section tried debating the climate science. One statement was criticised as a “typical ‘we know better’ argument”. Another commenter opined that all peer-reviewed scientific literature is “fraudulent”. The most sensible comment in the mix noted “very little space left between ‘Greta Evangelists’ and equally fanatical ‘haters'”. This appears right. It is a polarized, poisonous, deadlocked debate.
Historical parallels? Over the christmas break, I enjoyed reading James McPherson’s ‘Battle Cry of Freedom’, which described the gradual polarization of ante-bellum America, in the 25-years running up to the US Civil War. One cannot help seeing terrifying similarities. Animosity begat animosity. Eventually the whole country was divided by an ideology: abolitionists in slave-free states versus the unrepentant slave economies.
Ideological divides are also deepening in the energy space. 40% of world GDP has now declared itself on a path to zero carbon. What animosities will emerge between these carbon-free states and the unrepentant carbon economies?
Economic opportunitiesin energy technologies remain the best way we can see to deliver an energy transition without stoking dangerous animoisities. They will remain the central theme in our research in 2020, and we are aiming to stay out of the politics(!). Our RealVision video is linked here.
EOG patented a new digital technology in 2019: a load assembly which can be built into its rod pumps: to raise efficiency, lower costs and lower energy consumption. This 8-page note reviews the patent, illustrating how EOG is working to further digitize its processes, maximise productivity and minimise CO2 intensity.
Satellite-based analysis is gaining momentum, and features in three of our recent research reports. A step-change in resolution is helping to mitigate methane leaks and scale up low-carbon gas. It is possible to track Permian completion activity from space. We also suspect renewable growth may slow, as small-scale solar brings heartland markets closer to saturation. Satellite images should continue finding its way into commercial research, as data improves and costs deflate.
The Spy Who Loved Methane
If 3.5% of natural gas is “leaked” as it is commercialised, then it is debatable that natural gas may be a ‘dirtier’ fuel than coal, because methane causes 25-120x more radiative forcing than CO2. Hence it is crucial for the scale up of natural gas – and for the energy transition – that methane leaks are mitigated. Our recent note, ‘Catch Methane if you Can‘ outlined five breakthrough technologies to help, based on screening 34 companies and 150 patents (chart below).
Satellites were among the breakthrough technologies, with the capability to find methane leaks from space. This matters as c5% of super-emitting leaks comprise c50% of leaked methane volumes. But pinpointing these leaks – and who is reponsible for them – has not previously been possible. The current satellites in orbit have had spatial resolutions of 50-100 sq km and detection thresholds of 4-7Tons/hour. By 2022, this will improve to <1sq km spatial resolutions and c100kg/hour. Full details are contained in the note and data-file.
Tracking Shale Completions from Space?
Another debate in 2020 is whether the shale industry is slowing down, in activity terms, in productivity terms, or whether it is staring to re-accelerate. Based on reviewing 650 recent technical papers, we know the best companies are continuing to improve underlying productivity; while they can also re-attract capital and growth by touting low carbon credentials, with some ever potentially becoming “carbon neutral” .
Satellite imagery shows how the industry is consolidating. Below, using data from Terrabotics, we can count the number of completions in the Permian, by operator and by county, in 3Q19. The ‘Top 10’ companies now comprise half of all completion activity. For an introduction to Terrabotics, and their data, please contact us.
Renewables slow-down: Could it be soooner?
Another theme for 2020 is whether renewables growth will slow down, as heartland markets reach grid saturation. This was the precedent when Spain and Portugal reached 25% penetration of renewables in their grids. The UK, Germany and California could follow suit this year, as explored in detail here.
What is not quantified in our data-set of large-scale utility plants is small scale renewable penetration, such as rooftop solar. However, satellite are also starting to unearth these smaller-scale systems, finding them to be more extensive than expected. For example, Stanford’s “Deep Solar” project, has used machine learning to identify over 1.5M solar installations from 1bn satellite images. 5% of houses in California are found to have rooftop solar systems, suggesting renewables are even closer to their threshold.
How do you use satellites in your process?
We are incorporating satellite imagery into more of our research, as evidenced by the three examples above. We write about technologies in the energy space, but these technologies are also changing the commercial research space. We would be very interested to hear from you, if you have observations on the topic, or would like to discuss useful data sources.
We argue CO2-labelling is the most important policy-measure that can be taken to accelerate the energy transition: making products’ CO2-intensities visible, so they can sway purchasing decisions. There is precedent to expect 4-8% savings across global energy use, which will lower the net global costs of decarbonisation by $200-400bn pa. Digital technologies also support wider eco-labelling compared with the past. Leading companies are preparing their businesses.
Faster Efficiency gains are critical to decarbonisation. We model it is possible to fully decarbonise the world’s energy system by 2050: c17% by ramping renewables, 26% by shifting to less CO2-intensive fossil fuels (which still grow in absolute terms to 2050), 27% through carbon capture initiatives and 30% through industrial efficiency gains and demand-side technologies, which get “more for less” (chart below). To repeat, the largest contributor to eliminating 2050’s CO2 is using energy more efficiently.
A problem: consumers currently have almost no idea whether they are consuming energy efficiently when making purchasing decisions. particularly in the food industry, which can comprise up to 30% of an individual’s carbon footprint, at 2.5T of CO2e pp pa (chart below, data here). One recent study in Nature found that 1000 consumers under-estimated the CO2 emissions of their dietary items by as much as 10x [1]. 59% of consumers confess being confused which foods count as sustainable.
A few examples show how helpless we are at fore-knowing the carbon footprints of our purchases: How much more CO2 is there in 1kg of beef versus 1kg of vegetables? (the answer is a stark 13.5x, at 27kg vs 2kg). How about 1kg of cheese vs 1kg of milk (answer: 13.5kg vs 1.9kg). How about a typical book versus a typical tennis racquet? (answer: 6kg vs 3kg, chart below, data here). How about a “high CO2” versus a “low CO2” chocolate bar (6.5kg vs 0kg, as CO2-impact can vary 50x, within producers of the same product [2]). Is more CO2 saved by driving an electric car for a whole year or by forgoing a single Trans-Atlantic round-trip flight? (answer: both are around 2-3 tons). Are there any CO2-negative products for purchase? (there are, data here).
CO2 labelling must be a solution. If consumers are to favour lower carbon products, then knowledge is the first step. It is necessary to be able to compare and contrast products. This is “eco-labelling”: placing a label for the CO2 associated with each purchasing option. Ideally it is a numerical calculation, or more simply, a traffic-light (red, yellow, green) may be adopted.
Eco-Labelling in Practice: A Short History?
A precedent. CAFE standards for cars are the best-known, longest-running eco-labelling program. They go back to the 1973-4 oil crisis. Today, OEMs are required to use EPA-certified fuel economy test results and cannot advertise any other fuel economy metric for vehicles. Making fuel efficiency visible to consumers has been one driver behind the impressive 2% pa CAGR in US fuel economy (chart below).
Likewise, EU Ecolabels were established in 1992, to identify environmentally friendly products: at this time, 75% of fridges and freezers were rated as low efficiency (ratings D-G) while today, 98% are classed as highly efficient (ratings A++ or A+++), cutting their emissions by c7%. The label informs 85% of consumers’ purchasing decisions. What gets inspected by consumers is thus respected by suppliers.
Prior eco-labelling schemes have been attempted for broader consumer products, but the technology may not have been ready. The first supermarket carbon labelling program was implemented by Carbon Trust, in the UK, in 2006. It included Walkers Crisps, British Sugar and Quaker Oats. Tesco trialled carbon labels on milk, detergents, oranges and toilet paper in 2007, but the pilot was shelved in 2012, due to unforeseen costs and lack of take-up. Subsequent schemes have been trialed in Canada, Japan, Korea, Thailand, Switzerland, France, Finland and the US.
Digital technologies can help, making it easier to add up the CO2 associated with each input, at each successive stage of the supply chain, to yield a final estimate at the point of consumption. This will produce more precise estimates than in the past, which are more auditable and less expensive to compute.
The US already has a toehold, through the EPA’s FLIGHT tool, which covers most industrial facilities and has a broad coverage. For example, it recently allowed us to decompose Permian producers’ total CO2-intensities (chart below, data here).
Technology companies are emerging to make further progress. As an example, Ecoingot is using a mobile phone-based scanner alongside app based on calculations, RFIDs and retailer data to make products’ CO2 visible to consumers. It is working with Whole Foods, Walgreens and CVS. Climate Neutral also launched in 2018, to help brands declare their intent to eliminate CO2 emissions in their products.
Policies could help further.
One past challenge has been that disclosures are voluntary, which means lagging
producers have no incentive to identify themselves. Policies for mandatory
eco-labelling may change this. For example, Denmark has announced climate
labelling on food products will accompany its plan to become carbon neutral by
2050: stickers will be placed on all food products to improve consumer choice. A
petition is currently gathering signatures in Germany, lobbying for a similar
requirement.
Consumers support it. A recent YouGov survey
of 9,000 consumers, across seven countries, found 67% support for recognisable
CO2 labelling on products. 66% of survey participants also say
they would feel more positive about companies that can demonstrate they are
making efforts to reduce carbon footprint of their products.
Companies support it. In December-2018, Carbon Trust estimated it was doing 40-50x more life-cycle CO2 analyses than a decade ago, particularly in the business-to-business category. Case studies on its website include BT, Carlsberg, Dyson, Evian, GSK, Howdens, Samsung, Vodafone et al. Pick one of these examples at random, and you learn that a Dyson Airblade hand-dryer is 80% more energy-efficient than the industry standard. It is not just in the oil industry that carbon credentials are set to impact capital costs.
What are the impacts on decarbonisation?
Impacts of Eco-Labelling? A Norwegian study has measured a 9% reduction in meat consumption, after adding traffic-light eco-labels in a University cafeteria [3]. Likewise, an Australian super-market found a 15% reduction in the sales of “black-labelled” goods and a 8% increase in green-labelled goods, after implementing its own pilot [4]. More ambitiously, Tesco and WWF have launched a campaign to cut the environment impact of the average UK shopping basket by 50%.
Costs of Decarbonisation could be lowered by c$200bn per annum in our base case scenario, where an c8% CO2 saving is achieved on 50% of products (chart below). Thus a lower reliance upon CCS or reforestation is required in our decarbonisation models. The savings could surpass $1trn per annum if the reliance is lowered on costly green hydrogen technologies, although these do not currently feature heavily in our decarbonisation models. Double the savings from eco-labelling, if the practice can drive a c8% efficiency gain through the entire energy system, and $400bn of annual savings are achieved.
We conclude one of the most critical policy challenges to drive the energy transition is to mandate broad CO2-labelling of products, so that consumers can begin selecting lower-CO2 items, where today’s visibility is woefully poor. In turn, this will reward companies that improve their emissions and disfavor those that do not. Decarbonisation will not be achieved by making the energy industry into a Waste Land, but by strengthening its efficiency.
References
[1] Camilleri, A., Larrick R. P., Hossain, S. & Patino-Echeverri, D. (2019). Consumers underestimate the emissions associated with food but are aided by labels. Nature.
[2] Poore, J. & Nemecek, T. (201). Reducing food’s environmental impacts through producers and Consumers. Science 360 (6392) 987-992,.
[3]
Slapo, H. B. & Karevold, K. I. (2019). Simple Eco-Labels to Nudge Customers
Toward the Most Environmentally Friendly Warm Dishes: An Empirical Study in a
Cafeteria Setting.
[4] Vanclay, J.K., J. Shortiss, S. Auselbrook, A.M. Gillespie, B.C. Howell, R. Johanni, M.J. Maher, K.M. Mitchell, M.D. Stewart, and J. Yates. 2011. Customer Response to Carbon Labelling of Groceries. Journal of Consumer Policy 34: 153–160.
The key challenge for the US shale industry is to continue improving productivity per well, as illustrated repeatedly in our research. Hence, this short note reviews an advance in fracturing fluids, which has been patented by BP. Diverter compositions are optimised across successive pressurization cycles, to create dendritic fracture geometries, which will enhance stimulated rock volumes.
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BP has patented a novel regime of fracturing fluids,which can be deployed across multiple pressurization sequences in its shale completions. The first sequence contains permanent diverting agents, introduced to create bi-wing and large fractures, then flowed back. The second fluid contains temporary, near-field diverting agents, which will dissolve in situ, usually within 24-72 hours, to expand the fracture network. Similarly, the third fluid contains temporary, far-field diverting agents.
The purpose of this completion design is to create dendritic fracture geometries. The diverting agents prevent fracturing fluids from leaking into the formation, so that primary, then secondary, then tertiary fracture networks can be created independently, each improving reservoir fluid conductivity (chart below).
The approach is data-driven. The formation of new fractures, with increasingly dendritic geometries, can be inferred from a linear slope between instantaneous shut in pressures on successive pressurization cycles. The fracturing fluids’ composition is also said to be determined based on Instantaneous Shut in Pressures, in-situ stress calculations and flowback volumes.
The permanent diverting agents may comprise mesh proppant, walnut hulls, large grain size proppants or particulates, such as polylactic acid, benzoic acid flakes, rock salt, calcium carbonate pellets. Small mesh size is envisaged (40-70 to 100 mesh), with low concentrations (0-0.1 lb/gal) to mitigate the risk of screen-outs.
The temporary diverting agents are not specifically disclosed in the patent, but are intended to dissolve in response to temperature, salinity, pH or other parameters. They may be pumped alongside proppant or standalone.
The patent is increasing evidence that Oil Majors are now innovating at the cutting edge of shale, in order to drive productivities higher. For a review of which companies screen as having the most advanced shale technologies, from the patent literature, please see our recent note, Patent Leaders.
Source: Montgomery, R., Hines, C. & Reyna, A. (2018). Hydraulic Fracturing Systems and Methods. BP Patent US2018202274
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This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.
Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.
