Could new airships displace trucks?

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 teh 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 100kmpg. 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 higher for 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

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Will renewable growth slow down from 2020?

The growth of renewables has been revolutionary, with wind and solar emerging towards the bottom of the global cost curve, scaling up at a pace of 270TWH pa. However, we find unsettling evidence that the market could slow by c15% from 2020, plateauing in heartland geographies such as California, Germany and the UK. The rationale, and all the underlying data, are included in this 6-page PDF research report and associated Excel file.

Ramp Renewables? Portfolio Perspectives.

It is often said that Oil Majors should become Energy Majors by transitioning to renewables. But what is the best balance based on portfolio theory? Our 7-page note answers this question, by constructing a mean-variance optimisation model. We find a c0-20% weighting to renewables maximises risk-adjusted returns. The best balance is 5-13%. But beyond a c35% allocation, both returns and risk-adjusted returns decline rapidly.


Pages 2-3 outline our methodology for assessing the optimal risk-adjusted returns of a Major energy company’s portfolio, including the risk, return and correlations of traditional investment options: upstream, downstream and chemicals.

Page 4 quantifies the lower returns that are likely to be achieved on renewable investment options, such as wind, solar and CCS, based on our recent modeling.

Pages 5-6 present an “efficient frontier” of portfolio allocations, balanced between traditional investment options and renewables, with different risk and return profiles.

Pages 6-7 draw conclusions about the optimal portfolios, showing how to maximise returns, minimise risk and maximise risk-adjusted returns (Sharpe ratio).

The work suggests oil companies should primarily remain oil companies, working hard to improve the efficiency and lower the CO2-intensities of their base businesses.

Patent Leaders in Energy

Technology leadership is crucial in energy. It drives costs, returns and future resiliency. Hence, we have reviewed 3,000 recent patent filings, across the 25 largest energy companies, in order to quantify our “Top Ten” patent leaders in energy.


This 34-page note ranks the industry’s “Top 10 technology-leaders”: in upstream, offshore, deep-water, shale, LNG, gas-marketing, downstream, chemicals, digital and renewables.

For each topic, we profile the leading company, its edge and the proximity of the competition.

Companies covered by the analysis include Aramco, BP, Chevron, Conoco, Devon, Eni, EOG, Equinor, ExxonMobil, Occidental, Petrobras, Repsol, Shell, Suncor and TOTAL.


More information? Please do not hesitate to contact us, if you would like more information about accessing this document, or taking out a TSE subscription.

Good Batteries vs Bad Batteries?

We define a “good battery” as one that enhances the efficiency of the total energy system. Conversely, a “bad battery” diminishes it. This distinction matters and must not be overlooked in the world’s quest for cleaner energy. Electric Vehicles are most favoured, while grid-scale hydrogen is questioned.


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Oil Companies Drive the Energy Transition?

There is only one way to decarbonise the energy system: leading companies must find economic opportunities in better technologies. No other route can source sufficient capital to re-shape such a vast industry that spends c$2trn per annum. We outline seven game-changing opportunities. Leading energy Majors are already pursuing them in their portfolios, patents and venturing. Others must follow suit.


Pages 2-3 show that today’s technologies are not sufficient to decarbonise the global energy system, which will surpass 100,000TWH pa by 2050. Better technologies are needed.

Pages 4-6 show how Oil Majors are starting to accelerate the transition, by developing these game-changing technologies. The work draws on analysis of 3,000 patents, 200 venture investments and other portfolio tilts.

Pages 7-13 profile seven game-changing themes, which can deliver both the energy transition and vast economic opportunities in the evolving energy system. These prospects cover electric mobility, gas, digital, plastics, wind, solar and CCS. In each case, we find leading Oil companies among the front-runners.

Is the world investing enough in energy?

Global energy investment will need to rise by c$220-270bn per annum by 2025-30, according to the latest data from the IEA, which issued its ‘World Energy Investment’ report this week. We think the way to achieve this is via better energy technologies.

Specifically, the world invested $1.6bn in new energy supplies in 2018, which must be closer to $1.8-1.9bn, to meet future demand in 2025-30– whether emissions are tackled or not. The need for oil investment is most uncertain. More gas investment is needed in any scenario. And renewables investment must rise by 15-100%.

Note: data above includes $1.6trn investment in energy supplies and c$250bn in energy efficiency measures

Hence the report strikes a cautious tone: “Current market and policy signals are not incentivising the major reallocation of capital to low-carbon power and efficiency that would align with a sustainable energy future. In the absence of such a shift, there is a growing possibility that investment in fuel supply will also fall short of what is needed to satisfy growing demand”.

We do not think the conclusions are surprising. Our work surveying 50 investors last year found that fears over the energy transition are elevating capital costs for conventional energy investments (below).

Meanwhile, low returns make it challenging to invest at scale in renewables.

We argue better energy technologies are the antidote to attracting capital back into the industry. That is why Thunder Said Energy focuses on the opportunities arising from energy technologies. Please see further details in our recent note, ‘What the Thunder Said’. For all our ‘Top Technologies’ in energy, please see here.

References

IEA (2019). World Energy Investment. International Energy Agency.

Two Majors’ Secret Race for the Future of Offshore Wind?

An exciting aspiration in wind technology is to obviate large, expensive “towers”, and unleash tethered kites into the skies. They can access 2-4x more wind-power at greater altitudes, and at 50-90% lower costs. Intriguingly, we have discovered Exxon and Shell are at the forefront of pursuing this new wind opportunity offshore, based on their patents and filings.

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Why the Thunder Said?

Energy transition is underway. Or more specifically, five energy transitions are underway at the same time. They include the rise of renewables, shale oil, digital technologies, environmental improvements and new forms of energy demand. This is our rationale for establishing a new research consultancy, Thunder Said Energy, at the nexus of energy-technology and energy-economics.

This 8-page report outlines the ‘four goals’ of Thunder Said Energy; and how we hope we can help your process…


Pages 2-5 show how disruptive energy technologies are re-shaping the world: We see potential for >20Mbpd of Permian production, for natural gas to treble, for ‘digital’ to double Oil Major FCF, and for the emergence of new, multi-billion dollar companies and sub-industries amidst the energy transition.

Page 6 shows how we are ‘scoring’ companies: to see who is embracing new technology most effectively, by analysing >1,000 patents and >400 technical papers so far.

Page 7 compiles quotes from around the industry, calling for a greater focus on technology.

Page 8 explains our research process, and upcoming publication plans.

Under-investment risks in the energy transition?

Fears over the energy transition are now restricting investment in fossil fuels, based on our new paper, published in conjunction with the Oxford Institute for Energy Studies, linked here.    

They have elevated capital costsby 4-7% for oil and by c25% for coal, compared with the early 2010s.

  • One consequence will be to concentrate capital into renewables, gas,  and shorter-cycle oil projects (i.e.,  shale).
  • But there will also be negative consequences, risking long-run supply shortages of oil and coal.
  • Companies are also being pressured to ‘harvest’ their existing assets, rather than maximising potential value in the 2020s, which may impact valuations.  

For further details please see the full paper, linked here, or contact us.