Sunday, 14 June 2009
Japanese wooed by green policy
Published Date: 13 June 2009
THE Japanese are buying up hybrid cars, solar panels and energy-efficient TVs, wooed by government incentives designed to battle a recession while conserving energy.
Tax breaks and rebates on green cars have helped two hybrid vehicles, Toyota's Prius and Honda's Insight, become the best-selling models in Japan during the last two months.
Green 'supergrid' could plug Europe into renewable power by 2030, say scientists
By David Strahan
Sunday, 14 June 2009
Europe could build an electricity supply based entirely on renewable energy by 2030, according to scientists making a presentation at the House of Commons this week.
MPs will hear that an electricity "supergrid" across Europe and North Africa could solve the problem of the intermittency of wind turbines and solar power and dispense with the need for nuclear and "clean coal" power stations altogether.
The supergrid would stretch from Britain to Kazakhstan, and Scandinavia to Morocco, and transport huge amounts of renewable power back and forth to marry supply with demand.
MPs will hear from Dr Gregor Czisch, a German energy consultant who has devised a computer model which is based on historical weather and demand data. It is designed to find the cheapest electricity supply based wholly on renewables.
The supergrid would require tens of thousands of kilometres of overhead lines and undersea cables, and the entire system would cost more than €€1.5trn (£1.3trn) over 20 years.
Sunday, 14 June 2009
Europe could build an electricity supply based entirely on renewable energy by 2030, according to scientists making a presentation at the House of Commons this week.
MPs will hear that an electricity "supergrid" across Europe and North Africa could solve the problem of the intermittency of wind turbines and solar power and dispense with the need for nuclear and "clean coal" power stations altogether.
The supergrid would stretch from Britain to Kazakhstan, and Scandinavia to Morocco, and transport huge amounts of renewable power back and forth to marry supply with demand.
MPs will hear from Dr Gregor Czisch, a German energy consultant who has devised a computer model which is based on historical weather and demand data. It is designed to find the cheapest electricity supply based wholly on renewables.
The supergrid would require tens of thousands of kilometres of overhead lines and undersea cables, and the entire system would cost more than €€1.5trn (£1.3trn) over 20 years.
Our prize winner pumps up his effort
The Sunday Times
June 14, 2009
Tom Smith is still fighting for his dream after winning our £100,000 competition
Rachel Bridge
It has been a rollercoaster ride for Tom Smith since he won our Sunday Times One Minute Pitch competition four years ago. Back then, Smith, a Cambridge PhD, so impressed our panel of judges with his plans for a low-cost solar pump to help farmers in the developing world irrigate their crops that they unanimously decided he should be awarded the £100,000 prize.
His pump, which uses readily available heat sources, including sunshine, to provide energy to lift water from under the ground, was chosen from thousands of entries by Sunday Times readers.
Each of them had one minute to persuade our judges — who included Sir Tom Hunter, the entrepreneur, and Allan Leighton, Post Office chairman at the time – that their business idea deserved to secure the prize.
In the four years since walking away with the £100,000 cheque, Smith has come tantalisingly close to grasping his dream, but the downturn in the housing market has sent him temporarily crashing back to earth. The experience has left him older and wiser, but more determined than ever to turn his dream into reality.
Born in Cambridge and brought up in Haddenham, a small village in the Fens, Smith spent his childhood creating things, including model aircraft and a tree house. “I have always had an inventive spirit,” he said.
After leaving school he spent eight months in the Andes at an experimental farm that was trying to revive ancient farming techniques. It was here that he found an interest in agriculture in the developing world.
He returned to study physics at Imperial College London, and part-way through his course came up with the idea for his pump while on holiday in Paris.
“I was staying in a flat high up in a building and it was incredibly hot. I thought it must be possible to use some of the energy beating down on the roof to cool down the room. So I started to think about ways in which you can expand and contract fluids in pipes using temperature differences,” he said.
After winning our competition, Smith decided to focus on developing a commercial application for his pump in the shape of a more energy-efficient way of circulating hot water in domestic central-heating systems. He hoped that the revenue from this would be able to sustain his primary vision, the irrigation pump.
Everything went to plan at first. Smith found a partner for the project, Christos Markides, and they formed a company called Thermofluidics.
Cambridge University offered them the use of a laboratory for two years at a peppercorn rent to develop the central-heating aspect.
As a result, Smith managed to attract the interest of a large American industrial engineering company that wanted to help him take the project further. Thrilled, he spent a year negotiating a licensing deal and collaboration agreement.
In April last year, however, disaster struck. The American firm pulled out, citing the downturn in the construction market and leaving Smith back at square one. “We were negotiating with them for a long time and plugged all our efforts into that,” he said.
“The American company axed a whole load of projects and we were one of them. It was a big blow. We put too many eggs in that one basket because we believed that it was a sure basket.”
Smith tried to find another commercial partner, but by this time the recession had caused other firms to abandon research and development projects.
Smith could easily have given up, but he was still determined to push ahead with his solar pump, knowing the huge difference it would make to farmers in the developing world.
So after reassessing the situation, he and Markides are in the process of splitting their roles, with Markides taking over the development of the central-heating application and Smith putting all his efforts into developing his solar pump. “I decided that it was going to be now or never,” he said.
Last summer Smith moved to Devon, where Exeter University has made him an honorary fellow and is providing him with a laboratory and a place on the roof of the physics department to test the solar panels for the pump.
He is now putting together engineering drawings for a preproduction prototype and has identified several agricultural sites in the surrounding area where he will be able to do field trials.
Smith still has £50,000 of the £100,000 he won in our competition and is in the process of applying for more grants – helped by his ability to provide matched funding – in the hope of getting the pump into full commercial production in 2012.
It has been a long journey. Now 31, Smith has been working towards his dream for almost nine years, having in effect worked unpaid for all that time.
“It is pretty frustrating, especially when about 18 months ago things really looked as though they were going to take off in a big way,” he said.
“I thought it would happen a lot more quickly. But I am still solvent and I am still doing this and I have no plans to stop. Things could be a lot worse. If it weren’t for The Sunday Times prize, I would have to have given up a long time ago.”
He is still confident he will eventually achieve his goal. “Six months ago I wasn’t at all optimistic, but now I am quite hopeful that things will come together. I still believe it will happen,” he said.
HOW IT WORKS:
THE pump Tom Smith has developed is powered by the sun so it can be used in places that do not have electricity. And because it has no moving parts or precision components, it can be produced cheaply. Smith hopes that, once it goes into production, each one will cost about £50 to make.
The pump uses liquids and gases that expand and contract due to temperature differences. This can create enough pressure to raise water from underground.
June 14, 2009
Tom Smith is still fighting for his dream after winning our £100,000 competition
Rachel Bridge
It has been a rollercoaster ride for Tom Smith since he won our Sunday Times One Minute Pitch competition four years ago. Back then, Smith, a Cambridge PhD, so impressed our panel of judges with his plans for a low-cost solar pump to help farmers in the developing world irrigate their crops that they unanimously decided he should be awarded the £100,000 prize.
His pump, which uses readily available heat sources, including sunshine, to provide energy to lift water from under the ground, was chosen from thousands of entries by Sunday Times readers.
Each of them had one minute to persuade our judges — who included Sir Tom Hunter, the entrepreneur, and Allan Leighton, Post Office chairman at the time – that their business idea deserved to secure the prize.
In the four years since walking away with the £100,000 cheque, Smith has come tantalisingly close to grasping his dream, but the downturn in the housing market has sent him temporarily crashing back to earth. The experience has left him older and wiser, but more determined than ever to turn his dream into reality.
Born in Cambridge and brought up in Haddenham, a small village in the Fens, Smith spent his childhood creating things, including model aircraft and a tree house. “I have always had an inventive spirit,” he said.
After leaving school he spent eight months in the Andes at an experimental farm that was trying to revive ancient farming techniques. It was here that he found an interest in agriculture in the developing world.
He returned to study physics at Imperial College London, and part-way through his course came up with the idea for his pump while on holiday in Paris.
“I was staying in a flat high up in a building and it was incredibly hot. I thought it must be possible to use some of the energy beating down on the roof to cool down the room. So I started to think about ways in which you can expand and contract fluids in pipes using temperature differences,” he said.
After winning our competition, Smith decided to focus on developing a commercial application for his pump in the shape of a more energy-efficient way of circulating hot water in domestic central-heating systems. He hoped that the revenue from this would be able to sustain his primary vision, the irrigation pump.
Everything went to plan at first. Smith found a partner for the project, Christos Markides, and they formed a company called Thermofluidics.
Cambridge University offered them the use of a laboratory for two years at a peppercorn rent to develop the central-heating aspect.
As a result, Smith managed to attract the interest of a large American industrial engineering company that wanted to help him take the project further. Thrilled, he spent a year negotiating a licensing deal and collaboration agreement.
In April last year, however, disaster struck. The American firm pulled out, citing the downturn in the construction market and leaving Smith back at square one. “We were negotiating with them for a long time and plugged all our efforts into that,” he said.
“The American company axed a whole load of projects and we were one of them. It was a big blow. We put too many eggs in that one basket because we believed that it was a sure basket.”
Smith tried to find another commercial partner, but by this time the recession had caused other firms to abandon research and development projects.
Smith could easily have given up, but he was still determined to push ahead with his solar pump, knowing the huge difference it would make to farmers in the developing world.
So after reassessing the situation, he and Markides are in the process of splitting their roles, with Markides taking over the development of the central-heating application and Smith putting all his efforts into developing his solar pump. “I decided that it was going to be now or never,” he said.
Last summer Smith moved to Devon, where Exeter University has made him an honorary fellow and is providing him with a laboratory and a place on the roof of the physics department to test the solar panels for the pump.
He is now putting together engineering drawings for a preproduction prototype and has identified several agricultural sites in the surrounding area where he will be able to do field trials.
Smith still has £50,000 of the £100,000 he won in our competition and is in the process of applying for more grants – helped by his ability to provide matched funding – in the hope of getting the pump into full commercial production in 2012.
It has been a long journey. Now 31, Smith has been working towards his dream for almost nine years, having in effect worked unpaid for all that time.
“It is pretty frustrating, especially when about 18 months ago things really looked as though they were going to take off in a big way,” he said.
“I thought it would happen a lot more quickly. But I am still solvent and I am still doing this and I have no plans to stop. Things could be a lot worse. If it weren’t for The Sunday Times prize, I would have to have given up a long time ago.”
He is still confident he will eventually achieve his goal. “Six months ago I wasn’t at all optimistic, but now I am quite hopeful that things will come together. I still believe it will happen,” he said.
HOW IT WORKS:
THE pump Tom Smith has developed is powered by the sun so it can be used in places that do not have electricity. And because it has no moving parts or precision components, it can be produced cheaply. Smith hopes that, once it goes into production, each one will cost about £50 to make.
The pump uses liquids and gases that expand and contract due to temperature differences. This can create enough pressure to raise water from underground.
Slump may swamp eco city
The Sunday Times
June 14, 2009
The property crash has cast doubts over plans for a green metropolis in Florida that has the backing of Bill Clinton
Dominic Rushe
In Central Florida, where the Ronald Reagan Turnpike meets Highway 441, lies a largely empty area of old cattle ranches and swamp known locally as Yeehaw Junction. Over the next decade property developers backed by a fast-food billionaire, and with the blessing of Bill Clinton, the former president, hope to turn the site into an eco city the size of Washington DC. If, that is, they can ever get the plans off the drawing board.
Destiny Florida is being developed by the property entrepreneur Anthony Pugliese and is backed by Fred DeLuca, the billionaire co-founder of Subway, the sandwich chain. It is far more ambitious than the usual Florida land grab.
Destiny intends to be green from the ground up, a hub of eco-friendly business built round an environmentally friendly city that will preserve much of the rich local landscape. When finished, Pugliese hopes that “Destiny will position itself not just as the global model for sustainable building in the 21st century but also become the hub of green technology — like a [green] Silicon Valley for the United States, if not the world.”
His plans, now being drawn up by Arup, the London-based design and engineering firm, certainly seem to have impressed Clinton. But some critics are already doubting Destiny’s green credentials, claiming that its plans are nebulous and getting more so. A failure in Florida would be a black eye for the Clinton Climate Initiative, which supports “climate positive” developments in mainly urban areas.
Destiny is the largest of 16 sites chosen by Clinton alongside projects in London, Berlin, San Francisco and Warsaw. His approval has already attracted global interest from firms looking for a green base for their operations, said Pugliese, though he declined to give names, citing non-disclosure agreements.
While most of the other Clinton-backed schemes are developments of urban areas, Destiny intends to build a city from scratch covering 64 square miles and producing energy to meet at least 50% of its own demands.
The first building, a green-friendly petrol station selling ethanol and services for electric cars as well as regular fuels, is already under construction.
The city will be designed using green technology throughout, said Pugliese. “We don’t want to end up designing beautiful buildings and then plopping on solar panels. The idea is to design buildings that provide for solar panels and to design buildings that can incorporate all types of new technologies.”
Half the world’s population now lives in cities and that figure is expected to grow to 70% by 2050. Cities occupy only 2% of the world’s land area, yet they are responsible for more than two-thirds of global energy use and greenhouse-gas emissions.
Clinton’s “climate positive” developments will strive to reduce the amount of on-site carbon-dioxide emissions to below zero. In Destiny, solar panels will be used to supply power to homes and to feed into the grid. Rubbish from restaurants will be composted and grass cuttings will be made into fertiliser. LED lighting will be used in place of less energy efficient incandescent units.
Destiny also hopes to lead the way on water. The city will aim to capture as much rain water as possible and reuse “grey” water from sinks, showers and kitchens to irrigate vegetation as well as using local supplies of brackish water (more salty than fresh) wherever possible.
Even the golf course will eschew the legions of sprinklers usually associated with hot-weather ranges in favour of greens using less thirsty grass. “Water is going to become a big issue everywhere we go in the future. It’s probably going to be more scarce than oil,” said Pugliese.
Central Florida is the least developed area in this densely populated state. It also happens to be an area of outstanding bio-diversity, home to rare plants and animals. Without sensitive planning all this could be lost, said Pugliese.
He hopes to start construction by 2011 and the project could take 25 to 50 years to complete. “The fortunate part is that we are starting with a clean canvas,” he said.
However, Destiny has more than ecological challenges to overcome in Florida. The property crash has hit the region hard. Florida is second only to Nevada in the number of repossessions and the state now has so many abandoned homes that the authorities are concerned the untended properties will create an extra hazard during the forthcoming hurricane season.
Destiny is not selling homes yet but it will need to raise cash – cash that is still in short supply. The credit crunch “hasn’t affected us because we are not putting infrastructure into the ground at this time”, said Pugliese, adding that Subway’s DeLuca had been “very important” in the funding of the project. “Right now, we are self-funding,” he said, but Destiny would look at raising money through bond issues and possibly through taxes on residents.
Eric Draper, policy director of Audubon, the conservation group, said that “conceptually” he was supportive of Destiny’s plans to set aside land for eco systems. He said its scientists had seen early plans but were “not aware of specifics at this point”. Charles Lee, Florida-based director of advocacy for Audubon, was less diplomatic. Destiny’s plans had become “nebulous”, he said. “They have gone through a couple of team leaders and, with each change in the team, things have become fuzzier and fuzzier,” he said. “It’s flopping around like a fish on the land.”
Pugliese responded: “I don’t understand what he’s talking about. Our plans have only gotten better. We have studied every square inch so that we know where wildlife corridors are, where wetlands are, where environmentally sensitive plants are and animals. We understand the land and have only taken areas for building that have been disturbed and cannot be saved.
“There is always going to be someone who doesn’t want you to build anything, ever again. They are the last ones to move to Florida and they don’t want anyone else to come here. But that’s not very practical and that’s not going to happen.”
Given Florida’s demographics, the odds are that some new development will rise out of Yeehaw Junction. The credit crisis will ease, property markets will recover, green businesses will want new homes. As Pugliese goes back to the drawing board, though, a bigger question remains: how green is Destiny’s destiny?
June 14, 2009
The property crash has cast doubts over plans for a green metropolis in Florida that has the backing of Bill Clinton
Dominic Rushe
In Central Florida, where the Ronald Reagan Turnpike meets Highway 441, lies a largely empty area of old cattle ranches and swamp known locally as Yeehaw Junction. Over the next decade property developers backed by a fast-food billionaire, and with the blessing of Bill Clinton, the former president, hope to turn the site into an eco city the size of Washington DC. If, that is, they can ever get the plans off the drawing board.
Destiny Florida is being developed by the property entrepreneur Anthony Pugliese and is backed by Fred DeLuca, the billionaire co-founder of Subway, the sandwich chain. It is far more ambitious than the usual Florida land grab.
Destiny intends to be green from the ground up, a hub of eco-friendly business built round an environmentally friendly city that will preserve much of the rich local landscape. When finished, Pugliese hopes that “Destiny will position itself not just as the global model for sustainable building in the 21st century but also become the hub of green technology — like a [green] Silicon Valley for the United States, if not the world.”
His plans, now being drawn up by Arup, the London-based design and engineering firm, certainly seem to have impressed Clinton. But some critics are already doubting Destiny’s green credentials, claiming that its plans are nebulous and getting more so. A failure in Florida would be a black eye for the Clinton Climate Initiative, which supports “climate positive” developments in mainly urban areas.
Destiny is the largest of 16 sites chosen by Clinton alongside projects in London, Berlin, San Francisco and Warsaw. His approval has already attracted global interest from firms looking for a green base for their operations, said Pugliese, though he declined to give names, citing non-disclosure agreements.
While most of the other Clinton-backed schemes are developments of urban areas, Destiny intends to build a city from scratch covering 64 square miles and producing energy to meet at least 50% of its own demands.
The first building, a green-friendly petrol station selling ethanol and services for electric cars as well as regular fuels, is already under construction.
The city will be designed using green technology throughout, said Pugliese. “We don’t want to end up designing beautiful buildings and then plopping on solar panels. The idea is to design buildings that provide for solar panels and to design buildings that can incorporate all types of new technologies.”
Half the world’s population now lives in cities and that figure is expected to grow to 70% by 2050. Cities occupy only 2% of the world’s land area, yet they are responsible for more than two-thirds of global energy use and greenhouse-gas emissions.
Clinton’s “climate positive” developments will strive to reduce the amount of on-site carbon-dioxide emissions to below zero. In Destiny, solar panels will be used to supply power to homes and to feed into the grid. Rubbish from restaurants will be composted and grass cuttings will be made into fertiliser. LED lighting will be used in place of less energy efficient incandescent units.
Destiny also hopes to lead the way on water. The city will aim to capture as much rain water as possible and reuse “grey” water from sinks, showers and kitchens to irrigate vegetation as well as using local supplies of brackish water (more salty than fresh) wherever possible.
Even the golf course will eschew the legions of sprinklers usually associated with hot-weather ranges in favour of greens using less thirsty grass. “Water is going to become a big issue everywhere we go in the future. It’s probably going to be more scarce than oil,” said Pugliese.
Central Florida is the least developed area in this densely populated state. It also happens to be an area of outstanding bio-diversity, home to rare plants and animals. Without sensitive planning all this could be lost, said Pugliese.
He hopes to start construction by 2011 and the project could take 25 to 50 years to complete. “The fortunate part is that we are starting with a clean canvas,” he said.
However, Destiny has more than ecological challenges to overcome in Florida. The property crash has hit the region hard. Florida is second only to Nevada in the number of repossessions and the state now has so many abandoned homes that the authorities are concerned the untended properties will create an extra hazard during the forthcoming hurricane season.
Destiny is not selling homes yet but it will need to raise cash – cash that is still in short supply. The credit crunch “hasn’t affected us because we are not putting infrastructure into the ground at this time”, said Pugliese, adding that Subway’s DeLuca had been “very important” in the funding of the project. “Right now, we are self-funding,” he said, but Destiny would look at raising money through bond issues and possibly through taxes on residents.
Eric Draper, policy director of Audubon, the conservation group, said that “conceptually” he was supportive of Destiny’s plans to set aside land for eco systems. He said its scientists had seen early plans but were “not aware of specifics at this point”. Charles Lee, Florida-based director of advocacy for Audubon, was less diplomatic. Destiny’s plans had become “nebulous”, he said. “They have gone through a couple of team leaders and, with each change in the team, things have become fuzzier and fuzzier,” he said. “It’s flopping around like a fish on the land.”
Pugliese responded: “I don’t understand what he’s talking about. Our plans have only gotten better. We have studied every square inch so that we know where wildlife corridors are, where wetlands are, where environmentally sensitive plants are and animals. We understand the land and have only taken areas for building that have been disturbed and cannot be saved.
“There is always going to be someone who doesn’t want you to build anything, ever again. They are the last ones to move to Florida and they don’t want anyone else to come here. But that’s not very practical and that’s not going to happen.”
Given Florida’s demographics, the odds are that some new development will rise out of Yeehaw Junction. The credit crisis will ease, property markets will recover, green businesses will want new homes. As Pugliese goes back to the drawing board, though, a bigger question remains: how green is Destiny’s destiny?
Rush for ‘easiest oil in the world’
The oil giants are to return to Iraq for the first time since 1972
Danny Fortson
This month an Iraqi politician will appear on television to open envelopes and reveal the winners of a long and hard-fought contest. In the balance hangs the wellbeing of 28m people, tens of billions of dollars of contracts and how much you and I pay for everything from yoghurt pots to petrol.
It should make good viewing. For the hopeful contestants, it has been a long wait — since 1972 to be exact. That was when the Iraqi oil industry was nationalised and foreign operators were booted out.
Now the oil giants have been invited back. At the ceremony on June 29 and 30, Hussain al-Shahristani, the oil minister, will reveal which of them will be the first to be let back into the south of the country, where most of its oil and gas resources are found.
Up for grabs are 20-year concessions to operate six huge oilfields and two gas fields. In all, 32 companies are bidding, including BP, Shell, Sinopec of China, Lukoil of Russia and Total of France.
“It’s a once-in-a-lifetime opportunity,” said Manouchehr Takin, analyst at the Centre for Global Energy Studies. “Fields like this don’t exist anywhere else in the world.”
The excitement is understandable. Iraq owns the world’s largest oil reserves after Saudi Arabia and Iran, but produces the same amount per day, about 2.5m barrels, that it did in 1976. Decades of underinvestment, wars, Saddam Hussein’s regime, and political infighting have meant that hundreds of billions of dollars worth of the black stuff have remained underground.
There have been many false dawns, however, and jumping back into the oil industry in Iraq brings as much risk as opportunity.
The country is still occupied by more than 130,000 American troops and nobody can be sure how the security situation will hold up. Visitors to Kurdistan, the most stable part of the country and where many of the early oil deals have been struck, still travel in armed convoy. Hotels are cordoned off behind blast walls patrolled by guards wielding AK47s.
The contracts have been put out to tender but a highly controversial hydrocarbon law — intended to govern how oil proceeds are split among the population – remains locked in parliament, more than four years after it was first proposed.
Al-Shahristani is fighting for his political life. He has been heavily criticised in recent weeks by MPs angry about the stagnation of the industry at a time when the country desperately needs revenue.
Yet the oil companies are unfazed by the uncertainty. Iraq is sitting on 115 billion barrels of proven reserves. At a time when explorers are going to great lengths to get at new sources, Iraq’s is the “easiest” oil in the world. It costs between $2 and $4 a barrel to extract, compared with $50 or more for tar sands or deep-sea drilling.
In its annual review of world energy, BP announced last week that global reserves fell for the first time in more than a decade. Lambert Energy, a consultancy, predicts that at present rates of decline the world will need 40m barrels a day of new production capacity within a decade just to keep up with current demand.
Philip Lambert, its founder, said: “The world needs Iraq, both the north and the south, to work. There is nothing else that can fill the gap.”
So will this latest initiative succeed? Industry insiders say it has a good chance. On June 1, Jalal Talabani, the Iraqi president, hosted a gala ceremony celebrating the connection of a pipeline out of Kurdistan, in the north of the country. It was a momentous occasion. It connected two fields, Taq Taq and Tawke – the first to be developed since the 1970s – to the port of Ceyhan in Turkey.
Talabani’s presence was key. Since 2003, the Baghdad government and Erbil, the capital of the semi-autonomous Kurdistan, have been locked in a bitter row. Ashti Hawrami, the Kurdish oil minister, has signed 30 contracts with foreign companies without the blessing of the federal oil ministry. These so-called production-sharing agreements are generous. They give oil companies a 10%-20% cut of revenues.
The deals infuriated Al-Shahristani, who blacklisted any company that dealt with the Kurds. That is why no big oil company entered the region, leaving it to minnows such as Heritage Oil, Addax Petroleum and Norway’s DNO.
Talabani’s blessing at the opening was seen as a shift in the government’s stance. Uncertainties remain, though. The Kurdish contracts have yet to be ratified by parliament, while the law to determine how oil income – 95% of Iraq’s GDP – will be distributed remains mired in controversy.
The deals offered to the oil giants in the south won’t be nearly as attractive as those in Kurdistan. They are technical contracts, under which companies are paid a fee to increase production. Oil groups have found such deals in other countries such as Iran unappealing. However, the contracts do provide for additional payments if production targets are passed.
Fortunes are already being made. Last week Heritage, the group run by Tony Buckingham, agreed a merger with Genel Enerji, a Turkish group that shares ownership of the Taq Taq and Tawke fields. After the deal, Buckingham’s 16% stake in the new group, which is set to enter the FTSE 100, will be worth about $1 billion (£610m).
Sinopec and Korea National Oil Company are circling Addax , the London and Toronto-listed group that also has operations in Kurdistan. It could be taken over for as much as $8 billion, which would mean a $2 billion payday for boss Jean Claude Gandur, who owns about a third of the firm.
Since 2003, the oil giants have been manoeuvring for position. BP sent in workers to help the government carry out field studies.
The big prizes lie in exploration because much of the country’s oil remains undiscovered – Takin estimates that up to 200 billion barrels could be realised – and that would put Iraq comfortably ahead of Saudi Arabia as the world’s largest owner of oil reserves.
The Iraqi government will this year auction off new blocks for exploration. Paul Atherton, chief financial officer of Heritage Oil, said: “It’s all about getting in early and cherry-picking the best assets.”
Danny Fortson
This month an Iraqi politician will appear on television to open envelopes and reveal the winners of a long and hard-fought contest. In the balance hangs the wellbeing of 28m people, tens of billions of dollars of contracts and how much you and I pay for everything from yoghurt pots to petrol.
It should make good viewing. For the hopeful contestants, it has been a long wait — since 1972 to be exact. That was when the Iraqi oil industry was nationalised and foreign operators were booted out.
Now the oil giants have been invited back. At the ceremony on June 29 and 30, Hussain al-Shahristani, the oil minister, will reveal which of them will be the first to be let back into the south of the country, where most of its oil and gas resources are found.
Up for grabs are 20-year concessions to operate six huge oilfields and two gas fields. In all, 32 companies are bidding, including BP, Shell, Sinopec of China, Lukoil of Russia and Total of France.
“It’s a once-in-a-lifetime opportunity,” said Manouchehr Takin, analyst at the Centre for Global Energy Studies. “Fields like this don’t exist anywhere else in the world.”
The excitement is understandable. Iraq owns the world’s largest oil reserves after Saudi Arabia and Iran, but produces the same amount per day, about 2.5m barrels, that it did in 1976. Decades of underinvestment, wars, Saddam Hussein’s regime, and political infighting have meant that hundreds of billions of dollars worth of the black stuff have remained underground.
There have been many false dawns, however, and jumping back into the oil industry in Iraq brings as much risk as opportunity.
The country is still occupied by more than 130,000 American troops and nobody can be sure how the security situation will hold up. Visitors to Kurdistan, the most stable part of the country and where many of the early oil deals have been struck, still travel in armed convoy. Hotels are cordoned off behind blast walls patrolled by guards wielding AK47s.
The contracts have been put out to tender but a highly controversial hydrocarbon law — intended to govern how oil proceeds are split among the population – remains locked in parliament, more than four years after it was first proposed.
Al-Shahristani is fighting for his political life. He has been heavily criticised in recent weeks by MPs angry about the stagnation of the industry at a time when the country desperately needs revenue.
Yet the oil companies are unfazed by the uncertainty. Iraq is sitting on 115 billion barrels of proven reserves. At a time when explorers are going to great lengths to get at new sources, Iraq’s is the “easiest” oil in the world. It costs between $2 and $4 a barrel to extract, compared with $50 or more for tar sands or deep-sea drilling.
In its annual review of world energy, BP announced last week that global reserves fell for the first time in more than a decade. Lambert Energy, a consultancy, predicts that at present rates of decline the world will need 40m barrels a day of new production capacity within a decade just to keep up with current demand.
Philip Lambert, its founder, said: “The world needs Iraq, both the north and the south, to work. There is nothing else that can fill the gap.”
So will this latest initiative succeed? Industry insiders say it has a good chance. On June 1, Jalal Talabani, the Iraqi president, hosted a gala ceremony celebrating the connection of a pipeline out of Kurdistan, in the north of the country. It was a momentous occasion. It connected two fields, Taq Taq and Tawke – the first to be developed since the 1970s – to the port of Ceyhan in Turkey.
Talabani’s presence was key. Since 2003, the Baghdad government and Erbil, the capital of the semi-autonomous Kurdistan, have been locked in a bitter row. Ashti Hawrami, the Kurdish oil minister, has signed 30 contracts with foreign companies without the blessing of the federal oil ministry. These so-called production-sharing agreements are generous. They give oil companies a 10%-20% cut of revenues.
The deals infuriated Al-Shahristani, who blacklisted any company that dealt with the Kurds. That is why no big oil company entered the region, leaving it to minnows such as Heritage Oil, Addax Petroleum and Norway’s DNO.
Talabani’s blessing at the opening was seen as a shift in the government’s stance. Uncertainties remain, though. The Kurdish contracts have yet to be ratified by parliament, while the law to determine how oil income – 95% of Iraq’s GDP – will be distributed remains mired in controversy.
The deals offered to the oil giants in the south won’t be nearly as attractive as those in Kurdistan. They are technical contracts, under which companies are paid a fee to increase production. Oil groups have found such deals in other countries such as Iran unappealing. However, the contracts do provide for additional payments if production targets are passed.
Fortunes are already being made. Last week Heritage, the group run by Tony Buckingham, agreed a merger with Genel Enerji, a Turkish group that shares ownership of the Taq Taq and Tawke fields. After the deal, Buckingham’s 16% stake in the new group, which is set to enter the FTSE 100, will be worth about $1 billion (£610m).
Sinopec and Korea National Oil Company are circling Addax , the London and Toronto-listed group that also has operations in Kurdistan. It could be taken over for as much as $8 billion, which would mean a $2 billion payday for boss Jean Claude Gandur, who owns about a third of the firm.
Since 2003, the oil giants have been manoeuvring for position. BP sent in workers to help the government carry out field studies.
The big prizes lie in exploration because much of the country’s oil remains undiscovered – Takin estimates that up to 200 billion barrels could be realised – and that would put Iraq comfortably ahead of Saudi Arabia as the world’s largest owner of oil reserves.
The Iraqi government will this year auction off new blocks for exploration. Paul Atherton, chief financial officer of Heritage Oil, said: “It’s all about getting in early and cherry-picking the best assets.”
Isentropic: Rock battery could store electricity
Cambridge firm finds way to save excess power in gravel
Danny Fortson
POWER from the wind and the sun is the future, we are told. There’s just one snag – these power sources aren’t dependable. Unless there is a way to store electricity in times of plenty we will need a lot of back-up power, probably fossil-fuelled, to tide us over when the clouds move in or the wind stops blowing. And that’s not very green.
Isentropic, a five-man outfit in Cambridge, thinks it has the answer: a gravel battery. It may sound distinctly low-tech, but the company has come up with some clever engineering to make tanks of rocks into electricity stores. It comes from an idea pioneered in the 1830s by John Ericsson, the prolific Swedish inventor who designed a hot-air engine and the USS Monitor, the ironclad warship of the American civil war.
Mark Wagner, a former hedge-fund manager who is now the company’s chairman, said Isentropic came about because of another boat. A sailing enthusiast, he was on the lookout for new hydrofoil designs in his attempt to set a world speed record.
When he came across a novel model on the internet, he called its designer, John Howes, an engineer at the Civil Aviation Authority. “We worked on the boat for a while, but then he told me about this heat pump he was working on.” That was eight years ago.
Isentropic’s “battery” works like this. An electrical current feeds a heat pump, a bigger version of the device that keeps your fridge cold. The fridge in your kitchen uses electricity to drive a tiny heat pump to create a temperature split, chilling the inside of the fridge and warming the back.
Isentropic’s system uses Howes’s pump to heat argon gas to 500C on one side while cooling it to -150C on the other. The hot and cold gas is then passed through two giant gravel tanks, heating one and cooling the other. The power is stored in the gravel as a temperature difference.
When power is needed, the process can be instantly reversed and the heat pump now works like an engine — the extreme temperatures are brought together and turn the engine, which powers a generator to create electricity.
Today most of the world’s electricity storage systems are based on hydro-electric schemes with two reservoirs. When power is needed, water is released from the top reservoir to drive a turbine and then pass into the lower reservoir. When there is surplus power, the turbine pumps water back up to the higher reservoir. The disadvantage is that it takes a huge amount of power to pump the water back up. Dinorwig hydro station in Wales is run only at times of peak demand, when prices are highest.
Wagner said his team has proved the technology with a pair of prototypes and is now looking for funding to build a demonstration plant. Between him, the other founders and a handful of private investors, they have invested about £1.5m so far. Other companies are working on a similar technology including Saipem, the French industrial giant.
Danny Fortson
POWER from the wind and the sun is the future, we are told. There’s just one snag – these power sources aren’t dependable. Unless there is a way to store electricity in times of plenty we will need a lot of back-up power, probably fossil-fuelled, to tide us over when the clouds move in or the wind stops blowing. And that’s not very green.
Isentropic, a five-man outfit in Cambridge, thinks it has the answer: a gravel battery. It may sound distinctly low-tech, but the company has come up with some clever engineering to make tanks of rocks into electricity stores. It comes from an idea pioneered in the 1830s by John Ericsson, the prolific Swedish inventor who designed a hot-air engine and the USS Monitor, the ironclad warship of the American civil war.
Mark Wagner, a former hedge-fund manager who is now the company’s chairman, said Isentropic came about because of another boat. A sailing enthusiast, he was on the lookout for new hydrofoil designs in his attempt to set a world speed record.
When he came across a novel model on the internet, he called its designer, John Howes, an engineer at the Civil Aviation Authority. “We worked on the boat for a while, but then he told me about this heat pump he was working on.” That was eight years ago.
Isentropic’s “battery” works like this. An electrical current feeds a heat pump, a bigger version of the device that keeps your fridge cold. The fridge in your kitchen uses electricity to drive a tiny heat pump to create a temperature split, chilling the inside of the fridge and warming the back.
Isentropic’s system uses Howes’s pump to heat argon gas to 500C on one side while cooling it to -150C on the other. The hot and cold gas is then passed through two giant gravel tanks, heating one and cooling the other. The power is stored in the gravel as a temperature difference.
When power is needed, the process can be instantly reversed and the heat pump now works like an engine — the extreme temperatures are brought together and turn the engine, which powers a generator to create electricity.
Today most of the world’s electricity storage systems are based on hydro-electric schemes with two reservoirs. When power is needed, water is released from the top reservoir to drive a turbine and then pass into the lower reservoir. When there is surplus power, the turbine pumps water back up to the higher reservoir. The disadvantage is that it takes a huge amount of power to pump the water back up. Dinorwig hydro station in Wales is run only at times of peak demand, when prices are highest.
Wagner said his team has proved the technology with a pair of prototypes and is now looking for funding to build a demonstration plant. Between him, the other founders and a handful of private investors, they have invested about £1.5m so far. Other companies are working on a similar technology including Saipem, the French industrial giant.
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