Peak oil – the moment when global oil production reaches its maximum and then begins a gradual, yet inevitable decline – could be here already, according to some analysts. Or it could be decades away, as most of the world's top government energy agencies say.

Now Fatih Birol, the chief economist at the International Energy Agency, is saying that the globe will see oil production peak in 2020 – about a decade earlier than most official government predictions.

British newspaper The Independent published an interview with Birol on Monday that laid out that prediction, along with statistics that show that the world's 800 largest oil fields are seeing a 6.7 annual decline in production, worse than the 3.7 percent decline the agency estimated in 2007.

The prospect of peak oil is a critical one for the modern global economy, since almost all transportation fuel needs, and a good part of the rest of society's energy demands, are filled by petroleum products.

While a peak in production doesn't imply that the oil will run out at that time, it does imply that increasing demand won't be able to be met by increased production, which could lead to a drastic spike in the price of oil.

That could stall or even reverse any upturn for the global economy, Birol said, given that the alternative – to find "the equivalent of four Saudi Arabias" in new oil supplies – seems unlikely.

"Many people think there will be a recovery in a few years' time but it will be a slow recovery and a fragile recovery and we will have the risk that the recovery will be strangled with higher oil prices," he told The Independent.

It isn't the first time Birol has brought these facts, including his prediction that peak oil production will occur in 2020, to the media's attention. He presented similar information in an interview with the Guardian newspaper in December.

In that interview, he also predicted that oil production from countries that aren't part of OPEC – the Organization of Petroleum Exporting Countries – will plateau and decline in the next three to four years, leaving OPEC nations, primarily those in the Middle East, in increasing control of the world's oil supplies.

Birol isn't the only highly placed energy watcher worried about shrinking future global oil production. The U.S. Department of Energy's Energy Information Administration has downscaled its projections for how much oil the world will produce in 2030 in its most recent report on the subject, according to a June article in The Nation magazine.

The agency's most recent International Energy Outlook report for 2009 predicts that global production of conventional oil will reach 93.1 million barrels per day in 2030, a drop from its 2007 prediction of 107.2 million barrels per day by 2030, that article states. The world produced 81.5 million barrels per day in 2006.

That would leave "unconventional" sources of oil, such as the oil sands of Canada and Venezuela, oil shale deposits in the Western United States and "ultra-deep" offshore oil deposits like one slated for development off the coast of Brazil, to make up the difference.

Biofuels could help ease a shortfall as well, but so far they make up only a tiny fraction of the world's fuel supply. Production of so-called "next generation" biofuels made from non-food sources like grasses, agriculture and wood waste and municipal garbage has so far failed to meet expectations for growth in the United States (see U.S. Won't Meet Its Own Biofuel Mandate).

Critics of peak oil predictions say that they fail to take into account more optimistic estimates of the oil remaining in the earth, as well as the potential for technology to improve oil recovery from existing fields and to discover new ones.

(For a sample of these counter-arguments, read this Green Light post relaying some comments ExxonMobil CEO Rex Tillerson made in February at Stanford University. )

MOUNTAIN VIEW, Calif. -- Electric cars will be great, says Alan Shaw, CEO of biofuel maker Codexis, particularly for drivers that may not be born yet.

"One day we might get there," he said during a roundtable discussion at the Western Energy Summit taking place at NASA Ames in Mountain View today. "But the existing infrastructure supports the internal combustion engine. That is not going to change lightly. I'm not sure if it will change in our lifetime."

"Oil and gas and diesel are the fuels of today and the internal combustion engine is the transportation of choice today," he added. "The internal combustion engine will stay, although the fuel will change... The electric car for me is a bit of a dream."

Well, there's a way to make friends. Shaw makes some very good points, even if they may not sit well with everyone or may be a bit pessimistic. Electric cars are expensive, batteries still need to be technologically enhanced, and swapping out the existing car infrastructure will take years. Some cars go for 30 and 40 years. After Californians drive them, many go to emerging nations where they drive on for decades.

"One day we might get there" with electric cars, he added.

Others, such as the Director of Sustainable Development in the R&D division of the Environmental Protection Agency, pointed out that these "new" fuels to replace oil, diesel and gas will take years too. Biofuels only make a fraction of the world's liquid fuels and U.S. is already behind, by many estimates, in meeting its goals for cellulosic ethanol.

Shaw actually agreed with this. It will take $50 billion to $100 billion in investment for the U.S. to meet its renewable fuel standards. Startups just don't have that. Ultimately, biofuel companies will have to link up with petroleum giants. The consolidation process will begin soon.

It will be like musical chairs.

"There are so many chairs. When all of the chairs have gone, there is nowhere to sit," Shaw said. "When all of those investments [from large oil companies] are made, that could be it... The large industrialists will really drive this sector."

Shell and Ford today made projects announcements that, while they might be small steps, take both companies in a greener direction. And both partnered with Canadian companies to make these deals happen.

Shell announced that customers at a gas station in Ottawa, Ontario, will be the first to fill their cars with gas blended with biofuel. Shell claims it's the first service station in the world providing advanced biofuel made from wheat straw. All gasoline sold at the station will contain 10 percent cellulosic ethanol, produced by Canadian Iogen Energy Corp.

Cellulosic ethanol is identical to ethanol but offers 90 percent fewer CO2 emissions compared to regular gasoline, claims Shell and others. Shell and Iogen have partnered in setting up a demonstration power plant producing 40,000 liters per month, announced Canadian Transport and Infrastructure Minister John Baird.

"This is a great day for Canadian technology and proof that Canada's commitment to developing low CO2fuels is starting to pay dividends for the environment, farmers and consumers," said Baird in a statement.

Shell notes that there's still a lot to be done before the biofuel could be available for a vast amount of consumers, but it is a start. Shell is also a big advocate of GTL, a liquid fuel that is made from natural gas.

Hydro-Quebec and Ford, meanwhile, announced a three-year research program on plug-in hybrids. Nine utilities in North America will use 21 cars that will collect vehicle data such as battery technology, customer use and grid infrastructure. Hydro-Quebec will be the only Canadian utility taking part in the program, which will be conducted by Electric Power Research Institute (EPRI).

Pushing plug-in hybrids to utilities seems to be a common strategy among automakers. A few years ago, plug-ins were strictly for hobbyists but major manufacturers will release them in limited volumes over the next three years. Chalk it up to customer demand and government tax incentives (see The Myth of Electric Vehicle Subsidies).

"We believe collaboration with utility companies to explore new business models, standards, infrastructure and communication between vehicle and electric grids will be a key component to advancing the commercialization of electric vehicles in the coming years," said Nancy Gioia, director of the Sustainable Mobility Technologies and Hybrid Vehicle programs at Ford.

According to Hydro-Quebec, the transport sector in Quebec accounts for 42 percent of the greenhouse gas emissions.

"The reduction in greenhouse gas emissions that could be achieved through the electrification of transport in Quebec, where 98 percent of the electricity is produced from renewable sources, would be considerable," said Thierry Vandal, Hydro-Quebec’s president and CEO, in a statement.

 

James Baughman won the Inventor of the Year Award from the Intellectual Property Owners Education Foundation for the plasma transferred arc for spraying a thermal coating into aluminum engine blocks.

Aluminum engine blocks weigh substantially less than a standard engine, which improves gas mileage. Weight is effectively the third clean fuel in automotive, akin to batteries and biofuels. Bright Automotive and Aptera, for example, are adopting new materials to replace steel for various components in their cars. (Expect a bunch of material science startups and companies like Dow Chemical to tout materials for this market over the next few years.)

The spray eliminates a heavy cast-iron liner that is usually used in aluminum engines. Iron is used because of its low wear resistance. The spray cuts about six pounds out of the engine.

 

 

A few months ago, Doug Cameron, an analyst and scientist with Piper Jaffray, predicted that we could start to see the evolution of a cellulose industry. Simply put, biofuel companies are often either skilled at making feedstocks and sugars or at producing fuel from sugars and plant matter, but not both. Unfortunately, because of the nascent stage of the industry, most are forced to do both.

The industy appears to be taking a step toward specialization and segmentation today. BlueFire Ethanol, which has been trying to produce ethanol out of landfill waste, is sending sugars to Solazyme, one of the big algae fuel companies, for testing. BlueFire has had trouble getting its own ethanol plant off the ground, but it does have working knowledge about producing sugars. Solazyme is different than most other algae companies. Rather than grow algae in bioreactors – large plastic bags filled with microbes and water – it puts specific species of algae in fermentation vats and feeds them sugars. When the algae are fat and full grown, it squeezes the oil out of them. Solazyme has expertise in biology and oil production. Growing food for algae, however, is not part of its long-term agenda. By working with Solazyme and others, BlueFire can potentially carve out a revenue stream while Solazyme can offload a function on its way to producing fuel.

Granted, it is only a test right now so it's hard to say what will happen, but an interesting development. If anything, Cameron can feel vindicated.

Venture capitalists and some others have been critical of Solazyme's "feed 'em sugar" process because it adds feedstock costs. (Here's one of the first articles on that debate between sunlight and fermentation for algae.) Solazyme for its part has said it has tried growing algae with water and that it doesn't economically make sense. Solazyme got an inadvertent vote of confidence last week when Greenfuel Technologies, one of the leading bioreactor advocates, went under after spending $70 million in VC funds. For more on what Solazyme is cooking up, check out this video.

Algae cultivation for biofuel applications is full of promise and hype.  Until one of the many companies working on the puzzle solves the cost issue -- algal biofuels remain a well-funded science project.  But now, OriginOil might have solved a few pieces of the cost puzzle with new lighting and new extraction technologies.

Harvesting oil from algae is an expensive and difficult challenge.  Algae must be separated from its growth medium -- water -- and the lipids in each algae cell must be extracted.  Companies are researching a variety of ways to filter the algae from water and to liberate the lipids from the algae -- ranging from chemical catalysts to bioconversion.

OriginOil (OTCBB:OOIL) is a small cap early-stage algae farmer looking to use their Helix BioReactor to evenly illuminate algae and create large amounts of biomass.  They recently signed a CRADA with the DOE's Idaho National Laboratory and hope to use ultrasonics and microwaves to crack algal cell membranes.

The firm's process combines electromagnetism and pH modification (using CO2)  to break down cell walls, and release the oil within the cells. Algae oil rises to the top for skimming and refining, while the remaining biomass settles to the bottom for processing as fuel and other co-products.

According to the company, in less than an hour, the oil, water and biomass separate by gravity alone and unlike conventional systems, no chemicals or heavy equipment are used in the one-step process.  No initial dewatering is required.

If OriginOil’s claims are true -- it might be on its way to bringing algae fuel pricing to “pump parity,” the only metric that really matters in bringing this technology to commercial reality.

The April issue of the Greentech Innovations Report dives deep into the algae pond.  You can subscribe to it here.

The electric car phenomenon rolls on. Mitsubishi announced today that it will bring its i MiEV all-electric car to the U.S. The car will likely appear in Oregon first: the state of Oregon along with utility Portland General Electric are helping Mitsubishi by agreeing to build charging stations. Mitsubishi did not put deadlines on when it will bring the cars to the states, but it could be sooner rather than later. It will start releasing the cars in Japan in July. Shipping in July will mean that Mitsubishi will become the first company to ship a "practical" electric car. The company has a point there. Right now, you can buy a cheap electric car from Zenn that tops out at around 25 miles per hour or a $109,000 Tesla Roadster, but there's not a lot of options in between. Mitsubishi is focusing on mid-range cars like Nissan, but it also has high-end sporty prototypes like the cars from Tesla Motors and Fisker Automotive. (Fisker is a plug-in hybrid but mostly runs on electricity.) And, like Nissan, it will initially sell to government agencies and fleet car buyers. These sort of cars don't leave town much on road trips so the limited range of electric cars are less of a problem. The i MiEV runs on a lithium-ion battery pack that can be charged in seven or so hours on a 240-volt line. High-speed charging could accomplish this task in less time, but good luck finding an outlet.