Moving away

Wind farming is wind development as practiced by an individual, a small business, a group, a community, or a school. Other types of farm energy production range from converting waste cooking oils to biodiesel to anaerobic digestion. With development of an I-29 manufacturing and technology corridor, we are on the brink of being America's "Energy Basket."

Wind farming is for the courageous; I am not courageous.

South Dakota cities near I-29 can spur economies

When the region learns from many decades of experience that taught Silicon Valley- from which the corridor cities can learn- how to create and maintain a “habitat” for innovation – a unique setting where entrepreneurs find easy access to

• scientific research
• rapid prototyping services
• intellectual property attorneysworkforce training programs
• venture funding and
• local governments that understand the relationship between time and money.

Business starts and failures during those decades have highlighted three factors that explain a lot about why companies tend to succeed in Silicon Valley- and by extension- in the I-29 corridor development

• industry clusters
• personal networks and
• an exceptional workforce.

How to Kick Silicon Valley’s Butt by Guy Kawasaki June 06, 2006), commented on what makes for a successful economic area by saying "Be logical. Make the challenge to create a Silicon Valley as easy as possible. Thus, a region should use it’s natural, God-given advantages. For example, aquaculture in Hawaii, security technology in Israel, alternative fuels in the Midwest, and solar power in the Sun Belt. There’s a reason why the best succeed with what they have because they know everything about the resource or asset."

Why Startups Condense in America, by Paul Graham, says "the recipe [for a Silicon Valley-like economic engine] is a great university near a town smart people like. A silicon valley has to be a mecca for the smart and the ambitious."

Mr. Graham offers tip for governments that want to encourage startups: read the stories of existing startups, and then try to simulate what would have happened in your county. When you hit something that would have killed Apple or Hewlett-Packard, prune it off. Startups are the kind of thing people don't plan, so you're more likely to get them where it's ok to make career decisions on the fly.

According to Rebecca Buckman in Venture Capital's New Green Machine (January 2, 2008), "In the first nine months of last year, U.S. venture investors poured $2.6 billion into clean tech, more than the $1.8 billion invested in all of 2006." This enthusiasm for "green" products and energy is a "glove in hand fit" with agri-energy technology, manufacturing, and production in the I-29 corrodor.

South Dakotans know agriculture; its farming and ranching families are problem solvers having great work ethics and electrical and mechanical aptitudes. Agri-energy production and manufacturing are as complementary to farming and ranching operations as computer software is to hardware.

Estimated Used Cooking Oil in South Dakota

Used cooking oil (UCO) can be transesterified to road-grade biodiesel in eight hours or so. Rather than having a waste disposal problem, generators of UCO in South Dakota have an untapped fuel resource for local

• fire departments
• ambulance services
• city street / county highway maintenance depts.
• city buses
• U.S. Postal Service
• furniture / large appliance delivery vehicles
• tool vans ("Snap-On") and
• other local delivery service vehicles

as well as for farm equipment.

According to chemical engineers at the University of Saskatchew, an estimate of annual U.S. per capita generation of yellow grease [used cooking oils and greases] is of 9 lbs.

Using that estimate, 754,844 SD residents generate 6,793,596 pounds of yellow grease. Tyson Foods determined that about 8 pounds of yellow grease and animal fats transesterified to 1 gallon of biodiesel (BD).

If mathematics are consistent, each year we could have 849,199 gallons of BD to use. At between $4.11 to $4.39 per gallon of petro-diesel (U.S. Energy Admin., 28 April 08), the BD is worth $3,490,210 - $3,727,983.

Each year South Dakotans throw away about $3.5 million; other states are throwing even more millions into landfills or down drains. Rudolf Diesel designed his engines in the 1890s to run on peanut and other vegetable oils before crude oil refining was economical.

By 1912 the first Chevron gasoline station had been built, changing internal combustion practices for the forseeable future. Perhaps Diesel's initial vision will enjoy a greater resurgence here in the U.S. as we travel "back to the future."

Disposal problem is a profit center

Perhaps the National Restaraunt Association's “Conserve” environmental initiative would be wise to have a "roadmap" on how to convert used cooking oil to biodiesel? The fuel can be marketed to

• municipal and county departments (fire, ambulance, transit, street/highway) and
• organizations that use diesel fuel in boiler operation as a means to reduce their petro-diesel costs.

Biodiesel

• is also less toxic than salt
• biodegrades as fast as sugar and
• releases far fewer pollutants when burned compared to petro-diesel.

Liquid used cooking oil is filtered, tested for FFA and water content, then put in a processor for conversion. A processor can produce as few as 30 gallons (in a large closet) or as much as 275 gallons (in a backroom) of the fuel.

In a mall a central facility could occupy several thousand square feet off in a remote corner of a parking lot.

Ted Turner and others at a National Restaurant Association conference on going green mentioned "environmental stewardship and local sustainability" and '“the plus one' attitude emphasizes using local/regional sources." Producing biodiesel for city and county vehicles through "restaurants going green would have an even bigger impact."

PR would be fantastic and used cooking oil disposal costs would be replaced by profits from long-term contracts for biodiesel purchases.

Why throw away a fuel source at a time when "product-innovation and profitability have become even more important staples of successful restaurants."?

No more cheap oil, No. 2

This continues from yesterday's post-

The Wall Street Journal, p. C10; 'The Mother of All Bubbles'? by Gregory Meyer.

• the speed of the ascent of the price of a barrel of crude oil to nearly $117 has forced banks and brokers to repeatedly revise their oil price forecasts up-ward.
  
• some analysts continue to warn that oil prices may fall to $80 per barrel as the world's oil supply and demand balance rights itself- could be seen by June [2008].
  
• $50 per barrel could be reached if pent-up supply in Iraq, Nigeria, Venezuela, and other producers makes it to market.

[Historic political / religious conflicts are major stumbling blocks to that happening.]

• pricing sentiment seems to ignore the signs of a supply surplus through the end of 2008.

Tim Evans, energy analyst, Citigroup: "There is no supply-demand deficit."

[but] global demand is expected to be 1.3 million barrels per day higher in 2008 than 2007.

Michael Lynch, Strategic Energy & Economic Research, thinks the supply / demand situation justifies a price of $30 - 40 per barrel

• local and geopolitical events double that price.

"We are stuck in this rut of an upward market until something major changes in the macro picture," advises Adam Robinson, energy research analyst, Lehman Brothers.

theoildrum.com comments on a The Wall Street Journal article - "Oil Officials See Limit Looming on Production," posted by Gail the Actuary on November 19, 2007

"A growing number of oil-industry chieftains are endorsing an idea long deemed fringe: The world is approaching a practical limit to the number of barrels of crude oil that can be pumped every day. Some predict that, despite the world's fast-growing thirst for oil, producers could hit that ceiling as soon as 2012."

[We started refining oil about 100 years ago] "with a finite amount of oil, and this is gradually being depleted. As it gets depleted, it becomes more and more difficult to extract economically, so production tends to decline [and prices quickly climb]."

"The WSJ article quotes Randy Udall:

Randy Udall, co-founder of the U.S. chapter of the Association for the Study of Peak Oil and Gas, has written that these unconventional oil supplies are like having $100 million in the bank, but 'being forbidden to withdraw more than $100,000 per year. You are rich, sort of.'"

"This is a good way of understanding our current problem. There is a lot of oil in the ground [North Dakota, Alaska, offshore Florida, Brazil], but it is complex oil to get out. It is expensive, and requires a lot of trained workers. We are rapidly reaching the point where we cannot pull as much oil out of the ground, because the 'easy oil' is gone, and the remaining oil is in difficult locations and is hard to extract."

Fuel for action, if not thought.

No more cheap oil No. 1

In the 21 April, Monday, The Wall Street Journal, it reported on the general state of affairs of crude oil price, price speculation, and future production. The following excerpts and musings make up rough energy market info on what drives agri-energy technology.

Adequate inexpensive fuels- "cheap" fuels have now gone the way of the penny stamp and the nickel candy bar- and agriculture are necessities we can sustain if we think hard about and follow through with corridor development.

The Wall Street Journal, "Saudis wary of new oil projects pending sales forecast," by Spencer Swartz, p. C6; 21 April M 08.

• bull market in crude oil just got a catalyst that could push prices even higher, if not prevent them from falling significantly.
  
• Saudi Arabia may be reluctant to develop new oil projects after 2009

--it has no plans to increase oil production capacity beyond the 11% it will add during 2009

--it is waiting on more predictability about crude oil consumption

--it fears output / consumption of biofuels will reduce demand, which decreases the profitability of new oil field development

--the data confirming or invalidating market changes may be "several years away."

• Asia and emerging markets are [wildcards].
  
• non-OPEC producers are unable to fill in the slack created by less OPEC production.
  
• Ali Naimi, Saudi Arabia oil minister- "All the latest projection- at least up to 2020- do not require [developing] anything higher [than the planned 11%]."

--Saudi Arabia hasn't, until now, laid out a timeline to when new capacity might be addedo "If you look at projections for demand, it has started going down."

[so Saudi Arabia and OPEC can work the politics of "over a barrel" as well as the degree of production.]

DrumBeat: April 18, 2008, Posted by Leanan at theoildrum.com/ tells about a few of the causes of $115+ per barrel crude oil-

• a Nigerian rebel group said Friday it had sabotaged a major oil pipeline operated by Royal Dutch Shell and vowed to step up attacks on oil installations. * Strikers at the major southern French oil port of Fos-Lavera vowed to remain on picket lines through Saturday. The strike trapped 23 vessels, including four crude oil tankers and six refined products tankers in the port.
  
• a similar strike in March lasted 17 days and forced four oil refineries with 603,000 barrels per day of combined capacity to curtail operations, helping spur a late spring rally in European diesel prices.
  
• a British union will launch a two-day strike on April 27 at Ineos Grangemouth refinery, forcing it to shut down with a reduction of delivery by the North Sea Forties pipeline system, which terminates there.

"All of the techniques [for estimating global oil reserves and production] seem to be converging to show a likely decline in production in the next few years, or even starting about 2005. Oil production data suggests that world oil production has been flat to slightly declining for the last two years, so it is possible the decline has already begun."

[Farm energy production / agri-energy production is highly unlikely to suffer from this kind of headache]

--to be continued

Life and finding work in South Dakota- No. 2

Just before I went outside to shovel the “April showers” off the sidewalks, Dakota News Network reported a bit more about the I-29 technology corridor, mentioning “the South Dakota equivalent of California’s Silicon Valley.” The manufacturing and technology corridor development is to stretch from Yankton north to Aberdeen. In addition to the corridor, this eastern area of the state also has some of the best wind power of the nation- classes 4/5/6.

Whether wind development will be done to complement hydropower and power from the coal-fired Big Stone electricity plant has not been mentioned in the media, so one has to assume it hasn't been discussed by the ad hoc working group.

After shoveling and a bit of lunch I did a Google search which found about 291,000 URLs for “silicon valley economic development.” One defined the organization of development we now take for granted as “Silicon Valley” One of the pages had “An industry cluster is a symbiotic, living entity that grows best when nurtured in hothouses of like-minded companies.

"[These] leading clusters call Silicon Valley home
>> Semiconductors
>> Computer & Communications Hardware
>> Electronic Components
>> Software
>> Biomedical
>> Creative & Innovation and
>> Nano-Bio-Info Technology Convergence.”

For an I-29 technology corridor to flourish, it can use this as a proven business model and development structure. The development can adopt and modify the SV industry clusters concept with respect to our region's assets.

An overview of an industry cluster has this information
>> Industry name
>> Profile
>> Changes driving opportunities
>> Where the opportunities are
>> Major labor market trends
>> Silicon Valley Firms
>> Venture Capital Investments
>> Cluster Infrastructure and
>> Detailed Industry Components.

What industry or industries can we seed and grow much like Silicon Valley grew microelec-tronics, computers, and software? What need (actual or latent) can the I-29 technology corridor satisfy as SV meets needs?

This is food for action, not just thought in these times of triple-digit oil prices and $3 billion dollar farm bill programs. There has to be positive cash flow somewhere out there.

A focus on agri-energy in the I-29 corridor would be much like the focus on transistors and other electronic components that served as the foundation for Silicon Valley's successes. Both are regional "fits;" both are "spheres of economic activity" that satisfy needs. In SV's case the needs became "all things digital." I-29 can address energy availability in parallel with meeting needs for foods and fibers.