This Week in Energy: Gasification, China, Brazil, KiOR

This Week in Energy is a weekly round-up of news making headlines in the world of energy. Most of these stories are posted throughout the week to our Energy Ticker page.

The purpose is to stimulate discussion on energy issues. Community members should feel free to turn these into open thread energy discussions. Suggestions and news tips are welcome. I (Sam) can be reached at editor [at] consumerenergyreport [dot] com.

Reporting from the Gasification Technologies Conference

This week Robert Rapier attended the 2011 Gasification Technologies Conference. This conference covers developments for converting coal, natural gas, and biomass to power and liquid fuels via gasification. Robert provided some updates from the conference on Twitter (@RRapier), including:

  • Shell’s 140,000 bpd Pearl GTL facility has started up. During the project, Shell has gone an amazing 77 million man hours without a lost time injury.
  • At the conference, Shell predicted that in 2050 the world will use twice as much overall energy and 6-10 times as much renewable energy as today.
  • The U.S. is falling behind China in gasification. Since 2004, China has started up 35 gasification plants while the U.S. has started up zero.
  • Biomass to liquid (BTL) producer Rentech is scheduled to begin producing fuel from their 20 ton per day facility in Colorado by the end of this year.

Chinese Happenings

China’s demand for energy continues to climb, but the Chinese are increasing taxes on oil and gas to help reduce demand. On the supply side, it was revealed that China has ties to a major shale gas discovery in the UK, and they have launched an attempt to take over a London-listed uranium miner: China eyes shale gas and uranium firms in UK. As Robert’s recent post on carbon emissions showed, fossil fuel usage across the Asia Pacific continues a steadily climb, and China is attempting to lock up as many energy sources as they can. This includes the planned construction of more new nuclear reactors in the next few years than in the rest of the world combined, as well as attempts to secure patents from bankrupt solar firm Evergreen Solar.

The Emergence of Brazil

Robert has frequently touted Brazil as a country ideally positioned for strong economic growth even in a world in which energy supplies are tight (and in 2008 he invested in the Brazilian energy giant Petrobras as a result). This week the New York Times reported on the emerging power of Brazil (and Petrobras): In Brazil, Energy Finds Put Country at a Whole New Power Level:

Petrobras grew at its own impressive pace for decades, mixing progress with setbacks as Brazil struggled with drawn-out dependence on foreign oil. But Petrobras’s huge offshore oil discoveries in recent years now enable its leaders to contend that it could surpass Exxon Mobil — called Standard Oil in Walter Link’s day — as the world’s largest publicly-traded oil company.

Note: This next week Robert will be in Brazil for a firsthand look at how Brazil’s many energy options are reshaping the country’s future. Robert will be speaking at a seminar on sustainable urban development in Brasilia: Seminário Internacional Jornada Brasília +50: Mobilidade Sustentável

KiOR Overvalued?

This week Robert had an article published in the Christian Science Monitor: Clean energy falls short so far. It is a condensed version of an earlier article, in which Robert wrote that he had strongly considered shorting one of Vinod Khosla’s IPOs because he considered it grossly overvalued. That company happened to be KiOR. Following a downgrade of KiOR last week by one analyst, this week another analyst reported that he also considers the company overvalued:

KiOR: $1.7B Market Cap With No Revenue

The author, who did short KiOR, ultimately concludes “the point is that KIOR’s present fair value is less than 10% of the current market valuation.” On Monday an article on R-Squared will take a closer look at KiOR and explain why Robert ultimately decided not to short it. (On the topic of investments, in November Robert will discuss energy investing and due diligence at the annual ASPO Conference in Washington D.C.)

Keystone Pipeline, Solyndra (still)

  • In contrast to the New York Times editorial opposing the Keystone Pipeline, this week the Washington Post endorsed the pipeline, arguing that “rejecting the pipeline won’t reduce global carbon emissions or the risk of environmentally destructive spills.”
  • The bad news about Solyndra continues to trickle in, and will likely continue to be a political liability for President Obama as election season heats up. This week’s news focuses on e-mails that indicate that an Obama administration appointee at the Energy Department pressured White House analysts to sign off on the loan to Solyndra, despite a clear conflict of interest involving the appointee’s wife.