Andy Karsner

Shell: We need tough fracking rules

April 17, 2011

Marvin Odum, the president of Shell Oil, made a revealing and insightful observation at the “Shell 2011 Energy Summit” last week in Houston.

“You are only as good as the worst operator in your industry,” he said.

Marvin Odum

He could have been talking about BP. Shell wants to drill offshore in Alaska, home to some of the richest undeveloped oil and gas reserves in North America, but there’s little chance of that so long as memories of the BP Deepwater oil spill remain fresh.

Or he could have been talking about the Tokyo Electric Power Co. Last month’s accident at Fukushima has cast a cloud over hopes for a global nuclear renaissance, fueling opposition to nukes from India to Germany to Minnesota.

In fact, he was talking about hydrofracking—the technology that will allow vast amounts of natural gas to be tapped from fields around the U.S., creating a boom in the shale fields of Wyoming, Texas, Louisiana and Pennsylvania.

But fracking, as it’s called, is controversial. When wells are improperly drilled, water supplies can become polluted. Some gas drilling companies won’t say what chemicals they are injecting into the shale to drive out the gas. Just last week, an unpublished study challenged the conventional wisdom that natural gas is a cleaner fuel than coal, arguing that the release of methane during drilling could aggravate global warming.

To head off the criticism, and clean up the highly-fragmented natural gas drilling industry,  Shell wants strong regulation of hydrofracking. The company says it will monitor its own wells carefully and disclose the chemicals it uses in its fracking fluids.  The goal, it appears, is to engage with critics and demonstrate to them that when well managed, fracking has benefits that far outweigh any harm. [click to continue…]

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GE & Google say: Get Smart

February 17, 2009

Imagine driving into a gas station, filling the tank and not knowing how much the gas cost–until a bill arrives at the end of the month. That’s how most of us buy electricity, it’s a crazy way to do business and, if all goes well, it won’t last.

Why? Because momentum is building behind the so-called smart grid, which, among other things, will make buying electricity more transparent. The $787-billion stimulus package signed into law today by President Obama includes $4.5 billion for a smart grid, along with tax incentives to promote solar and wind power.

This afternoon, an event called “Plug In to the Smart Grid” organized by General Electric and Google attracted a standing-room only crowd of more than 500 people to Google’s New York Avenue offices in Washington. Among the speakers were such power players as Carol Browner, the president’s climate czar (although she didn’t say anything), John Podesta, the head of Obama’s transition team and leader of the Center for American Progress think thank, and Chris Miller, a senior aide to Senate leader Harry Reid.

Washington’s renewable-energy crowd is downright giddy about the president’s push for clean energy.

“Look where President Obama has chosen to be today,” said Dan Reicher, a Google executive and former Clinton administration official who was co-host of the event, along with Bob Gilligan of GE. “He could be standing by a bridge or a highway. But he’s at the Denver Museum of Science, looking at a solar panel.”

Gilligan ticked off the advantages of the smart grid: “It enables higher penetration of renewables. It allows the utilities to operate in a more efficient manner. Most importantly, it empowers and enables consumers by giving them more information.”

Because a smart grid is essentially the application of information technology to the electricity business, Google (an IT company) and GE (an energy company) have joined together to push for better federal and state policy to enable the grid. This was their first outreach event in DC. Here are a few things I learned:

Information is power. Power over power, in this case. A smart grid will tell consumers how much their electricity costs at any given time of day, how much each appliance draws down from the grid, how their usage compares with their neighbor’s, perhaps even whether they are using clean or “dirty” power. So, for example, if consumers know that it’s cheaper to run the dishwasher or washing machine at night, many will do so. Can you think of a better way to promote energy efficiency in homes?

As Ed Lu, a Google executive (and former space shuttle astronaut for NASA), put it: “All of our work in this area is based on the premise that consumers ought to be able to see how much energy they are using.” Google’s working on a software, called the Google PowerMeter, to show consumers their consumption in real time.

Andy Karsner, the smart and outspoken former Bush administration energy official, said: “This is about full transparency and disclosure and empowerment of every consumer and small business in America. People ought to know how the biggest investment they make in their life performs, on the day they buy a new home.”

How that information will be delivered is no simple matter. It raises issues of privacy, intellectual property and security, among others.

The grid needs to get bigger and stronger, as well as smarter. Right now, there’s not enough transmission capacity to move wind power from the Great Plains to Chicago or solar power from the southwest to urban centers like Los Angeles.

“That’s going to require literally thousands and thousands of miles of new transmission, and we’ve seen very little (recently) in this country,” said Reicher.

To get major transmission lines built, the federal government will need more authority to site them, even over objections from state and local officials.

“Siting continues to be a problem,” Podesta said. It’s a lot easier to move oil and gas around this country than it is to move electricity, in part because the federal government exercises its power to get gas pipelines built.

Turning to Chris Miller, the Senate aide, Reicher asked: “Is the federal government going to end up with significantly more authority to site transmission lines?”

“Yes,” Miller replied. He said enhanced federal clout could be part of an energy bill that the Senate will take up this spring.

Karsner added: “This is not a question of the opportunity to bring solar from the southwest or wind from the Midwest. I would say it’s a necessity…If the planet could talk, it would say, stop choking me.”

Highlights from the Plug Into the Smart Grid event will be posted on Google’s DotOrg channel on YouTube (a Google property), where there’s also an interesting video about the Google PowerMeter gadget. We’ll also be looking at the smart grid during FORTUNE’s Brainstorm Green conference, with a panel that includes the CEOs of smart-grid firms GridPoint and Silver Spring Networks as well as venture capitalist and grid guru Chuck McDermott.

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A crisis is a terrible thing to waste

December 1, 2008

After a long day on the conference circuit, I can report that the mood among business people is simultaneously grim (because of the economy) and hopeful (about the Obama administration and his economic team.) Today, I heard from, among others, Hank Paulson, Tom Friedman, Madeline Albright, management guru Jim Collins, Fred Smith (founder and CEO of Fedex), Ed Rendell and Carol Browner—how that’s for name dropping?—and chatted informally with a bunch of senior business execs at the FORTUNE 500 Forum and an earlier lunch at the Center for American Progress. The theme that’s emerging is the headline of this blogpost: That a crisis is a terrible thing to waste. That quote, by the way, is variously attributed to economist Paul Romer, Merck’s CEO Dick Clark, Obama aide Rahm Emanuel and Eric Schmidt of Google and it has become the cliché of the moment.

Some highlights from the palaver:

Paulson, as usual, stuck to his script, even during an unscripted q-and-a with FORTUNE’s Andy Serwer. He sounded less optimistic than he has before—clearly, he won’t be around as Treasury Secretary for long enough to see his tireless efforts to stabilize the financial system lead to a broader economic recovery. His “crisis” argument is that we need to better regulate financial institutions like hedge funds and instruments like derivatives, and come up with ways that unwind non-bank institutions so that future bailouts can be avoided. Paulson said, “We need to get to a place in this country where no institution is too big or too interconnected to fail.” He was quite gracious in his praise for his successor, Tim Geithner.

Friedman did his “green is the new red white and blue” shtick very well—hey, he’s been on tour for three months, he said, for his new book, Hot Flat and Crowded (which I liked but not as much as I wanted to). The Timesman cautioned that the economic crisis ought not to be used for government spending programs, even “green” ones, unless they lay a foundation for future growth. “We are charging this bailout on our kids Visa cards,” he said. “We owe it to them to spend the money wisely.” Friedman also said he was “disgusted” by the performance of auto executives who came to Washington on private jets to ask for government help, without a turnaround plan. “The term bail more than bailout represents how we should be thinking about them,” Friedman said. Ouch.

Albright, interviewed at a FORTUNE dinner at the state department, said bluntly, “I don’t think I’ve ever seen the world in such a mess.” (“That’s a diplomatic term,” she added.) She identified Pakistan as the hotspot that most concerns her because it has nuclear weapons, extremist groups, poverty, corruption and a weak government. (I won’t bring that up tomorrow, when I’m having dinner at the Pakistan Embassy.) But she, too, sees hope amidst the gloom: “Barack Obama’s election is the most amazing thing that could have been done for Brand USA.”

Rendell, the Pennsylvania governor, had a “green” idea that was new to me: Permanently ground the NY-D.C. airplane shuttles and replaed them with speedier Amtrak service. (Planes use more fuel and generate more greenhouse gases than do trains.) A side benefit: “Getting rid of the shuttle would ease congestion at LaGuardia, Newark, Philadelphia and BWI,” he said. He also said he’d heard that you can microwave tires to generate energy, to which Browner replied: “Don’t try that at home.”

Collins delivered a great talk on managing through turbulence at the FORTUNE forum that I won’t try to summarize. He did speak, as he often does, about the importance of core values—to companies and to people. “Those who prevail have a set of values that they go back to, no matter what the world throws at them, and they are not negotiable,” he said. The irony is that those who understand that their values trump even the need to survive have the best chance of coming through hard times. A company’s values and purpose, Collins said, provide “the answer to the question, why is it important that we continued to fight.?” He quoted advice given to him after he lost an academic job by management guru Peter Drucker: “The question is not how do you survive? The question is, how do you make yourself useful?” His final words to the crowd: “Go out and make yourself useful.”

Finally, I moderated what I thought was a lively discussion about energy policy at the FORTUNE forum with FedEx’s Smith, former Bush administration energy official Andy Karsner, Glenn Prickett of Conservation International and Shell Oil president Marvin Odum. There was a surprising degree of unanimity around what the Obama energy policy should be: figure out a way to put a price on carbon emissions (most favored a carbon tax over a cap and trade system), set stricter national standards for building and appliance efficiency, provide longer-term tax breaks for renewable energy and electric cars, and invest more in basic research. It was interesting to me to hear that degree of support for government regulation from a panel that (I’m guessing) was made up of three Republicans and one Democrat. Smith was the only one of the group I’d never met before, and I was impressed; he’s really thoughtful about the question of what markets can do well, and what they can’t, and has devoted lots of his own time to studying energy issues. I’d quote some things he and the others said but I’ve yet to learn how to moderate a panel and take notes at the same time. Happily, no one said that a crisis is a terrible thing to waste.

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