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As we learn more about the events in the Gulf, we learn more about BP's failures. Not just technical failure, but managerial and leadership failure as well.  While President Obama puts together an independent commission to look into what actually happened, we can start the discussion as follows:

Subject: The whole world needs offshore oil, so it's time we gave everyone enough insight to help solve the BP/Horizon accident and make sure there are no repeats anywhere in the world.

• The whole world needs offshore oil from areas which are not a part of OPEC, to bridge to a post-OPEC world and hold down oil prices. Some countries such as Brazil, Angola, China, Australia, India, and others will produce offshore oil no matter how the BP/Horizon accident is resolved.  We need them to have a disaster prevention and recovery tool kit to make offshore oil clean and safe.
  
  
• It took 40 years to get over the Santa Barbara accident in 1969.  I worked for Shell at the time; in 1970, Shell had their own platform explosion in the Gulf of Mexico.  In 2010,  the USA government briefly considered drilling off of the Pacific coast of North America.  Whoops.  After the BP/Horizon experience, however resolved, offshore drilling is set back by N years.  N may be approaching infinity this time, unless new management and technical tools are developed.
  
  
• BP is nearly the worst major company to lead that effort.  The current top management of BP have been playing catch up and trying to change a slipshod culture since the Texas City refinery accident.  In the real world, the Amoco component wrecked the Amoco Cadiz tanker in the Bay of Biscay long before that.  It becomes apparent that a safety culture would have: 1) not hired the Horizon rig without changes, and 2) would have established a management system and culture which made good long term decisions about safety and environmental protection.  Management should have responded to anomalous pressure readings from an exploratory well by ceasing everything out of the ordinary until the condition of the well was understood.  Murphy was the first recorded safety engineer.
  
  
• Those of us who have tried to help BP solve this problem have learned that BP is a closed system whose communication with the outside world is in a coma, induced by their lawyers.  A whole succession of other bright people have found the same.  Those silly engineering solutions tried so far are demonstrably off target, but who is listening?
  
  
• For the Secretary of the Interior, Ken Salazar to announce that BP has all the smartest people included in looking for solutions is sublimely naïve.  Did BP offer him Kool Aid?  Why did he drink it?
  
  
• The offshore technology community has a lot of smart people, but it becomes apparent that the best work for someone other than BP, Transocean or Halliburton.  Are they being listened to?  We get from others that there are 500 engineers and scientists from 160 companies working at the Houston war rooms of BP.  So why is BP not dispensing needed information to smart people elsewhere to work on this unprecedented problem?  Why did a Purdue professor have so much trouble getting their videos so he could assist by estimating how much oil was spewing? This is no longer "confidential information"; it now falls into the domain of public interest. Measurements show the flow from the well to be closer to 70,000 barrels each day, not 5,000 as BP has been repeating, all the while incorrectly saying the flow cannot be measured. BP has even had the audacity to say that they have not embraced better estimates because it does not matter enough.  To whom?  If you don't know how to measure the flow, how do you design a solution?
   
• This circus is proof positive of a leadership crisis at BP.  Over the weekend, we learn that not only was this the first well drilled into the same formation by Horizon, but that the first well was a dud.  A shouting match broke out between BP and Transocean over how to seal this second, troublesome well with anomalous pressure readings.  Now, I am as skeptical of TV journalism as the next thinking person, but look into the eyes of one of the coolest, bravest people I have watched being interviewed and see what you think about how this accident came about.If you wish to get the facts in writing, see this.
  
  
• The worst strategic mistake that BP has made is not being an open system to the many bright scientists and engineers who are eager to help.  There will never be a "safety culture" or an "ecofriendly culture" at BP until the very top management creates and supports it.  And that culture requires that BP embrace help where it is clearly needed.
  
  
• Here's the most frustrating part: clowns from BP, Transocean, and Halliburton being grilled by other clowns in Congress (and a couple of very good public servants) is great theatre.  But refer back to point 1 above.  The world needs safe, clean offshore oil as a bridge.  Almost the whole world suspects that getting offshore oil cannot be clean and safe.  Everyone loses if we leave the world with that impression, which must be corrected.  At the very least, BP is part of the problem and a very much smaller part of the solution.
  
  
• I had hoped that with 400 or 500 engineers reported to be working on the problem at BP war rooms, the flow would be drastically reduced by now.  I believe that management of the solution tool kit must be wrestled away from BP.  President Obama has begun that process by recruiting the O-Team, but they are not (yet) in charge. This team includes brains and experience from NASA ventures into space and decades of US work on atomic weapons, energy and research.  Why have these creative, skilled people waited until now to learn what they need to know about the accident and the aftermath?   Why wasn't that conveyed widely? Why was there no contingency plan? Or why is the current state being called a "contingency plan that is working"?  Why does it take a global scale disaster and an act of God/the President to bring together a team of experts to look at ways to solve this problem after the fact?
  
  
• The world needs all offshore-interested parties to participate in one or more open collaboratives to fix the problems highlighted by the BP/Horizon accident; more importantly, the collaboratives must create a priori technology and management systems to prevent or fix the next offshore accidents, without regard to who is running the show.  Finally, these collaboratives must truly embrace anyone who can help with solutions - they must be open and transparent.

Let me leave you with a visual.  If we believe BP, they said the spill is at 5,000 barrels a day. That's 210,000 gallons per day.



A typical tank truck holds 8000 gallons, Then, BP's claim looks like this:



However, if we are to believe the worst-case scenario, it looks more like this:

When Bill Joy said: "There are always more smart people outside your company than within it," he wasn't trying to be a smart-alec.  Instead, he was urging companies to leverage ideas from outside to solve some of their most challenging problems.
 
Now, in a world of frozen financial markets with justified discouragement about returns to investors in conventional venture capital models, how can needed innovations be funded in relatively mature, but suddenly stressed,  industries such as plastics, electric power delivery, alternative energy, and energy delivery?

I think the answer is to form Solution Collaboratives.



A while back I blogged about Opening up Reverse Innovation in which I tried to make the case for another business model where solutions become the focus of "open collaboratives,"  Let's call this a solution collaborative:

Companies with a strategic interest in solving a problem or a class of problems can participate by funneling resources (money, labs, information, smart people, etc.) through the collaborative; by participating in direction; and by contact with analysis and expertise. Information from a collaborative world would logically lead to new entities which make problem-solving investment, but also could be individually exploited by strategic players.

How to Organize a Solution Collaborative

A solution collaborative is created in 2 stages, just as a proprietary venture might be formed. The first stage is to collaborate in researching and analyzing the solution to a technoeconomic problem of general interest across an industry or industries.  The result of this stage is a stream of information and consultations which flow back to all participants.   The collaboration brings technical expertise and knowledge of market needs to bear on any feasible solutions to this need, together with actionable information for individual collaborators to pursue.

The second stage is conditional.  If demanded by participants, the collaboration can even evolve to creating an organization to bring about the solution, to the mutual benefit of collaborators.   Since the collaboration is organized and has access to the "best and the brightest" from everywhere, and especially  benefits from having excellent feedback about market needs, a collaboration removes most of the risks which attend venture capital firms or the use of a proprietary R&D effort.


Why Collaborate?

Others have talked about the anecdotal benefits of a collaboration curve.  We can assure you that the benefits of collaboration are not anecdotal - but quantifiable, economic benefits.

Studies have shown that too many firms mistakenly applied an "outsourcing" mindset to collaboration efforts. This fatal mindset leads to three critical errors:

1. they focus solely on lower costs, failing to consider the broader strategic role of collaboration.  
2. they don't organize effectively for collaboration, believing instead that innovation could be managed much like production and partners treated like "suppliers."
   
3. they don't invest in building collaborative capabilities, assuming that their existing people and processes are already equipped for the challenge.

To be successful requires you developed an explicit strategy for collaboration and make appropriate organizational changes to aid performance in these efforts.

Collaboration is a new and important source of competitive advantage. Speaking from experience, one of my companies - PTAI - has been doing collaboratives among industry competitors since 1972.  Back in the day, we called them "multiclient studies."  We acted as if we were a corporate staff group but with better access, studied the heck out of an issue, wrote a detailed analysis and sold it to the many interested parties.  Those in the plastics, automotive, paper, packaging  and other industries bought them widely on a variety of technoeconomic  issues.

Then, in the 1990s, PTAI innovated a method to benchmark performance among competitors in an industry, allowing any participant to quantitatively place its performance among competitors along hundreds of variables.  We continue to execute this method to the advantage of hundreds of global businesses in 55 specific industries and both numbers continue to grow.

Now we're turning our attention to solution collaboratives through another one of my companies - Townsend Solutions- to address some of the most pressing problems faced by some of the mature industries.

A recent New York Times article - “China Leading Global Race to Make Clean Energy” by Keith Bradsher - reminded me to write down some thoughts about industry progress in reducing carbon dioxide emissions—a road less traveled.

The Times has finally discovered that the Chinese will dominate the clean energy world by using cheap labor, a huge and hungry domestic market, governmental uber-subsidies and hordes of trained technologists.   By clean energy, the author means wind and solar, with hydro and new nukes thrown in for good measure though not really discussed. Ironically, a raft of other, recent articles make the same point, and although the brevity of their treatment makes them worth reading, it leaves one wondering how much of this (“The Chinese are coming, the Chinese are coming!!!”) is truth and how much hyperbole.

So what should we do as patriotic Americans?  Fortunately, a young Ms. Miley Cyrus is on the case, so we can all breath a little easier. Incidentally, her song “…Wake up America. Tomorrow becomes a new day. And everything you do matters. Yeah, everything you do matters… Oh, it’s easy to look away, but it’s getting harder day by day…” was more popular in Europe than in the US.

We Have Already Lost the Race for Wind Turbines and Solar Panels
Let’s concede this point.  It is now practically impossible for European or U.S. industry to catch up with the Chinese in building and installing equipment such as advanced wind turbines and piezoelectric solar cells.  So we can expect that wind and solar equipment manufactured in China will be at least cost-competitive if not dominant.   Our response should be to buy those components from China and install them wherever they make economic sense.

But even in China, these clean energy sources will not necessarily be economically competitive with other traditional energy sources.  All of these innovations are necessary. But they do not preclude in any way the need to innovate in the conventional energy sector, which will still be around and important in the year 2030 and beyond.

Even if the Chinese win this race, so what?   

This still leaves plenty of room for new technological innovation in other areas. The question is: where does it make sense for us to innovate?

Here are some suggestions:

- radically better wind turbines or solar cells
- storage of off-peak clean energy
- better long distance high voltage transmission of clean power
- new methods for CO2 capture and sequestration
- geo-engineering (see previous post on Nathan Myhrvold’s Stratoshield and Salter Sink)

The Chinese are also beginning to lead the world at long distance, high voltage transmission as well. However, installation and maintenance is another ballgame. We could innovate in areas that are part of this ecosystem where we already have an established lead and huge expertise.

Let’s Not Ignore the Biggest Clean Energy Contributor
This brings me to the original purpose of this blog entry. We must not overlook the ways to do Carbon Capture and Sequestration (or Storage), which we’ll abbreviate as CCS.  Conventional power generation stations, either those already in place or the newer generation of coal-and-gas-fueled thermal power stations being rapidly installed in China, India and elsewhere are between half and 80% of capacity in many places.  The huge stock of sunk costs in coal-and gas-burning thermal power units will not be replaced by the best Chinese wind and solar equipment. unless their carbon emissions cannot be economically reduced. 

So the biggest opportunity is to create clean, economical fixes to the world’s stock of existing electric stations.

The owners of these coal facilities have the lowest variable power cost in many areas of the world.  In areas like the Middle East, gas is provided at such low value that this is the least cost producer of power. So most big utilities would like to continue to operate these sunk costs.

Refitting existing plants with proven CCS technology, especially ethanolamine absorption and desorption, is difficult at many existing plants; is capital intensive; uses from 15 to 30 per cent of the capacity of the power station to remove CO2 and other pollutants; and seems to add about 3 to 4 US cents per KWH ($30 to 40 per MWH) to costs of generation of power.  A good, concise treatment of the technology and cost for this approach is in Energy Procedia 1 (2009), 1289-1295.

Yet the mega-utilities seem to be betting politically on this retrofitting plus transporting, pressurizing and injecting of relative clean CO2 streams to subsurface storage sites.  Once again, many environmentalists don’t like this solution either (go figure!).

Of course, for a sizable fraction of coal/thermal power facilities, a shutdown will be preferred to refitting.  Yet coal is forecasted to be so much cheaper than other primary energy sources that massive refitting is still seen by utilities as the best answer.

Enter Shale Gas—The New Kid in the Block
In North America and soon elsewhere, new discoveries of shale gas deposits will make natural gas competitive with coal for most new facilities equipped with CCS.  This is because gas generates about half as much CO2 and because gas-fired plants are cheaper to build than coal-fired ones.  Existing wind and solar technology will not be competitive with shale gas using new CCS technologies.

China Needs Coal CCS, but Someone Must Lead in Innovating
Despite news to the contrary, this is where the U.S. and Europe have an innovation window!   There must be some way to climb off of the experience curve for this mature CCS technology and develop a better, even radical improvement which has its own, lower experience curve. 

So here’s my nomination: instead of pure CCS, as currently envisioned, we need to develop Crud-O2 (explained below) as our CCS. 

Let me explain: in the conventional coal power scheme, the flue gases are sequentially treated to remove nitrogen oxides (NOx), fly ash and particulates (including some heavy metals), sulfur oxides (SOx) and then subjected to CO2 capture. The emitted flue gas contains nitrogen, water and tails of each pollutant.  Each processing stage adds costs for chemical and energy and subtracts net, available energy from the plant.  Each pollutant needs separate handling and disposal and creates additional environmental exposure.  NIMBY (Not In My Backyard) always rears its ugly head.  So instead of doing this sequentially in a multi-stage, muti-handled operation, we need to develop means of recovering these streams as essentially one liquid stream, rich in CO2 but containing solids, metals, SOx, NOx, and perhaps some water: let’s call it Crud-O2.

This recovery is similar to proposed schemes, where relatively clean CO2  having been absorped and desorped in an amine plant, must be compressed to a liquid for transportation.  We propose that the entire flue gas stream, probably with solids filtered out, be compressed in multiple stages with intercooling, probably taking 4 or 5 stages.  All components heavier than CO2 will condense, some in the intercooling step, some at the end of the train.

As an alternative design, refrigeration loops can lower the temperature of the Crud-O2 until it forms a liquid at lower system pressure.  Optimizing the use of compression or refrigeration, including the draining of liquids from the intercooling steps, is a design process very familiar to chemical and power plant engineers.  As an end result, our Crud-O2 storage vessel will contain all (or most) of our bad actors.  Energy still contained in the flue gas, resembling the existing flue gases from a coal-fired plant with amine-CCS added, can be recovered back into the system, reducing net energy consumption.

With Oxygen Combustion, Crud-O2 May Be Even Better
There is much R&D being done on replacing combustion air with oxygen, either partially (let’s call it enrichment) or completely.  Current materials of construction will not withstand the temperatures generated with pure oxygen combustion, so designs use a recycle of cooled flue gases into the combustion chamber to limit the maximum temperatures.  This approach makes a flue gas with progressive reduction of nitrogen content, hence more easily captured by compression/refrigeration into Crud-O2.  At the limit, it approaches zero flue discharge.  Obviously, the energy for producing oxygen from air must be netted out of the net energy production, and the capital for an air separation plant must be added to the capital costs of such a scheme.  Optimization is required, but the net result is the same, with all of the bad actors in our Crud-O2 and ready for transport.

Crud-O2 Spends Eternity Under the Sea
But where in blazes do we take this Crud-O2?  Here, we enter Wonderland.  As proposed for pure CO2 over several years by many creative types, we propose putting the Crude-O2 in some appropriate place on the bottom of the ocean. 

Depending on the properties of the Crud-O2 and the temperature at the bottom of the ocean, it requires over 1000 meters of ocean depth, and some sources (here and here) suggest 3,500 meters of ocean depth. It’s easy to find out and scout unlimited places which fit, all over the world.  The ocean has many square miles of such places.

Shades of Captain Nemo 
At this depth, there is virtually no solar radiation, the population is mostly primitive worms, the bottom is covered with debris and plant/animal material which drifted down over the millennia, currents are rare or slow, and (importantly) CO2 or Crud-O2 are denser than the water overhead.  A quiescent layer of CO2 on that bottom would slowly diffuse into the water above at the interface, which environmentalists do not like.  We don’t see why they don’t like it, since the oceans of the world already contain gajillions of tons of CO2.  Better the deep oceans than our lungs?  But there is an easy answer to how to keep the Crud-O2 components from leaving this dark, underwater tomb.

We suggest that a membrane made of fibers, coated with polymeric material to be relatively impermeable and permanent, be installed at the bottom of said ocean before Crud-O2 is injected beneath the membrane.  Hydrodynamics virtually guarantees that the membrane, as it slowly rises atop the lake of Crud-O2, is under very minor net forces.  The membrane prevents diffusion of Crud-O2 components up into the water (and the obverse, of course).  but since they are acting on both top and bottom of the membrane, they cancel each other out.  We envision rolls of coated fabric, with Velcro or other connectors at all margins, dispensed and connected by remote vehicles.  A trench would be an ideal location, so that as the reservoir is filled, the membrane rises at the virtually flat water/Crud-O2 interface.

Using a protective membrane at such depths suggest several advantages to a good design engineer.  Polymer science knows how to design the membrane for a lifetime of centuries, given the cold, dark, quiescence in ocean trenches.  Resisting any corrosive effects of the Crud-O2 components is relatively easy for a polymer chemist, but the lack of light, temperature or cathodic currents makes this an ideal environment for long life. Also, the Crud-O2 can be delivered down to the bottom with minimal pumping pressure, enough to overcome flow pressure drop, as the head in a standpipe will be approximately the same as or slightly larger than the head in the surrounding water.  The same consideration means that a standpipe from the surface down to the membrane can be light gauge pipe, as internal pressures and external pressures are virtually identical.  Hydraulics also makes a “blowout” very unlikely and of minimal impact.  A “blowdown” would be much more likely.

In each of these cases, contrast the situation with high pressure pumping into depleted oil or gas formations, where high pump costs and high energy usage are the norm.  Blowouts are possible.  Safety is problematical.   With Crud-O2, you need only liquefy the stream and more energy use is not major.  This is an elegant solution.

And in the worst case, someone in the year 2050 or 2150 or 3010 can easily fix any unforeseen developments. 

Transporting Crud-O2
We envision towable, multiwall pressure vessels coated on the inside to resist Crud-O2 components.  Think giant kielbasa with double casing, having buoyancy and stiffness between the two walls.  Crud-O2 can be shipped either at high pressure at ambient temperatures; insulated/refrigerated to low temperature and modest pressure; or somewhere in between.  Unloading would not require any change of conditions to all injection to the bottom.  These tanks can be rolled into a stream or river near the source; towed by virtually any tow boat to join more tanks; be towed as a “train” out to sea; stationed by a platform above the storage site; unloaded by low head pumps in good weather only; sent back with a “heel” of Crud-O2 or else inflated with nitrogen (say); and eventually show up at some other Crud-O2 source for refilling.  Repeat over and over.

Of course, we could design to deliver the Crud-O2 by pipeline in those cases where this is preferable.  A subsea pipeline could be made of flexible material and would be almost neutrally buoyant, since liquid CO2 and water are close in density.

Bonus Clean-up Opportunity: Bunker Fuel
Once the elements of the Crud-O2 system are in place, we would find other uses beyond stationary power stations and industrial plant furnaces.  The International Maritime Organization (IMO) of the UN is trying to reach final rules governing the quality of bunker fuel used by the great majority of the world’s largest ships. Closer to home, the  Environmental Protection Agency is targeting an 80% cut in nitrogen oxide, or NOx, emissions by 2016.


Bunker fuel is literally the bottom of the barrel in the world’s refineries, blessed with several percent sulfur and scads of heavy metals.  Only petroleum coke is somewhat heavier (a solid) and bunker fuel has roughly the same consistency as road asphalt.  The proposed IMO rules will limit the allowable sulfur in bunker fuel from the current levels of 3.5% to 0.5% by 2025.  Oil refiners are skeptical about whether they can meet this new spec at any  reasonable cost, which begs the question, since bunker is used only because it is cheap.  Really cheap, compared to any alternative liquid fuel.

We envision multistage compression on the ships, with seawater heat exchangers, to create Crud-O2 from the stack gases.  Multi-wall, cylindrical tanks would be ideal repositories, as these could be stowed with freedom anywhere on these large ships.  When near a port or a Crud-O2 repository, the ship could let the tank overboard … it could even be towed … for pickup by a sea train of CO2.  Thus equipped, the ship would be able to burn whatever bunker was available with pollution of the air as is occurring today. 

There are approximately 50,000 ships over 5,000 DWTons which rely on bunker fuel. 

The largest bunker burners - the largest container ships - burn 75 to 125 tons/day of bunker fuel when under way.  Even larger tankers and bulk carriers actually burn less as they move at slower speeds.  But at 2.5 T/day of CO2/Bunker, and assuming only 50 T/day for 50,000 ships sailing 250 days per year each, the annual CO2 load is over 1.5 billion tons.  And this CO2 recovery would happen all over the world.  In the case of bunker fuel, the recovery of the sulfur is the driving force, not CO2 reduction.

Even under IMO’s proposed regulations, these ships would still be allowed to emit CO2 without limit, and be carbon taxed.  There are probably 400 significant oil refineries in the world which produce bunker.  These will be required to invest to improve their bunker fuel and produce less of it, given the proposed IMO regulations. 

The scope of this is enormous. 

What we need to compete with the Chinese, is not so much incentive, but imagination.  Our existing industrial solutions won’t cut it.  We can and must innovate our way out, or learn to live with the smog, the pollution, the global warming, and the global insecurity it produces.

NEXT: More fun clean-up applications for Crud-O2! You betcha.

Hi, welcome to my blog. Over the years I’ve been called many names (some of which cannot be mentioned in polite society) Skipper, Phil, “Mad Professor” Townsend and now - more appropriately, I guess - “Wild Phil.”  I’m an entrepreneur who loves to innovate, invent, and tinker with ideas and technology.

As a teenager raising cattle in a farm outside of Muncie, Indiana I would look at passing by car registration numbers and wonder if they were perfect squares or cubes. When it came  time to decide on college, it was only natural to that naive 17 year old that I should go to MIT.

The fact that I was the first person in my family to go to college did not bother me a bit. I ended up getting my diploma in Economics and Chemical Engineering.  Afterward, I attended Purdue on an NSF Fellowship and obtained a Masters in Chemical Engineering.

My industrial background came next during 5+ years with Shell Chemical in Houston, where I did and supervised chemical process design and development and managed chemical plants.  The entrepreneurial bug in me, however, made me realize pretty soon that I was better off being my own employer, so I went back to school at Harvard’s Doctoral Program in Business.

I wore a T-shirt that said “Harvard, because not everyone can make it into MIT” while pursuing my business doctoral studies at Harvard Business School teaching management of technology to the MBA students.

However, just short of submitting my doctoral thesis, bigger opportunities in form of the world’s first energy crisis beckoned me back to Texas.




Houston - the Bayou City - has been my home ever since.  I founded several companies including Phillip Townsend Associates, Inc. a leading global benchmarking company and Townsend Solutions, a global consultancy on plastics and materials.
 

I was also chairman and part owner of a large utilities services company which had 2,000 employees across 23 states in the US for clearing and maintaining electric distribution lines.


Some of my other fun ventures include Wild Phil’s Buffalo Ranch.