With U.S. oil imports hitting a 17-year low, the mainstream media has awoken to the fact that, as I pointed out in a Fortune.com article 3 years ago, peak oil is not happening anytime soon.  Charles Mann’s excellent cover story in this month’s Atlantic, “What If We Never Run Out of Oil?” focuses on an obscure though potentially vast source of energy: methane hydrates, or crystalline natural gas trapped below the seabed.  If early exploration ventures by Japan and other countries succeed, this gas “could free not just Japan but much of the world from the dependence on Middle Eastern oil that has bedeviled politicians since Churchill’s day.”

An Associated Press story last week reached a similar conclusion about “unconventionals” in general: companies are opening huge deposits of shale gas, “tight oil,” and other hard to reach petroleum sources that will essentially flip the energy world upside down, as the United States regains its status among the world’s largest exporters of petroleum.

Both of these stories, though, share a common misconception, captured in the AP article’s headline: “New Technology Propels Old Energy Boom.”

In fact, the technologies underlying today’s petro-boom are not new at all; they are innovative applications and refinements of technology that has existed for decades.  The boom’s core technology is hydraulic fracturing, or fracking.  And drillers have been fracking wells for nearly 60 years.  More than 1 million wells have been developed using fracking since the 1940s, according to EnergyFromShale.org, an industry-supported website.

The early use of fracking to get at reserves previously thought of as unrecoverable, emerged in the early 2000s after exploration companies began examining geologic formations using x-ray computed tomography, or CT scanners.  The CT scanner was invented in 1967.

Tinker Imaginatively

What’s happening today is not a new-technology revolution; it’s an evolution of new applications for existing technology.  We are doing things that we’ve been doing for decades more efficiently, more effectively, and in much wider applications.

That may sound like a fine distinction, but it’s an important one: Silicon Valley has for years invested in sexy new technologies, from smartphones to social media to exotic solar power materials.  The cleantech industry itself has not benefited from a fascination with the new, the exotic, and the high-tech.  The technology for embedding sensors in a drill head so that technicians on the surface can map a formation as they drill is not all that sexy, and it didn’t come from a VC-funded startup in a Mountain View garage.  It came from drilling engineers in the field figuring out, incrementally, how to do things better, cheaper, and smarter.  Often, as in the case of the 21st century oil and gas boom, imaginative tinkering can be more fruitful than reinvention or laboratory R&D.

Leaving aside, for the purposes of this blog, the question of how we can move toward a carbon-free energy system in a world suddenly awash in hydrocarbons, the next phase of technology will almost certainly focus on how to better store, transport, and distribute the seemingly limitless supplies of natural gas now becoming available.  The difficulty and expense of liquefying and transporting natural gas have been a drag on the wider use of the relatively clean fuel for many years, particularly in the transportation sector.  In 2012, GE Oil and Gas introduced its Micro LNG plant to power remote industrial locations and fuel long haul trucks and locomotives, and last month the company debuted its LNG In A Box system for small-scale retail fueling stations.  The Norwegian gas producer and distributor Gasnor in 2009 launched the world’s first specialized, small-scale LNG carrier, the Coral Methane, designed to deliver fuel to remote ports along Norway’s coastline.

These are not “new technologies,” and they’re not being developed and funded as such.  But they’re exciting innovations.  And they are helping to power an energy transformation that will shape the world’s economy and its geopolitics through the rest of this century.

CODA Automotive has been a poster child for how challenging it is start a new car company in America.  Despite using “gliders” from Hafei and installing their own drivetrain, the company has struggled to get production vehicles launched, resulting in a 2-year delay from their first announcement of a launch in the fall of 2010 (it actually launched in May 2012).  The style and crashworthiness of the vehicles have been loudly questioned.

After the company endured low sales, significant layoffs, and supplier problems over the last several months, it comes as a surprise to few that CODA Automotive has formally declared bankruptcy.  CODA’s demise proves that, even if an automobile company is successful in raising funds (almost $600 million in CODA’s case), it ultimately can’t compete without actually selling large numbers of vehicles.  An automaker’s success, whether cleantech or old tech, is ultimately reliant on moving metal: the car has to be good –very good.  That’s the reason Hyundai and Subaru are growing while Dodge struggles to find its footing and Suzuki said goodbye.

CODA’s combination of tired styling, questionable safety, and little evidence of reliability made for a big challenge in attracting mainstream buyers.  Tesla has prospered because the company now has 3 years of history for exciting products in unique niches.  Fisker had the potential to follow Tesla’s playbook with a killer product, but slow production, quality challenges, supply chain problems, and lack of products in the pipeline have most likely doomed Fisker, as well.

The few owners of CODA vehicles are now stranded.  After shelling out $40,000, they now have a vehicle with little to no dealer and repair shop support.  Not only is this is a problem for these owners, but it also could dampen the spirits of potential buyers of innovative vehicles from other start-ups.  Many drivers are willing to take a risk on a piece of cool technology from a new company, but rarely does that technology cost almost as much as the average annual income in America.

The nuclear power industry’s drive to deploy small, modular reactors (SMRs) took a significant step forward this month.  Nuclear technology vendor Babcock & Wilcox (B&W) formalized its funding agreement with the U.S. Department of Energy (DOE) for the mPower reactor project.  With $79 million of federal funds for this year (and a total of $150 million over the 5-year program), B&W plans to build a prototype SMR at the Clinch River site in Tennessee, owned by the Tennessee Valley Authority (TVA).

SMRs have gleamed in the eyes of nuclear power providers for a decade now, as the industry seeks a new model for economical, carbon-free power generation for the 21^st century.  The Fukushima nuclear accident in March 2011 seemed to squelch the so-called “nuclear renaissance,” but many countries – including the United States, South Korea, Russia, China, and even Japan – are moving ahead with plans for small reactors that can be factory-crafted (thus “modular”) and assembled onsite.  Economies of scale have dominated the nuclear power industry for most of its life, with reactors expanding to 1,000 MW or even 1,500 MW.

Now, many believe that the future of nuclear lies in SMRs of under 300 MW that can be arrayed in multiple configurations, giving power generators more flexibility and, in theory, lower capital costs.

There are more than a dozen designs currently under development for SMRs.  Most of them are simply miniaturized versions of existing, light-water reactors; the mPower is a 180 MW “advanced integral pressurized water reactor” that could be deployed not only for supplying power to the grid but in more specialized applications, such as powering remote oilfield operations or desalinating water.

Arctic Nukes

“SMRs offer TVA an important new option for achieving clean, base-load electricity generation and we are ready to begin the work to understand the value of that option,” said TVA senior vice president of policy and oversight, Joe Hoagland, in a statement.

Increased safety is also a feature of SMRs, at least potentially.  NuScale Power, a startup principally backed by Fluor Corporation, said at an SMR conference earlier this month that it has developed an inherently safe system that, in case of a full power shutdown such as happened after the Japanese earthquake and tsunami, will self-cool the reactor without the need for external power or water.  Essentially, the NuScale design uses a simplified set of water valves that flip open automatically in case of a power disruption.

“Because of the simplicity of the NuScale design, only a handful of safety valves need to be opened in the event of an accident to ensure actuation of the [emergency cooling system],” said Jose Reyes, the co-founder and CTO of NuScale, speaking at the Nuclear Energy Insider SMR Conference in Columbia, South Carolina.  “These safety valves have been mechanically pre-set to align to their safe condition without the use of batteries following a loss of all station power.”

The earliest applications for SMRs are likely to be distributed generation in remote places, including military forward operating bases.  A Russian consortium is constructing a barge-mounted SMR, based on the nuclear engines that power icebreaker ships, that can be deployed in some of the least hospitable places on Earth.  The idea of nuclear reactors powering oil and gas production in the Arctic is hardly a reassuring thought for environmentalists and diplomats, but it’s likely to become a reality in less than a decade.

The mPower prototype is scheduled to be up and running by 2022.

Facing unresolved feedstock challenges – including access, cost, and security of supply – the global biomass power market is teetering on the verge of obsolescence.  Combined with controversy around emissions, changes in subsidy programs, and a boom in natural gas power generation, an increasing number of projects have  been cancelled in recent months across the United States and Europe.  Meanwhile, a wave of biomass pellet plant installments may presage an industry boom – albeit much later than otherwise expected.

In the United Kingdom alone, roughly one-third of announced biomass power projects across the country have been abandoned in recent years.  Many of these were dedicated facilities, ranging from 100 MW to 300 MW of capacity.

The Achilles heel of biomass power production is sourcing an adequate supply of feedstock at a reasonable cost.  Biopower’s problem is not so much a function of scarcity – biomass is ubiquitous and currently the fourth largest energy resource worldwide after coal, oil, and natural gas – but it’s an inefficient source of carbon relative to fossil fuels.  Unlike coal, oil, and natural gas, biomass lacks density in two ways.  First, it’s scattered across large swaths of land (such as forest thinnings from national forests) and must be collected and aggregated.  Second, its energy density is three-fifths that of coal, adding a premium to the cost of transporting volumes from source to customer.

Competing against low-price fossil fuels like coal and natural gas, biomass feedstocks can’t afford to rack up costs associated with harvesting, aggregating, processing, and transportation without heavy subsidization.  Where coal producers capture efficiency through economies of scale and an international transport infrastructure, biomass production remains, at best, a cottage-based market.

Pellet Pull

For these reasons, the financial viability of biomass power falls off a cliff when resources are sourced outside of a 50-mile radius, making larger projects with bigger biomass appetites much riskier.  These projects typically bank on a concentrated local source combined with the import of biomass pellets from international suppliers, a market still in its infancy.

Today, wood pellets are one of the largest internationally traded solid biomass commodities used specifically for energy purposes, but they represent only a fraction of the scale of the global coal trade.  Biomass pellets have lower moisture content than raw biomass, which decreases fuel degradation during the storage period, increases energy density, and creates a more homogeneous composition, all of which translate to higher energy efficiency during combustion.

Growth in biomass power generation is dependent upon the expansion in the international trade of wood pellets over the next decade – principally from Canada, the Southern United States, Russia, and Baltic region of Europe to the European Union and Asia Pacific.  Responding to the sudden surge in the global trade of industrial biomass pellets, Energy Exchange APX-ENDEX was launched in November 2011, becoming the world’s first dedicated exchange for biomass renewable energy.  The exchange is expected to bring more transparency to the market by adopting several certification schemes for industrial wood pellets already used in today’s bilateral contracts in order to ensure that the wood pellets originate from sustainable wood sources.

With the trade in industrial pellets still in its infancy, many biomass power plant operators like RWE in Germany and Drax Group in the United Kingdom have taken matters into their own hands, investing in upstream pelleting facilities outside their domestic markets.  Many oil majors – from Conoco to Chevron – are getting in on the action as well.  Although the biomass pellet market is heating up, it will be 5 to 10 years before biomass power generation picks up steam.