Russ: Hi I’m Russ Capper and this is The EnergyMakers Show coming to you today from the campus of the University of Houston. And I’m very pleased to have as my guest Dr. Ramanan Krishnamoorti, Chief Energy Officer and also Professor of Chemical and Biomolecular Engineering; Ramanan welcome back to The EnergyMakers.
Ramanan: Such a pleasure to be here.
Russ: You bet. So we figured out it’s been at least 4 years since you’ve been on, there’s been a little bit happening in the energy space in the last 4 years, right?
Ramanan: Well time flies if you have fun, even when you’re not having fun as the energy industry has found out over the last 4 or 5 years. It’s been a tough few years and we’ve seen changes happen in the way we produce energy but also in the way we consume energy. And there’s a much better perception of both the supply and the demand side of energy with the populous and that’s where the equation has changed quite a bit.
Russ: Well also if you go back that long that was even really before the whole shale revolution and so there was an all of the above strategy back then, shale has been unbelievable but I read an article recently, a piece that you wrote for the Houston Chronicle, that argued for all of the above today as well, right?
Ramanan: Yes, for transportation. Transportation has been the last bastion where fossil energy has dominated. 92% of all transportation energy comes from fossil energy, particularly petroleum; now that’s starting to change. Yes, some of the electricity we produce still comes from coal and natural gas, but only 60% of it comes from coal and natural gas. That’s starting to become more dependent on things like solar and hydroelectricity. We’re starting to see a shift in the way we’re starting to think about energy, even in this last bastion of where energy consumption happens.
Russ: There’s one other thing in there that I read, you said that the grid needs to go through some adjustments too to handle all these battery powered vehicles. I did an interview at least 3 years ago with the Pecan Street Organization in Austin, there’s this tremendous database of usage going on with a community of I think 1300, 1400 households and a lot of it in the beginning was focused on what happens when everybody has a battery operated car. And they would show wow, they come home at night and they’re all plugging in, so there’s got to be some pretty significant grid changes to handle a significant change in power source for vehicles, right?
Ramanan: Absolutely. Now if today we had a magic silver bullet and said every car that runs on gasoline is going to run on electricity and every truck that runs on diesel is going to run on electricity, you’re going to have to double the electricity production and transmission across the country. That means having twice the number of power plants, twice the number of grid wires that are running and you’re just fundamentally going to change the entire infrastructure on which we have started to build and grow. Just the gasoline filling stations and diesel filling stations across the country if you were today to say we’re going to take a country the size of the United States, have 300 million people drive around, what’s the investment I need to put those gas stations?
It’s going to be several trillion dollars; conservative estimates are about $5 trillion. That’s not an easy investment and it’s not going to happen overnight. It’s going to take it’s time I think as we start to evolve these changes. These are going to be gradual. I think there are going to be early adapters for some of these technologies but there are massive, massive infrastructure changes that need to happen. And you add to that – this is my favorite part of this – what happens if you go to completely driverless cars? These cars are always moving, they’re not going to have time to go and charge up at any time. How are you going to move them?
One thing we’re going to see is a lot of parking lots are going to go away but that’s a good thing, but what do you do with these driverless cars and how do you charge them? How do you keep them in a mode where they can continue to move continuously? So lots of very interesting sociological and sort of fundamental changes in the way we live are coming upon us largely because of transportation.
Russ: The future’s not going to be boring is it?
Ramanan: It’s not going to be boring.
Russ: You worry about how you charge those cars, a lot of people are worrying about how do you employ all the drivers that used to drive them too, which is huge.
Ramanan: Exactly. How do you employ those drivers? How do you look at the natural resources for charging for batteries? Where do you get those? If you start to look at cobalt which is one of the elements that’s used in a lot of batteries for vehicles, that’s a material that we only mine about 7,000 tons a year. We use about 1500 tons of that for batteries today. What if every internal combustion engine went to a battery technology? We’re going to have to be mining a lot more cobalt; where are we going to get that? How are we going to do this in a sustainable way? I think part of it all comes back to this fundamental question of now how do you sustain human progress and the quality of life that we have over generations struggled to come to have today? And I think that’s one of the most fundamental questions.
Russ: Very interesting. In all of this, talking about the grid and how you’re going to power and charge electric vehicles, it seems like natural gas continues to rank higher and higher in where it’s going to fit in, all of this LNG stuff that’s happened. I think I guess back when we had the interview we weren’t even doing the thing where the LNG plants that were built to import suddenly converted to exporting and how much gas we’re producing now, even out of the Permian it’s just mind boggling.
Ramanan: It is amazing as to what’s going on in the Permian and how the costs have been cut to a point where resources we never thought we could exploit are exploitable at $20 a barrel. Total lifting costs are less than $20 a barrel in much of the Permian. That was unbelievable; that’s been an unbelievable transformation in what we’ve done. And this isn’t just gas, you get a lot of condensate and the condensate is what is driving a lot of the fuels market in terms of how we are maintaining this energy balance within the United States.
But globally LNG has just – and I hate the word exploded because – that market has just simply grown to a point where natural gas is no longer thought to be a global commodity, it has become a global commodity. It used to be a regional commodity and you used to always think about petroleum, crude being a global commodity, natural gas being a local commodity. That’s all changed; Australia coming online, Qatar coming online and all of the import terminals that have come about in China and India and Europe, and then with the U.S. lifting the ban on LNG exports that has just been a transformation that’s – instead of having $15 to $20 per ton you’re looking at $6 to $7.
Russ: On your comment about the cost of production going down how much do you believe that technology has played in that role?
Ramanan: It’s all about technology and people and I don’t think you can separate those two apart at all. It is one leads to the other. Technology and the way in which the expertise has used that technology has really transformed the way how we’ve use shale; the shale resources and the unconventional resources. We’re starting to see the same thing happening in offshore. Offshore was considered to be one of those bastions where $62, $65 a barrel was considered sort of the low water mark. Today that’s dropped over 40 and it’s continuing to drop because of technology and the right people with the right training being available to really harness that energy.
And I think that’s really where I think that combination of having technology and have the right people there, the people who are well trained, to use the technology, it’s changing. And I see a lot more of it happening over the next 5 years. With the way cognitive is coming online it is something. Cognitive computing and the way we think about it, I think you’re going to see a much more rational way to exploit our natural resources and it’s going to come in a way that not only will reduce costs; I think rational approaches to how we explore, drill, produce. And if we need to cap resources it’s going to cut costs to a point where it’s going to be largely – price shocks are going to be driven by black swan events.
Russ: That’s interesting cognitive computing; we’ve focused on that a lot mainly on our other show, The BusinessMakers Show. I had Sridhar Sudarsan from IBM Watson on and had several guys and were working with some new people and artificial intelligence; it’s interesting that it’s going to affect energy too.
Ramanan: I think it’s going to fundamentally impact us in a way I don’t think anything else has.
Russ: Wow. Okay so I said it was 4 years ago, I keep on referring back. I’ve been out here a lot since then, interviewed Dr. Christine Economides, Phillip Jefferson your student who recently graduated, quite a few. So let’s talk about UH Energy; how has it shifted to what’s going on?
Ramanan: Well UH has become and has grown in stature as I think we’ve conferred on ourselves a moniker that we are the energy university. And I think we’re living up to that in every aspect of it; whether it’s from an educational standpoint and we’ve created some amazing programs on the educational side, but also the research. We’ve got three national centers that are focused on energy, not necessarily just fossil energy but energy in the broad landscape. And we have a significant outreach effort that reaches out to the community; starts all the way from high school education to college education to really finding ways to help teach our next generation. And I think we’ve taken on the role of trying to become the top leader in various aspects of energy across the global spectrum.
Russ: Well based on what I see you’re accomplishing that. I’m out here also for your energy symposiums which are continuing this next year as well, right?
Ramanan: Right. This is our fifth year and we’ve got a very impressive lineup of topics that we are working with. The first one comes back to our favorite issue about the grid and what is the future of the grid? Are we in a place where the grid can handle all the energy demand that the United States needs? The next one is one our second topic that we talked about, the Permian. And it’s about has the Permian really made OPEC obsolete? And the real question is OPEC was always the swing producer. That role seems to now have become that of the Permian, and increasingly that’s what is controlling global costs of oil and gas. And so the third one we are talking about is on renewable energy and where do we go with renewables? I think that’s an interesting topic in itself because it starts to highlight some of the big challenges that you’ve got. Everybody says renewable energy works great as long as you give them subsidies, but there have been some companies in Houston area which have come out and explicitly said let’s lay fair; let’s get rid of all subsidies and see if we can survive or not. The fourth one really comes back to the issue that we talked about just a little while back; what’s the role of artificial intelligence in the energy landscape.
Ramanan: And I think that’s a place where I think we’ll have some really interesting discussion. Artificial intelligence, cognitive computing, data analytics; these are three things along the same sort of path forward that I think will make for a very interesting discussion as we go forward.
Russ: Great. Well I really appreciate you spending some time with me and I’m going to attend these energy symposiums. I find them to be very interesting so thanks a whole lot.
Ramanan: Thank you so much, we really appreciate it and really enjoy the conversation.
Russ: I did as well.
Ramanan: Thank you.
Russ: You bet. And that wraps up my discussion with Dr. Ramanan Krishnamoorti, Chief Energy Officer here at the University of Houston. And this is The EnergyMakers Show.
brought to you by