Hurricane season began June 1, and the U.S. National Oceanic and Atmospheric Administration predicts that the 2008 Atlantic season will be “near normal or above normal” and that hurricane activity in the central and eastern Pacific regions to be “below normal.” But even a “near normal” prediction brings the probability that major hurricanes will form and make landfall. For those along coastal areas, storm preparedness is essential, but even those living further inland should heed NOAA’s advice: BE PREPARED!

 

Extrapolations from the prediction can only be estimated, weather experts insist, but for 2008, about two-thirds of the season will bring with it “12 to 16 named storms, six to nine hurricanes, and two to five major hurricanes. Most of this activity is expected during August through October, the peak months of the Atlantic hurricane season,” NOAA said. An average hurricane season has 11 named storms, including six hurricanes, two of which become major. “The outlook is a general guide to the overall seasonal hurricane activity. It does not predict whether, where or when any of these storms may hit land. That is the job of the National Hurricane Center after a storm forms,” said Conrad C. Lautenbacher, NOAA administrator.

 

A tropical storm becomes a category one hurricane when winds exceed 74 miles per hour. A category two hurricane has winds from 96 to 110 miles per hour; a category three has winds from 111 to 130 miles per hour; a category four storm winds are 131 to 155 miles per hour; and a category five storm has winds above 155 miles per hour. Typically, a hurricane lasts an average of three to 14 days, and a long-lasting storm may cover 3,000 to 4,000 miles at a speed that ranges from 10 to 20 miles per hour. Even though the past two hurricane seasons have spared the U.S. of serious damage, energy services companies doing business along the Gulf Coast vividly recall the devastation left by Hurricane Katrina in 2005. They have, no doubt, a well-practiced emergency plan already in place.

 

But even those whose homes and jobs are farther inland can be subjected to punishing rains and winds as a hurricane loses power over land. So an appropriate disaster response plan is something every company should have on hand. The cover story in the June 9 issue of Time, “How to Survive a Disaster,” offered five ways to put the odds more in your favor if disaster strikes. Simply put, you should improve your “disaster personality.” The magazine suggested an improved attitude will help you respond better to trauma. Knowledge of a disaster situation raises your survival chances, and controlling your anxiety level can  enhance decision-making. Keeping your body healthy and trim is very important. Training for what to do in a disaster is one of the best ways to do the right thing when a disaster hits. Mark November 30 as the end of hurricane season.

 

By any measure, the energy industry is massive. Everything seems big in the oil patch due to the

amounts of money required, the risks taken, the scale of equipment and even the size of a pipe wrench. But in the scramble to develop the newest and best ways to produce crude oil and natural gas, a group of scientists and engineers is betting small. So small in fact, that the technology cannot be seen with the naked eye. Called nanotechnology, it has the potential to revolutionize the energy industry and a number of other major industries along the way.

 

The breakthrough in nanotechnology came in 1985 when chemists developed amazingly strong, one nanometer-diameter carbon molecules. “Carbon atoms arranged as nanotubes exhibit tensile strengths 100 times that of steel and can be either metallic or semi-conducting.” A nanometer, the unit of measure, is one-billionth of a meter. In size, a nanometer is to a meter as a marble is to the earth. Explained another way, a nanometer is the amount a man’s beard will grow in the time it takes to raise the razor to his face. The magic of nanotechnology is that materials behave differently at the nanolevel than they do at normal size. Nanomaterials can be constructed as coatings,materials and even machines. Yes, they have even built nanocars powered by light. Another theory is to make nano-dump trucks that are chemically programmed to “haul” oil, connecting them to each other by nano chains and sending them downhole to “haul” oil to the surface. Nanotechnology, when applied to elastomer seals in a laboratory test, “indicate a 35 percent improvement in abrasion resistance and a 40 percent improvement in strength over conventional seal materials.

 

In the future, nanotechnology will be used to improve conventional materials. Steel can be strengthened and lightened, increasing effectiveness and reducing cost. Significantly less energy would be required to trip a pipe string that is 30 percent lighter, yet offers greater strength and durability,” reportsWade Adams, director of Rice University’s Richard E. Smalley Institute for Nanoscale Science & Technology. He outlined some fascinating possibilities, like nanoenergetics could dramatically alter fracturing and stimulation work. Carbon nanotube wires “could be deployed as conductors for powering the bit, rotational equipment and even plasma drilling torches.” Asmind-boggling as those ideas are, perhaps the most amazing is a concept known as “gas to wire” where nanotechnology could be used to convert hydrocarbons directly into electricity by way of an in situ catalytic upgrade. Nanotechnology promises to pay big dividends in areas like healthcare, high technology, communications and manufacturing. So despite its small size and years of research that still needs to be conducted, the challenges overcome by nanotechnology may well turn out to be really big.

 

Checking on a rig or equipment in the field is time consuming, and in these days of high fuel prices, an expense. Depending on the location, it can take hours and even days to reach your destination. If you have to diagnose a problem and call for parts or repair, that becomes non-productive time. But what if you could watch your rig around the clock and never leave the office?

 

A Dallas-area newcomer has developed a monitoring system that does just that with cameras mounted on the rig and a signal that bounces off a satellite uplink, down to the Internet and your office computer. Drillsite Broadcast Company already has five of the monitoring units in operation as of June with orders for 17 more units, and the company expects to have around 30 units operating by October 1. Four cameras are mounted on the rig, two in the mast and two covering the rig floor where approximately 40 percent of drilling accidents occur. Viewers can switch between the cameras at the touch of a computer mouse. The cameras do not impede drilling operations, and they are hardened to withstand the rigors and vibrations of drilling. Access to the video feed is password-protected.

 

One of the biggest obstacles DBC solved was attaching the camera to eliminate vibration from the rig. Consequently, the system delivers good quality video. At the rig location, the entire video operation is controlled from an unmanned six-foot by 10-foot environmentally hardened unit. The broadcast services provide bi-directional data transmission rates of more than one megabyte per second and also deliver data, video and voice over Internetcommunications.

 

The cost is between $250 and $400 a day. DBC argues that the cost, when weighed against benefits such as improved safety, monitoring and high-speed data transmission of real time activity make the system compelling. “The video feed has no audio,” DBC says, “because noise from normal operations would be distracting.” DBC offers clients password security at two levels. A lower level password only allows access to the video feed from the cameras. A higher level password, say for top managers, provides access to the video, and the logging and other proprietary information that is part of the system’s data transmission capability. The two levels of password access also solved another problem with some privacy concerns by rig hands who would be the “stars” of the show. But letting hands share the password with family members allows them to stay in touch. “We’ve had big ’ol roughnecks turn to the camera, mouth the words, ‘I love you’ and blow kisses to their kids at night,” a DBC executive said.

 

The technology is just now rolling out to U.S. drilling rigs. DBC plans to expand internationally and extend the product line offshore and to other sectors of the energy services industry. To see the quality of the video, visit the DBC website, www.drillsitebroadcast.com. Check on the rig, but do it from the office.

 

 

The housing and mortgage credit crunch continues to be a major drain on the economy, but this is old news. And skyrocketing energy prices remain a hot topic, but we have been living with $100-plus oil for some time now. But statistics for U.S. unemployment numbers are gaining increasing significance and creating the possibility of a triple threat to the economy. Throw in consumer confidence numbers compiled by the Gallup Poll, and it all suggests a U.S. economy getting hammered on a number of fronts. The U.S. Bureau of Labor Statistics reported the May 2008 “unemployment rate rose from 5 to 5.5 percent, and non-farm payroll employment continued to trend down (49,000).”

 

During May, “employment continued to fall in construction, manufacturing, retail trade, and temporary help services, while health care continued to add jobs. Average hourly earnings rose by 5 cents or 0.3 percent,” the agency said. The half-percent jump was “the largest one-month increase in more than two decades.” Among the sectors that lost workers, the BLS noted that construction employment dropped by 34,000 with nearly that entire number coming from residential specialty contractors, down 19,000, and building construction, down 12,000. The BLS said May job losses in manufacturing were 26,000, and that 2008 “monthly job losses in manufacturing have averaged 41,000 compared with 22,000 a month in 2007 and 14,000 a month in 2006.”

 

Numbers are hard facts, but how people are feeling is also important. Recent survey results released in June by the Gallup Poll indicate the mood of America; and right now, things are sour. A Gallup survey on economic issues indicates there is a “crisis” situation over gasoline prices with 42 percent of Americans, the decline of the dollar at 29 percent and healthcare costs and the housing market at 28 percent. Other categories in the survey that are considered a “crisis” by at least 20 percent of Americans included food prices, wages and job losses. In all of the preceding categories, when “major problem” is added to “crisis” then 93 percent of Americans are alarmed about gasoline prices. Even the category of least concern in that group, job losses, is considered alarming to a full 70 percent of respondents. “U.S. investor confidence is weak,” Gallup reported in another survey. “Investor optimism tumbled to its lowest level since the beginning of the Iraq war, as the Gallup Index of Investor Optimism fell to 15 in May, down from 22 in March and 95 in May 2007,” the pollster reported. And “investors’ optimism about their portfolio investments over the next 12 months has also decreased.”

 

In a third survey result, Gallup reported that a record-high 55 percent of Americans think they are “financially worse off… than a year ago, marking the first time in Gallup’s 32-year history that more than half of Americans give this pessimistic assessment.” Driving home the speed with which financial worries have increased, Gallupreported that when the question was asked back “in late January/early February of this year, 44 percent said they were worse off.”

 

 

Boone Pickens may be one of the most complicated businessmen in the world. His name is synonymous with energy, primarily the crude oil and natural gas deals that turned Mesa Petroleum into one of the largest independent oil and natural gas companies in the world. And though he built his empire more by way of his boardroom maneuverings than through the drill bit, he amassed a fortune worth billions, introduced new ways of doing business, and has become one of the nation’s leading philanthropists. Even at 80, he is still making the big deals and getting plenty of attention.

 

Two of his more recent ventures are outside of the oil patch but are noteworthy for their size and inventiveness. The current population of Texas is about 22.5 million and is expected to grow significantly in the coming years, according to a number of estimates. At the same time, Pickens, who owns vast amounts of land in the Texas Panhandle, foresaw the day when thirsty cities would maneuver to gain rights to his underground water. So in 1999 Pickens and a group of Texas Panhandle landowners began assembling water rights in order to sell them to growing cities.

 

Mesa Water, according to its web site, holds rights to 81 million acre-feet of water and is capable of selling up to 320,000 acre-feet of water per year to willing buyers (an acre-foot of water is 325,851 gallons). It is estimated that 320,000 acre-feet of water is an amount sufficient to satisfy the needs of about 1.5 million people. Over a 30-year period, sales are projected to exceed $1 billion, and already voters have approved over $100 million in bonds to begin work on right-of-way acquisition.

 

A more recent venture involves energy, but not crude oil or natural gas. In June 2007, Pickens announced his intention to create the world’s largest wind farm, also located in those same four Texas Panhandle counties. Mesa Power plans to construct up to 2,700 wind turbines on up to 200,000 acres of land, and altogether the turbines are expected to generate up to 4,000 megawatts per day. Papers filed with the Electric Reliability Council of Texas estimates the project will generate 1,000 megawatts by 2011, and the project is expected to be complete by 2014.

 

In May, Pickens wrote a check to General Electric for almost $2 billion for an initial order of 667 generators. The combined cost of the water and wind-generated electricity projects is estimated to total $13 billion. Wind-generated electricity is a huge opportunity for the nation, Pickens insists. He believes the potential exists for massive wind farms along a giant swath of America, running north and south through the Great Plains and another corridor running west from Texas to southern California. In April, Pickens stated, “You need a giant plan for America. There needs to be a huge plan from someone with leadership. It’s going to take years to do, but it has to start now.”

 

A flood fell from the skies of the Midwest in June. Rivers raged, then overflowed their banks, topped and breached levees, and laid waste to hundreds of communities and millions of acres of some of the most productive farmland in the world. At least 15 people were killed, and the billions of dollars in damage are still being calculated. For some, recovery from the devastating 500-year storms will take years; but for far too many, the fury of the storms forced them to forever abandon homes, businesses, farms and ranches. Food price inflation is one major consequence of the storms because corn, wheat, soybeans and other crops were drowned or washed away. Iowa is the nation’s leading corn producer, and reports state that 2 million acres of soybeans and 1.3 million acres of corn were lost due to rain and flooding. That is about 9 percent of the Hawkeye state’s entire corn production and approximately 1.5 percent of the nation’s expected corn harvest. Reports also indicate that a full 16 percent of Iowa’s 25 million acres of farmland was impacted by the rains and floods. The U.S. Department of Agriculture had already reduced its projection of the 2008 corn harvest to 11.7 billion bushels, and an estimate released in late June spiraled that number further downward.

 

The June storms had an almost immediate added impact on grain prices. The Associated Press noted, “Corn prices have shot up more than 80 percent in the last year because of rising energy prices and surging global demand for biofuel and livestock feed.” In the past two years corn prices have more than doubled; and in the first few weeks of June, prices for corn rose another 25 percent. Demand sent the price to a record high of $8 a bushel at the Chicago Board of Trade. And around the world, the cost of food during the past three years has increased 83 percent, according to the World Bank. An analyst with Barclay’s Capital characterized worldwide agricultural productivity as “stagnant” and that increases in food prices have been particularly difficult for poor nations who depend on large food imports. An analyst with Merrill Lynch said, “Food security is becoming a big deal for a lot of food-producing nations,” citing Egypt, Vietnam and Cambodia as food exporters who have essentially stopped exporting surplus food out of the country. From an energy standpoint, Citi Investment Research suggested as much as 100 million barrels of biofuel might not be produced due to high corn prices. The storm clouds may have parted, but the impact of higher food prices will be with us for many years to come.