Category: Technology

Kuwait’s Green Future – Sunshine and Sunflowers – Article for Al Jarida 23 December 2016

This article was written for the Al Jarida newspaper and published on Saturday 23 December 2016.

This article took a full page to discuss the economics of solar energy in Kuwait.

It is published here on page 10: Al Jarida Article 23 Dec 2016

Kuwait’s Green Future – Sunshine and Sunflowers

I saw Tesla the other day in Kuwait. That’s the electric car championed by Elon Musk and his team. It was a P85D – an all wheel drive machine with two electric motors with a combined power equivalent to 762 horses.

In Kuwait.

I parked next to it.

Electric cars in Kuwait? Who would have thought in a land of cheap, cheap oil, that electric cars could exist here.

Well, because energy from the sun is now cheap, cheap, cheaper!

Take a look at this chart:

Source: EIA, CIA, World Bank, Bernstein analysis

(Henry Hub is compressed natural gas, Brent is crude oil, LNG is liquefied natural gas)

Look at the grey line. That’s the falling cost of solar photovoltaic (PV) energy. It was in 2012 that the cost of producing energy directly from the sun became less costly than producing it from coal, natural gas or oil.

That was four years ago!

Considering that capital moves in cycles of seven years, we are fast approaching the time when new investment will consider PV power generation before other, more expensive options options.

In fact, in many parts of the world, this is already the case: Portugal and Germany are two examples where this year (2016) there was so much energy being produced by renewables (wind and PV) that the large gas and coal fired installations – which cannot shut down without significant startup costs – were paying customers to take away the energy they produce so they could maintain their minimum ramp down production rates.

Kuwait is one of the luckiest countries in the world – an abundance of oil has produced one of the highest standards of living anywhere and income per capita is amongst the highest in the world, with Luxembourg, Singapore and Qatar. The second most bountiful gift is now coming to the fore: the Sun. Many, many days of full, unclouded sun means Kuwait as a nation can produce enough energy equivalent to 1 quarter of the world’s energy demands. One quarter? How is that possible.

Let’s show you how:

The area of Kuwait is 17,820 square kilometres.

17,820 km 2 means 3,564 Gigawatts of energy can be captured on a sunny day across the entire country of Kuwait – capturing only 20% of what falls on Kuwait on one of the many sunny days here.

Compare that to the entire world demand for energy: only a mere 12,000 Gigawatts – or 4 times more than what could be produced from Kuwait.

Suspend your sense of practically for this scenario for a moment. It’s the relative size that is important. Scale is what matters.

Kuwait has the potential to provide 25% of the world’s energy demand – from the sun alone.

(Note: World energy consumption 9,301 MToe = 67B boe = 12 TW https://en.wikipedia.org/wiki/World_energy_consumption)

World energy contribution from oil, Kuwait’s contribution to world energy demand is only 1.5%, from 3,000,000 barrels per day.

So energy from the sun landing in Kuwait alone is 17 times more prolific as an energy source and hence far more beneficial for Kuwait than oil.

Let’s bring this into personal perspective. That Tesla car I saw. The shaded car park for that Tesla car – fitted with low profile, efficient “BIPV” – Built In Photovoltaic – panels can produce 2,500 watts-peak of energy during the day. (170 watts per square meter x 2.5 meters x 6 meters). Over an 8 hour day that would be 20,000 Watt hours. Over a year, 7.4 megawatt hours. One barrel of oil holds about 1.7 megawatt hours of energy. Hence our BIPV solar car park would produce the equivalent of 4.3 barrels of oil, or 680 litres of oil in one year. We know that from this crude oil we can extract only 300 litres of gasoline but we’ll discount this for this thought experiment, and convert it all into motion – we are talking about liquid energy. That means 6,800 km of driving at 10 km per litre.

But an oil driven car is not an efficient converter of oil energy into motion energy.

An electric car is.

The Tesla consumes 237.5 watt-hours* of energy per kilometre (from Tesla).

That means the energy from the BIPV solar car park will drive the Tesla 31,000 km – 4.5 times further than the oil driven car.

Remember that each year in Kuwait the average car travels 20,000 km. So our BIPV solar car park can drive the oil driven car for about one third more than its total requirement each year. For the electric car – more than 1.5 times the national driving average. That means a net excess of energy production. That’s a lot of hassle free driving and a direct reduction in additional power generation requirements for the country – on a per car basis.

Combined with efficient energy production, additional charging stations, you can see that very quickly the cost of driving will go very close to zero. Indeed, if there was a feed in tariff (FIT) – with the BIPV solar car park’s extra energy going into the power grid for general consumption, then owning an electric car could generate income.

Now let’s talk about buildings. There’s a lot in Kuwait, in the sun all day long and a great demand for energy requirements because of the high cooling requirements.

Buildings are also attractive for solar production using “BIPV” – Built In Photovoltaic. Imagine that you can’t even tell that a glass wall or feature elevation is really a power generator!

Companies such as Polysolar and BiPVco (both British companies, with BiPVco being a joint venture with Tata steel and Swansea University), are both producing elegant, stylish and effective means of drawing energy from the sun built directly into a building. For Polysolar the glass facade of a building can now collect energy from the sun. And curved surfaces are no problem for ultra lightweight and flexible panels from BiPVco.

Upto a third of a building’s energy requirements can be obtained from “BIPV” – Built In Photovoltaic. Building with energy efficient materials and using smart energy building controls, this can easily reach more than 50% from the sun, from BIPV – barely perceptible as being anymore than part of the elegant and advanced design of a modern building.

The future of photovoltaic is bright for the world, and especially in Kuwait: The Emir of Kuwait, Sheikh Sabah IV Ahmad Al-Jaber Al-Sabah GCB, gave a speech 9 November 2016 at the 22nd Conference of the Parties to the United Nations Framework Convention on Climate Change in Marrakech, also known as COP 22, emphasizing the small nation’s commitment towards reducing greenhouse gas emissions, and focus on voluntary renewable energy generation. Kuwait is targeting 15% renewable energy generation by 2030, representing an investment of USD 100 billion over the next 14 years.

The future is electric.

About Jeremiah Josey

Mr. Jeremiah Emanuel Josey is an Australian who has been living in the Middle East for 8 years. Expert in the finance and energy markets, he is the Chairman of Swiss based Meci Group, a business and investment consultancy that operates across the Middle East, Central Asia and Russia.

See JeremiahJosey.com and Meci-Group.com for more.

Post script: This article below contains great facts and figures that clearly define the decline of oil from now (November 2017) to about 2022 or 2023. Over this time will see oil dependant countries like Iraq, Saudi Arabia and Kuwait collapsing, and places like Russia and Iran obtaining their revenues from elsewhere. Venezuela is going through their collapse now.

CleanTechnica article by Zachary Shahan

December 25, 2016

After Oil: Money, Food and Polymers – New Business Activities for the Middle East

I wrote this article for the Al Jarida newspaper and it was published on Saturday 7 February 2015.

This article took a full page as I was developing an argument for Kuwait and other oil rich countries after demand for crude oil declines. It is published here: Al Jarida Article 7 Feb 2015 (Go to page 12)

After Oil: Money, Food and Polymers – New Business Activities for the Middle East

Fourteen years ago the former Minister of Oil for Saudi Arabia, Sheikh Ahmed Zaki Yamani said that by 2030 oil would remain in the ground because people would not want it. One oil rich country, Iran, is discussing their future budgets without oil. I have written previously about how dramatic falls in energy creation from solar radiation is now a direct competitor to burning fossil fuel. So what can economies that are heavily reliant on oil revenues such as Kuwait do in a post oil world? This is what I will discuss in today’s article.

Based on experience, for a change to take place in any market there must be three major forces that come together at the same time. These three forces are: Economic, Social and Technical. If a market or industry sector has these forces in play, then it will change. Let us look at the oil market and see if these forces are present.

Economically? Yes. Falling prices have made many oil reserves uneconomic. Falling prices of other energy sources drives consumers towards them.

Socially? Yes. Climate change issues are affecting the entire world and reducing carbon dioxide production is now a topic of common discussion. The United Nations Framework Convention on Climate Change (UNFCCC) and the Intergovernmental Panel on Climate Change (IPCC) are both very vocal in the need to curb carbon dioxide emissions immediately. Not next year, but now. Today. Yesterday if they could do it.

Technically? Also yes. Energy can be produced as efficiently from the sun and the wind as it can from fossil fuels (coal, oil and gas).

So it seems the forces are aligned. Hence the market will move. Then the question remains, what does this mean for countries that are heavily reliant upon fossil fuels, especially crude oil, for their state revenues? Something needs to change. Business will have to divest and reinvest in order to create new revenue streams.

There is a catch however, a complex economic catch. In countries where oil revenues provide a lot of state revenues, oil production is also very cheap. For example in Russia, oil production cost is around $15 per barrel. It’s about $10 per barrel in Iran and less than $5 per barrel in Saudi Arabia, Iraq and Kuwait. New revenue streams however will come with higher operating costs, high retooling costs (more capital investment) and high human capital retraining costs. Margins will be less. Hence there must be significant increases in revenue by these lower margin activities to cover the revenues lost by a fall in oil demand. It will be difficult.

So with that groundwork laid, I boldly predict that for oil rich states such as Kuwait that once oil demand declines there are three areas that can replace oil revenues. These are:

1. Finance, equity and debt investments, investment yields 2. High value polymer production, taking it beyond low value petrochemicals 3. Aquaculture for high efficiency protein production

These income streams can either occur through private ownership, in which case taxation regimes would be required to provide state revenues. Or the ventures would be state owned and continue to operate much like the oil and gas sector operates now. The later would be a tall order. The economic efficiencies necessary in these new industries will not allow traditional work ethics common with the high margin, easy to produce revenues from crude oil. Therefore state governments will get smaller. The private sector will grow, if it can. Private sector needs three factors in it’s favour to thrive: 1) great infrastructure – transport, communications, access to liquidity; 2) excellent legal systems; 3) low taxes. This is something Dubai has been developing and they appear to be doing well.

Let’s go through each one of these three new revenue options in turn, using Kuwait as an example and the benchmark of $50b – Kuwait’s gross income with crude oil price at $45 per barrel.

1) Finance, Equity and Debt Investments, Investment Yields

Sovereign wealth funds of the Middle East are in an ideal position to expand their operations to replace falling oil revenues. Since 1953, the Kuwait sovereign investment fund has accumulated an estimated $550b in assets. Therefore, quite simply, a 10% yield on investment would replace all present revenues from crude oil.

But can you get such a high yield on so much capital? You can. You can even get more.

Berkshire Hathaway, the very well known investment group established by Warren Buffet in the 1960’s, holds net assets of $484b. Their net revenues have averaged 20% per year for the past 50 years.

This demonstrates that high yields are achievable.

Employing 330,000 people, Berkshire Hathaway presents a viable model for Kuwait moving forward after oil. Raising the level of investment knowledge therefore is an important skill to develop amongst Kuwaitis. The management of such investment could be achieved by creating 100 investment groups each allocated $5b. Each group would be set the target to achieve 20% or more net annual revenues. It would be survival of the fittest. Consolidation, knowledge transfer and then further expansion would increase the performance of the funds and the skills of the investment management teams.

From first hand experience, investment yields greater than 50% are possible when carefully selected and expertly executed.

So the management of money is a viable solution to entirely replace revenues from falling oil demand.

2) High Value Polymer Production, Taking It Beyond Low Value Petrochemicals

Here is a perspective of the use of crude oil in today’s world:

From Renewable Energy World

The chart shows that 44% of crude oil is consumed as gasoline, 21% as diesel, and 9% as jet fuel. That means that 74% of crude oil is burnt every day, never to return, non-renewable.

Notice that only 2.7% of all production is consumed in the polymer industry – petrochemicals. This is an industry that takes a product with a market value of $0.30 per kg (crude oil), and then, with complex chemical and mechanical processes, produces products that sell for $1, 5, even $17 per kg. This industry is is the petrochemical industry, producing plastics and polymers.

Value adding to crude oil is a straightforward way to increase revenues once you have installed the necessary equipment and have the required numbers of trained personnel.

I have put together the table below to show different polymers with their prices, their world market share and how much of Kuwait’s revenue this would represent.

For example polycarbonate, a transparent, highly impact resistance plastic common in the automotive industry, sells for about $5 per kg.

PTFE, a high tech fluorocarbon polymer sells for about $17.5 per kg.

But the demand for both of these polymers is low compared to crude oil volumes. Even if Kuwait was producing all of the worlds requirements for these two high value polymers, it would not provide any where near the replacement revenue for the State.

Polymer	World Production (million tonnes per year)	Bulk Market Price ($ per kg)	World Market Value ($ billion per year)	% of World Crude Market Value	Profit at 20% Margin	% of Kuwait Income ($45b)
Polyethylene	80	1.7	136	10%	27	60%
Polypropylene	60	1.5	90	7%	18	40%
PVC	43	2.5	108	8%	22	48%
Polyester (PET)	28	2.2	62	5%	12	27%
Polyurethanes	12	2.5	30	2%	6	13%
Acrylonitrile-Butadiene-Styrene (ABS)	7.3	2.5	18	1%	4	8%
Polycarbonate	3.7	5	19	1%	4	8%
PTFE (Teflon)	0.2	17.5	3.5	0.3%	1	2%
Crude Oil (Kuwait)	150	0.30	45	3%
Crude Oil (World)	4,025	0.33	1,328	100%

Prices and quantities are from various years eg 2012, 2013, and 2014 and are indicative only for the purposes of general trends and forecasting for this article. Further details analysis would be necessary to undertake investment level decisions.

When considering what products the petrochemical industry should focus on, the table highlights that advanced polymers are high value but are not high volume. It also highlights the large scale of investment needed to produce a viable revenue source from advanced polymers. Also there is no one single polymer that would replace crude revenues. Instead a mix would be required, determined by market demand, capital expenditure, and feedstock availability.

Let’s consider two countries in the region, Saudi Arabia and Iraq. Saudi Arabia presently produces 75% of all Petrochemicals in the Middle East (and 10% worldwide). In 2013 Saudi petrochemical production was 86.4 million tonnes and the total value was $66.9b. Note that this equates to only $0.77 per kg, so it’s not in high value polymers, but in mid value intermediate polymer feedstock. In Iraq, Shell has just signed a $11b deal with the Iraqi government to build the Basra Nibras complex (operating by 2021). This is a petrochemical facility with a modest 1.8 million tonne per year capacity. Also, it is not making high value polymers, only intermediary polymer feedstock. Further capital investment is required to do higher value adding.

For an exercise, let’s assumed that the profit margin for a basket of high value polymers is 20% and that that basket sells for $2.5 per kg. This includes all capital investment, operations, maintenance and replacement allowance for the equipment (depreciation). Therefore the net profit will be $0.50 per kg. Thus, with 1,000,000 barrels per day of oil (123 million tonnes per year) converted into a high value polymer would yield $26b in net profits per year, or about half of Kuwait state requirements.

So this is possible, though with considerable capital investment and the time to establish it.

3) Aquaculture for High Efficiency Protein Production

What else can these countries do when oil is no longer wanted for burning? Well, it will still remain a low cost source of energy, and that means that other industries can be supported with it. One such industry is aquaculture, the most efficient form of protein conversion of any animal husbandry practice, as the table below highlights:

Feed Conversion Ratios

Animal	Kilograms of Animal Feed to Produce 1 Kg of Animal Meat
Beef	20
Sheep	4
Chicken	2
Fish	1.4
Shrimp	1.1

This is food for thought for oil rich nations with abundance of sunshine, water, and hence cheap energy. Growing fish and shrimp for hungry expanding world markets is a possible viable investment path, especially as the forecasts of collapsing wild fish and shrimp stocks come more frequently into the news.

One of the fastest growing food industries due to it’s high feed conversion ratio is shrimp farming. Iran has increased shrimp production to 8,000 tonnes per year in only about 15 years, and Saudi Arabia is producing about 25,000 tonnes of shrimp per year over a similar time frame.

There are plans for a 9,000 tonne per annum shrimp farm in Iran which will double production from that country and put it on level with Saudi Arabia.

WorldFishCentre.org

However, growing shrimp is not a replacement for crude oil sales. It’s a supplement.

Here’s why.

The market price for shrimp is around $5 per kg and they cost about $2 per kg to produce. Hence the net margin is $3 per kg.

To produce $1b net profit per year requires 300,000 tonnes of shrimp.

Note that world shrimp production is about 4 million tonnes per year.

About 40,000 Ha is required to produce this much shrimp (if growing white tail vannamei).

The Kuwait land area is 1.782m Ha, so 2.2% of Kuwait’s total area would have to be converted to shrimp ponds.

Incidentally this much land would also produce about 100 GW of electricity if photovoltaic cells where installed. This is the same amount that both China and India are committing to install by the early 2020’s.

So the volume of resources required is large whilst the net return is comparatively low, despite the fact that it is healthy and expanding.

So, there you have it. A stool with three legs provides the greatest stability:

1. Finance 2. Polymers 3. Food

Perhaps fishing and textiles will again be the mainstay for the region in years to come as it was before oil.

Author Deck Mr. Jeremiah Josey is an Australian who has been living in the Middle East for 7 years. Knowledgeable in the energy markets, he is the Chairman and Director of Oil & Gas of Swiss based Meci Group, a business and investment consultancy operating across the Middle East, Central Asia and Russia.

February 8, 2015

The End of Oil? Oil Pricing for 2015 and the Rise of Solar Energy

I wrote this article for the Al Jarida newspaper and it was published on Saturday 24 January 2015.

It’s a further development of my previous blog on how technology is changing the way the energy market operates and how the oil price may never rise again.

It is published here:

Al Jarida Article 24 Jan 2015 (Go to Page 16)

The End of Oil? Oil Pricing for 2015 and the Rise of Solar Energy

For oil prices, it’s a possible flat line in my opinion. Sideways. In fact with recent dramatic changes in the cost of energy we may be witnessing the end of oil. If oil stays low for long enough it may never rise again.

Said in June 2000, by Sheikh Zaki Yamani, former Oil Minister of Saudi Arabia (1962–86), “Thirty years from now there will be a huge amount of oil – and no buyers. Oil will be left in the ground. The Stone Age came to an end, not because we had a lack of stones, and the Oil Age will come to an end not because we have a lack of oil.”

How so? I hear you ask. How have we reached the end of our modern “Stone Age”?

I say yes. Let’s have a look at why.

Economically, world energy has hit and passed a price equilibrium point between two competing mediums: fossil fuels, and solar energy. This means that how we do busy will change. And it will change rapidly now. For instance, mobile phones took out the land line market in a matter of years once mobile phones became cheap and available enough to do so. They were the better option technically and economically.

Energy from fossil fuels has historically been cheap and this enabled the great economic boom of the past 100 years: a population explosion from 1.7 billion people in 1900 to over 7 billion now, and GDP from $2.7 trillion (adjusted) to over $75 Trillion in roughly the same time period (per capita moving from $1,600 adj. to $10,000). The Green revolution (food production). The Technology revolution (computer development). The Connectivity Revolution (mobile phone & internet) and now the Knowledge revolution (P2P and social networking). All fuelled by cheap energy. And now this low cost energy has engineered it’s own replacement: Solar energy.

Looking closely at Illustration 1 below we see these low fossil energy prices. We also see the rise in crude oil prices to between $10 and $20 per mmbtu that caused the oil shocks of the 1970s. Renewable energy, particularly wind and solar, attempted to rise in this time, but their high technology cost was so great that when oil prices dropped again in the mid 1980’s so did interest in alternative means of keeping us warm, cooking our food and illuminating our homes. Just keep burning fossil fuels was the acceptable, economic solution. That is until now. Solar technology costs have plummeted, especially in the last 6 years, coming from an astronomical $220/mmbtu to now being at the same level as Brent crude and LNG at around $15 per mmbtu. And it’s still falling.

As far as economics go, fossil fuel prices are going the wrong way (up) and solar pricing is going the right way (down).

So what is really happening with the tumbling price of oil? Is Saudi Arabia attempting to displace US supply by shutting down high priced tight oil investments? Are there moves afoot to destabilise the Middle Eastern power base by cutting revenues of Iran for their support of the Syrian regime and other related matters? Are there plans to destroy the asset side of the Russian balance sheet and topple their eastern European hegemony?

Yes, it may be all, or some of these things. For now.

But these are still small compared to the impending impact of economics and the immutable power of the sun. I don’t think that solar prices are having any direct effect on oil demand right now, but I believe that very soon they will. We may find that the price of oil does not rise again, or if it does, not for very long before demand falls for the final time. Remember that more than 40% of crude oil consumption is by passenger vehicles and that’s an important fact when considering the low cost of generating power from the sun.

Led by their wallets, consumers will migrate towards solutions that are supported by lower cost energy and they will seek them out as manufactures support their demands. So it’s just a matter of availability of options. And what is the option for reducing energy costs: locally generated electricity for domestic consumption and electric vehicles or EVs for transport. EVs are 90 percent cheaper to fuel and maintain than gasoline cars (Rocky Mountain Institute).

Those options appear to ready now. Today, EVs can be purchased from many of the major vehicle manufactures from around the world. For instance BMW, Chevrolet, Citroen, Fiat, Ford, General Motors, Honda, Kia, Mahindra, Mercedes Benz, Mitsubishi, Nissan, Renault and Tesla to name a few. In fact BMW are expected to phase out internal combustion engines within 10 years (Baron Funds, September 14, 2014). So that means within the very close and near future, almost half of the demand for crude oil will evaporate. The Sheik’s prediction will come true. And about the image of electric cars, in 2013 the fully electric Tesla Model S won the Car of the Year (Motor Trend) for all car types, not just EVs, and was quoted as being the best car ever tested. Ever!

What continues to drive down the cost of solar energy is mega solar projects and continued large scale PV installations. For example the Indian government has made its intentions clear to have 100 GW of installed generating capacity by 2022 and China are planning 100 GW by 2020. That’s the equivalent of 200 nuclear power stations. And pricing will be around $0.06 per kWh – on a par when levelled with present energy costs (nuclear, coal & LNG).

Is the fall in oil price here to stay. Perhaps not just yet. It depends the uptake of EVs, and that is a matter of their availability. But soon low oil prices will be here to stay.

Our choice in this energy shift is to be leaders or let others lead.

Author Deck

Mr. Jeremiah Josey is an Australian who has been living in the Middle East for 7 years. Knowledgeable in the technology and energy markets, he is the Chairman of Swiss based Meci Group, a business and investment consultancy that operates across the Middle East, Central Asia and Russia.

See www.JeremiahJosey.com and www.Meci-Group.com for more.

January 25, 2015
Brilliant, and Ancient Technology

This is the famous 12 sided stone in Hatum Rumiyoc Street, Cusco, Peru. It is 1,000’s of years old, carved with a technology long forgotten by man, and is in fact lost to modern science. We do not know how it was done, and we do not know who did it. It wasn’t the Incas. There is simply nothing in their technology capable of achieving it.

The stone is carved from diorite which is a very hard, very rare, igneous rock. These days we cut it with diamond.

Why are there 12 sides? It’s elementary my dear Watson: the most efficient and most conservative means to cut a stone is to remove as little material as possible, just make some flat surfaces so you can get a good seal with other rocks (there is not filler or mortar used in this wall). This is only possible if the means by which you cut the rock is so easy, is so simple, that you do not mind putting in 1, 2, 3, 12 sides to get fit you want. Cutting rock almost as hard as diamond like a hot knife cuts butter – what reality is needed to achieve that?

That is another discussion, and includes the Pyramids, and Florida’s Coral Castle – a very, very recent application of a similar and related technology.

12 Sided Stone, Hatum Rumiyoc Street, Cusco, Peru

Jeremiah Josey

January 13, 2013
The End of Humanity? It’s All in the Numbers

For the human population to remain steady, each woman needs to have at least two children – one to replace herself and one to replace her mate. The actual number works out to be about 2.1 – to allow for accidents and the like.

In this very good presentation by Hans Rosling, he very clearly demonstrates how much of the western world is way below 2 births per woman, in fact many countries hover around 1, and he shows how as countries “modernize” their birth rates drop rapidly.

That means the end of the human race!

With a little bit more thinking (see here), we’re talking about the year 2300 for the population to be less than 1 billion people. And then afterwards where does it end??!!!

Hans Rosling’s web site is here: www.gapminder.org.

Jeremiah Josey

January 13, 2013
Read The Manual

A handful of years ago I was asked to join Western Mining and build a major part of their new AUD 1 billion fertiliser facility in far north western Queensland. Western Mining was then led by two icons of the Australian mining industry, Hugh Morgan and Andrew Michelmore. The facility was going to built at a remote site called Phosphate Hill. I grew up in areas like Phosphate Hill so I was excited to be outback again.

Hugh Morgan

Andrew Michelmore

Riverside Centre, Brisbane, Australia

I arrived on the project when design and build tenders were being evaluated in WMC offices at Riverside Centre, 123 Eagle Street, Brisbane, Australia. Coming from the “grubby” oil and gas game, you gotta love the Australian mining business: red carpet and art work in the in the foyer and lobby areas and almost-gold faucets in the toilets. I was the client engineer in charge of the Phosphoric Acid facility and my project engineer was going to be from Bechtel. Together we would be taking phosphate rich rock and dissolving it in sulphuric acid to make feed stock for fertiliser. Fun stuff. I was 26 years old

The Phosphate Hill Fertiliser Facility, North West Queensland

The facility manufactures 1,000,000 tonnes per year of ammonium phosphate fertilisers and is located approximately 1,000 km west of Townsville on a large phosphate rock deposit. The entire operation combines world-class, low-cost manufacturing facilities spread across multiple sites. At Phosphate Hill, ammonia is produced from methane gas sourced Santos’s Ballera gas facility located 800 km to the South. Sulphuric acid is supplied via specialised GATX rail cars delivered by train from a purpose built sulphuric acid plant located 150 km to the north at Mount Isa. There, waste gases containing sulphur are collected from Xstrata’s copper smelting facilities and converted into acid. To the east in Townsville there are the warehousing and export port facilities. During construction approximately 1,000 personnel where located on site, housed at a camp at the nearby Monument. Now a crew of about 250 personnel cover the operations of:
– Mining and Gypsum stacking
– Beneficiation
– Ammonia production
– Phosphoric acid production
– Granulation
Built by WMC Resources, owned briefly by BHP, now owned by Incitec Pivot

Phosphate Hill Fertiliser Facilities

Bechtel where wrapping up their assessment of tenders so there wasn’t much to do except watch what was happening. And then visit all the locations. The chosen contractor was a consortium of Norsk Hydro‘s using hemihydrate technology (based in Rotterdam, Netherlands), Mitsui process design (Tokyo, Japan) and Clough detailed design and construction (Perth, Australia). Norsk had operating plants in Thailand and Jordan, so within a few weeks of arriving in WMC’s offices on Eagle Street, three of us from WMC and the Bechtel project engineer went on a world tour taking in Japan, Thailand, Jordan and The Netherlands. It was 1997. The trip is a story in itself, but most memorable was the introduction to Japan which I savoured and repeated several times since including an extended period I call my “Japan time”. There’s a reason why Toyota is the best car in the world.

For fun, I formed the social club during the construction period and the club became responsible for beer purchases. We did ‘beer and barbies’ – this was Australia after all. We averaged 2 cases, or 48 375 ml cans of full strength beer per person per week. That was a “six pack” every night for every person in our 1,000 construction crew for 3 years. That was a lot of beer for a construction site with zero alcohol policy. I’m surprised that only 1 person was killed during the work.

As an aside, Bechtel have an amazing story. Still a family owned business, it was founded around 1898 and their key to success is taking a 5% commission on all procurement they manage. And they want to manage all of it. [Pro tip: always be between those that can, and those than can’t. Be he middle man!].

I owe a lot of my lessons to the head of my construction consortium, Michael ‘Mike’ Anderson. A veteran in project management, he knew how to build a plant and he knew how to make it profitable. I just had to watch and learn. He used the most wicked, and most effected application of critical chain theory I had ever seen. His got his team to make estimates for their respective work scopes: BOQs, GAs, structural, concrete, tendering etc. Then he got his project planner to make two plans: one with the information as given. And a second plan with all of the times simply cut in half. He then put the first plan into a locked drawer and got his planner to swear he would never tell anyone about the first plan. The project then proceeded to run on the second “compressed” schedule. It was what I call planning to win as opposed to planning to fail as traditional Gantt chart planning does. It worked perfectly, with Mike coming in 6 months early on his contract. My task as the client then evolved into making the path as smooth as possible for Mike and his team to do what they had to do: build a world class phosphoric acid plant.

Mike the man

DELKOR Filter Belt similar to the four at Phosphate Hill

One of the things that struct me was the laissez-faire, relaxed nature of the WMC/Bechtel management office. I had come from the oil industry. Among my previous gigs after the refinery, were as project engineer for Chevron’s USD 4.5 billion gas pipeline from their Kutubu gas fields in Papua New Guinea to Gladstone; and saving the Moonie to Brisbane oil pipeline which was in danger of being washed out across it’s multiple creek crossings and Santos was stalled on the fix for more than 2 years on what to do. (More stories there also). Why so relaxed for such a huge facility? It wasn’t until I walked into my first phosphoric acid facility in Thailand to understand why. There where no consequence of failure. If anything went wrong, it would just be a plop on the ground, not an explosion in the air. It was very hard to get killed in a phosphoric acid plant. Once I realised this, all stress about the project fell away from me. Nothing could go wrong. Well almost. We “forgot” the fluorine. More on that next.

Once the process design and preliminary layouts where done we where ready for HAZOPing. Coming from the oil and gas industry I was an expert, having re-designed the entire HAZOP procedure at BP where I was running 1 or 2 HAZOPs each month. Each were small – only a few hours sometimes, but every HAZOP runs the same. For Phosphate Hill we planned to HAZOP Japan for about 2 weeks to go through the 100 or so P&IDs we had. On the very first day we spent the entire day being ‘taught’ how to HAZOP by an ex-Shell consultant. We spent the entire day HAZOPing a 3 meter deep sump that ”could’ occasionally get hot water into it… It was hair pulling stuff. It was so draining that we actually forgot to properly evaluate the floruie coming from the rock. Passed off as “insignficant”, the singficant amounts of flourine in the rock caused massive problems later on during operations with staff having to wear alsmot full hazmat suits to go anywhere near the filter belts. When looking back, one of our process engineers had only ever worked on low floruine rock. If I wasnt’ so bored at the HAZOP I might have raise the issue to consider how much gas would be released compared to other sites worldwide. We would be one of the largest.

P&ID for HAZOP

The most immediate task I set for myself after the world tour and I was back in the office in Brisbane was to create a battery limit interface for my plant. There were hundreds of interactions coming from multiple contractors into (and out of) the phosphoric acid and I was the only one who really cared that they all worked. Even my contractor, Mike, ever playing the contractor game, would come up with inputs and outputs that simply didn’t align with other contracts. Granted however he was totally organised and no one else was. He was first so others had to catch up to him. So I became the negotiator in-between them all. After all, I wanted my plant to work. And talking with everyone else in the project I got to learn about how everything worked.

One of the most revealing events in this process was when I went to the project’s chief scientist with two pieces of paper: one was what the specification of what the Benefication plant was going to produce (ground up wet rock) and what the phosphoric acid was expected to receive (also ground up wet rock). They where different. At first I thought it would be a simple matter of alignment. A casual hallway chat. When nothing happened, I escalated to email. And then further discussions. This continued for some weeks until I was told to “just let it go. Ignore it”. When one of the senior managers on the project arrived to the office in a new Porsche a few weeks later, I was started to get the idea.

But I was enjoying the complexity of the project. From a office overlooking the Story Bridge and the Brisbane River in one of the world’s most prestigious buildings, after a few months I moved to the site at Phosphate Hill and was baking in a construction donger before the air condition had been installed. For next several years I watched another creation of humanity come together and rising out of the earth.

Over the duration of the project I kept negotiating my salary higher and higher until I was told that I was the highest paid member of the staff at my level. A few years later when I was consulting at Mt Isa mines and at the deepest point in their 3,5000 deep copper mine, I became friends with another engineer who told me he had been offered a job at WMC to run the phosphate acid project on such-and-such a date. Remembering back, that was my position! And it aligned with one of my negotiation pay raise cycles. I had obviously negotiated too well and my new friend was offered my place, but at even less than what I had started at WMC. He – obviously – didn’t accept. Again it told me about the games going on behind the scenes on the project.

I had drawn up a Gantt chart on my office white board which remained to the end of the project. It showed how the how the entire project would be delayed by anywhere from 12 to 18 months and how my phosphoric acid plant would be 6 months early. It was always an interesting talking piece with the other team members.

When drawing up my battery limit management plan, it was also apparent that the Phosphogypsum waste coming from my plant wasn’t being addressed. When I raised the question, again I was told not to worry about it. That is until later. The gypsum stacking facility had been entirely forgotten from the project.

Eventually I was asked to also take care of the Gypsum stacking facilities – not a small thing as you can see from the google map. When the answer was “no” to my question, “would I be paid more?”, I declined. However I picked it up some time later because I was getting bored waiting for the rest of the project to catch up which was by now clear to everyone else running late. So I had a bunch of time up my sleeve. I also met an awesome chap who fixed dirt like I’ve never seen it fixed before. He was a civil construction guy brought in to build the earthen dams to hold millions of tonnes of future accumulation of phosphogypsum forever. Yes, there’s no apparent commercial use for these huge piles of white stuff.

50 Years old stack in Florida

The design of a phosphogypsum stack

Through my time building the gypsum handling facilities I met and worked with one of the former advisers to the Queensland Premier, Sir Joh Bjelke-Petersen. This person, Mr Smith will do, was the architect of the entire North West Region Minerals province and the reason why the Phosphate Hill actually went ahead at all. Mr. Smith had an ambitious plan. He brought together arguing, warring government and semi-government factions of the likes of Santos, Queensland Rail, Mount Isa Mines and a bevy of private companies. Over 2 years he negotiated and cajoled to bring everyone into alignment: to install gas pipelines, have lower rail transport prices, make available port land in Townsville, and share port facilities with the coal industry amongst many other key factors. Twenty contracts where signed in 2 weeks at the end of those 2 years and the Phosphate Hill Fertiliser Facilities became possible. It was incredible to hear his story as he regaled them to me in the best business clubs across Brisbane.

Sir Joh Bjelke-Petersen

One day Mr Smith casually slid two massive tomes across the table to me. Each was 3 inches thick, cheaply bound in green cardboard and red spiral spine wire. I asked what they were and he replied they where the project manual for Phosphate Hill, in two volumes. Wow! I never knew these even existed. For days after I plunged into them and their 1980’s typewritten paper. I was amazed that the entire project existed in such detail from the mid 1980’s. In fact every single problem that had delayed the rest of the project had been identified, thought about and a solution or solutions already determined and documented. If everyone on the project had read this report before the project started hundreds of millions of dollars would have been saved in mistakes, cost overruns and simple ignorance. But then, I realised that wasn’t the main agenda. In the midst of mistakes money can be made.

As Phosphate Hill was being commissioned someone else handed me the book Cash Flow Quadrant, by Robert Kiyosaki, and I didn’t look back.

In a few days I read the book, consuming it with zeal. Suddenly I had all of the vocabulary I didn’t have before. All the knowledge that had been bouncing around in my mind came into alignment. I was financially literate. Well 101 level anyway. Within 6 months I was out of WMC, the project was into operations mode now, and within a further 3 months, after looking at more than 1,000 prospect rental properties across Australia, started on my property acquisition spree. I remembered Kiyoski’s advice “you only make money when you buy”. That leads to another story of how I turned AUD 25,000 into more than AUD 1,000,000 in less than 18 months. I’ve only ever consulted for fun thereafter.

So, reading is the path to success. That was a clear lesson from my time with WMC.

Jeremiah Josey

March 20, 2011
How to get a 1 hour suntan in 5 minutes
I was sitting by the pool today (as I often do), thinking about stuff (as I often do)…

I was thinking about a movie called Sunshine released in 2007. An excellent Si-Fi movie set 50 years into the future when the sun is dying. (Worth a watch by the way. It’s a straight forward and complex concept.)

I was thinking about the “sun room” on the space ship. The crew often go there, and after requesting the computer to open the screen only 2% or 3% they watch the sun from close up. They learn a lot about themselves by doing this – watch it, you’ll understand what I mean.

That got me thinking, how close would the earth be to get a suntan in 5 minutes that now takes 1 hour? Crazy thought, but I was lying in the sun pondering it?

So I decided to do a mind exercise to work it out:

Let’s assume that the atmosphere remains as it is. It just makes it easier.

Now for some straight physics and geometry: The surface of a sphere is calculated by 4 time Pi times Radius squared – 4 x pi x r^2.

I.e. Surface Area of a sphere is proportional to the square of its radius.

When the sun emits energy in any given second (all across the frequency range: gamma rays, ultraviolet, light, infrared, and a heap of photons all charged up and going somewhere fast), that particular unit of energy spreads out around an ever-growing sphere as it moves away from the sun, i.e. it decreases directly in proportion to the square of the distance away from the sun. I.e. Energy is proportional to Radius^0.5

To get a 1 hour sun tan in 5 minutes we need to cram in 12 times as much energy in 5 minutes as we would have done in 60 minutes.

What is the square root of 12? It’s only 3.46, about 4.

That means we need to move the Earth only a 107 million miles closer to the sun and you’ll only need 5 minutes to get a tan! And 10 minutes to burn, and 1 hour, hmmm… probably a cinder?? !!

There you go. Stuff you really need to know.

Some interesting facts on the sun and the Earth’s relationship to it.
- It’s ‘only’ 150 million kilometers from the Earth to the sun (That’s the distance it takes to go around the earth 3,750 times) (So to tan in 5 minutes we need to move the earth to an orbit of 43 million kilometers, inside the orbit of Mercury).
- It takes the light from the sun about 8 minutes to reach us.
- The estimated temperature in the center of the sun is 15,000,000 °C.
- Diameter of the sun is 1.39 million kilometers (That’s 34 times the earth’s circumference)
- Surface temperature of the sun is 6,000 degrees celsius.
Puts our home into perspective a little doesn’t it.

Jeremiah Josey
August 12, 2010
The Mediocrity of Australian Politics

Recent public movements in Australian politics reveal the truth behind the talking: National interest, getting things done, change for the good of everyone? These are not on the agenda. Personal interest, personal gain and tepid caution: these are what drives the upcoming Australian election.

As pointed out by Leigh Ewbank in his recent blog, the major parties are playing very low key campaigns. Both parties have identified the marginal electorates where they need to win to win the election, and they are focusing their campaigns accordingly, minimizing any disruptive or controversial discussions that may upset the status quo of their stable – already won – electorates.

In her post, Fiona Armstrong cites that scientist believe we have 10 years to correct climate change. In my blog post from last year on the melting of Greenland’s ice cap, I demonstrate that the data already published shows that it is already too late: my recommendation is that adapting to change is the best solution – it is simply too late to do anything else.

However, is it the morally best solution? I think not.

100% carbon free energy production by 2020 for all of Australia? The plan already exists. The plan is robust, it is solid and it is achievable. Only those who work in the energy industry understand this. They know this. For everyone else it is debate, conjecture and point scoring, and certainly leaves them exposed to influence from special interest groups, namely the coal industry.

I worked with giants of the coal business for years in Australia – individuals that shaped Australia’s policy not by writing papers and debating bills, but by promoting and selling coal – billions of dollars of it. These people are not interested in doing anything that will disrupt this business.

Until these individuals shift, until the coal industry shifts, the Government – along with the Australian people – may as well piss into the wind.

We are not long term animals. We don’t think long term. We don’t act long term. Never have been, most likely never will be. This is just yet another disappointing example. It is the main failure of the great democratic experiment of the 20th century.

Hopefully 10 years is not so long term that we WILL act responsibly.

Links

My post on Greenland’s melting ice:
http://jeremiahjosey.wordpress.com/2009/08/14/an-inconvenient-truth-3-years-on/

The plan for Green Australia by 2020:
http://media.beyondzeroemissions.org/preview-exec-sum14.pdf

Fiona Armstrong’s post
http://cpd.org.au/2010/07/are-you-fair-dinkum-julia/

Leigh Ewbank’s blog
http://therealewbank.com/2010/07/30/dealing-with-the-electoral-unimportance-of-climate-change/

Recent Summit on Australia by 2020
http://www.australia2020.gov.au/docs/2020_Summit_initial_report.pdf

Jeremiah Josey

July 31, 2010
Food, Inc. A review of the documentary – recommended

What a great documentary. Not just because of the story (eat food in the USA? Yuck), but also because of the great positive, do something message at the end.

Let’s start with that message:

“You can vote to change the system… three times a day

Buy from companies that treat… workers… animals … and the environment .. with respect

When you go to the supermarket
* Choose foods that are in season
* Buy foods that are organic
* Know what’s in your food
* READ LABELS

The average meal travels 1,500 miles from the farm to the supermarket.
* Buy foods that are grown locally
* Shop at farmers markets
* Plant a garden (even a small one)

Cook a meal with your family … and eat together

Everyone has a right to healthy food.

Make sure your farmers market takes food stamps

Ask your school board to provide healthy school lunches

You can change the world with every bite…”

More on the background of the film:

The US food system has effectively become a inorganic, inhumane, industrialized machine for delivering as much salt, fat and sugar to consumers as possible, while keeping it all soooo secret: it puts people in jail for speaking out against it…(I couldn’t write these words if I were in 13 states of the USA, like Florida, Colorado and Texas!! http://www.sourcewatch.org/index.php?title=SLAPP).

Amazingly complex and technical, the industrial food system does things like wash meat with highly toxic substances to kill the people killing bugs that got there because the cows are fed government subsidized corn… ??? and grow super fat chickens that can hardly walk because they are too fat for their legs (I’m happy for my small Kuwaiti chickens now!!)

Did you know that:
*There are a few hundred deaths each year from eating hamburgers in the USA… Bet you didn’t think that eating a hamburger could kill you that quick!! http://www.cdc.gov/ncidod/EID/vol5no5/mead.htm
*A third of Americans born after 2000 will suffer from early onset diabetes, brought on by high sugar and refined food intake…
*Monsanto “owns” the soyabean in the US, and farmers trying to collect seeds to replant are sued
* The average American consumes 200 pounds – 90 kg – of meat every year

We are what we eat.

http://www.foodincmovie.com/

http://www.youtube.com/watch?v=QqQVll-MP3I

http://en.wikipedia.org/wiki/Food,_Inc.

Jeremiah Josey

July 27, 2010
Great People – Dean Karmen

you can learn about a guy called Dean Karmen from a book called Project Ginger: about how Dean made the segway (and other neat inventions)

It’s thanks to people like Dean Karmen that we get to experience marvellous “miracle” technology as “common place” after millions of dollars and millions of human hours have been spent perfecting it, both operationally and economically. His Segway is an example of that. The LED lighting system that he put in his house is another example, invented by someone else, but requiring people like Dean to step up and pay to use it to keep development viable and ongoing. The system halves his power requirements!! Wow, how many power stations don’t need to be built if that was common place? Lots!!

One of Dean’s most profitable inventions was the miniaturization of the kidney dialysis machine: from a huge bed side monolith to a small under the plane seat portable unit. He’s saved countless lives – the new one is much more reliable – and has give mobility to millions.

Yeah, I admit it: I’m a fan of people who stretch to excel and change the world in the process. To the guy who developed the sonic tooth brush: thanks. My teeth have never been cleaner. ;o)

That’s one of the great things I love about technology: that it takes only one person, or a small team, dedicated and skilled, and thick skinned to plough into an idea or concept until its finished. Hey, wasn’t Thomas Edison like this to invent the electric light bulb.. How many prototypes… over 1,000??? And the cost of the early units… Whoa!! Momma mia!!

I work in the heart of the post-modern industrial age: the Middle East, and I’m putting in more veins – pipelines – to keep the black blood flowing. It’s an amazing concept crude oil. Straight out of the ground. It’s so easy here there’s no need to pump it. There’s enough pressure to drive it all the way to the cleaning tanks. It’s actually a struggle just to keep the black gold in the ground!

So primitive, yet so new, modern and well, essential to absolutely everything we do nowadays (the kind of essential like “Made in China” has become: cheap price always trumps chump quality). So I get a very good perspective on what’s going on technology-wise and how it affects the world. From Nokia Mobile phones made in China – now India (I have both. Used to have one made in Finland…) – to new a innovative ways to make stuff from crude oil (like the Rocky Mountain Institute have documented so very well, Google their web site), to crazy new ways to make renewable crude oil, and of course better ways to do what I do now.

From the audio perspective, it’s the same. A great friend of mine and his team has cracked the electrostatic puzzle and now have a beautiful sounding – and beautiful looking – full room speaker (100% sweet spot: full live stage sound from any position in the room!) Just magic!! Nakamichi had signed them up for production just as the Japanese icon went sideways… ( God willing they will rise again, and we’ll get to read about them here. And I’ll tell you who they are

Well done Dean. Go the innovators!

Jeremiah Josey

July 14, 2010