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SpiroFlo and Vortex Tools comment on changes in Colorado—both in the recession of oil & gas and the rise of the marijuana industry.Marijuana

Despite being the VP Marketing for multiple companies, it’s rare I do a crossover blog where I represent more than one company at a time, as the marketing reality that most people only care about stories that impact their industry or scratch their interest (duh). However, since the business landscape in Colorado has shifted over the last year, we’ve seen changes that affect different industries, so here we go. Firstly:

Oil and Gas Has Scaled Back Out of Colorado

Overall, it’s been a brutal year for oil and gas. The top four global companies scaled back 10% of their work force… and that was just the beginning. The cuts have continued and spread to smaller companies. Companies have scaled back to their core assets, selling off the rest, and for most, those core assets aren’t in Colorado. Blame asset valuations, blame stricter regulations, but week after week, formerly prominent oil and gas companies are leaving Colorado,* or filing for bankruptcy, or, at the very least, not spending money on anything.

*Usually right about here I’d link up a few stories of this happening, but there are so, so many. Right now you can Google “Denver oil and gas company” every week and pop up a negative story, but hey, gasoline prices are low, so many don’t care.

Most analysts now believe oil and gas prices will not recover until 2017. Prices have dipped again in October and November this year due to refinery maintenance season (during times of cheap oil, they’re at high capacity, so any time one goes down for a period of time, it hurts an already stressed market). In addition, many wells are currently shut in, so when prices do inch up a bit, everyone’s going to rush to take advantage of that gain, flood the market with production glut, and, you got it,  tank the price again.

This means it should be a time of improving existing production—lowering operation costs, recovering more production/valuable liquids (condensates and natural gas liquids), and avoiding environmental fines (easiest way: by not polluting)—the kinds of applications Vortex Tools enable, but many of the employees who are left are just keeping their heads down and trying not to get laid off. This should also be a time of asset expansion for smart investors (the adage of “buy low, sell high” still applies), but for many oil and gas companies, they’re not doing much of anything save staving off going out of business.

At the same time:

Marijuana is Booming in Colorado

As one of the first states to legalize recreational marijuana, a whirlwind of industry has set up around this venture, but it’s still a complicated (and energy intensive) market. Energy companies call pot one of the most energy intensive ventures. In one Colorado service area, retail marijuana makes up for ~1% of retail electricity use. Increased electricity use was one of the ways (illegal) pot growers used to get caught—turns out when your electricity bills spike several times over what they used to be, people take notice, and the assumption is you aren’t just plugging in a slew of outlet air fresheners.

In addition to high electricity use, the marijuana industry uses a lot of water, and currently, what’s going down the drain untreated shouldn’t be (lots of nitrates, fertilizers, chemicals, etc.). Most everyone involved in the industry is surprised that the law hasn’t changed yet and that it’s a matter of time until it does. However, there’s a misconception that the marijuana industry has a lot of money, but most players do not. Once laws change to get more stringent, a lot of smaller operations that hopped into this growing industry will burn out. In addition, the marijuana industry has also been sold a lot of snake oil already, so there’s a lot of skepticism for even valid solutions.

That’s where SpiroFlo comes in. With no moving parts and no additional energy source required, there are two main applications we work in: 1) Reducing the amount of water used and improving the water quality/oxygen content of what’s left: Basically improved hydroponics—growing better plants faster with fewer resources. 2) Removing contaminants from water drainage: Most people expect the laws to change on this within the next 12 months, so spinning out contaminants from water used for marijuana will become important (and will be a determining factor in which companies go out of business). Given that we’ve done similar applications in other markets, we’ve got both credibility and low operating expenses covered.

As a company, SpiroFlo sat down and discussed the moral side of it, as marijuana is in a strange place: It’s legal in certain states, but not nationally, which causes issues with banking and credit. Then investors want to play games, too. They recognize there’s money to be made here, but they don’t want the negative association. Currently the general rule is: If you touch the plant, investors can’t fund you. However, if you help the people who do touch the plant, then they can fund you.

Yeah…

Anyway, we sat down as a company and had the moral conversation on marijuana and the conclusion we came to is this: When it comes to industries you can’t work with for moral reasons, where do you draw the line? What issues are more important than others? Even in Vortex Tools’ work in oil and gas, there are people who don’t like the industry enough to acknowledge the value in our tools reducing pollution, energy, and operational costs while increasing the efficiency and revenue generators from the oil and gas production. Regardless, some issues are gimmes to avoid (hint: you don’t have to discuss them as an organization, or if you do, you’ll be doing so in prison), marijuana isn’t. Not anymore. So we looked at our company goal as SpiroFlo, which is to reduce water use and improve the quality of the water left. Regardless of what different employees thought of the marijuana industry, we agreed that while it’s here, we should do what we can to improve water use.

Colorado Business is Going to Look Different

So overall, what this means is that oil and gas in Colorado will be replaced by the marijuana industry. However, that’s not the only business sector being replaced; it’s happening all over. There is little warehouse/retail space left to lease and what is left over is high above market value. Due to the population influx, residential rents are above what they should be, too. Yet all of this could bend as laws become more stringent or more states legalize marijuana. For now, this is a common sentiment from many Coloradoans:

stop-moving-to-colorado-bumper-sticker-car-1024x768

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Colin McKay Miller is the VP of Marketing for the SpiroFlo Holdings group of companies:

SpiroFlo for residential hot water savings (delivered 35% faster with up to a 5% volume savings on every hot water outlet in the home), industrial water purification (biofilm removal), and reduced water pumping costs.

Vortex Tools for extending the life of oil and gas wells (recovering up to 10 times more NGLs, reducing flowback startup times, replacing VRUs, eliminating paraffin and freezing in winter, etc.).

Ecotech for cost-effective non-thermal drying (for coal, biosolids, sugar beets, dairy waste, etc.) and safe movement of materials (including potash and soda ash).

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I think you and I are gonna be friends

Vortex Tools will take part in a shark tank during Denver Startup Week (9/16-9/20). We’ll present sometime between 3-4:15 PM on Wednesday, September 18th.

With our application in reducing CO2 emissions and recovering 10 times more natural gas liquids than pigging alone, Vortex Tools has been invited to present at a shark tank (read: aggressively judged competition) during Denver Startup week—a five-day event to promote clean energy applications in Colorado.

Given that it’s a shark tank, it won’t be pretty. Either we’ll win or I’ll wind up playing the role of a great white shark on some judge’s leg (all I need to do is get two rows of jagged teeth and then figure out how to dislocate my jaw for better snacking).

If nothing else, anything remotely shark-related is an excuse to share two minutes of idiocy from “Sharknado.” This montage is not safe for work (or safe for anyone with more than 50 brain cells):

For more on Denver Startup Week events, see here.

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Colin McKay Miller is the VP of Marketing for the SpiroFlo Holdings group of companies:

SpiroFlo for residential hot water savings (delivered 35% faster with up to a 5% volume savings on every hot water outlet in the home) and industrial water purification (biofilm removal).

Vortex Tools for extending the life of oil and gas wells (recovering up to 10 times more NGLs, reducing flowback startup times, replacing VRUs, eliminating paraffin and freezing in winter, etc.).

Ecotech for cost-effective non-thermal drying (for biosolids, sugar beets, etc.) and safe movement of materials (including potash and soda ash).

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Vortex Tools shares how the Environmental Protection Agency (EPA) halted their probe linking fracking to groundwater contamination, and what this means in the grand scheme of politics and energy development.

*For the basic pro and against viewpoints of the practice (with some added insight to the pro-fracking stance) see hereFor commentary on how difficult it is to get a neutral view of fracking, see here.

At the end of 2011, the EPA released a report linking fracking to groundwater contamination in Pavilion, Wyoming. They stated that the chemicals found in the drinking water were, a) above safe and acceptable standards for drinking water; and b) consistent with fracking chemicals. Although many people already had opinions on the practice, this marked the first time the government had linked fracking to groundwater contamination.

The anti-fracking crowd viewed this report as conformation of the obvious—that you can’t “damage” formations without consequence. The pro-fracking crowd—including oil and gas companies like EnCana: the company accused of groundwater contamination in Pavilion, WY—viewed it as a premature statement with negative consequences to the energy industry. Both sides felt like there needed to be more investigation to confirm the results, because it may be nuts that you can set your tap water on fire, but just because an oil and gas company is drilling nearby, that doesn’t automatically mean that they’re to blame.

By Zarateman (Own work) [CC0], via Wikimedia Commons

I don’t speak the language, but this *might* just be an anti-fracking poster… Dotting the i with a skull is a bit of a giveaway

At the time, the EPA stated that it would continue their investigation to conclusively link fracking to groundwater contamination. As of October 2012, the EPA stated that another round of tests had turned up similar results. However, this week, the EPA announced that it’s dropping their investigation to have independent scientists confirm the link between the two.

So… what happened?

Well, I guess that depends on who you ask. Someone like EnCana would view the EPA dropping their case as a victory, noting that the EPA is essentially stopped their investigation to prove the tie between fracking and groundwater contamination because they can’t. As for the EPA’s prior findings? EnCana says, “the EPA’s results were based on faulty testing.”

Erik Milito, director of upstream and industry operations for the American Petroleum Institute, said, the “EPA has to do a better job, because another fatally flawed water study could have a big impact on how the nation develops its massive energy resources.” Many would argue that the damage from the 2011 report has already been done.

The EPA, of course, says otherwise. According to EPA spokesman, Tom Reynolds, “We stand behind our work and the data, but EPA recognizes the state’s commitment to further investigation.” Others would argue that there are more important things to do with the federal budget at this time. The EPA has stated that they reserve the right to open back up their investigation at any time, even if, you know, they won’t (unless it’s politically advantageous at the time).

Part of the problem was that the EPA couldn’t find expert peer reviewers for their report. The Federal Register announced that reviewers, “needed to be free from the appearance of any conflict of interest and have the necessary expertise to review the findings.”

Free from conflict of interest… in regards to fracking… Right…

Not surprisingly, the public comments period got extended three times, and they still didn’t get what they needed.

So… what now?

The EPA is allowing Wyoming to continue their investigation and at least one side of the debate won’t believe the “independent” results—whatever they are.

In a joint statement, the state and the EPA announced that they do not “plan to rely upon the conclusions” of the EPA studies. With the EPA (formerly) heading up the investigation, no one would’ve been surprised if fracking and groundwater contamination came out linked. Now that a (largely) pro oil and gas state is heading up the investigation—with EnCana putting in a $1.5 million grant to help the process along—no one will be surprised when the new conclusions go the opposite way of what the EPA found.

Regardless of whether most people have already made their decision on the value of fracking, there are laws being made based on what government and independent testing have to say. A state like Vermont, who jumped to be the first state to ban fracking in 2012, doesn’t count. Many viewed it as a political move, as they hardly have any fracking applications to ban in the first place.

And really, that’s what most of this is: The movement of political weight. It isn’t one political party or the other. It’s all of the above. 

Don’t believe me? I’ll remind you that an EPA representative recently called to “crucify” the oil and gas industry right as a pro-oil and gas Congressman said that, “We need to cut the legs off the EPA.” Call me crazy, but I call the (metaphorical) threats of death and limb removal, even to entities, to mean that the debate isn’t going to be fair.

While I figured that it wouldn’t take the current political administration long to come against the oil and gas industry, it came quicker than I thought, as the Obama administration announced to reduce the amount of federal land designated for oil shale development by two-thirds.

Personally, I translate that as, “Okay, oil and gas industry, we’ve still got the perception war won for now. You’ve currently taken the data war in regards to fracking, but we’re going to limit your pursuit of that energy resource anyway.” More on that next time.

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Colin McKay Miller is the VP of Marketing for the SpiroFlo Holdings group of companies:

SpiroFlo for residential hot water savings (delivered 35% faster with up to a 5% volume savings on every hot water outlet in the home) and industrial water purification (biofilm removal).

Vortex Tools for extending the life of oil and gas wells (recovering up to 10 times more NGLs, reducing flowback startup times, replacing VRUs, eliminating paraffin and freezing in winter, etc.).

Ecotech for cost-effective non-thermal drying (for biosolids, sugar beets, etc.) and safe movement of materials (including potash and soda ash).

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cleantech open logoI’m pleased to announce that SpiroFlo qualified as a semi-finalist for the 2013 Cleantech Open (CTO) for our residential hot water savings and industrial biofilm removal applications.

If you’ve followed this blog—gnawing on every tasty word (and why wouldn’t you?)—you’d know that I had a lot to say, good and bad, about going through the 2012 CTO as Vortex Tools. A fair question then to ask is: Why are you doing it again?

There are two main reasons:

  1. The Cleantech Open receives criticism and makes changes: I’m not going to say that all the changes came from what I said—common problems become commonly shared complaints—but I’m as blunt in-person and I had opportunity to share my thoughts with the CTO planners. Regardless of how it happened, this year they’ve changed the overall judging scheme. I still think they’re going to be painfully shorthanded volunteer-wise, but I’m willing to wait and see.
  2. SpiroFlo is a better fit: Last year, we entered thinking that the CTO is a competition, and chose our more established, more successful green oil and gas company, Vortex Tools. While the CTO is a competition, it’s designed more to accelerate smaller companies, making SpiroFlo a better fit.

I highly doubt I’ll write as much on the CTO as I did before, but I do like that it keeps me apprised of innovation in the green sector, as well as the same old flawed thinking that doesn’t seem to budge. Odds are there will be a speaker who, A) believes nuclear energy and/or oil and gas can be done away with today; and B) we can do so because of what some non-American country (usually Japan or somewhere in Europe) is doing with wind and solar.

I’m a fan of some of these technologies—living in a dry state, seeing what Germany has done to implement green roofs makes me jealous—but there’s a misguided belief among some environmentalists that multi-year, best scenario projections will equate to reality. Even by favorable estimates, Japan’s current wind and solar use could offset maybe 10% of their nuclear energy use, and that’s before you get into the painful realities of what happens when you try to move large amounts of business from one entity to another.

However it goes, I’m sure I’ll annoy some people when I take to the microphone. I’m looking forward to it.

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Colin McKay Miller is the VP of Marketing for the SpiroFlo Holdings group of companies:

SpiroFlo for residential hot water savings (delivered 35% faster with up to a 5% volume savings on every hot water outlet in the home) and industrial water purification (biofilm removal).

Vortex Tools for extending the life of oil and gas wells (recovering up to 10 times more NGLs, reducing flowback startup times, replacing VRUs, eliminating paraffin and freezing in winter, etc.).

Ecotech for cost-effective non-thermal drying (for biosolids, sugar beets, etc.) and safe movement of materials (including potash and soda ash).

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Vortex Tools explains why, with fuel costs and slim profit margins, the airline industry is one of the likeliest to not go green.

By Flickr user Axwel [CC-BY-2.0 (http://creativecommons.org/licenses/by/2.0)], via Wikimedia CommonsI’ve mouthed off a lot about airlines lately (see here and here). Maybe it’s just that I’m experiencing their joys and troubles more often from traveling. For instance, the fact that a plane can leave the gate, then stall on the runway while luggage gets loaded on late, while still allowing the airline to check the box for an “on time” departure is indicative of the level of meaningless standards.

But here’s my bent today: I realized a while ago that the airline industry has no motivation to go green.

Many environmentalists don’t like oil and gas, but there are motivations to keep the industry cleaner. In the event of an oil spill, there are fines, cleanup costs, public relations pains, etc. In the event of too many CO2 emissions from the wellhead, the producer gets fined until they’re in compliance with air laws. Additionally, regulations keep changing—usually in a way that’s stricter on oil and gas pollution. Flaring gas is continuing to get scaled back and I doubt fracking will make it, in its current form, through another 10 years.

Vortex vapor recovery tool

Vortex vapor recovery tool

In working in the oil and gas sector—using Vortex Tools to vastly reduce CO2 emissions and to recover 10 times more valuable natural gas liquids to make a profit while burning a cleaner flare—I can tell you that all of these aspects equate to motivation to make a dirty industry cleaner.

But airlines don’t really have this kind of motivation.

Like any other industry, they can spin their efforts as green, but it’s about intent and application. Everything the airlines do is to get planes in the air with less cost. The biggest obstacle to this is the price of fuel. While they can’t control the cost of the commodity, they can control the weight they’re putting on the plane. You may be familiar with examples of airlines using lighter seats, thinner and lighter magazines, and not serving food on shorter flights.

(The exception to all these rules is if you pay a premium—for larger seats, for extra luggage, for food on the short ride.)

Then there are some uglier examples of controlling weight. While we’re seeing people get dinged for their bag being overweight, we’re also seeing examples of people getting dinged for they themselves being overweight. I get it logistically—I’m a small man and the airline experience gets me way too familiar with the odors and feel of the people around me—but you can see how this can get cruel quick. I’ve got some larger friends who understand that they need to buy a first class ticket if they want to fly comfortably, but what happens when you put these kinds of requirements on say, an obese kid?

In addition, the cynical part of me is waiting to hear some secret audio from a worldwide airline executive complaining about how fat Americans are ruining profit margins. In the mean time, Samoa Air has already introduced a “pay what you weigh” model.

During the Cleantech Open, I met a company, Molon Labe, who made a sliding airline seat. The value of this is that you could load / unload the plane faster (slide over the middle seat on your side and go), get a faster turnaround (using energy in the air instead of wasting it on the ground), and, according to them, saving airlines $75,000 a day in fuel costs (not sure how many planes would need to install their seats to get that number, but it’s still significant).

As the Cleantech Open had a large sustainability component, Molon Labe’s argument was that this kind of efficiency could allow a plane to have more flights in a day, allowing airlines to remove planes from their fleet entirely. In theory, less planes = less energy use = less environmental impact, but from what I’ve seen of this industry, less energy use + greater flight turnaround = more flights in a day. More flights in a day = more environmental impact, and, if it makes sense and the profit margin is good enough, more planes in the fleet.

It’s a reality that rarely gets pushed back on companies touting green, but more efficiency does not always equal greater sustainability.

In the end, regardless of what I think of certain airline practices, I know it’s a tough industry. The profit margins are surprisingly slim and most airline companies go bankrupt at some point. As comedian Louis CK noted, it is amazing that we can sit in chairs and fly through the sky to the other side of the world (see 2:00 on — yes, the clip is in English):

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Colin McKay Miller is the VP of Marketing for the SpiroFlo Holdings group of companies:

SpiroFlo for residential hot water savings (delivered 35% faster with up to a 5% volume savings on every hot water outlet in the home) and industrial water purification (biofilm removal).

Vortex Tools for extending the life of oil and gas wells (recovering up to 10 times more NGLs, reducing flowback startup times, replacing VRUs, eliminating paraffin and freezing in winter, etc.).

Ecotech for cost-effective non-thermal drying (for biosolids, sugar beets, etc.) and safe movement of materials (including potash and soda ash).

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Vortex Tools looks at a recent infographic release from the White House on the Energy Security Trust and explains why it makes a flawed boast.

So the White House recently released this infographic explaining the perks of the Energy Security Trust:

wh_2013_energy_trust_large

There’s a lot that sounds good here—no extra costs, more clean energy, and supporting American jobs, research and innovation—but there’s an obvious burning question that this style of marketing often misses: If this $2 billion revenue is from profitable oil and gas companies, and it’s used to “shift our vehicles off oil for good,” why would the oil and gas industry support it? Natural gas isn’t enough (as an industry that has yet to recover), and anyone in oil and gas just assumes it’d be next on the chopping block anyway.

If I looked at Bill Gates and said, “I want to take some of your profits and use them to invest in companies that will shift computer use away from PCs for good” I’d expect him to look at me and say, “Um… no.” So when I see this type of stick it to ‘em marketing, I just assume that there’s something dishonest going on. While I’ve run across some in-depth rebuttals already, the short version is this:

  • The oil and gas industry is only giving what they have to, by royalties and fees paid to the government for using federal land.
  • While there is no increase in the budget for this program, these funds could be used to pay down the deficit.
  • These types of subsidies already exist… and many would argue that they already don’t work. I spoke to a guy who got out of solar recently. He said, “We’re all playing a game of last man standing, waiting for the subsidies to stop so that we can cash in after many solar companies crash. The only way to make money as a small, innovative company is to get acquired by the big energy companies, because they’re the ones with the funds to last to the end.” Who are the big energy companies? They’re the ones who’re tied to the oil and gas industry, either directly or indirectly, so you’re just pouring in money to delay the inevitable and still have the guys you don’t like make a profit (if that’s your bent).
  • While there’s duplicity for subsidies, not surprisingly, none of the Energy Security Trust is going towards oil and gas expansion in the U.S.

Of course I hope that the Energy Security Trust increases jobs, innovation and clean energy, but when I see flawed tactics covered by iffy marketing, I’m not expecting much.

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Colin McKay Miller is the VP of Marketing for the SpiroFlo Holdings group of companies:

SpiroFlo for residential hot water savings (delivered 35% faster with up to a 5% volume savings on every hot water outlet in the home) and industrial water purification (biofilm removal).

Vortex Tools for extending the life of oil and gas wells (recovering up to 10 times more NGLs, reducing flowback startup times, replacing VRUs, eliminating paraffin and freezing in winter, etc.).

Ecotech for cost-effective non-thermal drying (for biosolids, sugar beets, etc.) and safe movement of materials (including potash and soda ash).

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SpiroFlo shares a British infographic on business electricity costs and ramifications.

For all that’s legitimate in this infographic, I have to pick on one statement: “Enough sunlight falls on the earth in one hour to power the entire world for a year!”

This is possible… if we could actually develop a solar panel that could capture, store and use that much energy. We’d also have to cover the whole earth in this amazing, not-yet-invented solar panel. This means no more oceans, no more landscapes. As for the Egyptian pyramids? Cover them with solar panels. The Statue of Liberty? Solar panel her (and replace that flame while you’re at it). The Great Wall of China, the Lighthouse of Alexandria, the Roman Coliseum? Panels, panels, panels!

While we’re at it, we might as well cover ourselves in full body solar panel outfits. If nothing else, we’ll be one step closer to looking like a Tron movie. In the meantime, it’s a good reminder of why solar could be so big:

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Colin McKay Miller is the VP of Marketing for the SpiroFlo Holdings group of companies:

SpiroFlo for residential hot water savings (delivered 35% faster with up to a 5% volume savings on every hot water outlet in the home) and industrial water purification (biofilm removal).

Vortex Tools for extending the life of oil and gas wells (recovering up to 10 times more NGLs, reducing flowback startup times, replacing VRUs, eliminating paraffin and freezing in winter, etc.).

Ecotech for cost-effective non-thermal drying (for biosolids, sugar beets, etc.) and safe movement of materials (including potash and soda ash).

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