-Here's another example of how energy costs are compacting the airline industry. We watch airlines go out of business, consolidate, cut routes and capacity. As we see the fares go up, we can kiss goodbye to mobility for the declining middle class.- RK
http://www.nytimes.com/2008/05/31/business/worldbusiness/31silverjet.html?scp=1&sq=loss+of+backer&st=nyt
May 31, 2008
Loss of a Backer Grounds a Business-Class Airline
By JULIA WERDIGIER
LONDON — Silverjet, the business-class-only airline, on Friday became the third such carrier to cease operations in the last six months, unable to cope with rising fuel costs or to attract new financing.
The British airline, one of four independent carriers that focused on flying business travelers across the Atlantic, suspended its service after 18 months. Its last flight touched down in London on Friday afternoon.
Silverjet, which flew from London to New York and Dubai, failed to receive a $5 million payment from the investment fund Viceroy Holdings, based in the United Arab Emirates, as part of a loan agreement, forcing about 9,500 people to rebook flights with other airlines.
In a letter to Silverjet customers, chief executive Lawrence Hunt apologized and said he was “working actively with new investors” to restart the service.
But Geoff Van Klaveren, an analyst at Exane BNP Paribas in London, said, “It will be difficult to secure new funding before the oil price comes down.”
He added: “Even airlines with the strongest balance sheets find their cash flow under pressure these days.”
But the appointed administrator for Silverjet, Begbies Traynor, said Friday that “a number of interested parties have already been in contact,” making the company confident that it can find a buyer.
Small business-class-only airlines mushroomed over the last two years, pledging to change the face of air travel by catering to a growing market of business passengers. But competition from larger network carriers and a record oil price that increased more than 40 percent over the last six months meant that airlines without strong financing started to run out of cash.
One Silverjet rival, Maxjet Airways, stopped flying in December and another, Eos Airlines, grounded its planes last month. L’Avion, a French privately owned airline, still flies between Paris and New York.
Andrew Fitchie, an airline analyst at Collins Stewart in London, said it was just a matter of time for the smaller business-class-only carriers to close down because they lack the economy of scale.
“It’s very difficult for the stand-alone operator without a large portfolio of offerings and a strong franchise to pull it off,” Mr. Fitchie said. “The high oil price has just precipitated their problems.”
That does not mean that the business-class-only concept is doomed, he said. Atlantic business class travel is the most lucrative for larger airlines, and as the likes of Silverjet dwindle, larger carriers started to adopt the all-business-class idea. British Airways, one of Europe’s biggest airlines, announced plans in February to start its own business-class-only flight from London to New York next year. Singapore Airlines started a similar service on May 17, and Deutsche Lufthansa operates such flights through a subsidiary.
Larger airlines are not immune to the increase of fuel prices, and some analysts predicted more companies would go out of business. British Airways said this month that higher oil prices were expected to contribute to a “particularly difficult” first quarter, and several carriers announced plans to eliminate routes, retire aircraft and raise fares. American Airlines, the world’s largest carrier, plans to cut thousands of jobs and added a $15 fee to check one bag.
Rising fuel costs also squeezed independent low-cost airlines. Oasis Hong Kong Airlines left thousands of passengers stranded when it ran out of money last month, and American carriers ATA Airlines, Aloha and Skybus Airlines also stopped flying.
Silverjet, based in London’s Luton airport, never made a profit and struggled to stay in business. The company had to suspend its shares from trading a week ago when the money did not arrive.
Mr. Hunt set up Silverjet with the help of his cousin Christopher Foyles of the British bookstore family empire after he had a string of disappointing experiences flying across the Atlantic. With money from an initial public offering, the airline started flying Boeing 767s with 100 flat-bed seats between Newark and London Luton airport in 2007 and added a route to Dubai in December.
Showing posts with label Energy Depletion. Show all posts
Showing posts with label Energy Depletion. Show all posts
Saturday, May 31, 2008
Friday, May 30, 2008
Mounting Costs Slow The Push For Clean Coal - 053008 NY Times
http://www.nytimes.com/2008/05/30/business/30coal.html?_r=1&hp=&oref=slogin&pagewanted=print
The Energy Challenge
Mounting Costs Slow the Push for Clean Coal
By MATTHEW L. WALD
WASHINGTON — For years, scientists have had a straightforward idea for taming global warming. They want to take the carbon dioxide that spews from coal-burning power plants and pump it back into the ground.
President Bush is for it, and indeed has spent years talking up the virtues of “clean coal.” All three candidates to succeed him favor the approach. So do many other members of Congress. Coal companies are for it. Many environmentalists favor it. Utility executives are practically begging for the technology.
But it has become clear in recent months that the nation’s effort to develop the technique is lagging badly.
In January, the government canceled its support for what was supposed to be a showcase project, a plant at a carefully chosen site in Illinois where there was coal, access to the power grid, and soil underfoot that backers said could hold the carbon dioxide for eons.
Perhaps worse, in the last few months, utility projects in Florida, West Virginia, Ohio, Minnesota and Washington State that would have made it easier to capture carbon dioxide have all been canceled or thrown into regulatory limbo.
Coal is abundant and cheap, assuring that it will continue to be used. But the failure to start building, testing, tweaking and perfecting carbon capture and storage means that developing the technology may come too late to make coal compatible with limiting global warming.
“It’s a total mess,” said Daniel M. Kammen, director of the Renewable and Appropriate Energy Laboratory at the University of California, Berkeley.
“Coal’s had a tough year,” said John Lavelle, head of a business at General Electric that makes equipment for processing coal into a form from which carbon can be captured. Many of these projects were derailed by the short-term pressure of rising construction costs. But scientists say the result, unless the situation can be turned around, will be a long-term disaster.
Plans to combat global warming generally assume that continued use of coal for power plants is unavoidable for at least several decades. Therefore, starting as early as 2020, forecasters assume that carbon dioxide emitted by new power plants will have to be captured and stored underground, to cut down on the amount of global-warming gases in the atmosphere.
Yet, simple as the idea may sound, considerable research is still needed to be certain the technique would be safe, effective and affordable.
Scientists need to figure out which kinds of rock and soil formations are best at holding carbon dioxide. They need to be sure the gas will not bubble back to the surface. They need to find optimal designs for new power plants so as to cut costs. And some complex legal questions need to be resolved, such as who would be liable if such a project polluted the groundwater or caused other damage far from the power plant.
Major corporations sense the possibility of a profitable new business, and G.E. signed a partnership on Wednesday with Schlumberger, the oil field services company, to advance the technology of carbon capture and sequestration.
But only a handful of small projects survive, and the recent cancellations mean that most of this work has come to a halt, raising doubts that the technique can be ready any time in the next few decades. And without it, “we’re not going to have much of a chance for stabilizing the climate,” said John Thompson, who oversees work on the issue for the Clean Air Task Force, an environmental group.
The fear is that utilities, lacking proven chemical techniques for capturing carbon dioxide and proven methods for storing it underground by the billions of tons per year, will build the next generation of coal plants using existing technology. That would ensure that vast amounts of global warming gases would be pumped into the atmosphere for decades.
The highest-profile failure involved a project known as FutureGen, which President Bush himself announced in 2003: a utility consortium, with subsidies from the government, was going to build a plant in Mattoon, Ill., testing the most advanced techniques for converting coal to a gas, capturing pollutants, and burning the gas for power.
The carbon dioxide would have been compressed and pumped underground into deep soil layers. Monitoring devices would have tested whether any was escaping to the atmosphere.
About $50 million has been spent on FutureGen, about $40 million in federal money and $10 million in private money, to draw up preliminary designs, find a site that had coal, electric transmission and suitable geology, and complete an Environmental Impact Statement, among other steps.
But in January, the government pulled out after projected costs nearly doubled, to $1.8 billion. The government feared the costs would go even higher. A bipartisan effort is afoot on Capitol Hill to save FutureGen, but the project is on life support.
The government had to change its approach, said Clarence Albright Jr., the undersecretary of the Energy Department, to “limit taxpayer exposure to the escalating cost.”
Trying to recover, the Energy Department is trying to cut a deal with a utility that is already planning a new power plant. The government would offer subsidies to add a segment to the plant dedicated to capturing and injecting carbon dioxide, as long as the utility bore much of the risk of cost overruns.
It is unclear whether any utility will agree to such a deal. The power companies, in fact, have been busy pulling back from coal-burning power plants of all types, amid rising costs and political pressure. Utility executives say they do not know of a plant that would qualify for an Energy Department grant as the project is now structured.
Most worrisome to experts on global warming, the utilities have recently been canceling their commitments to a type of plant long seen as a helpful intermediate step toward cleaner coal.
In plants of this type, coal would be gasified and pollutants like mercury, sulfur and soot removed before burning. The plants would be highly efficient, and would therefore emit less carbon dioxide for a given volume of electricity produced, but they would not inject the carbon dioxide into the ground.
But the situation is not hopeless. One new gasification proposal survives in the United States, by Duke Energy for a plant in Edwardsport, Ind. In Wisconsin, engineers are testing a method that may allow them to bolt machinery for capturing carbon dioxide onto the back of old-style power plants; Sweden, Australia and Denmark are planning similar tests. And German engineers are exploring another approach, one that involves burning coal in pure oxygen, which would produce a clean stream of exhaust gases that could be injected into the ground.
But no project is very far along, and it remains an open question whether techniques for capturing and storing carbon dioxide will be available by the time they are critically needed.
The Electric Power Research Institute, a utility consortium, estimated that it would take as long as 15 years to go from starting a pilot plant to proving the technology will work. The institute has set a goal of having large-scale tests completed by 2020. “A year ago, that was an aggressive target,” said Steven R. Specker, the president of the institute. “A year has gone by, and now it’s a very aggressive target.”
The Energy Challenge
Mounting Costs Slow the Push for Clean Coal
By MATTHEW L. WALD
WASHINGTON — For years, scientists have had a straightforward idea for taming global warming. They want to take the carbon dioxide that spews from coal-burning power plants and pump it back into the ground.
President Bush is for it, and indeed has spent years talking up the virtues of “clean coal.” All three candidates to succeed him favor the approach. So do many other members of Congress. Coal companies are for it. Many environmentalists favor it. Utility executives are practically begging for the technology.
But it has become clear in recent months that the nation’s effort to develop the technique is lagging badly.
In January, the government canceled its support for what was supposed to be a showcase project, a plant at a carefully chosen site in Illinois where there was coal, access to the power grid, and soil underfoot that backers said could hold the carbon dioxide for eons.
Perhaps worse, in the last few months, utility projects in Florida, West Virginia, Ohio, Minnesota and Washington State that would have made it easier to capture carbon dioxide have all been canceled or thrown into regulatory limbo.
Coal is abundant and cheap, assuring that it will continue to be used. But the failure to start building, testing, tweaking and perfecting carbon capture and storage means that developing the technology may come too late to make coal compatible with limiting global warming.
“It’s a total mess,” said Daniel M. Kammen, director of the Renewable and Appropriate Energy Laboratory at the University of California, Berkeley.
“Coal’s had a tough year,” said John Lavelle, head of a business at General Electric that makes equipment for processing coal into a form from which carbon can be captured. Many of these projects were derailed by the short-term pressure of rising construction costs. But scientists say the result, unless the situation can be turned around, will be a long-term disaster.
Plans to combat global warming generally assume that continued use of coal for power plants is unavoidable for at least several decades. Therefore, starting as early as 2020, forecasters assume that carbon dioxide emitted by new power plants will have to be captured and stored underground, to cut down on the amount of global-warming gases in the atmosphere.
Yet, simple as the idea may sound, considerable research is still needed to be certain the technique would be safe, effective and affordable.
Scientists need to figure out which kinds of rock and soil formations are best at holding carbon dioxide. They need to be sure the gas will not bubble back to the surface. They need to find optimal designs for new power plants so as to cut costs. And some complex legal questions need to be resolved, such as who would be liable if such a project polluted the groundwater or caused other damage far from the power plant.
Major corporations sense the possibility of a profitable new business, and G.E. signed a partnership on Wednesday with Schlumberger, the oil field services company, to advance the technology of carbon capture and sequestration.
But only a handful of small projects survive, and the recent cancellations mean that most of this work has come to a halt, raising doubts that the technique can be ready any time in the next few decades. And without it, “we’re not going to have much of a chance for stabilizing the climate,” said John Thompson, who oversees work on the issue for the Clean Air Task Force, an environmental group.
The fear is that utilities, lacking proven chemical techniques for capturing carbon dioxide and proven methods for storing it underground by the billions of tons per year, will build the next generation of coal plants using existing technology. That would ensure that vast amounts of global warming gases would be pumped into the atmosphere for decades.
The highest-profile failure involved a project known as FutureGen, which President Bush himself announced in 2003: a utility consortium, with subsidies from the government, was going to build a plant in Mattoon, Ill., testing the most advanced techniques for converting coal to a gas, capturing pollutants, and burning the gas for power.
The carbon dioxide would have been compressed and pumped underground into deep soil layers. Monitoring devices would have tested whether any was escaping to the atmosphere.
About $50 million has been spent on FutureGen, about $40 million in federal money and $10 million in private money, to draw up preliminary designs, find a site that had coal, electric transmission and suitable geology, and complete an Environmental Impact Statement, among other steps.
But in January, the government pulled out after projected costs nearly doubled, to $1.8 billion. The government feared the costs would go even higher. A bipartisan effort is afoot on Capitol Hill to save FutureGen, but the project is on life support.
The government had to change its approach, said Clarence Albright Jr., the undersecretary of the Energy Department, to “limit taxpayer exposure to the escalating cost.”
Trying to recover, the Energy Department is trying to cut a deal with a utility that is already planning a new power plant. The government would offer subsidies to add a segment to the plant dedicated to capturing and injecting carbon dioxide, as long as the utility bore much of the risk of cost overruns.
It is unclear whether any utility will agree to such a deal. The power companies, in fact, have been busy pulling back from coal-burning power plants of all types, amid rising costs and political pressure. Utility executives say they do not know of a plant that would qualify for an Energy Department grant as the project is now structured.
Most worrisome to experts on global warming, the utilities have recently been canceling their commitments to a type of plant long seen as a helpful intermediate step toward cleaner coal.
In plants of this type, coal would be gasified and pollutants like mercury, sulfur and soot removed before burning. The plants would be highly efficient, and would therefore emit less carbon dioxide for a given volume of electricity produced, but they would not inject the carbon dioxide into the ground.
But the situation is not hopeless. One new gasification proposal survives in the United States, by Duke Energy for a plant in Edwardsport, Ind. In Wisconsin, engineers are testing a method that may allow them to bolt machinery for capturing carbon dioxide onto the back of old-style power plants; Sweden, Australia and Denmark are planning similar tests. And German engineers are exploring another approach, one that involves burning coal in pure oxygen, which would produce a clean stream of exhaust gases that could be injected into the ground.
But no project is very far along, and it remains an open question whether techniques for capturing and storing carbon dioxide will be available by the time they are critically needed.
The Electric Power Research Institute, a utility consortium, estimated that it would take as long as 15 years to go from starting a pilot plant to proving the technology will work. The institute has set a goal of having large-scale tests completed by 2020. “A year ago, that was an aggressive target,” said Steven R. Specker, the president of the institute. “A year has gone by, and now it’s a very aggressive target.”
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