About Tom Evslin

Video Profile of Tom Evslin

Follow Tom Evslin on Twitter


subscribe:

Add to Technorati Favorites!
Powered by TypePad
Member since 01/2005

technorati


« Guest Post on Controlling Medical Costs | Main | A New Business Belongs in the Cloud »

Back to Business

Retirement's over; I've been working on a new business. That's why I haven't been blogging for a while; startups are all-consuming.

NG Advantage LLC delivers natural gas "beyond the pipeline." Starting in early 2013 we'll truck compressed natural gas (CNG) from a compressor site we plan to build in Milton, Vermont to commercial users within a two and a half hour driving radius (see service area in VT, NH, and NY below). Large users of fuel will save 30 to 40% or more of what they're paying now for oil and propane while reducing CO2 emissions by 26% and practically eliminating sulfur and nitrous oxide from their stacks. Businesses which are not on pipelines need these savings to compete with those who are served by pipeline gas. Energy intensive businesses also need protection against the global uncertainty in oil prices.

So, if the savings are so great and it's good for the environment as well, why don't businesses like NG Advantage already exist?

Good question and there's a good answer. Until 2008 the prices of natural gas and oil products moved pretty much in lock step. If one or the other got a little out of line, there were enough users that were dual fuel – primarily power plants – to switch and bring prices back to parity on a per BTU basis. But new technology has come into the gas fields: horizontal drilling and hydraulic fracturing (unfortunately called fracking). America's recoverable reserves are an order of magnitude larger than they were originally thought to be. Production is increasing rapidly.

This is disruptive innovation in the same sense that the Internet was: it changes all the rules in the energy business. It no longer makes economic sense to build a new nuclear or coal plant in the US; electric rates are remaining stable or going down because the marginal cost of electricity depends on natural gas prices. Energy-intensive businesses are being built in the US again. And it now makes economic sense to truck natural gas to major consumers who can't get it from a pipe.

The US benefits especially from natural gas because it is NOT easy to transport – it must be either liquefied or compressed and must be carried in special vehicles (although it is safer to transport than oil or propane because it is lighter than air). It was only practical to use natural gas directly from a pipeline; it is now practical to truck it short distances as well. But the market for natural gas –unlike oil - is more local than global because pipelines don't go under oceans. Europe is stretching for new supplies and increasingly dependent on Russia for natural gas. North America has an abundant supply – President Obama says 100 years' worth; so natural gas prices are much lower here than in Europe or Asia. Our reindustrialization benefits from this energy price disparity. So does our effort to reduce our dependence on foreign oil.

Fifteen years ago I founded ITXC, which became a big company and went public, because it was clear that the invention of the Internet would take most of the cost out of telephone calls and the big telephone companies – including AT&T where I then worked - were in no hurry to crater their revenues for the benefit of their customers. There was an opportunity for new companies looking for new customers and willing to offer radically lower prices to succeed. This is another such opportunity since existing oil companies won't be in a hurry to turn natural into a competitor beyond the pipeline. We won't be the only ones to take advantage of the opportunity, but it's important to be first or among the first

Unfortunately current trucking technology doesn't support the economics of serving residences or businesses which use less than 150,000 gallons of oil or propane annually or 100,000 gallons in a six month period. We may be able to move downscale some; others will need pipelines before they can take advantage of natural gas.

Vermont Gas Systems is planning an expansion southward of their line in northwestern Vermont; that's a good thing for those residences and businesses along the path of the expansion. Since it'll be several years before the expansion is built, NG Advantage will serve major businesses along the route until the pipeline gets to them. And we'll serve businesses in Vermont and parts of New York and New Hampshire which have no immediate prospect of pipeline connections. I'd be surprised, though, if we don't end up developing markets which will then be served by pipelines faster than they would have been otherwise. That's fine with us, a measure of success; we just move our trucks out further to new areas.

We're starting to hire so we are creating jobs. But many more jobs will be created and retained because energy-intensive businesses in rural areas, where many costs are low but the price of energy is high, will be able to compete in an irreversibly globalized economy. In Vermont both food processors and manufacturers fit that definition.

Anyway, it's good to be back in the private sector. I'll blog when I can, not just about natural gas but also about how starting a business now is the same and how it is different than it was 15 years ago – not to mention lessons learned.

Related posts (while I was talking myself into doing this):

Natural Gas Disrupts the Energy Industry

The Pickens Plan Bill: The Wrong Way to Get the Right Result

Ending Tax Giveaways Isn't Raising Taxes

Good and Bad News about the Safety of Natural Gas Fracking

Comments

blog comments powered by Disqus

Now on Kindle!

hackoff.com: An historic murder mystery set in the Internet bubble and rubble

CEO Tom Evslin's insider account of the Internet bubble and its aftermath. "This novel is a surveillance video of the seeds of the current economic collapse."

The Interpreter's Tale

Hacker Dom Montain is in Barcelona in Evslin's Kindle-edition long short story. Why? and why are the pickpockets stealing mobile phones?

Need A Kindle?

Kindle: Amazon's Wireless Reading Device

Not quite as good as a real book IMHO but a lot lighter than a trip worth of books. Also better than a cell phone for mobile web access - and that's free!

Recent Reads - Click title to order from Amazon


Google

  • adlinks
  • adsense