Category Archives: Business

Russian Oil Production in Apparent Decline

According to an article by Greg Walters at Bloomberg.com, crude oil output in Russia is expected to decrease for the first time in 10 years.

“Two years ago, we said the growth rate was falling, and we said this was bad for Russia, remember?” Trutnev said in televised remarks after a government meeting in Moscow today. “Now we’re saying the production rate is falling this year. This is not a bogeyman, unfortunately, this is real,” Trutnev said, without giving a specific forecast.

The petroleum problem in Russia seems to stem from the lack of investment in exploration in combination with exorbitant taxes on the industry.

Gail the Actuary has an interesting post on the post-peak-oil economy. Gail is a contributor to The Oil Drum Discussions.  It’s all kind of gloomy.  Time for a nice glass of Bordeaux.

NIH Manditory Open Access

According to C&EN, the NIH has issued a rule that publications resulting from NIH funded research be submitted to PubMed Central for posting.  Naturally, organizations with copyright interest in published research is  less than enthused by this ruling.

What has happened over the last century is that a sizeable publishing industry has grown up around the publication of periodicals specializing in scientific research.  In exchange for release of copyrights, authors get free or nominally priced access to publishing and distribution of their work. For their part, publishers tap into a continuous stream of refreshed content that is virtually free of charge. 

Counterbalancing the low cost of content are the sad facts of subscriptions.  Many (most) journals suffer from low distribution numbers, so the zero cost of content helps to keep overhead down, but publishing and distribution costs cannot benefit from the economy of scale.

The special interests seem to be sitting in watchful waiting, but they have raised the issue of copyright. Their concern is that they are being forced to distribute their property by the strong arm of NIH without the chance for reimbursement.  This could resolve to a property rights battle and as such, I can’t imagine that the NIH would prevail in the courts.

Fork in the Road

Storms here in the Colorado Territory.  A spring upslope storm guides moisture up the rising terrain and drops frozen water on the high plains. Unlike the Eskimos, we have reduced it to a single word- snow.

I’ve spent much time lately with the attorney crafting business agreements. It is a delicate art. Sins of commission or omission can come back to clobber you.  Having been involved in a few of these things, I am beginning to see the patterns and whorls of terms and conditions, vision and revision, twisting and turning to morph, vanish, and crystallize over time. Hammering out a business agreement is a learning experience for all involved.

Over the course of negotiation, both parties learn about each other. They learn the strengths and weaknesses of the respective organizational structures and of the individuals involved.  Expectations that began as firm requirements slowly undergo plastic deformation into other shapes.

There are two main fears for most negotiators. Making a blunder of some sort and leaving money on the table.  Nobody wants to immortalize bad judgement or inattentiveness in an iron-clad document that will be in force for years. And notbody wants to aim too low in their expectations of performance or price.  Parties speak piously of win/win, but secretly they want WIN/win.

Buyers need a bargain trophy to parade before their bosses at the next performance review. Sellers want to appear shrewd in front of their bosses. Participants in a negotiation need many things and the appearance of sound, shrewd judgement is not the least of the needs.

Most large companies have whole departments that manage contracts and license agreements. They have specialists on staff to manage business agreements- maybe even a few lawyers. Chances are, if you are a chemist/engineer who has strayed from the lab and find yourself in business development or sales, you may be working on supply agreements, tech transfer agreements, tolling contracts, secrecy agreements, etc., already.

At some point in the career of a chemist/engineer, a choice will be given as to the kind of upward mobility opportunities one may take. Some, like myself, chose the path of business. A chemist may be assigned to a procurement job where chemistry skills are applied to buying chemicals for your organization.  Others may move into sales and represent a territory or become one of the Knights Templar of commerce- a business development manager.

Laboratory work is fun and gratifying. But so are many other activities. The operation of any scientific endeavor is complex. Universities and industry alike require that at least some of its soldiers move into administration so they can continue to operate.

Scattered Bits and Bobs

No rest for the wicked. I have been requested and required by the boss to attend the ACS meeting in NOLA.  Lots to get done before departure.  I’ll have to get my liver conditioned for a visit to the French Quarter.

I have been using the thermogravimetric analyzer (TGA) for fun and profit lately. It is quite useful in solving certain kinds of problems in process development.  Of course, if we attached a chain it might make a dandy boat anchor too.  Just kidding … mostly.

Lots of chemistry is presently under development in the USA. It is premature to concede the future of technology development to Asia just yet.  There are lots of companies struggling to get their new technologies to market- I see this every day. This is in stark contrast to news of the tragic comedy on Wall Street. It is important to remember that the stock market is only one of many indicators of economic vitality.  It seems to me that the current maelstrom is based on negligent banking practices, not industrial weakness.

Back to the hood. Gotta ice the trap on the vac line.

Disposable Reactors

Disposable reactors are here. According to ICIS, Marlborough, MA, based Xcellerex is offering disposable bioreactors for biologics manufacture.  These single-use reactors are available in the 40-2000 Liter working volume range.  The company offers several reasons for why their product might be desirable. They argue that more time will be available for productive reactor operation as opposed to having production down part of the time for reactor cleanout and validation.

The battle for high throughput moves to a new level. Xcellerex states that the installed capital cost is ca 1/2 that of hardpiped reactors. They make the case that delays due to cleaning are reduced and that plant time is used more efficiently.  

Monte Carlo Analysis

Th’ Gaussling is surfing the net looking at freeware. The possibilities are amazing. It’s like I’ve crawled up from underground onto a sunny Brazilian beach full of nubile sunbathers frolicking in the waves. It’s all just too wonderful to be true …

[sound of needle scratching across record]

So I’m new to Monte Carlo simulations. I have some economic modeling to do and it has become apparent to me that mere spreadsheet grinding isn’t enough.  To make a more convincing case I need to introduce plausible cost variances somehow by mixing and blending various kinds of guesswork distribution curves from the elements of the project. There is a particular Project Risk and Contingency Analysis software that seems reasonable to start with. It would be interesting to hear of experiences others may have had with Monte Carlo project modeling.

Ear to the Ground

My comments on recession come strictly from news and from petrochemical industry publications. I have not seen any indication that manufacturing of specialty chemicals (at least in the waters I swim in) are as yet affected by the economic turmoil that the lending fiasco triggered. Eventually orders will taper some, but the how much and when is not at all clear.

It takes a while for the effects of a downturn to filter upstream to all sectors of chemical manufacturing. The first effects will likely be a pushback on delivery of existing orders. Then, the period between succesive orders will lengthen as businesses closer to the consumers will start to trim down inventories and throughput.  Finally, sales forecasts will begin to report spotty sales projections 2 or 3 quarters out. Eventually, you run into those weak quarters and have to find a way to limp through them.

The important question relating to petrochemicals (aromatics, naphtha, ethylene, propylene, etc) is where does price elasticity really kick in for hydrocarbon intensive goods as crude prices continue to rise and the dollar continues to devalue? 

Packaging materials like PE, PS, and PP, etc. are very often not the primary product consumers are looking for. They are produced for sellers of consumer goods as packaging materials. The purchasing decision maker is not the person strolling down the isles of Wal-Mart, but rather the product manufacturers who have to package the goods. 

This economic disturbance seems unique. Demand from the global middle class is growing as the US economy falters.  Demand for hydrocarbon fuels and manufacturing feedstocks is strong from Asia for their own consumption. But Asian production is also strongly linked to the demand of their products from the west. Predicting how this thing plays out is very tricky. 

Polymer membranes, HDPE pipe, PVC pipe, automotive assemblies and fascia are all large consumers of hydrocarbon products. Demand for these materials, obviously, should parallel the health of construction and automotive industries. But as the US transitions to a net importer of polymers, the connection to US economics is murky.

I suppose the best business to be in is war profiteering and security, at least as long as a war president is in office. It seems to be shielded from the raw forces of economics. As long as the gov’t can print money, special interests can be paid.  A good career would be as a translator between Arabic and Mandarin.

Platinum Group Metals Update

14 March, 2008. As the deepening US gravity well continues to tug at the recession asteriod that is looming ever larger in the sky, we see a steady line of investors boarding Platinum Group Metal (PGM) investment vehicles for immediate launch off this doomed planet. 

Monday and friday opening EIB prices over the week of 3/10/08 thru 3/14/08.

Silver–  US$19.70/toz;  US$20.77/toz.

Gold–  US$971.55/toz;  US$1,0005.86/toz

Palladium–  US$470.00/toz;  US$516.00/toz

Platinum–  US$1,960.00/toz;  US$2,110.00/toz

The geology of PGM deposits is quite interesting. There are numerous resources detailing the Bushveld Igneous Province (or Complex) in South Africa. Check it out.

Green Innovation Lag

It is not unusual for a long time to elapse between an initial customer inquiry and when commercial quantities of product are loaded on the truck and driven out the gate. I have seen it happen over 1 to 10 years, with 3 years being quite common. The chemical industry is not like the semiconductor business. The paradigm shift period seems much longer. In fact, any given chemical processing technology can last for a large part of a career or more. The last big chemical paradigm shift I have noticed is high throughput experimentation (HTE).  Maybe others have a more recent example.

Green chemistry is considered by many to be a new frontier of opportunity. To its detriment, many of us are unsure of what green chemistry really is and how to implement it in manufacturing. Realistically, for green chemistry to find wide acceptance, it needs to turn a profit or offer some kind of concrete advantage. Pollution avoidance is too abstract. For any new method or technology, there must be a payoff.

It seems simple. Reduce VOC emissions by using aqueous solvent compositions. Increase atom efficiency in transformations. Minimize persistant pollutants, organic or metal. Increase space yields, reduce consumables.  Green chemistry is not so easily demonstrated to the public and it may not be in the public domain. Your green technology may be proprietary, so the ballyhoo factor will collapse to zero. The processor may have to labor down the green path in silence.   

A process changeover to a green process may require many people in several companies to align to the change like compass needles to the north pole. A chemical process change must offer some kind of improvement that, by consensus, is meritorious. There is a good chance that the change will require notification of the customer and possibly even their permission. Customers often want a price concession when there is a process change so they can capture some of the value, so this may mean reduced sales volume and profits for the processor.

The customer may require that the proposed process change will be cause for a new validation of their customers product, in which case, the final user will also have to perform a validation.   In all likelihood, you are proposing a green change to a process that previously offered no problem to the downstream users.

Obviously, the time for green process implementation is at the very beginning of process development. The development chemist must have an existing toolbag of techniques, transformations, and reagents to choose from to go forward with implementation. The best way to get to this point is with curriculum change at the university level. Chemists need to have green chemistry awareness from the beginning of their training. Converting souls when they are already within industry is the hard way to do it.

Microscale labs in the undergrad experience maybe green for the university, but it is hard to see how it translates to the implementation of green technology in industry. The green revolution must come from textbooks that use green transformations in chemistry and engineering coursework. It must come from professors who weave it into their lectures and provide examples of such transformations and practices in the lab experience.

Chemists and engineers from such backgrounds must move into industry and become group leaders and managers. Only at this point will green chemistry become “normal” and expected.

Shermer’s “Mind of the Market”

Google has been posting a series of interesting talks by contemporary authors. This talk is by Michael Shermer, author of Mind of the Market, and editor of the popular magazine Skeptic. It is a lengthy 53 minute video, but I would highly recommend it. I think Shermer has a good grasp on the anthropology of our present world.

This is off-topic, but useful. This link gives a bunch of really good hints on how to save money for your start-up company.