(Reuters) — General Electric Co plans to
intensify research focusing on complex energy projects such as waterless
fracking and gas turbine efficiency by earmarking an additional $10
billion through 2020 for its "ecoimagination" budget.
The new spending is set to be announced by Chief Executive Jeff
Immelt on Monday.
The research budget shows how reliant GE has become on the energy
industry, its fastest growth area, as it works to become a dominant
supplier of equipment and services to oil, natural gas and
alternative power companies at a time when the United States
undergoes an unprecedented energy boom.
While GE doesn't forecast what it plans to spend on its main capital
budget in future years, the new commitment gives investors a clue as
to what the company's priorities will be into the next decade.
The "ecoimagination" project, which was formed in 2005 to broadly
focus on sustainability and other environmental issues and has cost
nearly $15 billion, had been set to expire next year. Executives are
extending it to 2020 with the additional $10 billion.
While the overall goals of the project will remain, a larger
percentage of the funds will go to energy-related projects, an
acknowledgment of where Immelt and other executives see the future
of the company Thomas Edison founded in 1892.
"We have a very broad, long-standing commitment to energy," said
Mark Little, GE's chief technology officer and head of global
research.
NEXT-GENERATION FRACKING?
As part of the new focus, GE will study with Norway's Statoil how to
use carbon dioxide (CO2) in hydraulic fracturing, the process
commonly known as fracking which mixes more than 2 million gallons
of water per well with chemicals and sand to extract oil and natural
gas.
The energy industry's copious use of water has put it into conflict
with some residents in Texas, New Mexico and other arid states, and
many companies have been trying to find ways to curb fracking's use
of water, looking at using CO2 and even propane.
While CO2 fracking is not economical today, the companies hope to
find a way to collect CO2 at the wellhead, recycle it, use it to
frack again, then collect the CO2 and repeat the process, Little
said.
"Ideally, we'd have a virtuous cycle going on," he said.
A key challenge will be to help the CO2 carry proppant, a type of
sand that holds open the cracks in rock so oil and natural gas can
escape, much like water does in current methods.
GE also wants to boost the efficiency of its natural gas-powered
turbines to 65 percent from today's 62 percent. The company believes
its existing research into jet engine efficiency could help
significantly reach this goal, Little said.
COMPRESSED NATURAL GAS IN A BOX
The company plans to study how to make wind turbine blades cheaper
and more efficient through the use of different composite materials,
as well as expand its "CNG In A Box" product, which lets natural gas
producers compress the fuel directly at the well to be used locally
in engines.
The "ecoimagination" project is part of GE's larger research and
development budget, worth roughly $5 billion to $6 billion per year.
The project began in 2005 with a goal to spend $5 billion on
efficiency projects within five years and was renewed in 2010 with a
goal of spending an additional $10 billion by 2015. So far, it has
brought in $160 billion in revenue by creating new products and
saved $300 million on water and emissions costs, GE said.
A movement into energy is not new for GE, which last year bought
Lufkin, aiming to sell the company's oilfield pumps in international
shale fields and collect data to help oil producers become more
efficient.
GE has also become of the world's largest wind turbine manufacturers
since it bought Enron's wind business in bankruptcy.
(Reporting by Ernest Scheyder; editing by Terry Wade and Leslie
Adler)
