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 The commitment, which represents roughly two years' research
spending for the manufacturing giant, comes as General Electric
responds to new opportunities created by the U.S. energy boom.
"The reserves are here. The potential is here," Chief Executive Jeff
Immelt said on Monday, describing how new drilling technologies have
unlocked vast oil and gas reserves.
Energy companies need help reaching fossil fuels but also bringing
them to markets and GE can offer that know-how, the executive said.
"There's just technical intensity that is going into these
industries," he said at a Bloomberg energy event in Washington.
Hydraulic fracturing, or fracking, has revolutionized energy
development but the technique requires huge volumes of water to
rattle oil and gas from deep underground.
The method is controversial as landowners and communities raise
concerns about the safety of drinking water in energy patches and GE
is trying to develop drill techniques that use gas rather than
water, executives said.
Energy is the fastest growth area for GE as the global manufacturer
works to become a dominant supplier of equipment and services to
oil, natural gas and alternative power companies.
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 <STL.OL>
how to use carbon dioxide (CO2) in hydraulic fracturing — a process
that 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.
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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.
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.
(Additional reporting by Patrick Rucker
in Washington and Ed McAllister in New York; editing by Terry Wade,
Leslie Adler and Bernarrd Orr)
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