In The Headlines
The Race to Supply Engines for the Next Generation of Jetliners
As airliners replace their fleets with more efficient models, jet engine makers are rethinking how planes are powered in a bid to score deals with Boeing and Airbus. The narrow-bodied Boeing 737 Max and Airbus A320neo, slated to begin operating over the next two years, are designed to take advantage of improved aerodynamics. CFM International and Pratt & Whitney are building engines meant to cut fuel use by 15%, though they are taking different paths to get there. Jet engine sales in the next decade will total $500 billion, according to industry analyst Teal Group.
CFM, a joint partnership of General Electric and French aerospace company Safran, says it plans to close more than $8 billion in deals with airplane manufacturers for its new engine, the Leap, at the biannual Farnborough International Airshow July 14 in England. First announced at the air show six years ago, Leap’s technology was developed mostly at GE’s global research center in upstate New York.
GE has spent 20 years tinkering with a carbon composite used in the engine’s fan blades, which can weigh one-third less than conventional aluminum ones. It is making carbon composite engines by molding a woven, flexible carbon fiber and cooking it with epoxy resin to yield a material as durable as metal. Other parts of the engine use materials with the low weight and heat resistance of ceramics. Three-dimensional printing has enabled GE’s team to create one-piece parts that used to come in 20 separate, heavier pieces.
GE’s R&D operations last year cost $5.5 billion, twice what it spent a decade ago. Aviation is a top priority for GE according to Mark Little, who runs its global research center. “People around the world are flying a lot more, so the number of airplanes is going up by a factor of two over a decade,” he says. “Airliners are refreshing their entire fleets, because with that high-priced fuel, you simply can’t drag around the old engines.” GE’s revenue from its aviation businesses is now 14.8% of its total, up from 10% three years ago.
Richard Aboulafia, vice president of analysis for Teal Group, says competition helped push the long-gestating GE engine to market. “They needed to reinvent their product offering to fight off a challenge from Pratt,” he says. Pratt & Whitney’s new engine, the PW1000G, is based on a counter-intuitive idea: increasing efficiency by spinning fan blades more slowly. The two main parts of any jet engine are the fan, which moves air through the engine, and the turbine, which burns fuel to spin the fan. The relationship between the parts, traditionally connected to the same shaft, is push-pull: Turbines produce more thrust when moving at top speed, but fans create more drag as they spin faster. Pratt’s new engines have geared turbofans, which allow the two components to move independently. The fan blades can slow down while the turbine spins furiously.
Plane makers are split on which approach is best. Boeing, a longtime CFM customer, decided to design the 737 Max around the Leap engine. “We saw their technology road map and how they were bringing that to the Leap, and it made a lot of sense for us,” says Keith Leverkuhn, general manager for the Max line. Boeing already has more than 2,000 orders for the plane, bringing CFM’s total engines ordered to 6,770 as of June 30, which gives it an edge over Pratt’s 5,500, according to the companies.
CFM and Pratt are battling for Airbus’s business and have split its orders for A320neo engines, says aerospace consultancy Ascend. Airbus lets airlines choose their engines, and 36% of its A320neo inventory will carry the Leap, while 35% will use the PW1000G. The other 29% have not been unannounced. Aboulafia says CFM will eventually have to make a geared turbofan engine to keep pace with the efficiency that Pratt’s design could achieve. He points out that for now, however, anyone in the market for a jet engine has a difficult decision to make, saying, “It’s rather remarkable that they are able to take such different paths and have such similar results.”
“Water Drones” Reshape the Economics of Deep-sea Ocean Drilling
Companies in the oil and gas industry use fairly sophisticated technologies when exploring and tapping offshore hydrocarbon reserves. But when they service their sprawling infrastructure, the tools tend to be surprisingly low tech: boats, buoys, and the occasional aircraft to keep tabs on immense surface and subsea operations in sometimes hostile environments. A young and rapidly growing joint venture between a small California robotics company and the world’s largest oilfield services provider is quietly working to show energy companies how they can use ocean-going robots to make their operations safer, more efficient, and far less costly.
Houston-based Liquid Robotics Oil & Gas, or LROG, is just 18 months old, but it is already doubling the volume of its work year-over-year, to the point where it is actually turning away inquiries from potential customers as it struggles to keep up with demand for its technology. That technology can be somewhat complex, but the service LROG provides is simple enough: Its ocean-traversing robots take jobs conventionally undertaken by crewed surface vessels and does them autonomously and on a larger scale, all at a far, far lower cost.
As the energy industry moves into deeper and deeper offshore waters in search of new hydrocarbon reservoirs, those potential liabilities are magnified. The 2010 Deepwater Horizon disaster, in which a blown wellhead at the BP-owned Macondo Prospect scattered hundreds of millions of gallons of crude into the Gulf of Mexico, served as a stark and very visible reminder of the consequences when bad luck and bad decision-making converge. The more data a company can gather, the better decisions it can make. However, gathering that data is both risky and expensive. Every ship, aircraft, and human a company inserts into the offshore environment is a potential liability.
Liquid Robotics did not start out with an eye on the energy industry. In 2003, the predecessor to the company’s Wave Glider robot was cobbled together from a kayak and various household items as a means to record the songs of humpback whales near the island of Hawaii. From that original idea came the realization that a self-sustaining, long-endurance maritime robot could find work in a number of other applications, from oceanographic and meteorological research to maritime security and environmental studies. Liquid Robotics has since developed several versions of the Wave Glider. Roughly as long and wide as a large surfboard, Wave Gliders collect all the power they need (for propulsion and its onboard electronic systems and sensors) from the rolling motion of ocean waves and the sun’s rays, via solar panels on their topside. The robots can remain at sea for months or even years, without requiring service, piloting themselves autonomously and beaming data back to shore.
Liquid Robotics has roughly 250 Wave Gliders in service around the globe collecting a variety of data. The company sells that data to all kinds of customers, from federal agencies to research institutions to commercial interests. The company is growing at roughly 60% year-over-year. General Manager, Rod Nelson says. “We’re constantly looking for ways to do the traditional business lines with fewer people, especially when you get to be offshore. What robots really bring is the ability to do something unmanned, for a really long time, more cheaply. The alternative is to put a ship out there, and that’s a much more expensive proposition.”
And it is also less effective. Putting a single crew vessel in the water to extract data from undersea sensors or gather information on ocean conditions and chemistry can cost tens of thousands of dollars per day, often making it cost prohibitive to put more than one ship in the water in a given area at a time. A team of networked robots can share data and gather a more comprehensive picture of the area around a drilling operation or well site.
In all, about a dozen large energy companies are customers of LROG, says Rod Nelson, the firm’s general manager, and each has different ideas on how the technology should be deployed. Some want better current, weather, and wave condition forecasting; others seek to continually monitor ocean chemistry for the telltale signs of hydrocarbons, either for exploration purposes or to detect any potential leaks in their undersea infrastructure. The industry for ocean-going robots is young, and there is still plenty of room for manned vessels, manned submersibles, and manned aircraft in oilfield services. But the benefits of the unmanned “water drones” are already apparent, and both LROG and its energy industry customers are working to push the limits.
Sources:
1. http://buswk.co/1nlqAvn – BusinessWeek
2. http://bit.ly/1wj74VF – Fortune
The Good News Is . . .
• U.S. wholesale inventories rose in May, reinforcing the view that economic growth should surge in the second quarter following a weak first three months of the year. The Commerce Department said wholesale inventories increased 0.5% from a month earlier. The gains were driven by increases in inventories of metals, autos, machinery and lumber.
• Alcoa, Inc., a global leader in lightweight metals technology, engineering and manufacturing, reported earnings of $0.18 per share, an increase of 157.1% over year-ago earnings of $0.07. The firm’s earnings topped the consensus estimate of analysts by $0.06. The company reported revenues of $5.8 billion. Management attributed the company’s performance to improved demand from the automotive industry and higher regional premiums due to robust aluminum demand.
• The Swiss insurer Helvetia said that it had agreed to acquire Nationale Suisse for about $2 billion in cash and shares in a deal that would create the third-largest insurer in Switzerland. The deal would value Nationale Suisse at $2 billion. The combined company would operate in Switzerland and parts of Europe and would employ about 7,000 people. The two companies also see growth potential in their combined specialty insurance products, including insurance for art, engineering, and transportation.
Sources:
1. http://www.cnbc.com/id/101793184 – CNBC
2. http://1.usa.gov/1bnkk1D – US Dept. of Commerce
3. http://www.cnbc.com/id/18080780/ – CNBC
4. http://bit.ly/1oUJi0Z – Alcoa, Inc.
5. http://nyti.ms/1rjsrpF – NY Times Dealbook
Planning Tips
Tips for Purchasing Specialized Insurance
Insurance is based on the concept of protection from the unknown. Whether it is an unpredictable pet, prized possession, or wedding expenses make certain that you understand exactly what is covered in your current insurance policies to determine whether you may need to take on extra coverage. Below are tips for determining whether you may need specialty coverage.
Scheduled Personal Property Insurance – Scheduled Personal Property is handled as a rider to your home insurance policy, and assigns specific value amounts to prized items like artwork, jewelry, expensive handbags, designer clothing, and furs. (You may need to hire a professional appraiser to assign a value to the items). A common misconception is that your homeowner insurance policy will take care of these items in the event of fire, theft, or other disaster which destroys the valuable contents in your home. While that is true, the replacement limits covered under a standard policy are typically much lower than the value of the property that is lost or damaged. Scheduled Personal Property insurance will cover valuables that are lost during travel, are accidentally misplaced, and even things like wedding rings that slide down the drain.
Burial Insurance – You have probably heard of people arranging for burial plots before death, but you can also buy a burial insurance policy that will help cover the costs of your funeral. Burial insurance policies are typically sold through independent life insurance brokers, and in some cases, funeral homes. The premium is usually only a few dollars each week or month, and the payout is dependent on the age of the insured at the time of death, policies usually paying more the younger the insured is at the time of death. While it may sound morbid, having a financial plan for the costs to cover your death is a fact of life.
Dog Bite Insurance – No dog owner wants to think that his or her beloved pet could harm another individual, but dog bites do happen. According to the Insurance Information Institute, more than 50% of them happen on an owner’s property, and they account for one-third of all homeowner insurance liability claims. While most homeowner and renter insurance policies will cover dog bite liabilities we live in a litigious society, and laws vary by state around owner liability. If your dog bites someone and you are sued, standard coverage limits included in your existing policies may not be enough to protect your personal assets. To increase limits, you can purchase an umbrella liability policy, which will cover you above and beyond the liability coverage amounts in a standard insurance policy.
Flood Insurance – While most homeowner and renter insurance policies protect against natural disasters like fire, wind damage, hail, and other perils, flood insurance does not fall under the list of covered incidents. To secure protection against flood damage, you need to purchase a separate flood insurance policy.
Wedding Insurance – A lot of money goes into having a wedding, including hiring vendors and paying upfront deposits in order to secure services well in advance of the big day. Wedding insurance is intended to cover any missteps that can happen when it comes to your wedding like replacing lost funds if the caterer you secured with a deposit stops returning calls, replacing item costs if your tailor ruins your custom-made dress during alterations, if the wedding gifts are damaged, or if you have to suddenly postpone the event due to death or illness. It is often sold through the same insurer you use for your homeowner, renter, or auto insurance coverage.
Sources:
1. http://bit.ly/1tFvr42 – MoneyZine.com
2. http://1.usa.gov/1eCFAag – FEMA
3. http://bit.ly/W1unbL – Investopedia
4. http://bit.ly/1jFRGmd – Insure.com
5. http://bit.ly/1oTZ2Qv – TheKnot.com
6. http://bit.ly/1sbXE0J – HouseLogiccom
