Notes to Self:
Construction of clean coal/biomass plant on Jurong Island begins
China Huaneng plant to draw new petrochemical investors
EDB says some have reserved land at Tembusu, but not started on projects
Ronnie Lim Business Times 12 Nov 09;
CHINA Huaneng Group's latest $2 billion clean coal/biomass cogeneration investment on Jurong Island - which is expected to shave 10 per cent off customers' utilities bills - will be a catalyst in helping to draw new petrochemical investors at the greenfield Tembusu sector.
The project will contribute significantly to the petrochemical island's integration strategy, 'especially as competitive utilities options are particularly critical to the energy and chemical industry, which is a large consumer of steam and power', said Economic Development Board (EDB) chairman Leo Yip at its groundbreaking yesterday.
While he did not specifically say so, the project should encourage chemical companies, which Mr Yip said, 'despite adopting a cautious approach during the recession, are continuing their project studies on new investments, in readiness for the upturn'.
A number of petrochemical investors have already reserved land at Tembusu, but have not started building their projects yet, according to Julian Ho, who heads a multiple portfolio including chemicals at the EDB, but he declined to name them.
Germany's Lanxess is, for instance, expected to start building its 400 million euro (S$832 million) synthetic rubber plant at Tembusu around mid-2011. Others in the wings include the Jurong Aromatics Corporation US$2 billion project and possibly Mitsui Chemicals.
Despite still-shaky economies, Cao Peixi, China Huaneng president and chairman of Huaneng Power International - which bought Tuas Power for $4.2 billion - said that the group was confident enough about the Singapore market to give the go-ahead to its Tembusu Multi-Utilities Complex (TMUC).
'Investing in Singapore is an important part of Huaneng's global strategy,' he said.
'We will leverage on our expertise and resources to support Tuas Power's growth and maintain its competitive advantage in the Singapore energy market . . . at the same time, we also hope that we will be able to contribute to Singapore's energy diversity and security.'
The TMUC project - which will use low-sulphur coal (80 per cent of the fuel mix) and palm shell kernels and wood waste (20 per cent) - will provide 160MW of electricity and about 1,000 tonnes of steam per hour when completed. It will also provide chilled water and treat industrial waste.
Because of the use of biomass, the plant's advanced technology such as special circulating fluidised boilers, and careful handling of the coal and coal ash, TMUC's emission levels will even be lower than some oil-fired power plants.
Furthermore, as each unit of electricity is produced at a lower cost, it will translate to cost savings of about 10 per cent of a customer's utilities bill compared with energy generated by a gas-fired plant, the company said.
Lim Kong Puay, Tuas Power president and CEO, said that while the original plan was to build the entire project at one go, it will now do so in tandem with customer demand. This will see the project being done in two phases, with part of the clean coal/biomass cogeneration plant ready by 2012, and the rest by 2014.
Financing for the $2 billion project will come from equity from the parent company, as well as from bank financing.
While the 2,670MW Tuas Power currently has a 24-25 per cent share of Singapore's electricity market, Mr Lim declined to give a figure on what its targeted share of the utilities market on Jurong Island will be, come 2014. 'The Jurong Island market is big enough for a new player,' he would only say.
'We see the standalone TMUC project as a long-term investment commitment, and as is (with China Huaneng's go-ahead), we are already seeing renewed interest coming from potential customers there.'
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Construction of S$2b multi-utilities plant begins on Jurong Island
Ryan Huang, Channel NewsAsia 11 Nov 09;
SINGAPORE: Construction works have begun on the Tembusu Multi-Utilities Complex - a S$2 billion facility on Jurong Island for generating steam, chilled water, electricity and treating industrial waste.
The multi-utilities plant is expected to help develop Singapore's petrochemical sector, as well as bolster the country's energy security.
"As a utilities provider, it is important to put in the necessary infrastructure in place, and this will provide the impetus for new investors to invest in Jurong Island," said Lim Kong Puay, president & CEO, Tuas Power.
The move is in line with the nation's plans to develop the Tembusu area of Jurong Island as a new petrochemical sector over the next five years.
The new plant is expected to be about 10 per cent more cost-efficient than conventional ones due to synergies from producing the various utilities. One example is the simultaneous production of steam and electricity.
The facility will be completed in two phases, and will be partially ready by 2012. The rest of the complex will be ready by 2014.
The facility will be run by Tuas Power, which is a member of China Huaneng Group. It represents one of the most significant Chinese investments in Singapore and is expected to further enhance the island's position as a platform for firms to go international.
Leo Yip, chairman, Singapore Economic Development Board, said: "We welcome the opening of Tuas Power's Tembusu Multi-Utilities Complex to enhance the range of third party utilities options as well as competitiveness on Jurong Island.
"With Asia becoming an increasingly important consumer of energy and chemical products, Singapore is well positioned to be a strategic base for Chinese energy and chemical companies seeking to internationalise and access new markets to drive business opportunities."
- CNA/sc
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Cheaper power for petrochem firms
Jonathan Kwok, Straits Times 11 Nov 09;
PETROCHEMICAL companies looking to set up processing plants at the Tembusu area of Jurong island can look forward to around 10 per cent of savings on their utility bills, with the construction of Tuas Power's $2 billion multi-utilities plant there.
The plant, with an initial opening planned for 2012, will supply steam, chilled water and electricity, which when co-produced, will lead to higher efficiency.
These cost savings will be passed on to customers through more competitive rates, which will be around 10 per cent lower when compared to energy from gas-fired plants, said Mr Lim Kong Puay, president and chief executive of Tuas Power, at the plant's official ground-breaking ceremony on Wednesday.
Tembusu is an as-yet-undeveloped area in the northwest of Jurong island that the Economic Development Board has earmarked for growing the petrolchemicals industry.
With a US$3 billion (S$4.17 billion) petrochemical cracker complex by Shell to be completed on Pulau Bukom by the first quarter of next year, Mr Julian Ho, executive director of energy, chemicals and engineering services at EDB, expects interest from downstream companies to set up processing facilities at Tembusu.
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Showing posts with label Singapore. Show all posts
Showing posts with label Singapore. Show all posts
Tuesday, August 10, 2010
Friday, April 17, 2009
Hyundai Wins Building Bid for Singapore Oil Cavern Storage Facility
Pictures Source: The Straits Times, Singapore.Via Your Industry News:
Friday, Apr 17, 2009
Singapore moved forward with plans to build a 9.5 million-barrel rock cavern oil storage facility by awarding on Thursday an S$890 million ($594 million) building tender to South Korea's Hyundai Engineering (000720.KS: Quote).
The first phase of 1.48 million cubic metres (9.5 million barrels) comprises five caverns on offshore Jurong Island that could hold crude, naphtha, condensate and gas oil, most likely for commercial, rather than strategic purposes. The first two caverns are expected to be operational by early 2011.
A planned second phase could add another 1.3 million cu m of storage but a decision has not yet been made.
For cost and operational reasons, underground caverns are often used to hold long-term strategic stocks rather than more actively traded barrels.
The U.S. government stores its strategic crude reserves in four underground sites, while South Korea leases out its tanks to refiners to be used for strategic purposes.
Industry sources say underground caverns, which normally cost more than an above-ground facility of similar capacity, are typically used for barrels that remain in-tank for longer periods and are not traded in and out of tanks rapidly.
"The cavern facility will be used for commercial purposes, but there will be physical limitations for storage of trading barrels, particularly those that need to move quickly or be blended, as transferring of products will be involved," said a source in the storage business.
State-owned industrial landlord JTC Corp had said it would unveil the winning bid for the operator of the Jurong Rock Cavern project in the April-June quarter, delaying it from end of February.
A spokeswoman said the results would be unveiled before end-June.
JUMP IN STORAGE CAPACITY
This is not the first time the decision has been postponed -- the tenders were first called in late 2007, and the results have been plagued by months of delays since.
JTC said that more time was needed to study the design and construction process for the large-scale, complex project, as safety was a key priority.
Industry sources said bidders for the operation tender include Dutch oil and chemicals storage firm Royal Vopak NV (VOPA.AS: Quote), New York-based engineering and infrastructure consultants Parsons Brinckerhoff and storage operator Horizon Terminals Ltd, wholly owned by Emirates National Oil Company (ENOC).
Vopak already operates landed oil storage tanks next to the planned facility.
For phase one of the cavern project, there will be about 7.0 km (4.3 miles) of galleries and tunnels.
Once both phases are completed, the project could raise oil storage capacity in land-scarce Singapore to nearly 11 million cubic metres or almost 70 million barrels.
Since end-2005, Singapore has almost doubled independent oil storage capacities, but all of it has been leased out, leaving the market short of tanks despite slowing consumption.
For example, fuel oil storage capacity in Asia , following the opening of three new terminals with a Total of 4-5 million cu m since end-2006, has increased substantially but has not been balanced by a similar rise in demand for the residual fuel due to the economic downturn.
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Related News: Energy Business Review
JTC Awards Contract To Hyundai Engineering & Construction For Oil Storage Project In Singapore
Published:17-April-2009
By Staff Reporter
JTC Corporation (JTC), a provider of industrial real estate solutions and services, has handed the construction tender for the city-state's rock cavern oil storage project to Hyundai Engineering & Construction Co., Ltd. Jurong Rock Cavern (JRC) is an initiative driven by JTC to increase underground oil storage capacity on Jurong Island. JRC will comprise an oil storage complex to be built at subterranean depths beneath the seabed of Banyan basin.
Upon completion, the underground caverns will have a potential storage capacity of close to three million cubic meters catering specifically to liquid hydrocarbons like crude oil, condensates and diesel oil.
Development works for Phase 1 of JRC, with a storage capacity of about 1.5 million cubic meters, had commenced at the end of 2006. JTC is currently appointing an operator to manage, operate and maintain the JRC facility.
The first contract of the Phase 1 JRC project involving the construction of two access shafts and start-up galleries is near completion. JTC is progressing onto the next critical milestone of the JRC project -- the construction of tunnels, caverns and associated facilities.
Work will now commence with the detailed design of the caverns/facilities and actual construction is expected to start by end of the year. When completed, the JRC will have an overall storage capacity of 1.47mil cubic meters. The whole project will be completed in stages, with the first two caverns targeted for completion in 2013.
Saturday, March 7, 2009
Foundation stone ceremony at Neste Oil's NExBTL renewable diesel plant in Singapore
Taken from: Fox Business News
Friday, March 06, 2009
ESPOO, FINLAND, Mar 06, 2009 (MARKET WIRE via COMTEX) ----- project proceeding on schedule and budgetNeste Oil held today a Foundation Stone Ceremony to officiate the construction of its EUR 550 million NExBTL renewable diesel plant in Singapore. Neste Oil's President and CEO Mr Matti Lievonen was in attendance, and Mr Lim Hng Kiang, Minister for Trade and Industry, Singapore was the Guest-of-Honour at the event.
"The construction of our NExBTL renewable diesel plant in Singapore is proceeding on schedule and on budget. The market has been highly unpredictable in the past year but the Singapore plant plays an important part in our long-term strategy for growth, and our commitment to the project remains solid. We are very grateful to the local government for the support they have given us and look forward to when the plant is officially inaugurated in 2010," stated Mr Matti Lievonen.
Upon completion in 2010, Neste Oil's renewable diesel plant in Singapore will be the largest in the world with an annual capacity of 800,000 metric tons. Neste Oil's patented NExBTL technology allows flexible use of any vegetable oil or animal fat in the production of NExBTL renewable diesel, the cleanest diesel in the world. NExBTL-diesel is the only renewable diesel in the world that is fully compatible with existing diesel engines and logistics systems. The use of NExBTL-diesel significantly reduces greenhouse gas and tailpipe emissions compared to even the best fossil fuels, thereby contributing to better air quality. Feedstock, to be used at the NExBTL renewable diesel plant, are animal fat, palm oil and other types of vegetable oils. When fully operational, the plant will employ around 100 people.
Neste Oil Corporation
Osmo Kammonen Senior Vice President, Communications
More information: Mr Jarmo Honkamaa, Deputy CEO and Executive Vice President, Renewable Fuels, tel. +358 10 458 4758
About Neste Oil
Neste Oil Corporation is a refining and marketing company concentrating on low-emission, high-quality traffic fuels. The company's strategy is based on growing both its oil refining and premium-quality renewable diesel businesses. Neste Oil's refineries are located in Porvoo and Naantali and have a combined crude oil refining capacity of approx. 260,000 barrels a day. The company had net sales of EUR 15 billion in 2008 and employs around 5,200 people. Neste Oil's share is listed on the NASDAQ OMX Helsinki. www.nesteoil.com.
About NExBTL renewable diesel
NExBTL renewable diesel is an advanced fuel, based on renewable raw materials, that performs more efficiently and has a lower level of environmental impact than fossil diesel or FAME-type biodiesel. Neste Oil requires its raw material suppliers to commit to responsible and sustainable production methods. Feedstock of this type ensures that NExBTL renewable diesel has a 40-60% lower level of greenhouse gas emissions over its entire lifecycle compared to fossil diesel. NExBTL renewable diesel can be blended with conventional diesel fuel or used as such, and it is suitable for all diesel engines.
This announcement was originally distributed by Hugin. The issuer is solely responsible for the content of this announcement.
Copyright Copyright Hugin AS 2009. All rights reserved.
SOURCE: Neste Oil Oy
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From The Business Times, Singapore
Growing Market for Singapore Renewable Diesel Plant
By RONNIE LIM
OTHER investors may be scrapping their projects but it's flashing 'green' for Neste Oil's $2.4 billion investment in Singapore and Rotterdam. The Finnish giant is brimming with confidence about its two renewable-diesel refinery plants that cost $1.2 billion apiece and that will start operations in 2010 and 2011 respectively.
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| DOING THE SPADE WORK (From left) Mr Honkamaa, Mr Lim, Mr Lievonen and Neste Oil managing director Olli Virtas laying the foundation for Neste Oil's renewable diesel plant in Singapore |
In fact, it is already considering adding second lines at both to produce either more renewable diesel, or even renewable jet fuel for aircraft.
'We have no other competitor in 2G, or second-generation, biodiesel manufacturing,' Matti Lievonen, Neste's president and CEO, told media after a foundation stone-laying ceremony at its Tuas site. The two plants, when completed, will make Neste - until now, mainly a traditional oil refiner - the leading global producer of renewable diesel.
Both plants are 'on schedule and on budget', he said. Financing is not an issue at all, as Neste has a credit line of 1.6 billion euros (S$3.1 billion) until 2011, plus it has over 500 million euros in cash flow from last year.
Besides, given growing environmental concerns, the European Union is expected to pass legislation enforcing greater use of such renewable fuels soon. 'This is the whole logic for our renewable diesel - a market which mandates use of biofuels,' said deputy CEO Jarmo Honkamaa.
After earlier targeting 5.75 per cent mandatory biofuel use by 2010, the latest EU directive is that measures must be taken by all member countries to replace a minimum 10 per cent of all transport fossil fuels (petrol and diesel) with biofuels by 2010.
The Neste officials said this in response to questions on whether today's low oil prices of around US$40 - which means that normal diesel is roughly half the price of biodiesel - would impact the economics of its Singapore and Rotterdam biodiesel investments.
Each plant will produce 800,000 tonnes per annum (tpa) of renewable diesel - the largest such facility in the world - from one million tpa of renewable materials comprising vegetable oils such as palm oil, animal fat or tallow.
Neste - which operates two crude-oil refineries in Porvoo and Naantali with a total capacity of 260,000 barrels - already has a 170,000 tpa biodiesel plant at Porvoo, and is set to start up a second biodiesel plant of similar scale there this July.
'Neste is sourcing its biodiesel raw materials like palm oil and tallow on a group-wide basis, and is in talks with suppliers, like for instance, for jatropha in Thailand,' Mr Honkamaa said. Depending on the costs, over half of each plant's raw materials can be palm oil, with the rest tallow, although the biofuel refineries are completely flexible in their feedstock mix.
Neste is already in talks with big oil companies to take biodiesel from its Singapore and Rotterdam plants. 'We don't see a challenge in (securing) markets, the challenge is more in raw materials,' Mr Honkamaa said.
Speaking at the ceremony, Trade & Industry Minister Lim Hng Kiang said that Neste's project 'affirms Singapore's position as a trusted business destination', adding that 'the outlook of the energy and chemicals industries remains positive'. Underlying this, he said, are two main factors: the increasing emphasis on addressing environmental challenges and the Asian growth story, especially in China and India, and increasingly, Asean.
Saturday, October 4, 2008
Intellectual Ventures Sets Up Asian Base in Singapore
- Gabriel Chen, AsiaOne Business Segment, 3 October 2008
A LEADING American firm that patents inventions and invests in the inventions of others is basing its regional headquarters here.
The move by Intellectual Ventures (IV) will boost Singapore's aim to be the global hub for commercialising intellectual property (IP), a catch-all term meaning legal rights protecting how certain products are made and marketed.
In IV's case, it patents inventions and files patent applications in more than 30 technology areas, including nanotechnology, biomedical devices, software and consumer electronics.
The firm, which is helmed by former Microsoft chief technology officer Nathan Myhrvold, said yesterday that it chose Singapore because of its 'pro-business environment' and 'strong intellectual property protections'.
Dr Myhrvold said that when he and his colleagues founded the firm eight years ago, they wanted to focus time and resources on invention as a full-time activity - not as a sideline to other projects. He said this focus had brought success in the United States.
Dr Myhrvold, who completed a PhD in theoretical and mathematical physics by 23, said they were thrilled their invention efforts were generating growing interest among Asia's leading inventors.
'Expanding our invention efforts to Asia allows us to support even more inventors and to expand our initiative globally,' said Dr Myhrvold, who is also a prize-winning nature and wildlife photographer and master French chef.
Mr S. Iswaran, Senior Minister of State for Trade and Industry, who attended the launch of IV's Asian headquarters yesterday, spoke of the potential of IP.
Mr Iswaran said that while the IP generated in Singapore and beyond will benefit the economy, there are also opportunities to exploit it internationally.
'We believe that Singapore's strategic location at the confluence of IP creation and commercialisation...positions us well as a base for global companies to create, manage, and commercialise IP in the region and beyond,' he said.
IV is staffing the Singapore office at Gateway Building with 22 professionals, including business executives, technologists and IP law experts but that number will grow in the near future.
IV will also open offices in Tokyo, Bangalore, Beijing and Seoul.
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From the magazine issue dated Nov 22, 2004
FACTORY OF THE FUTURE?
The offices of the highly secretive Seattle-area start-up, Intellectual Ventures, are filled with evidence of the multiple hobbies of its polymath founder, Nathan Myhrvold. The multimillionaire former chief technologist at Microsoft is a scientist, so there's a collection of antique microscopes in his office. He is a photographer, so striking pictures of nature adorn all the walls. He is an avid writer, so antique typewriters line the hallway. And since he is also a paleontologist, the full-scale head of a T. Rex lords it over the lobby. It's actually a replica of the model used in the second "Jurassic Park" film.
The dino's ferociously bared teeth hint at elements of Intellectual Ventures' bold business plan. Myhrvold and his partner, former Microsoft chief software architect Edward Jung, have created the quintessential company for the 21st century. It doesn't actually make anything: it outsources, offshores and offloads nearly every task performed by regular corporations. It has no factories, machine shops or marketing teams. Only patent attorneys populate the quiet hallways. The five-year-old firm's plan is to create or buy new ideas, accumulate patents--exclusive rights to use the inventions--and rent those ideas to companies that need them to do the gritty work of producing real products. Because today's businesses are constrained by their need to make money, Myhrvold says, "it is irresponsible for them to think wildly outside the box." He wants to fill that innovation gap--"We are thinking wilder, crazier thoughts than anyone else."
To generate patentable ideas, Intellectual Ventures hired a dozen top scientists as part-time consultants to participate in several all-day gabfests each month, which the company calls "invention sessions." Lawyers transcribe the discussions, which can range from biotech to nanotech to solid-state physics, and follow up on the most promising ideas with patent applications. One participant, Dr. Leroy Hood of the Institute for Systems Biology in Seattle, says: "We are thinking about how you can solve problems that have never been solved before." Since the company has been holding sessions for only a year, it has likely produced about a hundred ideas whose patent applications won't be processed--or start earning any money--for at least three years.
But spinning new ideas is only a small part of the plan. Sources familiar with Myhrvold's strategy say that he has raised $350 million from some of the largest companies in high tech: Microsoft, Intel, Sony, Nokia and Apple. Google and eBay also recently invested. With this large bankroll, the company is out buying existing patents in droves. (Myhrvold won't comment on these activities, but sources say he has already purchased about 1,000 patents.) The strategy is to set up a sort of patent marketplace. Patent owners get money upfront for the dusty ideas sitting on their shelves, the investors get the rights to use the ideas without being sued and Myhrvold gets to rent those same ideas to other companies that need them to continue creating products. Intellectual-property experts say his plan is audacious and unprecedented, customized for a new, rapidly dawning business environment.
In this new world, intellectual property is every company's most prized possession--and biggest vulnerability. It has al--ready become America's No. 1 product and export: last year in the United States, for example, movie sales in theaters and as DVDs and videos exceeded the overall sales of steel. Intellectual property is now an asset with independent value that can be bartered, sold or battled over. Large companies have always accused their rivals of capitalizing on their ideas, of course. But now companies with more patents than actual products and a few bloodthirsty lawyers on the payroll have no reason to strike partnerships; they are out to win lawsuits. And the biggest companies with the most products that conceivably trample the most patents are sitting ducks. Last year, for example, Microsoft was ordered to pay $520 million for violating the patent of one employee firm, Eolas, which claimed to own the way users could get videos or songs inside a Web browser (Microsoft is appealing).
This is where Intellectual Ventures steps in. It is buying patents from all corners of the high-tech world, including those that could pose legal threats to its powerful investors. An Intellectual Ventures e-mail sent to law and consulting firms last year, and obtained by NEWSWEEK, says the company is "interested in purchasing patents and applications in the areas of software, e-commerce, communications, semiconductors, consumer electronics and computer architecture--basically, just about anything that deals with bits." By buying all these patents, Intellectual Ventures ensures they cannot be used against its investors by gadflies like Eolas.
The dino's ferociously bared teeth hint at elements of Intellectual Ventures' bold business plan. Myhrvold and his partner, former Microsoft chief software architect Edward Jung, have created the quintessential company for the 21st century. It doesn't actually make anything: it outsources, offshores and offloads nearly every task performed by regular corporations. It has no factories, machine shops or marketing teams. Only patent attorneys populate the quiet hallways. The five-year-old firm's plan is to create or buy new ideas, accumulate patents--exclusive rights to use the inventions--and rent those ideas to companies that need them to do the gritty work of producing real products. Because today's businesses are constrained by their need to make money, Myhrvold says, "it is irresponsible for them to think wildly outside the box." He wants to fill that innovation gap--"We are thinking wilder, crazier thoughts than anyone else."
To generate patentable ideas, Intellectual Ventures hired a dozen top scientists as part-time consultants to participate in several all-day gabfests each month, which the company calls "invention sessions." Lawyers transcribe the discussions, which can range from biotech to nanotech to solid-state physics, and follow up on the most promising ideas with patent applications. One participant, Dr. Leroy Hood of the Institute for Systems Biology in Seattle, says: "We are thinking about how you can solve problems that have never been solved before." Since the company has been holding sessions for only a year, it has likely produced about a hundred ideas whose patent applications won't be processed--or start earning any money--for at least three years.
But spinning new ideas is only a small part of the plan. Sources familiar with Myhrvold's strategy say that he has raised $350 million from some of the largest companies in high tech: Microsoft, Intel, Sony, Nokia and Apple. Google and eBay also recently invested. With this large bankroll, the company is out buying existing patents in droves. (Myhrvold won't comment on these activities, but sources say he has already purchased about 1,000 patents.) The strategy is to set up a sort of patent marketplace. Patent owners get money upfront for the dusty ideas sitting on their shelves, the investors get the rights to use the ideas without being sued and Myhrvold gets to rent those same ideas to other companies that need them to continue creating products. Intellectual-property experts say his plan is audacious and unprecedented, customized for a new, rapidly dawning business environment.
In this new world, intellectual property is every company's most prized possession--and biggest vulnerability. It has al--ready become America's No. 1 product and export: last year in the United States, for example, movie sales in theaters and as DVDs and videos exceeded the overall sales of steel. Intellectual property is now an asset with independent value that can be bartered, sold or battled over. Large companies have always accused their rivals of capitalizing on their ideas, of course. But now companies with more patents than actual products and a few bloodthirsty lawyers on the payroll have no reason to strike partnerships; they are out to win lawsuits. And the biggest companies with the most products that conceivably trample the most patents are sitting ducks. Last year, for example, Microsoft was ordered to pay $520 million for violating the patent of one employee firm, Eolas, which claimed to own the way users could get videos or songs inside a Web browser (Microsoft is appealing).
This is where Intellectual Ventures steps in. It is buying patents from all corners of the high-tech world, including those that could pose legal threats to its powerful investors. An Intellectual Ventures e-mail sent to law and consulting firms last year, and obtained by NEWSWEEK, says the company is "interested in purchasing patents and applications in the areas of software, e-commerce, communications, semiconductors, consumer electronics and computer architecture--basically, just about anything that deals with bits." By buying all these patents, Intellectual Ventures ensures they cannot be used against its investors by gadflies like Eolas.
But Myhrvold also intends to make money for his backers, not just to protect them. This is where the critics start to get anxious. "We're concerned that these giant pools of patent rights are going to prevent entrepreneurs from entering markets, as opposed to being used to promote innovation," says one worried Silicon Valleyventure capitalist. But Intellectual Ventures could do many things, observers say. It could demand licensing fees from its investors' rivals, companies like Yahoo and Amazon. It could also corner the market in a new technology, like a speedier silicon processor, and charge microchip makers a tithe to use it. Or Myhrvold could change directions altogether and start building actual companies around the best ideas.
Myhrvold and Jung won't exactly say. But they charge that Silicon Valley companies have stolen other people's inventions for too long while slashing their own R&D budgets. Referring to Intellectual Ventures' portfolio of patents as his own, he says, "If giant corporations are making billions of dollars off my ideas, I want something for it, and I don't think there is anything wrong with that." He expects his business plan will draw controversy, but notes, "Everything new in life is opposed by somebody." He also cites as a model the electronics companies that pool their DVD patents. Manufacturers that want to make DVD players now have to pay these consortiums small fees for the rights. Yet even with this tech tax, the cost of players has dropped sharply during the DVD boom.
Where is all this headed? Myhrvold reflects on his early days at Microsoft when he was criticized for selling pure software, a collection of ethereal bits unattached to something tangible like computer hardware. Today, this "ethereal" industry is one of America's largest, and Myhrvold repeats almost as a mantra, "Intellectual property is the next software." In other words, he expects a whole new industry of firms like Intellectual Ventures that deal only in the currency of ideas. He is so sure of it, he has even adopted a new hobby: studying for the patent bar exam.
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Failure Is an Option
What do you do when what you need to know hasn't been thought of yet?
Newsweek Web Exclusive
Jul 13, 2008 | Updated: 11:55 a.m. ET Jul 12, 2008
If there is a marketplace of ideas, Edward Jung and Nathan Myhrvold want to profit by it. The two Microsoft alumni formed Seattle-based Intellectual Ventures in 2000 to be the go-to place for creative thinking. Instead of developing new products, Intellectual Ventures has developed a portfolio of inventions, or "invention capital" as they call it, which the firm has patented and licenses to other companies. Jung, currently the chief technology officer, spoke last week from his office in Seattle with NEWSWEEK's Andrew Bast about what makes ideas valuable and why success often means putting up with failure. Excerpts:
NEWSWEEK: Can we start with the seemingly most obvious but probably most perplexing question: What is an idea?
Edward Jung: We think of an idea as an action that causes a reaction, and that reaction creates products of value. I'll give two examples. If you made a diagnostic device that could give you early treatment of cancer, there is some very definite value: extended lifetimes, economic value, products that you could put on the shelf, and so on. But then there are other ideas like pandemic control that would clearly create a lot of value for society and people in general, but it is a little hard to figure out how you would charge for it. That is one of the things that would differentiate pure ideas from extremely applied ideas. Once you have an idea like solving pandemics, though, sometimes someone will figure out how to create economics around that, even though nobody knows how to do it today.
What, then, is a good idea?At the heart of it, Intellectual Ventures is a capitalist company, so to us a good idea is nominated by some notion that it could be reduced to something practical. You could have an idea that is literally quite concrete, like how do you make your cell-phone battery life better. Very practical. But if you go back to the pandemic, that's also a good idea because it benefits society in general. So what we've done internally is divide goodness into many different categories, many time domains and many levels of certainty that we can actually create some economic value out of it. Some of our crazy future ideas are very risky, but because we do it at such a large scale, we can do a few of those as well as ones who are safer, more nearer term and more easily translated into economics. But good also depends on the area of technology you are in. So a good idea in computer science is measured differently than a good idea in life science.
Much of capitalism's genius is its incessant pressure to innovate. To that end, are good ideas losing out because they're not economically viable?
Let's say you're a public company. Your shareholders have a certain time horizon they have been trained to look at, and it is very difficult for your to invest outside of it. So if they are pressuring you for every quarter's results and you fail to meet those results, you're punished and naturally you're not going to be investing further down the chain. If part of your brand is to be very future-looking, however, then your shareholders will have much more patience. What is economic depends on where you've positioned yourself. We have a whole part of what we do that is positioned very far in the future. Because we work on intellectual property and not necessarily on product, by our nature we have investors who tend to be more patient. That allows us to operate in a domain that is further out in terms of its economic value. Other companies do this too. If you're big enough, you can invest a good amount in research.
A company like General Electric, for instance?Or Microsoft, who has a pure research group. It's actually one of the largest research groups in the industry, and that's because they have a lot of money. We can push even further out, because people's expectations aren't that we are going to produce the product, but we are going to produce the infrastructure to allow other people to create products. In that sense, we can expand the definition of what is economic to think about. I think that's valuable.
If you have to take so many leaps, then how do you gauge risk?
Ultimately, it's similar to taking that stack of papers and dropping it off the top of a staircase, right? There's a bit of "who knows?" and reality will eventually tell you. A lot of what we do is roadmaps. We can sit down and think about—and we've done this—with the rising costs of health care and the shift to chronic diseases and the change of demographics in civilized countries and the way socialized medicine is working, really what is going to happen to health care in the next 10 or 20 years? What needs to happen? What will be the economic pressures and therefore where are innovations necessary? We can think about that without the constraint of, "What is our business today?" In that context, ideas have a much purer value. For example, if an idea requires a complete change in the way socialized medicine works, well, OK, that's a pretty risky idea. It has to be a really fantastic idea to change something like that. That context, both what's happening today and the pure form of what needs to be solved allow us to try and assess that risk.
Wouldn't you say that human beings are most innovative when their backs are up against the wall?
This is a matter of opinion, but I think when people's backs are to the wall, that's not when great ideas come up. That's when great ideas get funded. Right now there's a lot of stock thinking about alternative energy, because we feel that our backs are coming up to the wall. That's not the best way to fund innovation, but it shows you that creating the incentive or capital will get more people to develop the ideas. I happen to think that when you find a great inventor, they invent all the time. You can't stop them, in fact. At one of our first invention sessions, the icemaker in the refrigerator broke. Inventors, among other things, seem to need caffeinated beverages, and immediately you had three or four top-notch inventors inventing new icemakers.
On the spot?
On the spot. They said, "The icemaker broke. Oh, hey, why do icemakers work this way? Well, here's a better way to make an icemaker. No, here's another way." And instantly, we had several new icemaker inventions. Now, we can create lots of new inventions and ultimately we can't pursue them all. So we have a process we call triage, and those didn't make it in triage because icemakers weren't as interesting as some of the other problems we were solving. But it goes to show that inventors will invent, if given the opportunity. You don't have to wait until your back is up against the wall.
What kind of education makes the most innovative people?
That's a hard one to answer. It's not the educational background as much as it's the personality that develops and much of that comes from the context in which they were raised and obviously some is genetics. It is interesting that we're operating globally now and you tend to see more flexible inventors—big idea inventors—coming out of the U.S. instead of a lot of other countries.
Why is that?Among the countries we operate in, by many metrics the U.S. actually has the worst education system. Why is it that we kind of have the worst education system but the best innovation track record? It's because, I believe, culturally we have a lot of people who have no fear of failure. The beauty, not of our education system, but of our culture, is that we will rebound from failure. Once I talked to a huge multinational company in Asia. When the CEO walks down the hall, everyone stands up and bows. I gave a talk about how many failures I had in starting new groups at Microsoft. At the end, I put a timeline down of my failures and I turned to the chairman of the company and all of his CEOs and said, "If I was at your company, when would you have fired me?" He pointed at the timeline and said, "Frankly, probably in your first year." I told him that if that were the case, I probably wouldn't have lasted long enough to create things of real value that I did at Microsoft, then, would I? Ultimately, most common among the great inventors we work with is that they have no fear of failure, no respect for the boundaries of their education, yet they are self-aware enough to take input from others.
Is technological innovation different from innovations in politics? Or can Karl Marx and John Adams readily be compared to Albert Einstein and Thomas Edison?
I have a different way of categorizing political and technical ideas. I actually think those guys came up with what we would call today great business-model ideas. They're not necessarily all about capital, but they have to do with how to organize people or processes to accomplish a goal. So I don't differentiate political ideas from others. I do however divide ideas into ones that are potentially win-win versus those that are more zero-sum. In general, because technology fuels economic growth, there are a higher proportion of technology ideas that are win-win than political ideas. To the extent that you end up with a political idea like capitalism that creates a lot of growth, maybe there is a win-win there, though a lot of people argue that there are a lot of losers in capitalism. Look at the pandemic example I gave earlier. There is a huge social component there. It's not just technology.
NEWSWEEK: Can we start with the seemingly most obvious but probably most perplexing question: What is an idea?
Edward Jung: We think of an idea as an action that causes a reaction, and that reaction creates products of value. I'll give two examples. If you made a diagnostic device that could give you early treatment of cancer, there is some very definite value: extended lifetimes, economic value, products that you could put on the shelf, and so on. But then there are other ideas like pandemic control that would clearly create a lot of value for society and people in general, but it is a little hard to figure out how you would charge for it. That is one of the things that would differentiate pure ideas from extremely applied ideas. Once you have an idea like solving pandemics, though, sometimes someone will figure out how to create economics around that, even though nobody knows how to do it today.
What, then, is a good idea?At the heart of it, Intellectual Ventures is a capitalist company, so to us a good idea is nominated by some notion that it could be reduced to something practical. You could have an idea that is literally quite concrete, like how do you make your cell-phone battery life better. Very practical. But if you go back to the pandemic, that's also a good idea because it benefits society in general. So what we've done internally is divide goodness into many different categories, many time domains and many levels of certainty that we can actually create some economic value out of it. Some of our crazy future ideas are very risky, but because we do it at such a large scale, we can do a few of those as well as ones who are safer, more nearer term and more easily translated into economics. But good also depends on the area of technology you are in. So a good idea in computer science is measured differently than a good idea in life science.
Much of capitalism's genius is its incessant pressure to innovate. To that end, are good ideas losing out because they're not economically viable?
Let's say you're a public company. Your shareholders have a certain time horizon they have been trained to look at, and it is very difficult for your to invest outside of it. So if they are pressuring you for every quarter's results and you fail to meet those results, you're punished and naturally you're not going to be investing further down the chain. If part of your brand is to be very future-looking, however, then your shareholders will have much more patience. What is economic depends on where you've positioned yourself. We have a whole part of what we do that is positioned very far in the future. Because we work on intellectual property and not necessarily on product, by our nature we have investors who tend to be more patient. That allows us to operate in a domain that is further out in terms of its economic value. Other companies do this too. If you're big enough, you can invest a good amount in research.
A company like General Electric, for instance?Or Microsoft, who has a pure research group. It's actually one of the largest research groups in the industry, and that's because they have a lot of money. We can push even further out, because people's expectations aren't that we are going to produce the product, but we are going to produce the infrastructure to allow other people to create products. In that sense, we can expand the definition of what is economic to think about. I think that's valuable.
If you have to take so many leaps, then how do you gauge risk?
Ultimately, it's similar to taking that stack of papers and dropping it off the top of a staircase, right? There's a bit of "who knows?" and reality will eventually tell you. A lot of what we do is roadmaps. We can sit down and think about—and we've done this—with the rising costs of health care and the shift to chronic diseases and the change of demographics in civilized countries and the way socialized medicine is working, really what is going to happen to health care in the next 10 or 20 years? What needs to happen? What will be the economic pressures and therefore where are innovations necessary? We can think about that without the constraint of, "What is our business today?" In that context, ideas have a much purer value. For example, if an idea requires a complete change in the way socialized medicine works, well, OK, that's a pretty risky idea. It has to be a really fantastic idea to change something like that. That context, both what's happening today and the pure form of what needs to be solved allow us to try and assess that risk.
Wouldn't you say that human beings are most innovative when their backs are up against the wall?
This is a matter of opinion, but I think when people's backs are to the wall, that's not when great ideas come up. That's when great ideas get funded. Right now there's a lot of stock thinking about alternative energy, because we feel that our backs are coming up to the wall. That's not the best way to fund innovation, but it shows you that creating the incentive or capital will get more people to develop the ideas. I happen to think that when you find a great inventor, they invent all the time. You can't stop them, in fact. At one of our first invention sessions, the icemaker in the refrigerator broke. Inventors, among other things, seem to need caffeinated beverages, and immediately you had three or four top-notch inventors inventing new icemakers.
On the spot?
On the spot. They said, "The icemaker broke. Oh, hey, why do icemakers work this way? Well, here's a better way to make an icemaker. No, here's another way." And instantly, we had several new icemaker inventions. Now, we can create lots of new inventions and ultimately we can't pursue them all. So we have a process we call triage, and those didn't make it in triage because icemakers weren't as interesting as some of the other problems we were solving. But it goes to show that inventors will invent, if given the opportunity. You don't have to wait until your back is up against the wall.
What kind of education makes the most innovative people?
That's a hard one to answer. It's not the educational background as much as it's the personality that develops and much of that comes from the context in which they were raised and obviously some is genetics. It is interesting that we're operating globally now and you tend to see more flexible inventors—big idea inventors—coming out of the U.S. instead of a lot of other countries.
Why is that?Among the countries we operate in, by many metrics the U.S. actually has the worst education system. Why is it that we kind of have the worst education system but the best innovation track record? It's because, I believe, culturally we have a lot of people who have no fear of failure. The beauty, not of our education system, but of our culture, is that we will rebound from failure. Once I talked to a huge multinational company in Asia. When the CEO walks down the hall, everyone stands up and bows. I gave a talk about how many failures I had in starting new groups at Microsoft. At the end, I put a timeline down of my failures and I turned to the chairman of the company and all of his CEOs and said, "If I was at your company, when would you have fired me?" He pointed at the timeline and said, "Frankly, probably in your first year." I told him that if that were the case, I probably wouldn't have lasted long enough to create things of real value that I did at Microsoft, then, would I? Ultimately, most common among the great inventors we work with is that they have no fear of failure, no respect for the boundaries of their education, yet they are self-aware enough to take input from others.
Is technological innovation different from innovations in politics? Or can Karl Marx and John Adams readily be compared to Albert Einstein and Thomas Edison?
I have a different way of categorizing political and technical ideas. I actually think those guys came up with what we would call today great business-model ideas. They're not necessarily all about capital, but they have to do with how to organize people or processes to accomplish a goal. So I don't differentiate political ideas from others. I do however divide ideas into ones that are potentially win-win versus those that are more zero-sum. In general, because technology fuels economic growth, there are a higher proportion of technology ideas that are win-win than political ideas. To the extent that you end up with a political idea like capitalism that creates a lot of growth, maybe there is a win-win there, though a lot of people argue that there are a lot of losers in capitalism. Look at the pandemic example I gave earlier. There is a huge social component there. It's not just technology.
URL: http://www.newsweek.com/id/145772
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