Last week when we wrote about the power of innovation to both develop new technologies and transform existing ones, we described a brand-new technology for making ethanol. Along those same lines, this week we bring you an example out of North Dakota of how everything old in the oil industry is new again.

North Dakota’s Bakken Formation was identified as an oil-rich site more than 50 years ago, but in the decades since has also been largely dismissed as an example of unreachable oil. The site’s recoverable reserves were believed to be much smaller than the total amount of oil in the shale, because so much of it was trapped in rock.

Fast forward to this year, and there’s a bit of a drilling boom in and around Bakken. The Wall Street Journal recently reported that “technological improvements in the past two years have taken what was once a small, marginally profitable field and turned it into one of the fastest-growing oil producing areas in the country.”

That’s right: An oil boom in Fargo country. Thanks to surging production in the Bakken Formation, North Dakota is now the country’s fourth-largest oil producer, after Alaska, Texas and California. North Dakota’s rig count is now the highest it has been in three decades.

The recent success of the Bakken Formation does not reflect erroneous initial estimates, but rather a steady improvement in the technology used to produce oil in shale. Horizontal drilling lets producers vastly improve yields from a single well so that they can save the cost and the environmental impact of drilling multiple holes. In recent years, this technology has been steadily refined. Even before the recent boom in North Dakota, geologists had started to recognize that the site showed significant promise. Two years ago, the U.S. Geological Survey issued a statement estimating that the recoverable oil in the Bakken Formation was 25 times greater than what was believed in 1995.

And as much as this turnaround has been a boom to North Dakota, creating jobs and even construction of a rail line to transport the oil, it is not an isolated story. Some experts believe the Bakken Formation stretches to Montana and southern Canada. They also say that there are similar formations in many other states from California to Colorado and Texas.

The term “game changer” gets thrown around a lot these days, but the story of Bakken goes to show that there are real game changing discoveries and innovations out there in the mature, but still vibrant oil industry.

When considering the nation’s daunting energy challenges, it’s always a good idea to keep in mind the power of innovation. This applies to game-changing technologies as well as new and improved ways of working in established industries: it’s both making fuel out of cow manure, and advancing deepwater drilling technology to unlock oil that was once considered unreachable.

Qteros, a small company based in Marlboro, Massachusetts, is just one of many examples of this sort of innovation. Today, the company is building a power plant that will create ethanol in a revolutionary, and highly efficient way. Not long ago, Qteros was nothing more than a lone microbe living in the ground of western Massachusetts, awaiting discovery.

That discovery was made by a local professor who was studying the biodiversity in the region, removing dirt from the forest floor, taking it to a lab and isolating its different components. One of those compounds, which was later named the “Q-Microbe,” showed an uncanny ability to digest plant matter and yield ethanol. Scientists who worked with this microbe described it as something of a plant eater.

Since cellulose – the stuff that plants are made of – is notoriously hard to break down, it has traditionally been difficult to produce ethanol in a cost-effective way. But the highly efficient way this Q-Microbe works creates new possibilities for making large volumes of ethanol from all sorts of plant matter, not just corn.

The company, in other words, has the power to upset the existing economics of ethanol production in a way that could produce a lot more for a lot less money. The fact that it’s based on a naturally occurring compound, offers a sense of all of the other potentially transformative substances that already exist in nature.

A final twist: This discovery that it is possible to break down plant cellulose more efficiently has set off a search for other so-called plant eaters. One of the recent contenders to be studied is the termite, which for all the destruction it leaves in its path seems to have a powerful bacteria in its gut that lets it digest wood. Talk about thinking outside of the box: How about eating your way out of the box?

We’ll be highlighting different examples of innovation in the coming weeks. Please be sure to tell us your thoughts on the most innovative moves in energy.

Last week we had the fortunate timing of blogging about the value of good home insulation on the same day that President Obama renewed his emphasis on this important but often overlooked energy saving measure when he called on Congress to pass a law that would give rebates to consumers who invested in insulation or other efficient energy equipment.

The announcement came with one of the most memorable sound bytes of the Obama Presidency to date: “It’s hard to import windows from China,” the President said, touting the benefits of the rebates in not just saving consumers on their energy bills but also creating jobs here at home.

Unfortunately, it was not just a sound byte, but also an opening for critics to take a look at our national energy policy and ask just how well it has worked to create domestic jobs in the energy sector. While we applaud any program that will boost domestic production of windows, water heaters and the like, we have to wonder if HomeStar is a bit of a red herring, used to distract attention from all the other areas of the energy sector where business is moving overseas.

Consider:

–Wind turbines. As the U.S. derives growing amounts of its power supply from wind, a disturbingly large number of the wind turbines we use are made in China. A large portion of stimulus funds from last year’s Recovery Act have gone toward building wind farms, but investigations have found the vast majority of wind turbines are made in China.

–Solar panels. The New York Times reports that one single Chinese solar panel maker captured nearly a third of the California market last year, while collectively, Chinese solar panel makers more than doubled their share of the California market over the course of 2009. As the American solar business grew, so too grew China’s stake in it.

–Oil. America’s dependence on foreign oil – in 2008 we imported 57% of all the petroleum we consumed — is a longstanding problem, that is arguably so entrenched that it would take a long time to reverse, even with the best intentions. But even judging on the basis of good intentions, there has been little action to support the domestic oil industry. Over the past year, CEA has tracked a pattern of roadblocks, red tape and unnecessary delays that have blocked some promising and environmentally responsible drilling and exploration projects from getting off the ground. Fewer acres were leased for on- and offshore drilling last year than in any previous year.

Oh, and let’s not forget —

–Windows. This little exercise got us curious about the claim that it’s hard to import windows from China. We’re not yet sure if windows are a major export for China, but it wasn’t hard to find some Chinese windows available for export. It should come as no surprise that a global exporter as large as China would find a way to safely export breakable glass. As long as we here in the U.S. discuss the very serious matter of international trade on such a simplistic level (“of course, you wouldn’t ship glass all the way from China”) we’re bound to adopt feel-good policies over those that really make a difference.

By David Holt, President of Consumer Energy Alliance

Higher energy costs lead to higher utility and gasoline prices for consumers.  Enacting a national Low-Carbon Fuel Standard (LCFS) will divert affordable, previously U.S-bound energy supplies from Canada to our competitors, reduce access to critical energy products such as diesel and home heating fuel, and increase prices at the pump – all without doing a thing to reduce global greenhouse gas emissions.  In fact, greenhouse gas emissions will increase as we turn our back on North American sourced oil and begin importing increasing amounts of energy from other continents via long ocean voyages.  We won’t use less energy because there is a LCFS; we’ll just obtain it elsewhere.

These conclusions are well documented.  Please download the PowerPoint on LCFS presented by one of the top energy policy analysts at the U.S. Department of Energy at a transportation conference last summer – and be sure to take a look at slides 16 and 17. You might also scan an LCFS study published in the American Economic Journal by professors from North Carolina and California. According to their research, an “LCFS cannot be efficient…,” and,  “…contrary to the stated purpose, an LCFS can actually raise carbon emissions.”

Since it was founded in early 2006, Consumer Energy Alliance has worked to promote policies that ensure an adequate supply of energy.  CEA is not opposed to using cleaner, more environmentally-friendly sources of energy and has embraced a “we need it all approach.”  In light of this mission, we were surprised at the recent statement from Natural Recources Defense Council (NRDC) lawyer, Liz Barratt-Brown, who asserted in an environmental advocacy blog that CEA’s opposition to the LCFS must mean that our organization is “against shifting to cleaner fuels”.   She alleged that CEA uses “deception” to represent ourselves.

While conducting its research project on CEA, it appears NRDC missed a recent post on our blog hailing the administration’s commitment to energy conservation programs, especially its efforts to promote and sustain a robust plan for home weatherization and re-insulation.  NRDC also missed CEA’s press release applauding the mayor of Houston for getting an important solar energy project across the finish line in that great city. And it must have missed CEA’s many public statements in support of wind power where  more needs to be done, and done now, to cut through the red tape and bring more of these installations online in parts of the country where wind generated electricity is both needed and efficient.

It’s true that CEA counts producers of conventional energy sources among its coalition, after all we are the Consumer Energy Alliance; a complete listing of our affiliates has always been available online. In her NRDC blog, Ms Barratt-Brown  finds it convenient to characterize our organization as an assemblage of “Big Oil” interests.  Were her blog even handed, it would note that we represent an even larger number of energy consumers: a full 60 percent of our affiliates are energy consumers.  While these consuming groups don’t see eye-to-eye with the producing groups on every issue all of them embrace and support CEA’s broad mission to advance a national energy policy that encourages us to conserve what we have, allows us to safely produce what we need, and invests in the kind of technology we believe will be critical in creating jobs, revenue and opportunity in the future.

It’s a big effort, to be sure, but it is one supported by a larger and more diverse group of interests than NRDC may realize. Among our more than 130 member companies, we’re proud to work with steel manufacturers, plumbing and heating contractors, community and neighborhood organizations, seafood producers, biodiesel producers, fertilizer groups, truckers, airlines, tourism officials, and many, many others. But the backbone of our organization isn’t found there. It’s made up of the more than 265,000 everyday Americans who have signed up over the years to support our cause, men and women who believe in a balanced, sensible energy strategy for this country, and understand the relationship between such a strategy and the creation of jobs, security and affordable energy.

Yes, we disagree with NRDC on some issues.  However, there is reason to believe that we agree on a number of other matters.  We know that NRDC is not anti-consumer just as we are not anti-environment.

I’m delighted to continue a dialogue in the future, and I’m also hopeful that we can dispense with the personal attacks and schoolyard insults, and get down to the serious business of crafting commonsense energy solutions for the American people.

The series of storms that slammed the east coast in recent weeks were staggering, not just for the volume of snow they dumped, but for the number of homes that lost power. Millions of homes suffered power outages, which in many cases lasted for several days or longer. Snowed-in residents often had nowhere to go and faced a surprising test of survival involving lots of layers, cold sandwiches, and for some of the more fortunate, good home insulation.

While most people wouldn’t choose to spend a week in February with no heat, we’ve heard from a number of folks who had reinsulated their homes – or built them to be energy efficient in the first place – that that they made it through some lengthy outages in reasonable comfort. Even a week without heat, they say, wasn’t so bad. Homes that are well insulated can maintain their temperature for much longer, even if the heat goes off. Residents can remain reasonably comfortable for days.

Now, it could be a century or more before the country again sees a winter like this one. But that is no reason to dismiss the important topic of home insulation. Investing to make a home or other building more energy efficient is often the most practical way to conserve energy. Yet too often, it is overlooked in favor of costlier solutions that are not always practical for individual homeowners.

This story bemoans that home insulation is just not as sexy as things like solar and wind power:

There are celebrity sized tax credits and other incentives to encourage people who can afford the upfront costs of solar and geothermal to install them, but the bonuses for increasing the insulation of one’s current home – something within the reach of most working Americans – are paltry by comparison.

Yet if you put down the cash to install any of those fancy green options, without a properly insulated house, it’s like putting a Prius engine in a car with four flat tires.

Remember HomeStar? The proposal that was floated last year to give homeowners incentives to improve their energy efficiency was widely ridiculed with the name Cash for Caulkers. Yet, for all the up-and-coming alternative sources of energy, basic insulation is still considered one of the low-hanging fruits of energy conservation.

Among the many lessons that the blizzards of 2010 have offered us is the fact that we all take our power for granted and that even in a world full of technology designed to make our lives easier, we may still on occasion have to turn to our own survival instincts. Home insulation is hardly a new concept, but it seems we continue to overlook its value.

This week as Congress debates a $15 billion jobs bill aimed at getting more than 15 million unemployed Americans back to work, there is this story out of Janesville, Wisconsin: an autoworker was so desperate to hold onto his job that he followed it when it moved to another state 500 miles away.

Desperate times do indeed call for desperate measures, and after two straight years of jobs loss, many people can think of worse things than a 1000-mile-per-week commute that, after hours on the road, leads to a paycheck.

You have to applaud Congress for its attention to the very severe jobs crisis the country faces. But any reasonable person also has to wonder if there isn’t an easier way.

The Heritage Foundation made the same point earlier this month when it outlined research showing how increasing domestic oil production by two million barrels per day could create 270,000 jobs.

The best thing about these jobs is that they would be easy to find. Ever since July of 2008, when then-President Bush lifted a 10-year-ban on offshore drilling, there has been pent-up demand from Florida to California, Texas and even Virginia to begin exploratory drilling in the nation’s outer continental shelf.

It’s going on two years since that historic milestone, which might have created more of the well-paying jobs we need. And yet, we’re all still waiting. That’s because there seems to be a de-facto ban in place, with layers of red tape, despite an overwhelming show of support by the American public in favor of increasing the responsible production of domestic oil and gas.

Now, given the history of energy in our country, it’s reasonable to assume that oil, gas, nuclear power and even windmills will all be the topics of debate for years to come. And that’s probably fine – to a point. Vigorous public debates can help us refine our policies so that they better address a broad range of interests.

But when you reach a point where the public “discussion” is so heated that it chokes off all action, the debate is no longer serving anyone. And, at a time when lawmakers are talking about spending billions of dollars to put people back to work, it seems irresponsible to disregard the strategies that would create thousands, perhaps hundreds of thousands of jobs, without costing the government a penny.

Today more and more states are revisiting drilling projects in coastal waters. For the first time in years, California, one of the most oil-rich states in the nation, is considering ways to allow more offshore drilling. But it took a severe state budget crisis to get it to that point, and strong opposition remains. Sentiment also appears to be shifting in Florida, where even some of the tourist groups that were once the staunchest opponents to offshore drilling have come to recognize that you can’t have a strong tourism industry without a strong economic base.

These are promising signs to be sure, but without decisive support and follow through, they will remain just that: unfulfilled promises.

In Virginia, lawmakers are close to passing a law that would allocate revenues from offshore drilling projects for roads in the state. Yet, the drilling itself has not yet commenced and could face delays for years. Even Alaska’s oil industry, long a strong and steady source of domestic oil, faces an uncertain future thanks to red tape.

Irresponsible behavior, or just madness? At a time desperate job seekers are being forced to drive thousands of miles to find work, this ongoing resistance to increased domestic oil and gas production seems to be a little bit of both.

The Wall Street Journal this week issued a kind of report card on all the different sources of alternative energy, where they stand and how much they are growing. One of the most interesting details was that the growth of the wind power sector will depend largely on where that wind comes from. Wind produced offshore is usually preferential to wind coming from a dusty plain in the middle of nowhere. Offshore wind would be generated close to large coastal population centers and would require less costly transmission.

This is the sort of assessment you start to hear once a power source is ready for Phase Two. Wind power has made enormous strides in recent years, both in terms of public acceptance and improved technology. U.S. wind power capacity surged 39% last year alone. The more sobering data point is that it still accounts for just 2% of total power generation in the country. If wind power producers want to increase that portion significantly, they need to start thinking strategically about how and where they build power plants.

This helps to explain why the long-contested Cape Wind project near Martha’s Vineyard, Massachusetts is so vital to the industry’s future. If — over the many objections from coastal property owners to fishermen to the Audubon Society — the project goes through, it would be the largest offshore wind power in the country, potentially offering a whole new paradigm of the power of wind.

But in the meantime, it is the power plants built on land that are generating the most investor interest.

Of course, this isn’t really logical – why a wind farm in remote West Texas would be embraced, while one near a major metropolitan area would be blocked for more than a decade. But if we continue to bow to special interests and let them dictate where these new power plants reside, we could very well be forfeiting the industry’s future promise to be anything more than a niche player. Already, the U.S. is quite far behind: its total wind power capacity ranks fifth worldwide on a per capita basis, behind China.

Once upon a time, when wind was new, any electricity it generated was viewed as a net gain. But those days are gone and the stakes are now much higher.