Posted on 07/20/2004 9:27:15 AM PDT by Baby Bear
AMID continuing violence in the Middle East, the issue of energy security is again on the front burner. With oil prices rising to a peak of US$40 (S$68) a barrel, countries have been looking at alternative energy with a greater urgency. This heightened sense of urgency, fortunately, has come at a time when there is evidence that a new approach using existing resources and technology can provide alternative energy to many countries.
A glimmer of good news recently appeared: China signed an agreement with Sasol, a South African energy and chemicals firm, to build two coal-to-liquid fuel plants in China. These plants, costing US$3 billion each, are reported by the Financial Times to jointly produce 60 million tonnes of liquid fuel (440 million barrels) a year. Since China imported 100 million tonnes of oil last year, these plants would give China much control over its domestic energy situation, though its demand is growing fast.
The raw material and capital costs of a barrel of fuel would fall under US$10 and other costs would not bring total costs over US$15.
Coal resources of one trillion tonnes are widely distributed around the world. Many countries, including China, India, Russia, Ukraine, Germany, Poland, South Africa, the United States and Australia have extensive coal deposits that would last 100 years or more at current rates of exploitation. But coal is a highly polluting fuel when burned directly and also emits a lot of global-warming carbon dioxide.
The Sasol technology, a third-generation Fischer-Tropsch process, was developed in Germany and used in World War II, and later in South Africa. (Steam and oxygen are passed over coke at high temperatures and pressures; hydrogen and carbon monoxide are produced and then reassembled into liquid fuels.)
It has long been too expensive to compete with standard crude oil. On the plus side, sulphur and other pollutants such as ash and mercury are removed - the sulphur can be sold as a by-product - and carbon dioxide is segregated and can be injected underground. If hydrogen is needed for fuel cells, these plants can also provide it. In the near term, the petrol and diesel produced are high grade and clean, meeting even future 'clean diesel' requirements of the United States.
The real question is if these plants can be built and reliably produce fuels for less than US$20 a barrel. Sasol already produces 150,000 barrels a day from coal. (Conversion from natural gas is cheaper and Sasol is in the process of switching its feedstock to gas in South Africa.) Each of the Chinese plants would be four times as large as the existing Sasol plant, and scaling up can involve difficulties. If Sasol can make these larger plants work at the publicised costs, this technology could be used by many other nations - rich and poor - who are willing to forego periods of very cheap oil for more security. (Indeed, even oil-producing Indonesia is looking into a coal-to-liquids plant as it now imports oil.)
This technology also works in converting coal to natural gas at a cost of US$3 to US$3.50 per million BTUs (British thermal units). Since current natural-gas prices in the US are roughly double that, it would appear that coal-to-gas is also an economically viable technology.
The coal-to-liquid technology would compete with the evolving tar-sands technology being expanded in Canada. This technology involves the production, either by mining or extracting with steam, of heavy oil trapped in sand. The heavy oil is then massaged into more valuable fuels. This source already accounts for a quarter of Canada's 3.2 million barrels per day output. It requires natural gas to heat the tar and is energy intensive, but still has production costs of under US$20 a barrel.
Tar-sand reserves are estimated at over 250 billion barrels. These and similar technologies would allow much more plentiful isolated natural-gas reserves, coal and tar sand to be converted into liquid fuels. The long-predicted decline in petroleum production could be delayed for decades or more, and the geopolitics of energy would be rewritten at something close to or below current crude-oil costs.
Is there a downside to rapidly adopting these technologies? Yes, from a global welfare perspective. Now, onshore oil-production costs are usually under US$5 a barrel. If prices are higher, somebody (the country owning the oil or the company producing it) gets the difference between the price and the cost. If we switch to US$15-$20 costs from these other technologies, then there is no surplus of price over cost, or a much smaller one. To use an economic phrase, the 'rent' on oil production is destroyed in a quest for self-sufficiency.
While true, the instability in oil prices - as well as the threat of terrorist disruptions to supply - are such that many nations might be happy to use their own resources to produce this vital input. They are no worse off if oil can be produced at US$20 a barrel, unless the price temporarily plunges below that level as it did in the late 1990s. A stable price and supply prevents very expensive disruptions.
None of this answers critics who are properly concerned with global warming. Subsidies to hybrid or other highly efficient vehicles are probably needed to reduce emissions. In the longer term, fuel cells burning hydrogen and producing only water as a waste product are promising, but still far from being economically feasible.
Overall, the coal-to-liquid technology is only one element of an integrated programme that is needed to deal with fuel security, local pollution and global-warming issues. But, even alone, it could bring an element of stability to world oil prices and thus also to the global economy. In addition, if it redirects efforts from geopolitical competition and even conflict to investment and efficiency, it is a welcome development.
The writer is an associate professor of economics at Tufts University. Rights: YaleGlobal Online, www.yaleglobal.yale.edu
I prefer the Corn-to-Liquid solution.
Moonshine??
Since oil is a fungible good, if this process is as cheap as is claimed, we will benefit from it even if nobody in the US does a thing about it. Other countries that produce oil from coal will import less oil or be able to export more, lowering the price for us as their demand goes down. So, objections in the US really don't matter. The only question is cost, this process has a long and successful track record. I think it is very promising.
Good Point. Is anyone out there working on a catfish/lobsterfication process?
Fortunately, if China diminishes its oil imports, that decreases worldwide demand for oil and lowers our oil price anyway.
The plant is profitable and he is in charge of the secondary products that also result. Ammonia from the stack gas is sold to fertilizer plants and CO2 s piped to Canadian oil fields for secondary recovery of oil, (pump gas into ground pump oil out.)
Coal to oil is more expensive. Oil has been cheap. Peak Easy says we will not run out of oil but that it will get more expensive. 4X
All these alternatives are more expensive. It is too late.
I'm furiously working on a solution to convert ordinary river gravel into gold, through a process known as "alchemy".
TOPICS News/Current Events Click to Add Topic KEYWORDS CHINA ENERGY Click to Add Keyword ------------------------------------------------------------------------ China plant to convert coal to motor fuel United Press International | 6/19/2002 | Hil Anderson Posted on 6/19/02 9:42 PM Pacific by Jewels1091 LOS ANGELES, June 19 (UPI) -- China's long-standing interest in using its plentiful coal to offset limited petroleum supplies took a step forward this week with the signing of an agreement with an American company for the development of the world's first plant that will convert coal directly into gasoline and diesel fuel. Hydrocarbon Technologies, a Utah subsidiary of Headwaters Incorporated, announced that the $2 billion project with Shenhua Group, China's largest coal company, would eventually produce 50,000 barrels of clean-burning gasoline and diesel fuel per day. "We are excited about the many opportunities created by this landmark agreement with Shenhua Group because we believe direct conversion of coal to liquid fuels is one of the most significant coal innovations in the last 50 years," said Headwaters Chairman Kirk Benson. "The HTI Coal Process is being considered for multiple projects and our technology is in a good position to be selected." According to the U.S. Energy Information Administration, China is both the largest producer and the largest consumer of coal in the world and has been grappling with an oversupply situation caused by world consumption "declining significantly" during the past several years. The Chinese government has addressed the oversupply issue, and the resulting softening of world prices, by closing mines and looking at power plant projects and export opportunities. "China has expressed a strong interest in coal liquefaction technology, and would like to see liquid fuels based on coal substitute for some of its petroleum demand for transportation," the EIA said in a research note. China, which is also a net oil importer, is currently the third-largest consumer of oil in the world and is expected to overtake No. 2 Japan in the coming decade with a projected demand of more than 10 million barrels of oil per day by 2020. The HTI process breaks coal down into small molecules that when enriched with hydrogen, form oil molecules that can be refined into diesel and gasoline fuel. The coal liquification project launched Wednesday will be built 80 miles south of Baotou in Inner Mongolia, close to Shenhua's reserves in the Shengdong Coalfield. The plant will require about 4,300 tons of coal per day when it begins production in 2005. Shenhua, which owns a 15-percent stake in the HTI liquification technology, plans to build two other similar plants in the area. In addition to this initial facility, Shenhua Group, a 15-percent owner of the technology, intends to construct three additional direct coal liquefaction plants in the Shengdong Coalfield of China, which spans Shaanxi Province and Inner Mongolia. HTI President Theo Lee said the project would provide a long-term revenue stream for the company, and would also pay dividends to the United States in the form of a new source of domestic oil. "Shenhua Group has exhibited foresight in utilizing China's vast coal resources to provide the country's future energy needs in an efficient and environmentally safe manner," said Lee. "In addition to providing an export opportunity for United States goods and services, the...HTI Coal Process will provide the United States with a commercially proven clean fuels technology that supports this country's drive toward energy independence."
If the Administration would just start talking up such technologies, OPEC will open the spigots just to try and defeat it.
Corn-to-fuel sounds better, but it can't solve the problem. Yield of either biodiesel or ethanol is about 8 barrels per acre of irrigated land per crop year. This same number is also in the range of every other processable crop. Brazil is the major user of ethanol fuel, using sugar cane as the source for a shrinking 20% of their surface transportation. Fuel ethanol costs twice as much as gasoline there, and provides only 2/3 of the energy per tankful. It works better as a gasoline blend, but it tends to damage gaskets and other rubber parts.
But back to the US. Replacing just 20% of our crude oil consumption with ethanol would require NEW, IRRIGATED land equal to the total area of Texas plus Tennessee. No, you cannot have my front yard.
It's the impurities in the coal that cause the polution, not the coal itself. Coal can be cleaned up, but the more effort that is invested in cleaning it, the higher its cost and the less attractive it is as an energy source.
ANY carbon-based fuel produces carbon dioxide, even his own body.
This guy writes like a naive little 12 year-old. He uses all the PC cliches but has little or no knowlege of thermal processes.
I seem to remember that this was in my HS chem class 30 years ago. A local power plant used to use that technology years earlier.
Simplistic explanation of CO2 production variations between coal and other hydrocarbons -
All hydrocarbon combustion processes react both carbon and hydrogen with O2 to generate energy.
The Carbon reaction creates CO2, the Hydrogen H2O (ideally).
But these fuels vary in their proportions of C and H
Coal - lots of C, little H, so plenty of CO2 per unit energy.
Natural Gas - little C, lots of H, so less CO2 per unit energy.
Liquid hydrocarbon fuels are in between.
My county of birth in NORTH CAROLINA did not raise corn but rather manufactured it
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