So, I was trying to find the “Octane” rating of a CO + H2 mixture (“synthesis gas” or “producer gas” – the stuff from a “gasifier”) as I was pondering making a device to turn “yard waste” into fuel for one of my Diesels. You can ‘fumigate’ high octane fuels into the air intake up to about 75% of full power. Natural gas can be used this way. It doesn’t pre-detonate, then when the Diesel injection happens, that acts like a spark plug to ignite the co-fuel. Low octane fuels (like ‘regular gasoline’) would knock or ping and as you approach a stoichiometric mix the knock tendency rises as well.
It would be “nice” to know if the fuel could be used this way before building a unit… and the “octane” rating would give me the information. But as so often happens, you trip over something else along the way… I still have not found the octane rating for synthesis gas (almost all the links I found contain “octane” as something related to gasoline produced via synthesis gas…), but did find this interesting paper:
http://www.anl.gov/PCS/acsfuel/preprint%20archive/Files/31_2_NEW%20YORK_04-86_0282.pdf
First off, I noticed that the page numbers start at 282 and run to 287. It’s 5 pages from something larger. There is a lot of information out there on fuel synthesis…
Second, it’s from Argonne National Laboratory, a place I’ve not looked at much. This implies they may have more interesting stuff to find… Finally, it is a PDF of what looks like old typewriter font material. This stuff has been around for a while. This implies things ought to have improved since then.
OK, the nub of it:
They talk about some things I’d not seen in more “popular press” type articles. One is the use of liquid phase reactors. Catalyst particles carried in a liquid bed of inert oil (there may be some “typos” in this as the “cut / paste” process was sometimes “creative” in how the software turned shapes into letters…and I may not have caught them all):
Chem Systems, Inc. has developed a liquid phase reactor system to improve the thermal efficiency of methanol production ( 1 ) . This Liquid Phase Methanol process is being further investigated under a cost shared contract in a 5 TPD process development unit (PDU) which is located at La Porte, Texas, on a site owned by the prime contractor Air Products and Chemicals, Inc. The PDU has operated very successfully with a Cu/Zn catalyst powder less than 50 microns in diameter slurried in an inert oil in the reactor through which the synthesis gas is passed. Operating conditions are 5.27 MPa (765 psia) and 25O oC (482 F ) . During its most recent 40-day run (May-June 1985) the PDU operated with a nominal 25 wt. percent catalyst slurry and the catalyst activity declined 0.34 percent per day.
It also talks a bit about the ability to choose between alcohol production and the production of gasoline and Diesel type hydrocarbons. The main point being “selectivity” in the process and catalyst. The original Fischer Tropsch process being rather un-selective leads to a need to crack waxes (or make a lot of candles ;-) along with less ability to control how much is gasoline, Diesel, or propane.
If one makes Methanol first, then the path to gasoline is more directly controllable via a zeolite catalyst named ZSM-5 (the M being for Mobil, I think… I’ve seen Mobil Oil involved with an M5 catalyst before. They used that zeolite catalyst with Methane, i.e. natural gas, in a facility in New Zealand to turn their natural gas production into liquid fuels back in the late ’70s or early ’80s). Zeolites are a kind of mineral / rock material. One kind is commonly found in water softeners, for example. They are a bit tricky to make (as small changes in process result in large changes of what they produce, so there is “black magic” involved in finding the “right” incantation to make any exact zeolite… but once the process is known, you can fairly reliable make batches of each unique mix.)
At any rate, you have one path:
Synthesis gas -> hydrocarbons -> cat cracking -> motor fuels
and a competing path:
Synthesis gas -> methanol -> ZSM-5 -> motor fuels.
Each will have a different set of reaction conditions (such as using copper instead of iron as the catalyst) and each has a different “selectivity” of product. Also, cat crackers are not cheap nor easy to make so you have a cost issue. ( Or a lot of candles…)
I found the discussion of liquid phase / slurry phase reactors interesting too. It mostly speaks to some process issues like the ease of keeping the catalyst fresh, but it was not something I’d thought about much in the context of fuel. An exothermic reaction can be made more efficient if you extract the heat (while keeping the temperature in the best reaction zone), so a liquid phase may also allow more thermal efficiency by better heat extraction; while the article states a better working temperature is possible.
liquid , or slurry phase, reactors are recognized as having a potential to significantly improve thermal efficiency over more traditional reactor designs for highly exothermic reactions.
A number of existing projects are investigating liquid phase reactors, but we need much more data describing the hydrodynamics of such systems under process conditions. Actual operating data are required from a reactor which can be operated in a commercially viable churn turbulent flow regime. Results from research to date are encouraging in processing a lower H2/C0 ratio syngas and producing a flexible product slate. The liquid phase Fischer-Tropsch reactor also operates at a higher, more productive, temperature (260 C-270 C) than is feasible with the Arge or Synthol reactors using the current iron catalyst at Sasol.
But notice that last line. “more productive”…
The other bit that caught my eye was a chart about relative performance. Sasol is making gasoline and Diesel fuels (along with a suite of process chemicals) in South Africa today with their process. The cost of gasoline made this way is about $2.75 / gallon US at present. (Price varies over time as the US Dollar depreciates… at one time it was 70 CENTS per gallon, but that was when oil derived gasoline was 50 CENTS per gallon and going to the movie cost about $2…) At any rate, any process that comes in cheaper than that is something I want to know about.
Unit product cost*, market basis, all liquid output
Case Relative Cost
Sasol (dry Lurgi/Synthol) 1.00
Modified Sasol (BGC Lurgi/Synthol) 0.83
Liquid Phase Fischer-Tropsch (BGC Lurgi/Kolbel) 0.69
Liquid Phase Fischer-Tropsch (BGC/Mobil)** 0.73
* All liquid hydrocarbon fuels valued the same.
** Upgrading of Fischer-Tropsch liquids to marketable fuels
based on ZSM-5 catalyst.
So this is saying that by taking a tour through liquid phase catalysts and ZSM-5 you can get the costs of fuels down to about 73% of the costs using the Sasol process. Assuming (and it is a big assumption, times have moved on…) that SASOL is still using that Sasol process, this implies that one could make gasoline in the USA (where this study took it’s cost basis and coal source data) at about $2 / gallon U.S.
So, we are not doing this because?…
For More Information
An interesting, and short, note about ZSM-5 and how it works / what makes it “special”:
http://chemelab.ucsd.edu/methanol/memos/ZSM-5.html
General FT orientation:
http://en.wikipedia.org/wiki/Fischer–Tropsch_process
If you would like to buy a Lurgi Methanol reactor ‘turn key’:
http://www.lurgi.com/website/fileadmin/pdfs/brochures/Br_MegaMethanol.pdf
There is an online archive of F-T materials:
http://www.fischer-tropsch.org/
That has some interesting stuff. Like this one…
It looks like Fluor has built these for folks:
Even folks at school “get it”. This is a nice paper that has an overview of approaches. It also looks at DME (Di-Methyl-Ether) production as an alternative path to motor fuels and finds it has significant production advantages. Nice color charts of reactor designs too:
http://www.ics.trieste.it/media/139813/df6496.pdf
Ferruccio Trifiro`
Summer School September 2009
Bologna
[…]
Bifunctional metal (Cu, Zn, etc.)-zeolite
catalysts have been developed, which can
convert syngas very selectively to DME
with high carbon monoxide (CO)
conversion (this reaction is far more
favorable thermodynamically than
methanol synthesis from syngas).• Syngas to DME breaks the thermodynamic limit
of syngas to methanol system with up to over 90
percent CO conversion, 5-8 percent investment
savings and 5 percent operational cost savings
So if you are willing to use DME as a motor fuel (and it has been done) then you can get the costs down even more…
IMHO, the path to freedom from OPEC does not run through a multi-$Trillion “20+ year” change of all our vehicles to some other power source (be it hydrogen, electricity, whatever). What I’ve termed the “Fleet Change” problem. The path to energy freedom runs directly through F-T conversions and Zeolites. Feedstock can be any of: Coal, trash (paper, cardboard, animal by-products), wood chips, “yard waste”, biomass (from trees and switchgrass to corn stalks and farmed algae), and any other carbon containing material. The products are gasoline and Diesel that can be run in the exiting fleet and through the existing fuel delivery systems. The costs are lower than OPEC derived fuels and the money would stay in our home country.
Why this is not being done is a really big “Dig Here”…
Musings from the Chiefio 
This is a long way around the horn. Why not make butanol as it is 100 Octane rated, but has 1/14th the volatility of gasoline and is much safer in a crash.
Take a look at my http://SCAF.i8.com or http://FuelFarm.i8.com websites for more on this fuel. I have a new patent on one process that could solve this problem and you can read about it there.
Conservative ideas, science, analysis and humor at The Two Minute Conservative, http://adrianvance.blogspot.com for radio/TV hosts, opinion page people and you. Now on Kindle.
Looking around a bit, I found some price information on “bulk methanol” that places it at about $400 / Ton +/- inluding cost and freight.
http://www.icis.com/v2/chemicals/9076034/methanol/pricing.html
OK, with 2000 lbs / T (American short ton, if it’s really a Metric Ton then these estimates will be “high priced”, that is, conservative, and the arguement is even stronger…) that would be about 5 lbs / dollar. (That’s a bit under a gallon of methanol IIRC 6.6 lbs / gallon)
Even if it takes 10 lbs of Methanol to make one gallon of gasoline, that’s on the order of $2 of “feedstock” costs.
So now I’m wondering just how hard it would be to make a zeolite “methanol to gasoline” reactor and start with the last step of the process… Even if it took $1 / gallon to run the thing ( “Way over the top”, I’m sure…) I’m still about $1 / gallon ahead of the game… (Gas is $4 / gallon in California).
Makes you wanna say “Hmmmm….”
Air Products and Chemicals, Inc has moved from La Porte (where my house is) next door to Pasadena and is still a going concern. Perhaps they merely need someone to remind them of what they once achieved.
Another advantage of slurries is that the catalyst can be replaced without having to take the reactor off-line.
Anyway, wax cracking can be done economically to make very high cetane high quality diesel and jet. The conditions don’t have to be as severe as in a cat cracker. Further, the uncracked material can be recyled almost to extinction.
But don’t knock wax as a final product of value either. A candle will cheaply and reliable provide light whenever it’s needed.
In any case, the hazards associated with syngas shouldn’t be taken lightly. One needs to guard against the accute toxic effects of CO and explosion hazards, in addition to the likely co-production of highly toxic metal carbonyls that can accumulate in vessels. I’m told that death from nickel carbonyl poisoning is very insideous and occurs at low concentrations.
My favourite is bio-butanol. Butanol can be used pretty much straight into existing infrastructure without the corrosive effects of short chain alcohol. New GE enzymes in the brew are giving better yields. Still looking for the kitchen version though!
[ Link added: http://www.butanol.com/ -E.M.Smith]
“Octane rating”? An interesting concept for a gaseous fuel. Probably valid (qv. Wikipædia [et al]) .
SASOL? The South African joke used to be that the number of tankers of fuel that left the plant was exactly the same as the number of tankers of Iranian oil that entered it! [This was before the pipelines, while His Imperial Majesty the Shahanshah still ruled]. I would respectfully submit that SASOL is a petro-chemical plant hiding a conventional refinery.
Fisher-Tropsch? Fuggetaboutit! Marginal. Burn the b****y coal.
Perhaps somebody may have ‘bought out’ the patent to ensure that you continue to pay $4/gallon or more for oil that is extracted and refined in the Gulf of Mexico?
EM,
1) At $100/barrel the actual gasoline costs about $2.50/gallon. The rest goes to the tax man and we can safely assume that the tax man will tax anything and everything but windmills and solar panels.
2) Mine mouth Central Appalacian steam coal currently costs about $4/mmbtu. A gallon of gasoline has 125,000 BTU’s. So your feedstock is going to cost 50 cents a gallon.
3) Dual fuel vehicles(gasoline/natural gas) already exist in Asia.
Right, I was just thinking, ‘let’s start a business”.
Just for the record.
This club undertakes fuel price survey’s.
The best I have seen until now.
http://www.gtz.de/en/themen/29957.htm
“Octane rating”? An interesting concept for a gaseous fuel. Probably valid (qv. Wikipædia [et al]) .
SASOL? The South African joke used to be that the number of tankers of fuel that left the plant was exactly the same as the number of tankers of Iranian oil that entered it! [This was before the pipelines, while His Imperial Majesty the Shahanshah still ruled]. I would respectfully submit that SASOL is a petro-chemical plant hiding a conventional refinery.
Fisher-Tropsch? Fuggetaboutit! Marginal. Burn the b****y coal.
[ Fair Notice, folks: I got this exact same message in the Spam queue, but with a different IP and name. This one maps to Spain, the other one to Czech. This could just be a troll / spam phish and I’m still deciding if it needs more “moderation”… -E.M.Smith ]
[ Oh, and with that said, it’s well established that F-T yields a lot of net fuel, that whole Nazi War Machine running on it and all; also SASOL makes tons of money, so it’s a net energy gain too… Yes, they make chemicals along with the fuel products. Folks pay more for chemicals… -E.M.Smith ]
These folks claim to make DME at 80% of the price of LPG and at about $375 US / ton…. Japanese company, but factory priced in China.
Click to access Ohno_DME_Dev_Co.pdf
DME can be blended with LPG up to 20% with doing NOTHING else. It can be run in Diesel engines with minor changes of injectors / pump and reduced emmissions (per the slide show).
Interesting…. but that it works well as an injected fuel (High Cetane rating) implies it would not work well as a fumigated “co-fuel”. That is, you need to do the injector / pump change route, so not a DIY at home deal.
OTOH, with a fuel at about $1 a gallon, that’s rather attractive… and per the wiki
http://en.wikipedia.org/wiki/Dimethyl_ether
it can be fed into the same process: ” Mobil is using DME in their methanol to gasoline process.”
And here is a pretty good technical article on that process from about the time it was first being used:
Click to access doe_pc_60054-t9-A.pdf
including a diagram of a fluidized bed reactor / regenerator that is 4 inches in diameter and 25 feet tall. That’s inside the “industrial garage operation” size…
And an interesting “compilation” of what company is doing it more or less now, but some folks in Australia:
http://www.chemlink.com.au/gtl.htm
If we’ve got a 10 year depreciation, that’s 3,650 days and assuming a 20 hour day (maintenance / down time) that’s 73,000 bbl of lifetime, or about $ 1/3 per bbl of depreciation. I don’t think I’m going to lose sleep over that…
More important is that natural gas is now about $4 / MMBtu http://www.eia.doe.gov/oog/info/ngw/ngupdate.asp so we’ve got to turn that feedstock cost into a $40 cost. OK, all up we’re probably in the $80 / bbl total of everything range with current prices (assuming that the two $5 / $5 ratios above continue to hold today). As oil was running about $70-$80 a couple of years back, not worth the risk. But now?
Then again, the article has dates in it only about 12 years back, so maybe bulk prices for feedstock are not as expensive as open market spot…
Uhm, why hasn’t turpentine or other hydrocarbons derived from pine sap been more widely used?
Below is a link to a fairly good article with references on CTL (coal-to-liquids).
http://www.aaas.org/spp/cstc/briefs/coaltoliquid/
I discuss this topic in my public speeches, the question of Why doesn’t the USA (and other countries) convert coal to liquids? For example, China has abundant coal reserves, and so does Australia. Why then do Australia and China import oil?
The answer is that OPEC has consistently priced oil at just below the break-even price of CTL, since 1980 after the Iranian Revolution and the oil cartel gained complete control of world oil pricing. At that time, Saudi Arabia chose to set the price at $32 US Dollars per barrel of oil. They knew that the break-even price for CTL was at roughly $40 per barrel.
Today, Saudi Arabia insists that the proper price for oil is in the $70 to $80 range. One can work out that $80 in 2011 is exactly $32 in 1980 dollars, when adjusted for inflation of 3 percent per year.
Unless a breakthrough in technology for CTL happens, no country will build massive CTL plants while oil is priced at what I refer to as the $32 point. Even the recent price spikes (2008 summer, also the present time) are temporary and have seen oil prices drop again to the $32 point.
The Saudis are extremely sharp businessmen, having thousands of years experience due to their unique location. They will do whatever it takes to prevent CTL from becoming economically viable.
A note about the $32 point: that was established long before carbon capture for climate change was a buzzword. If and when CTL plants are required to capture and sequester CO2, or cap and trade for CO2, the break-even point will increase somewhat above the $32 point. How much more is not certain, but my estimate is 10 to 20 percent higher. So, in today’s pricing (2011), the break-even price could be $88 to $96 per barrel. Another factor is the increased cost of high alloy steel used in CTL plant construction, relative to 1980 and adjusted for inflation. That could push the break-even price upward a bit more, perhaps to $100 to $110 per barrel.
The conclusion is that no private enterprise will build CTL plants in this economic environment. It would require massive government subsidies to build that infrastructure, measured in hundreds of billions US dollars. To construct CTL that would replace just half the US refining capacity, 8 million barrels per day, would cost about $560 billion. Such a massive program would undoubtedly cost much more, because the sudden demand for steel and other materials would cause price increases. This happened recently as China purchased great quantities of steel and copper.
I found an article from 2003 that states that 95% of all known natural gas deposits are too small for large scale commercial exploitation. Now I wonder, how many would be large enough for domestic or small municipal exploitation?
How many folks live right on top of enough natural gas to possibly power their home or even a couple of neighbors for 100 years (while not being enough to power 100 homes)? I know of a place in the Santa Cruz mountains where Chevron drilled exploratory wells in the late 1950’s and early 1960’s, found gas, but decided that the deposits were not large enough for commercial exploitation. I would be willing to bet such a deposit would provide one or two or five homes with all the energy they need.
@George:
Perhaps because it costs $15 / gallon at the hardware store and we don’t have that many trees? Oh, and it takes the paint off your air cleaner ;-)
FWIW, while I’ve not got an answer of a number for octane, I did find this comparative octane:
http://www.fao.org/docrep/t0512e/t0512e08.htm
so it ought to work OK in the air intake as a fumigated fuel for some ratios of fuel / air…
The behaviour of different Diesels is highly ideosyncratic here and “indirect injection” engines like the old Mercedes are far more “forgiving” of “funny fuel” than the more recent “direct injection” engines… Those with various computer controls and sensors will likely go nuts if you try this as readings will be going “off page” of the programming (i.e. more mass flow and temp than the fuel flow allows… so the computer is likely to be confused…)
At any rate, don’t try this if you are not conversent in the peculiarities of Diesels, have an older one to try first, and are not afraid of the words “Well, guess we’ll rebuild it and try again.”
With that said, it looks like I can make a giant Cigar to put on the roof rack of my old “beater” Diesel that smokes up some wood chips and feeds the “producer gas” to a simple fumigation pipe into the air intake. As long as the pipe is sized to stay under about 3/4 of total fuel flow, it ought to just be “move trottle and go”… I’d probably want to use only charcoal (keep methanol vapors low…) and make sure it was scrubbed pretty clean before it got to the engine… but I think this idea must might work.
The idea of stopping to load up wiht some “yard waste” or “old paper / cardboard” has a certain charm to it though ;-)
(Shades of Mr. Fusion!)
So maybe adding the extra filtering to take care of the tars et. al. would be worth it 8-}
The idea of a Mercedes with a big-ol-Ceegar on top puffing on it just has a certain charm to it too…
@Roger:
My suggestion on that was not subsidy, but a ‘flexible tariff’.
The tariff is set such that “any landed oil will have a tariff applied such that the market price will be $90/bbl in 2011 dollars for oil imported from non-North American sources.”
That keeps Canada and Mexico inside, while putting OPEC outside.
Then they can crash the OPEC price if they want, US price does not change.
After that, just stand back and let the market decide who builds what where and when…
Oh, and that massive $560 Billion? Isn’t that about 1/2 of what was spent in one DAY during the “emergency stimulus bill”? And isn’t it about 1/3 of the present annual budget deficit? Somehow I think this is about priorities more than about absolute size of projected costs…
For example, the Wikipedia entry for Laurel, California.
http://en.wikipedia.org/wiki/Laurel,_California
Someone living in those mountains is probably living right on top of enough gas to power their home for a very long time.
@George:
One Small Problem…. Zoning.
I grew up in a small farm town in the Central Valley of California. Just outside of town (about 20 miles away in one direction, about 40? in the other) were producing natural gas wells.
Being a bright lad, I figured out the size of the field extended under several cities, potentially including our own.
Investigation showed that no, we were not owed a share of the royalties. Early on case law established that since folks who lived in towns were forbidden to errect a derrick or drill for oil / gas: They could not extract “their” oil and gas, and thus had no actual rights to it…
So an oil company can drill a field right next your your home on ‘drillable’ land, find $Millions in gas, and you can not collect a dime.
Now, if you happen to own a few thousand acres of farm land that has not been zoned “farming only” and / or where you can throw enough local weight around to get it rezoned “farming and mining” then you can drill a well, PROVE there is gas there, then claim a share of the royalties for the field. If you don’t drill the well, the gas company just says the field ends just this side of your property…
Have a nice day…
Well, I wasn’t meaning for commercial sale, just domestic use. There are a few such wells up in Humboldt County where a land owner has a gas well for their own use, not for sale to anyone else.
A fellow in Kentucky:
“I have a private gas well on my farm. I was drilling for water about 30 years ago, hit gas and have been running my house on it since.”
After I started looking around, I find that there are many such wells. In fact, it is a niche business for some gas field operators.
@ E.M. re gov’t spending on CTL:
The $560 billion would likely be from private enterprise – and no company has that kind of money. Even if 5 oil companies decided to build the plants, at $112 billion each company, they don’t have that kind of money. Not even ExxonMobil has that kind of “extra” cash, and they have more money than any of the other oil companies. Last time I looked, ExxonMobil spends roughly $22 billion per year in total capital investment, of which only a portion ($3 billion) goes to refining. The project would require at least 5 years, so the annual outlay for CTL would be around $25 billion for each company. That is in addition to other capital projects. That is clearly impossible from self-generated funds, so the company would borrow or have the government fund the work. Borrowing would upset their debt/equity ratio and affect their bond ratings adversely.
The government funding, as you mentioned, is on the order of the stimulus spending. That stimulus creates and is creating an enormous inflationary pressure, not a good thing. Whether such government subsidy is good or bad is debatable, as there are some who would argue that cutting off imports from the Middle East is nothing but good, and we should call the money well-spent to make that happen.
But, in the greater sphere, if the US cut oil imports to zero, the price of crude world-wide would likely collapse from lower demand. How far the price would collapse is uncertain, but very likely far below the $32 point in 1980 dollars. Then the USA would be converting coal to make gasoline, jet fuel, and diesel at an expensive price, while the rest of the world enjoys far lower prices. The USA would find itself in a most un-competitive position, and for what gain?
This gets much more complicated, the more one digs into it. For example, would coal trains deliver the coal to local CTL plants? Or, would CTL plants be built at the mine-mouths, then the products shipped via pipeline? The cost of those pipelines would be substantial. If coal for CTL is shipped by rail, how is that to be done, given the present constraints on rail shipping? Expanding a rail line is not easy, nor cheap, nor done quickly. Building the additional rail cars and locomotives is also not cheap nor quickly done.
Environmental hurdles for all of this are staggering. Gaining a construction permit, after all environmental studies and approvals are performed and granted, can and does take a decade or more. Coal conversion leaves behind solid residue that must be disposed of by acceptable practices, which is also not cheap. For just a couple of examples, mercury must be captured and disposed, also non-combustible material such as fly ash, sulfur, and heavy metals.
I wish I had a less gloomy forecast, but I’ve spent a lot of time in the capital spending and strategic planning departments of major energy corporations. I believe I’m much more of a realist than a pessimist.
@E.M.:
You have to find something more peaceful (removing our cultural hurry), perhaps a bacteria.
http://www.timesonline.co.uk/tol/news/environment/article4133668.ece
@Adolfo:
I’m a bit more fond of the idea of growing algae on waste ponds… “Bio-engineering” IMHO “has issues”. There are bugs that have been developed to eat oil spills, for example. So what happens if they find a way into the oil fields?…
Have a bug that eats cellulosic waste? What happens when it gets into the forest litter?
And I’d believe that they were able to control all those bioengineered bugs if it were not for the number of “leakages” of “roundup ready” gene into non-target crops / species. There are already weeds being found with a “tripple stack” of the resistance genes to the 3 most common herbicides. Yet no COMPANY has ever made such a bug. It’s a natural product of the genes floating around in the environment now…
@Rodger:
Spread it out a little, guy!
It doesn’t all get spent in “year one” and this stuff can be done on small scales or large.
So $560 B over 10 years: $56 B / year. With 10 companies doing it, that’s $5.6 B each. Exxon, Chevron, Shell, BP/Arco, Conoco/Phillips, Dow, Dupont, Peabody, Eastman Chemical (already to coal to chemicals), and I’ll leave slot 10 open for “and all the rest”…
And the “porkulus” is only inflationary as they are monetizing the debt…
And to the extent you are making 100 M bbl of oil products from coal, you do NOT need 100 M bbl of “other capital projects” to make those goods. So I think there is a bit of double counting in the capital departement in your pessimistic view.
Or, in short: “If you tariff protect it, they will come.” ;-)
@ E.M. — well, you’re the economist, so I defer to your judgment on how CTL can be financed.
But, to use your phrase (and I really like this one), the existence proof is before us: the three countries with major coal reserves are NOT building CTL plants, even though each country has substantial oil imports. Those three are China, Australia, and USA. There must be a good reason why such disparate governments – and the companies that operate therein – chose to build petroleum refineries and import oil for them, but not subsidize or privately build CTL.
I can also state with great confidence that oil companies are extremely profit-oriented. If there was a way to make more money by building a CTL plant, they would – in a heartbeat.
The list of companies you suggested above is not bad, except that here in the USA the largest refiner is Valero. Perhaps they can be Number 10. They typically barely break even on oil refining, so have very little money to invest in CTL projects. For reference, Valero spent $3.3, 2.7, and 2 billion respectively in 2008, 09, and 10.
As to the double accounting issue, actually, the oil companies would be required to spend BOTH sets of capital until the CTL plants are up and running. The ongoing capital is required to keep existing refineries running safely and with minor additions to meet demand – which is all they are doing right now, anyway. There are a couple of refinery expansion projects underway or about to be underway, but not many at this time.
The 10-year time frame for the CTL projects is also not realistic, as very, very few companies will take on a major spending program – and this is a very major program – over such a long time-frame without a great deal of certainty that there will be a profitable market at the end. The last such refinery project in the USA required 4 years to construct. Marathon at Garyville, Lousiana. I wrote on that subject here: http://sowellslawblog.blogspot.com/2009/07/new-refinery-on-schedule-and-budget.html
Another, Motiva’s Port Arthur, Texas, refinery expansion has been moth-balled due to decreased demand for oil products. Motiva has several billion dollars of capital expended already on that project, with many more billions yet to spend, but has no end date in sight for when the return on that capital will occur. That is a sobering reality for those who would spend mega-billions in the transportation fuels industry.
The Saudis of course know all of this, and price their oil accordingly. $32 is the key point. The big players in the transportation fuels industry also know all of this, and plan their operations accordingly. CTL is not on their spending radar.
@Roger:
I wasn’t saying build A facility over 10 years. I was saying “total capital for several facilities over 10 years” with any one facility done in a few years… Smaller, modular builds, with a 4 year build, but start one every year or two…
As per “existence proof”…
Well, China IS building facilities (with SASOL as a major contractor, but also with others) and has been for a while:
http://www.sasol.com/sasol_internet/frontend/navigation.jsp?articleTypeID=2&articleId=14900002&navid=4&rootid=4
Though it looks like one of the projects is presently “on hold” pending
bribe paymentadmistrative review:http://www.reuters.com/article/2011/02/03/sasol-idUSWEA571820110203
For the USA, it’s pretty simple, IMHO, Saudi is the single largest political donor in the country and oil has more clout that coal.
Australia will need to speak for itself…
But I note in this article from 2008
Click to access coverage-128.pdf
So “things are afoot” though in a small way, and it looks like there is a GTL / CTL tug of war in the EU / Australia too.
Then again, maybe the Autralian business is just being co-opted by the Chinese:
http://en.21cbh.com/HTML/2010-6-4/2NMDAwMDE4MDg2NA.html
Also of interest:
http://blogs.wsj.com/environmentalcapital/2009/01/06/black-gold-china-joins-the-coal-to-liquids-club/
Which makes it look like we are doing “the usual” of canceling our plans every time there is a bump in the road. Then making them again when the price rises.
Plan? Direction? Strategic thinking? In America?…
while China, too, can have some equivocating, as in this direct coal to liquids (i.e. non-SASOL) plant:
http://news.xinhuanet.com/english/2009-04/05/content_11135751.htm
They list several more CTL projects, then (and remember this is a 2009 article…)
So I kind of have to question that assertion that there are three not doing anything…
I could list a whole lot more…
What is clear, though, is that not much is going on in the USA other than PC things like Rentech and Syntroleum doing chicken guts (with Tyson…) and trash to liquids.
So when I’m seeing that the major issue is the volatile nature of prices, and a secondary one is government inconsistency, to me it just cries out for a bit of “steady the market and get the govt to STFU”. To me, a price floor on imported oil does the first. As for the second, I think that will take more direct involvement of the folks paying over $4/gallon at the ballot box next round…
Oh Well. We can just buy the finished products from the Chinese, just like everything else…
as long as they loan us the money to do it…
UPDATE:
http://coalgasificationnews.com/projects-2/
has a list of projects in the USA presently operating or in development. While several list “canceled” next to them, there are a lot more in “operating” and “development” than I’d expected…
Hmmm….
Looks like India too:
http://www.steelguru.com/raw_material_news/Permission_awaited_for_NMDC_CIL_JV_for_CTL/193249.html
For those not familar with it a “crore” is a unit of counting / money in India. It’s 10 Million of something.
Well. China is subsidizing their tiny CTL plants, just as they do with all other facilities – nuclear power, refineries, coal-power, wind and solar power. Absolutely none of those plants could stand on their own economics (except oil refineries and coal power).
Which is fine for China to do that if they want to. Also, none of those projects is anywhere close to the output of an average petroleum refinery, which is approximately 125,000 barrels of oil input per day. Note that there are 80 million barrels of oil refined each day world-wide. Worldwide refining capacity is about 90 million barrels per day.
China also likely has strategic goals in mind: they want to be nearly self-sufficient in liquid fuels if and when their supplies are cut off by oil exporters, perhaps during the next world war. Not a bad strategy, actually. Any shortages could be made up by strict rationing, causing the populace to not use liquid fuels while the military receives all it needs. We did something very similar during WW2.
As you correctly note, even the USA has some pilot-scale projects on CTL.
I also note that other large oil importing and refining countries don’t have CTL – Japan, South Korea, and Italy. They could easily import coal and convert that to CTL. But they don’t, unless in very tiny pilot plants like the other countries. Instead, they import and refine oil.
I stand by my conclusion: only government subsidies (the Chinese approach) will cause these plants to be built. The Saudis know exactly what they are doing in pricing their oil. There is a very good reason that oil prices have been at $32 per barrel (1980 dollars) for the past 30 years. CTL economics is that reason.
None of troll/spam/phish, merely an ex-Seffrican who is obsessive about privacy/anonymity. Incidentally, the above e-mail, although anonymous and re-routed to increase privacy, works.
I worked in the energy industry in SA and have a close relative in the gasoline additive business there. The Nazis resorted to wood-fired Kubelwagens (later Volkswagens), and their tanks ran out of fuel on their second foray through the Ardennes (the Bulge).
I would re-iterate that SASOL is uneconomic (Roger Sowell @ 7:49 has it right) and produces a marginal amount of fuel (lots of highly profitable chemicals)
I’m remembering (mis-remembering) that methanol has use in fuel cell systems.
The development of production, refinement, distribution and storage facilities for methanol BURNING engines would be comparably profitable in selling to methanol-CONVERTING electrical motors.
There may be CO, H2, methane, and other fuels comparable that also burn and convert. But a path that serves both burners and converters seems to me to be worth exploring.
@j melcher:
Interesting idea… With methanol at $400 ton, making a little “methanol fuel cell” to add to your e-vehicle could be a very interesting option….
Hmmm….
@Roger Sowell:
So, roughly ‘Everything is too small to matter unless it is too big to do’…
Interesting view of life…
I think I’ll stick with “Every journey begins with but a single step” and “Many hands make light work”…
@ E.M.:
“So, roughly ‘Everything is too small to matter unless it is too big to do’… Interesting view of life…”
That is not my view at all. Having spent most of a lifetime working in energy-related efforts, and trying to cut costs, improve efficiency, and increase profits, my assessment is that lots of innovative ideas exist and are being developed. Some things start out small and eventually matter a great deal. The first oil well was one such small thing. I am all for advancements in technology that reduce the costs of consumables.
What we see happening all around are research projects to find a viable alternative to oil. CTL is but one of these. GTL, several types of biofuels, oil sands, tar sands, shale oil, municipal waste-to-gas-to-liquids, all have research funding. None of them thus far pass the tests of availability, reliability, and economic attractiveness compared to petroleum.
I have some experience from years ago with a disruptive (positive) technology that completely supplanted an existing one. An inventor developed and obtained a patent on an improved anode for chlorine production. His anode reduced energy consumption by a very large amount, I believe it was 50 percent or something like that. Energy cost is a major part of chlorine production economics. My employer had the world-wide licensing rights to the patent and needed no sales force. We simply answered the phone with all the orders pouring in. The product was so good that fully 90 percent of all new chlorine plants world-wide used that technology. We also converted more than 50 percent of existing plants to the anode, within a very few years. No government incentives were necessary. see the link for specifics.
http://pubs.acs.org/doi/abs/10.1021/cen-v048n047.p032
Some day, some bright researchers may find a similar improvement in technologies that would supplant oil. The research grant money is there. What is missing is the Eureka moment.
@Roger:
See:
from:
http://earlywarn.blogspot.com/2010/01/tar-sands-production-graph.html
I’d count 1.3 M bbl/day as “matters” especially with an exponential growth curve like that…
@ E.M. re oil sands production.
Yes, Canada made a long-term strategic decision several years ago to produce syncrude from their oil sands. It was not profitable then, and likely is only marginally profitable now.
That is not their big concern. Canada is looking ahead to a day when conventional oil supplies dwindle sufficiently, or worldwide demand increases (perhaps China and India growing will do it) and there is a significant increase in oil price. At that time their oil sands projects will be money-makers.
It is only a piece in The Grand Game.
OPEC prices their oil to discourage such investments. They cannot control what other governments do, in a money-losing proposition.
Btw, I want to publicly thank you for this post, and the comments thereon; these have been very helpful in marshaling my thoughts in preparation for my speaking engagement in New Orleans on Peak Oil and US Energy Policy.
I’ve seen this ‘factoid’ in several other places over the years:
http://zfacts.com/p/218.html
The cost of producing oil from Alberta tar sands is about $25 per barrel.
http://www.futurepundit.com/archives/003515.html
Extraction of oil from the tar sands of Alberta Canada costs only $23 to $26 per barrel and so production is expanding rapidly.
http://www.csmonitor.com/2006/0512/p04s01-woam.html
Production in Alberta is up 61 percent over the past four years. This year, Alberta’s oil sands are expected to produce 1.2 million barrels a day, roughly equal to the production of Texas.
“The oil sands … represent a turning point in the history of energy, and a switch to synthetic [chemically processed] sources of oil,” says Peter Tertzakian, chief energy economist at the Calgary-based energy consultancy ARC Financial.
However it’s extracted, all bitumen has to be transformed into oil in a process called upgrading. There are several different steps in upgrading, all of them using a lot of energy, usually natural gas. Itcosts $23 to $26 a barrel – depending on the project – to produce light oil from sticky goo of the oil sands.
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aZ6yVeyLhzkE&refer=energy
Companies will produce 10.1 million barrels of oil a day by 2030 from projects in Canada and Qatar, more than Saudi Arabia does today, according to forecasts by the International Energy Agency. That’s 8 percent of the world’s total.
Shell is spending $13.70 per barrel at its Athabasca project in Canada, higher than drilling projects, said Mather. Oil executives say that crude prices near $45 a barrel more than offset the extra cost.
http://oil-price.net/en/articles/are-canadian-tar-sands-profitable.php
. The extraction and refining processes related to tar sands cost companies mining tar sands in Canada approximately $27 per barrel. However, despite the extraction costs of oil from tar sands, in today’s current market, with the purchase price of oil at $80 per barrel, the production of petroleum from tar sands is still an extremely profitable affair for companies mining Canadian tar sands.
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I could keep going for another dozen or two links, but I think you get the idea….
Cheap tar alternatives are about $26 / bbl and the expensive stuff, like shale, runs up to $50 or even $75 for crappy shale.
With oil at $80 / bbl they were expanding at all due speed. With oil at $104 / bbl they are minting money…
and you are most welcome for any help I could offer…
BTW, other than tar:
http://edition.cnn.com/2009/US/10/16/plastic.trash.into.oil/
The plant cost $4 million to build, but Han says it can produce oil for as little as $10 a barrel at a time when oil is selling for more than $70 a barrel.
https://www.greentechmedia.com/articles/read/rentech-plans-wood-waste-to-biofuel-electricity-plant-in-california-4600/
The plant is expected to be up and running by 2012, said Julie Dawoodjee, Rentech’s vice president of investor relations. She would not give cost estimates for the project or the target cost of the fuel it would produce, except to say that the latter would be competitive with fossil-based fuels.
Even the “biased against oil” wiki says:
http://en.wikipedia.org/wiki/Synthetic_fuel
GTL economics
A synthetic fuel manufactured from natural gas (GTL), without CCS, in a large scale plant in the Middle East (where gas is relatively inexpensive), is expected to be competitive with oil down to approximately $20 per barrel.[71]
Recent advances by the oil company Shell have seen synthetic fuels start to become profitable. The company is building a GTL (gas-to-liquid) plant in Qatar, due to come online in 2011. It will be capable of producing 300,000 barrels per day (48,000 m3/d) of synthetic fuels and other products, using natural gas as a feedstock. Their spokesman claims the process will remain competitive with traditional diesel unless the price of crude falls below $20 per barrel.[72]
CTL/CBTL/BTL economics
According to a December 2007 study, a medium scale (30,000 BPD) coal-to-liquids plant (CTL) sited in the US using bituminous coal, is expected to be competitive with oil down to roughly $52–56/bbl crude-oil equivalent. Adding carbon capture and sequestration to the project was expected to add an additional $10/BBL to the required selling price, though this may be offset by revenues from enhanced oil recovery, or by tax credits, or the eventual sale of carbon credits.[73]
Chinese direct coal liquefaction economics
News reports have indicated an anticipated cost of production of less than $30 per barrel, based on a direct coal liquefaction process, and a coal mining cost of under $10/ton.
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but now I’m just starting to “pile on”, so I better stop ;-)