I will be in London for the rest of the week without Internet access, but I thought I would open up the floor for any questions readers may have. Since I have withdrawn from the discussions, I know that a lot of questions have been directed at me that have gone unanswered. So if you have a specific question that you really want me to take a crack at, list it in the comments and I will put up a post next week of answers to questions.
If other readers know the answer to a question, feel free to answer it in the comments. I will try to answer any outstanding questions when I return.
33 thoughts on “The Floor is Open for Questions”
Where do you see the oil industry in 20 years?
You said you were going to cut back on blogging in order to spend more time with your family. You seem to be a blogging as much, or more, as you were before that promise.
Are you doing what you said you would, or are you shorting your family?
Oil production has been flattish over the last couple years, and consumption is up in many places (with China receiving the most attention in this regard). Is there a source that I can access that shows who has been getting by with less oil?
Ideally this source would also give some clues as to whether these areas are reducing their use due to political/local factors on petroleum availability, increased efficiency, rising global prices, or whatevr other factors might be relevant.
Check out British Petroleum’s website, and look for World Statistical Review. There are large tables in there showing demand and production by country, continent, any way you want.
Short answer to your question: Demand for fossil crude is falling in the developed world, and that trend will accelerate. It is growing in China, but that will decelerate. India is not growing as fast as you think in fact oil demand in India fell in 2005, went up only slightly in 2006.
In five years, demand from China will probably start flatlining, due to alternative fuels and efficiencies. Same for India.
Remeber, oil was cheap for 20 years, and got cheaper all the time, until 1999. Then it began to creep up, but no one knew if it would stick. Now, people think it will stick, and changes in consumption are happening.
We have hit Peak Demand already, or soon will.
What’s your favourite Aberdeen pub? I’ll be making a stop there in November and always appreciate a local tip.
Just a question out of the blue in regards to ethanol; Would ethanol make more sense if it was simply burned at the production facility to make electricity vs trying to build infrastructure to transport it? Or is the EROI still to low even in that case?
If you wanted to make electricity, you would just burn the biomass without making alcohol first. The ONLY reason to make ethanol is because of the advantages of a transportable liquid fuel.
I have a burning doubt about biofuels. Even if we make a concession and adopt the energy balance figures given by proponents, there is still a high dependence on oil for crop production and harvest, transport of raw materials, biofuel plant operation, and transport of biofuels and byproducts. Since fossil fuels will eventually become too expensive to make this economical (assuming it is economical even now), where does that leave us? Jeff Vail has a recent post suggesting that much human labor will be needed for biofuels in the future. That is one thing to consider. Another issue is whether the industry can be self-sustaining if it remains mechanized. In other words, can ethanol be produced by powering the farm machinery and trucks on ethanol and still come out ahead? I think not. So it seems to me that ultimately, the large-scale biofuel industry will collapse and that biofuels will just be produced locally and on a small scale for local needs. Powering the current huge fleet of cars and trucks on biofuels is just a pipe dream.
So what’s your take?
Then would the EROI of using biomass for electrical generation actually work out to be favorable from an realistic economic standpoint (i.e., not completely propped-up by subsidies)? Or is it still a big enough sink as far as energy consumed per unit created that it would still be unfeasible to use for energy production? Logically, it would have a much greater energy return vs. creating ethanol, but I don’t think I’ve ever seen anyone bother to get an actual estimate of the capability (or capacity) of using biomass for direct energy creation. Admittedly, I haven’t looked all that hard though…may have to dig back through this blog some more.
Refining margins are quite low now after been about $30 a while back. What do you think the future holds for crack spreads and the refining business in general?
One has to be careful when dismissing the current biofuel-subsidy-corruption that one does not throw out the baby with the bath water. The feedstock for biofuels can come from three potential sources:
1. Food crops
2. Non-food crops
3. Waste products
Looking at the list, it is pretty obvious where we need to start. Trust Uncle Sam (and the ag lobby) to start at the opposite end.
The reality is that the US produces 250 million tons a year of waste, of which 65% is renewable and organic, in other words ideal feedstock for biofuel production. Add in the plastic, and it is more than 75% that can be used to produce fuels.
Of course, you have to factor in the effect of recycling (Table 4 and some math). However, even after recycling I still get ~57% renewable and ~83% organic.
As an example, there is a biofuel that survives very nicely without subsidies: biogas, i.e. the gas produced when sewage sludge is digested anaerobically. The reason is that anaerobic digestion reduces the volume of sludge wastewater treatment plants need to dispose of (saving headaches everywhere). The renewable energy (usually electricity produced from the biogas) is a nice bonus. The point is it is a win-win situation, and a model of how to make biofuels work.
It seems to me that electricity is going to be the key energy source in the future, with a combination of wind, solar and nuclear, but there will be a need to store and transport this energy. Batteries are heavy and expensive; they won’t be able to store large amounts of energy. Creating Hydrogen through electrolysis is feasable but storing and transporting hydrogen is difficult.
Biofuels, like ethanol, if produced with electrical equipment seems like a good method to store energy, although we couldn’t produce enough for our existing transportation networks.
What do you see as the best option for a transportable form of energy in the future?
A couple of posts ago you mentioned some things you were doing to prepare for a worst-case scenario:
I have no debt. My savings are protected against both energy inflation and a collapsing dollar. I have my eye on farmland in some locations that I think would fare well if things look like they are going really sour. I have a decent amount of food in storage.
How about some details? Especially the part about your savings.
Have you given up hope? Based on your more recent posts, it certainly looks like it.
Take a look at this Bloomberg story. Does the story indicate that there are too many tankers, or that OPEC is not following through with its promised production increase?
I am puzzled by the fact that at all of the sudden there is a surplus of tankers. But this might just be my ignorance of how the market for tanker capacity works.
By the way, I appreciate your continued involvement in the question of whether Saudi Arabia is facing an involuntary cut in production. Even though you often get flamed, I like to know what the alterative views are. I hope that you keep addressing the issue on occasion even if you do feel that you are beating a dead horse.
It is all to easy for me uncritically accept one side of the story when it is all that I hear. Right now, most main stream sources are not following the issue in the detail that I would like. So all I am left with is the oil drum as my major source of new news on the subject….
What would be an optimal location to live in ten or twenty years from now?
There’s always a lot of press about gasoline prices and inventory levels. How are these inventories affected by demand for other products, like diesel, propane, or fuel oil? Are refiners having trouble meeting demand for those products too, and is this siphoning some crude away from gasoline production?
I have read your articles on biobutanol and algae based biodiesel and have found that their conclusions are inaccurate because they lack several critical facts. I understand your reasoning for being cautious about these topics; however I do believe that it is also important to provide an alternative solution to accompany your “dead end” conclusions.
First, your essay about the problem with biobutanol is based on the assumption that it is being produced by the ABE process. Ofcourse it’s inefficient, it physically impossible to improve the ABE process because it is fundamentally flawed. However Dr. Ramey has created a new and more efficient method of production which increases the yield of butanol and decreases the number of and volume of byproducts. It uses two types on bacteria in anaerobic fermentation.
Secondly, I think you solved your own problem in the comments section of you algae biodiesel article. You referred to “starving” high yield algae in bioreactors. The past and current problems with bioreactors is that they are too expensive or just aren’t efficient. People keep thinking inside the the box. All you need is hot water, light&minerals (or lack of them in some cases) in a closed,controlled environment. You can do this with cheap materials, water, sunlight, and a solar hot water panel system. Sure, not all species of high oil yielding algae are perfect but there are plenty to choose from.
Don’t you think that at least one of these species could efficiently produce oil if the electrical energy input was reduced?
What was the reasoning behind the #3 point saying that closed bioreators are “totally absurd”? As far as I am concerned, any objective and logically thinking person sees great potential in this method. Furthermore I saw no specific evidence to back this point and even more importantly, no comments on how to possibly improve the process.
Since you have ruled out the two most efficient and promising fuel alternatives, what do you propose we replace gasoline and diesel with?
Would you consider leaving your current employer for another opportunity?
What is the motivation to maintain high gasoline inventories?
Since you have ruled out the two most efficient and promising fuel alternatives, what do you propose we replace gasoline and diesel with?
Now that’s what you call inside the box thinking. How do we even pretend to know what “the two most efficient and promising alternatives” are?
You can do this with cheap materials, water, sunlight, and a solar hot water panel system.
A few back of the envelop calculations should prove how wrong this statement is.
Hint #1: It takes a heck of a lot of energy to heat up water.
Hint #2: Cheap materials? I think King showed how expensive these become at a scale where it begins to make a dent.
Hint #3: Sunlight is actually quite diffuse energy. It takes a lot of area ($$$) to collect solar energy, in whatever form you do it.
1) How do you see the way forward for “peakoilers”? here and on the oil drum you are interested in getting reliable informationand predictions out to the public. But the number of peopel interested is small.
2) There will come a time when peak-oil will hit public awareness, and it will be an ugly sight. Panic is very possible, and this panic may be very destructive. How do we prevent this?
I should say that I agree with your general optimism of ‘we can overcome this’. I’ve lived in London in houses with NO or limited (one cable from the neighbour) electricity. I was still using energy (gas, for heating and cooking), but very very little. I usually cycle, and my food comes from a local food co-op. My only big sin is flying but I could give it up. In short I know we can live quite happily with a fraction of what we use, and it wouldn’t take marsall law. At the same time, it would take economic restructuring, and perhapse bidding farewell to the idea of perpetual economic growth.
FYI, NSSO has release their report on space based solar power.
Benjamin Cole frequently mentions the idea that “peak demand” is coming. That reminds me of the 1980s when I think demand went down and oil prices dropped. Unfortunately I can’t seem to find data that go back to the 1970s oil crises. The EIA data seem to go back only to 1984. How much did our oil use drop during the ’80s? How much of that drop was because we shut down oil-fired electricity plants and built nuclear plants vs how much was because of people buying higher-efficiency cars? What I’m really looking for is data about past decreases in oil usage to get an idea of how easy it might be to do something similar in the future
(without counting on PHEV which seem to continue to be just barely out of reach).
The reason why I say Butanol and Algae biodiesel are the two most promising fuels is that they can be created from a virtually infinite source and are compatible with our current fuel transportation infrastructure. Unlike the other proposed alternative fuels they are feasible for mass production and offer better qualities and fuel economy.
Yes it is true that it would take a fair amount of solar hot water heating for the process, however I don’t see your reasoning behind saying that it would cost a lot (since most of the material is just glass, mirrors, and metal pipes for the solar panels). Furthermore you could use the heat generated by the fermentation process to heat the water.
As far as King goes, I haven’t read his statements, but obviously he is assuming that you have to use expensive materials, probably from past (and obviously unsuccessful) experiments.
It good to be critical of these processes to help improve them, but it only counterproductive (and pessimistic, optimist) to botch all talk of a possible solution with out offering an efficient alternative.
In general I would say any proposed solution that is based on one substance is suspect. To produce a pure substance (no matter what it is) is to fight thermodynamics and to loose efficiency. Notice that today’s fuels (gasoline, diesel, jet fuel, etc.) contains a witch’s brew of different substances.
Next, I’d say any substance produced by fermentation is unlikely to be scaleable to the point where it would threaten existing fuel suppliers. Fermentation is a highly specific process, capable of producing a highly specific product, such as only the biologically active enantiomere. Fermentation is ideally suited for the high value, low volume world of pharmaceuticals. And, of couse, moonshine (low volume compared to oil).
The one possible exception would be anaerobic fermentation/digestion (AD). That is because AD can feed of a wide variety of feedstocks (unlike ethanol fermenters which only feed of sugars). The AD product (biogas) also separates from the fermentation broth spontaneously, unlike ethanol and butanol. AD does suffer from low conversion, and the presence of CO2 reduces the BTU value of the biogas.
By contrast, consider a chemical conversion process such as gasification. It can use a wide variety of feedstocks (anything that burns pretty much). And the products can be tailored to be completely miscible with existing fuel supplies.
Regarding the cost of materials for an algal system, I would encourage you to do some calculations based on a reasonable refinery equivalent and the amount of collector area you would need for that. Here is a statement regarding the cost of closed algal systems:
3. The use of closed photobioreactors (>$100+/m2) for such applications is totally absurd.
Read the entire post, from somebody who should know the details intimately. See King’s posts in the discussion section.
Concerning biodiesel, I can do no better than to quote the great RR: In the long run, biodiesel is dead. Take it to the bank. Second generation fuels produced by hydrocracking fats and oils will put biodiesel out of business. There aren’t the cold property issues, the cost of production is lower, and hydrocracking technology is well-developed. Biodiesel will be produced in people’s garages. But on a larger scale, it won’t compete with green diesel.
Ditto for biobutanol: Sad to say, but I believe biobutanol is dead. While research will (and should) continue, the process is currently at least 10 years from any sort of commercial feasibility. And I would point out that “never” falls under the umbrella of “at least 10 years.”
Read the post for more details.
Saying that I don’t propose (optimistic) solutions is a tad unfair. I have been harping on the WASTE->FUEL principle on every available opportunity (not quite as much as Ben Cole’s Peak Demand, but getting there). Let’s start with the low hanging fruit and take it from there.
Here’s my request: write a posting describing how one might tell if a given technology is promising or not. I think this would be immensely helpful to non-technical readers. With a bit of luck, it might even find its way into that bastion of foolish ideas: Washington DC.
I would use your analysis in dismissing corn ethanol, biodiesel and biobutanol as a template for developing such a posting.
For example, this guy claims he has a technology for producing (bio)propane (its all bio-whatever these days, even when its anti-bio disinfectants, isn’t it?) from sugars via a fermentation step. Even in a best case scenario (i.e. the technology works as described) that’s three strikes against it.
Strike 1: Based not only on food, but expensive food.
Strike 2: The product is cheap propane.
Strike 3: It uses fermentation as part of the conversion.
I’d call it as the call ’em in baseball…
Go to BP website, and then click on World Statistical Review. It goes way back, and you can see how oil consumption declined folowing 1979. In fact, world demand fell 11 percent, annual peak to trough. It did not recover for a full 10 years, and then only when oil was cheap again.
There was fuel switching back then, in power plants. And oi hit $100 a barrel, adjusted for inflation. And there was a recession.
So, 1979 is not 2007 exactly.
On the other hand, we are 28 years ahead in alternative fuels and technologies. And, this time around, it appears somewhat higher prices (maybe not $80, but perhaps $50) are here to stay. Once demand starts dropping this time around (now, or 2008), it likely will never start going back up, as long as fossil oil prices do not collapse.
Yes, yes PHEVs are always next year, next decade. Back in the early 1980s, I was eager to be the first buyer of a car powered by flywheels. It never happened.
But, once PHEVs are successfully introduced, it is game over for the oil boys. Demand will only fall, and for decades in a row. The much-hyped “boom” in demand from China and India may fizzle. (They are developinf alternative fuels too, and not being sissies about it).
My guess is that oil prices will be lower 10 years from today than now. It will take government taxation to keep people from going back to gas guzzlers.
Even w/o PHEVs, everybody knows we can build cars which get 50 mph right now. Worldwide introduction of higher MPG cars will have the same effect, though not as radical. Sheesh, people were buying 46 mpg cars back in the 1980s.
I absolutely agree with your point that the energy we use in the future will have to come from multiple sources, including biogas (very cheap and efficient) as you pointed out. Also we have to make everything that uses energy (from cars to houses) more efficient, it’s just the only way.
Yes, energy wise, hydrocracking is more efficient than the fermentation process but there are a few critical flaws. It is counter productive. Environmentally speaking hydrocracked “green” diesel is just as bad for the environment as petro diesel, since it’s really just the same thing just from different oils. Also, where are you going to get the oil from? Competing with vegetable oil is a bad idea, and the other only naturally occurring and renewable source of oil is algae. And if you numbers are correct about algae oil production, (I’m still skeptical), than there is no viable source for this oil.
As for butanol, yes, your assumption is correct about the process being inefficient if you assume that it is being made by the ABE process. But David Ramey has created a new process that is an anaerobic fermentation process. After all you did quite accurately point out that anaerobic fermentation is an efficient and cost effective process.
I know the Ramey patent like the back of my hand. I reread it again yesterday while sitting in Heathrow, and it confirmed what I wrote previously. Basically, Ramey has addressed an issue of conversion and reaction speed, at the cost of a more complex process. But, the critical area – the area that is killing the feasibility – was not addressed at all. The final product is still well below what would be considered a waste stream, not economically viable to extract the butanol. More on this later, and I may dedicate a stand-alone post to this.
Environmentally speaking hydrocracked “green” diesel is just as bad for the environment as petro diesel, since it’s really just the same thing just from different oils.
It’s not the same thing, because it is renewable. It is chemically the same, except it is sulfur-free. With respect to emissions, biodiesel wins in some categories and loses in others, but remember that biodiesel takes methanol to make, and there are a lot of embedded emissions in that process.
Competing with vegetable oil is a bad idea, and the other only naturally occurring and renewable source of oil is algae.
There are a lot of candidates besides vegetable oil. Jatropha is one.
As an avid reader of your blog, I was wondering if you can suggest a list of "educational" resources like a textbook/website where people like me can educate themselves re some of the general fundamentals of the energy business, especially things like EROEI, GHG emission cycle etc. So far I think your website has constantly helped me learn some of this stuff and I am looking forward to learn a lot more in the future.
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