Energy Potpourri

I am at the 2009 Gasification Technologies Conference this week, with a pretty full schedule. But there are three stories that I wanted to quickly hit. One is a follow-up on the previous cellulosic ethanol post, one is about Paul Sankey’s new report on peak demand, and the last is on a technology that ExxonMobil has reported on here at the conference that I felt was quite interesting. There will probably be no more new posts from me until the weekend. I only got away with this one because I decided to write instead of network (which I hate to do anyway) during free periods today.

When Technologies Are Mandated

I don’t care too much for mandates. I think they are so much worse than subsidies, because with a mandate you are really saying that it doesn’t matter how much it costs, you don’t want to know how much it costs – just do it.

If the government thought it was a good idea to blend bio-butanol into the gas supply, they could offer a $0.50/gallon subsidy to do so. If that doesn’t result in butanol entering the fuel supply, then that’s a pretty good indication that butanol is at more than a $0.50/gal disadvantage to gasoline. But imagine instead that it is mandated. The costs could go very high in that case, but gasoline blenders would still have to pay up. We may find out that the cost to fuel suppliers was $8.00/gal. Had it been a subsidy instead – and it needed to go to $4 or $5/gal to make it economical – it would have never passed because the costs would be more transparent.

Thus, I was not too enthusiastic about the cellulosic ethanol mandates we got as part of the 2007 RFS. In 2010, for instance, it is mandated that 100 million gallons of advanced biofuels will be blended into the fuel supply. Cellulosic ethanol has been the technology that has been favored, but I have warned about costs that are going to be very high. Instead of a mandate, suppose we put a $1/gal subsidy in for cellulosic ethanol. Then instead of relying on people promising that they can make cellulosic ethanol for $1/gal if they can just get grants, mandates, and loan guarantees – you put the burden on the producer. Here is a $1/gal subsidy for you. Build the plant, make your $1/gal ethanol, and collect the subsidy.

Not surprisingly we are now getting news that despite throwing a lot of money at it, the 2010 levels of cellulosic ethanol are going to fall far short of the mandate – as I have been saying all along. They are going to need more money to meet future mandates – highlighting the problems I have with mandates. From the NYT:

Biofuels Producers Warn They Are Going to Fall Far Short of Federal Mandates

“The current economic climate almost makes the RFS a moot point for the time being,” said Matt Carr, policy director for the Biotechnology Industry Organization.

His organization estimated last month that 2010 volumes will, optimistically, reach 12 million gallons, far short of the 100-million-gallon mandate that year.

Range Fuels had gotten an initial $76 million from the DOE, then an $80 loan guarantee from the USDA. They also got $100 million in private equity. (I predict some folks are going to lose some money – including taxpayers). But that still wasn’t enough, so they went back to the DOE for more money. This time, the DOE said no:

The Department of Energy’s loan guarantee program, producers say, has been particularly flawed. No advanced biofuel makers, aside from a partnership between BP PLC and Verenium Corp., have so far won approvals.

“We received a ‘Sorry, Charlie’ letter,” said Bill Schafer, a senior vice president of Range Fuels Inc., which is now building a cellulosic facility in Soperton, Ga., slated for completion early next year.

He said that under the program, biofuels companies must compete directly against solar, wind and even compressed natural gas — all energy technologies that, unlike advanced biofuels, have already been built at commercial scale.

So there you have it. The DOE seems to be losing some of the earlier enthusiasm for cellulosic ethanol. Range Fuels is here at the conference, by the way. I should probably say hi.

Again, this highlights the risk of mandates. Costs can spiral out of control. The ultimate cost can’t be easily predicted. Instead of assuming that technology can be mandated if enough money is thrown at it, we would all have been better off had there merely been subsidies offered. In that case, if this is truly not economically viable, the taxpayer may not have to foot the bill for millions of dollars for failed or stalled plants.

Printing Money

One of the reasons I invest in oil companies is that I think oil prices will continue to spike higher in the future. Because of the recession, we currently find ourselves with excess production capacity. But it looks to me like that excess production capacity will be eroded in the future, which will once again put pressure on prices. Oil companies will again reap very big profits by supplying a dwindling resource. (Whether governments will aggressively move to confiscate these profits is another question entirely).

There is another view that the oil companies will die out as oil depletes, and therefore oil stocks are very risky investments in the longer term. I don’t subscribe to this view because I believe the oil companies will possess enough cash to enter into any future energy business that looks lucrative. If we are supplying 90% of the cars with liquid fuels derived from coal in 20 years, I suspect it will be the oil companies producing it. In fact, most major oil companies – ExxonMobil, Shell, BP, ConocoPhillips – have active programs in this area. It is a naïve view to think that the oil industry as a whole will fail to anticipate the changing markets. That’s why I always think it is humorous that people feel the ethanol industry is a threat. If the oil industry thought it was a threat, there is nothing keeping them from getting involved.

Paul Sankey of Deutsche Bank just put forth both views in a new report. As I have mentioned previously, I think Sankey is an analyst who really understands the industry. And I agree with his first comments. I just don’t think he is right about the second point.

Don’t Fill Up on ConocoPhillips

That one is a somewhat misleading title because he is recommending ConocoPhillips (which I do own):

DESPITE NUMEROUS SIGNS that the global economy is still struggling, just about everyone following energy predicts at least one more spike in oil prices in coming years.

It’s just that scenario that prompted Deutsche Bank analyst Paul Sankey to publish today a 61-page opus to clients in which he upgraded shares of ConocoPhillips (COP) to “Buy” from “Hold” and raised his price target to $55 from $40.

Sankey’s thesis — and he’s not alone — is that Conoco will benefit in such a scenario by being able to sit back and milk profits from its existing reserves of oil with minimal new investment, thus leading to generous cash flows.

In brief, Sankey sees global demand surging again with economic rejuvenation, leading to a spike in oil of $175 per barrel in 2016, after which developments in global fuel efficiency, specifically electric cars, will cause demand for crude to fall off precipitously, until oil comes back into equilibrium with supply at $100 per barrel in 2030.

Sankey spells out why he is long-term bearish on the oil companies:

Peak Oil: The End Of the Oil Age is Near, Deutsche Bank Says

Deutsche Bank expects the electric car to become a truly “disruptive technology” which takes off around the world, sending demand for gasoline into an “inexorable and accelerating decline.”

In 2020, the bank expects electric and hybrid vehicles to account for 25% of new car sales—in both the U.S. and China. “We expect [electric propulsion] will reverse the dynamics of world oil demand, and spell the end of the oil age,” the bank writes.

But won’t cheaper oil in the future just lead to a revival in oil demand? That’s what’s happened in every other cycle. Au contraire, says the bank: Just as the explosion of digital cameras made the cost of film irrelevant, the growth of electric cars will make the price of oil (and gasoline) all but irrelevant for transportation.

He could be right, but I am betting against it. But I may find that in 20 years ConocoPhillips’ core business is something entirely different than it is today.

ExxonMobil’s MTG Technology

One of the more interesting presentations for me at the gasification conference has been ExxonMobil’s work on a different kind of coal-to-liquids (CTL) technology. Conventional CTL would involve gasification of the coal to syngas, followed by a Fischer Tropsch reaction that converts the gas into liquid fuels such as diesel. Exxon has a different process, in which they gasify the coal, but then they turn it into methanol. As I have said before, methanol can be made quite efficiently, and I think it’s a shame that it wasn’t allowed to compete with ethanol on an equal footing. But the technology doesn’t stop at methanol. The methanol is dehydrated to di-methyl-ether (DME, also a nice fuel). The DME is then passed over a catalyst and converted to gasoline in yields of around 90%. The technology is called methanol-to-gasoline (MTG).

The process has been around for a while, but hasn’t gotten much attention. In the 80’s and 90’s, they ran a 14,500 bbl/day plant in New Zealand. As far as synthetic fuel facilities go, that’s a big plant with an impressive track record of operation. The on-stream reliability of the plant was over 95% during its operation. (Following the oil price collapse in the 90’s, the plant stopped upgrading the methanol, and just made methanol the end product).

The advantage of the process is that capital costs are reportedly lower than FT, and the product is gasoline – in high demand in the U.S. The disadvantage is that the process produces relatively little diesel and jet fuel. The military and various airlines are highly interested in FT because of its ability to supply these important fuels.

Exxon reports that a new plant, based on 2nd generation technology with better heat integration and process efficiency, has been built in Shanxi, China. At 2,500 bbl/day, the facility is smaller than the earlier New Zealand facility, but Exxon has licensed MTG technology to a pair of companies in the U.S. DKRW announced in 2007 that they would utilize MTG in a 15,000 bbl/day facility in Medicine Bow, WY. Synthesis Energy Systems announced in September 2008 that they would license MTG for their global CTL projects.

While Exxon seems to be more focused on coal to gasoline, there is no reason this process couldn’t be used to turn natural gas or biomass into gasoline (GTL and BTL). This technology could be complementary to FT technology, providing gasoline while FT supplies the liquid fuels needed for airlines, marine applications, long-haul trucking, and the military.

During the Q&A, though, one guy asked “If this is so great, why aren’t you building these plants yourselves?” The answer was that they weren’t experts, and only wanted to license.

115 thoughts on “Energy Potpourri”

  1. CONCLUSION
    Having determined that the Khosla defendants have sufficient minimum contacts with
    this forum, and having further determined that the exercise of jurisdiction does not offend
    traditional notions of fair play and substantial justice, the court concludes that the Khosla
    defendants are subject to personal jurisdiction in this (Utah) court.4 Accordingly, the court DENIES the
    Khosla defendants’ motion to dismiss.
    Dated this 29th day of September, 2009.
    ___________________________________
    Dee Benson
    United States District Judge

    http://www.google.com/url?sa=X&q=https://ecf.utd.uscourts.gov/cgi-bin/show_public_doc3F2008cv0057-99&ct=ga&cd=sBj4SIA_Xbc&usg=AFQjCNHioYkPs5VlMwkmKAvpST_zr04QNQ

    Just came across this tonight on the net and thought bloggers might find it interesting. 24 pages of background leading up to a Utah Court jurisdiction for a legal battle between GAGE (Utah) Khosla Ventures (California) and Bud Klepper (Colorado) concerning licensing rights to a gasifer? Plus more.

    Maybe that is why project delays are being pushed back year by year now?

    Rod S.

  2. Well, oil companies may transition away from oil to something else, but history suggests the odds are against them. How many coal miners became big players in the oil industry? How many coach-builders became big players in the automobile industry? (Actually, a handful did … for a while.) How many mainframe computer makers are major PC manufacturers, 27 years down the track? How well are PC makers doing in the cellphone industry?

    Oil companies have expertise in geology and drilling. Their skills and corporate cultures might turn out to be transferable to something else, but I wouldn't bet on it.

  3. EV's alone won't kill the oil industry. But,EV's combined with cheap electricity could. Big oil will still have the advantage if the cheap electricity comes from deep geothermal,which I think will happen. The potential is enormous and there aren't many obstacles left to overcome.

    I just read the news that Ahwannajihad is Jewish. Hard to beleive the world depends on fruitcakes like him to make it through the day.

  4. I agree that for a company to transition away from one field to another is far from easy. Just look at all the companies conglomeration finished or made fubar.

    Deep geothermal is far-far off in my opinion. Companies keep talking but who is drilling and bringing a rather nasty, hot solution to the surface in a meaningful quantity?

    Getting it to the surface is the easy part.

  5. "but who is drilling and bringing a rather nasty, hot solution to the surface in a meaningful quantity?"

    Chevron has been into geothermal for over 30 years Russ. They have more than half of the private production. Chevron isn't making a lot of noise about deep geothermal,but they do have a long track record of developing geothermal resources they stumble upon. Oil wells are being drilled deeper and deeper. BP announced a major discovery at a depth of 7 miles earlier this month. How long before companies coming up dry at those kinds of depths decide to make lemonaide? Since drilling is 75% of the cost on a geothermal project,my hunch is it won't be long at all.

  6. Just came across this tonight on the net and thought bloggers might find it interesting.

    Interesting indeed. Trouble in paradise. I have been hearing rumblings of problems since almost the beginning, but it was all from sources that I couldn't divulge. So I have never gone into any details on what I have heard, but I can say that I don't think they will deliver per their claims.

    RR

  7. How many coal miners became big players in the oil industry? How many coach-builders became big players in the automobile industry?

    I see two very key differences, though. None of those companies were sitting on huge cash reserves when their business model started to fade away. The oil companies will be. So let's presume for a second that ethanol is the answer. The oil companies could buy the entire industry with a fraction of one quarter's profit. Those cash reserves are going to open up a lot of options.

    Second, the oil companies are very diverse. They have entire divisions devoted to refining. They don't know anything about drilling. They often have entire chemical divisions. They have divisions devoted to trading hydrocarbons. In short, they aren't as narrowly defined as some people thing. If future fuel supplies are remotely related to moving liquids or gases around, the oil companies already have that expertise. But oil companies are pretty good at letting their divisions run things as needed. They could (hypothetically) acquire an electric car company and leave the management intact to run it as they see fit.

    Again, I think one reason you didn't see this historically is the companies simply didn't have the money to do it. There is something to be said for stepping far outside the core business, but oil companies have a diverse set of core businesses.

    RR

  8. About the Only Profit Valero is making right now, according to them, is coming from the ethanol plants they bought from the bankrupt Verasun.

  9. I've heard that among fossil fuels, the combustion of coal leads to the highest amounts of CO2 released. Does the gasification/conversion of coal to liquids lead to similiar levels of CO2 release (outside of what would be released from the combustion of the resultant liquid)? Are there opportunities for carbon capture along the path?

    Also, can high sulphur content coal be used in these processes? Where would that sulphur end up?

  10. RR has presented a rare, balanced view into the future of oil. No hysterics, and acknowledgement that other intelligent people have different points of view.
    I think the future is bright, and I notice RR's gloom level has decreased in the last year.
    We have natural gas in epic supplies, and PHEVs are preceding apace. The price mechanism is our friend.
    RR's question about PHEVs meaning oil becomes cheap again is a fascinating one.
    I contend that gasoline taxes in the United States, combiend with PHEVs and CNG, could mean cheap oil for generations–but we would have to constantly remind the public the reason oil is cheap is because we have crimping demand, ad buying extra decades of cheapness.
    RR also does not mention another reason oil could stay cheap–if consumers get burned often enough by high or erratic prices, and unreliable supply (The OPEC-thug state business model), they will turn to perceived security of a PHEV/CNG. The power plant is not going down, and the price is predictable. Sheesh, Toyota says they are serious about fuel cells and methanol. Methanol is very cheap.
    All in all, I think our energy future is brighter than at any time in memory. We have options coming out of our ears.

  11. RR claims he wants to reduce the use of fossil fuel. So I went to the conference web site to see what I could learn.

    Existing Gasification Plants in the U.S. = 19
    Existing Gasification Plants in the U.S. running on fossil fuel = 19
    Existing Gasification Plants in the U.S. running on biomass = 0

    It is not that there have not been gasification plants built in the U.S. but just not any that I can find that work on biomass very long.

    There is lots of technology that converts biomass to energy. Here just one company:
    http://www.energyproducts.com/EPIEnergySystems.htm

  12. Are we really importing Natural Gas from Russia?

    In the form of synthetic nitrogen so corn farmers can dump it on their fields. (It costs less to make nitrogen fertilizer overseas, and is also a lot easier to ship across the ocean than natural gas.)

    The ethanol lobby likes to talk about how corn ethanol frees us from foreign energy, but they never tell us that more than 50% of the nitrogen fertilizer they use is imported after being made overseas with foreign natural gas.

  13. In that case, if this is truly not economically viable, the taxpayer may not have to foot the bill for millions of dollars for failed or stalled plants.
    CORRECTION: …the taxpayer may not have to foot the bill for as many millions of dollars for subsidies as he would for mandates

    The taxpayer is going to get scr… worked over, one way or another. It's a country for millionaires…

    In 2020, the bank expects electric and hybrid vehicles to account for 25% of new car sales—in both the U.S. and China.
    If he's right, I would venture that 95 – 99% of the 25% would be hybrids (not PHEV), with EVs and PHEVs being a rounding error. Hybrids run on good old gasoline, just slightly less of it.

  14. About the Only Profit Valero is making right now, according to them, is coming from the ethanol plants they bought from the bankrupt Verasun.
    Interesting comment. Do you have a source (again)?

  15. Also, can high sulphur content coal be used in these processes?

    An off-topic question perhaps, but I don't know the answer, and would like someone to 'splain this:

    Coal is formed from biomass (leaves, giant ferns, peat moss, etc.) that metamorphosed after millions of years of heat and pressure.

    Since coal is little more than "reformed" biomass, how did the sulfur and mercury that causes us so much grief get into that coal?

  16. @Maury – from the same site where you probably got the Chevron geothermal information http://www.chevron.com/deliveringenergy/geothermal/

    "Only a small group of sites around the globe — primarily in the Pacific Rim region – provide the special conditions needed to generate geothermal energy. At these locations, deep fractures in the earth's crust allow the molten rock to surge close enough to the earth's surface to heat water that goes underground."

  17. Optimist:
    Remember, if a fleet of cars gets 10 percent better mileage, and drives 10 percent fewer miles, you get nearly a one-fifth reduction in oil demand.

    If I were selling oil, I would be worried about the potential for reductions in demand ranging from 20 percent to 50 percent in the next 20 years.

  18. Since coal is little more than "reformed" biomass, how did the sulfur and mercury that causes us so much grief get into that coal?
    Sulfur is a natural part of proteins and the much ballyhoed anti-oxidants. Doing a perm on somebody's hair is all about manipulating the sulfide bonds.

    Not sure about the mercury.

  19. Remember, if a fleet of cars gets 10 percent better mileage, and drives 10 percent fewer miles, you get nearly a one-fifth reduction in oil demand.
    And if 5% of Indians and/or Chinese enter the market for automobiles that reduction literally goes up in smoke…

  20. Optimist-
    Unless the OPEC-baboon states decide to deliver oil on good terms–and they can't, due to internal corruption–those Chinese and Indians may buy CNG and PHEVs and even methanol fuel cell cars.
    We are leaving the Oil Era, and I think it augurs well global prosperity.

  21. Valero – ethanol profits

    Rufus~

    I suppose the conclusion that one could draw is that Valero is better at running a business.

    By the way: Did you see that GAO has issued a report recommending elimination of the blenders tax credit for ethanol saying it is no longer needed as a stimulus since the ethanol industry is reaching maturity? GAO Report on Biofuels

    Of course, the ethanol industry disagrees. They must like being considered immature.

  22. Peak Gasoline Is Here

    "The jury's still out on peak oil, but the concept of peak gasoline has some very credible proponents.

    Last Thursday, ExxonMobil (NYSE: XOM) CEO Rex Tillerson argued that U.S. gasoline consumption peaked in 2007. In his words, "motor vehicle gasoline demand is down, is headed down, and is going to continue to head down."

    This isn't a new position for the prominent oil patch poobah. Back in April, The Wall Street Journal cited Exxon's belief that U.S. light duty gasoline demand will drop by 22% by 2030.

    Tillerson isn't alone in the peak-gasoline camp, either. The government's own estimates indicate that gasoline consumption peaked in 2007, at 371.2 million gallons per day. Cambridge Energy Research Associates has concluded that 2007 was probably the peak, barring a collapse in the oil price.

    The main drivers (ahem) of this trend are the dovetailing desires for reduced oil dependence, lower emissions, and better fuel efficiency. The high oil prices of 2008 — and even today's prices, which are quite high by historical standards — have been a major force to shift consumer preferences toward more compact and efficient vehicles, including hybrids. Lithium-ion battery whiz A123 (Nasdaq: AONE) certainly has high oil prices — and government greenbacks — to thank for its recent warm reception on Wall Street.

    A parallel development is the army of venture capital-backed science projects seeking all manner of petroleum alternatives to stick in your fuel tank. Renewable fuel standards — optimistic, given current funding levels –hold out the promise of a robust end market for these products.

    ExxonMobil made headlines with its algae investment, following in the footsteps of Chevron (NYSE: CVX), BP (NYSE: BP), and Royal Dutch Shell. Valero (NYSE: VLO) has also been active in the area of fuel alternatives, funding the development of feedstocks as diverse as algae, municipal solid waste, and animal fats.

    Refiners have also been increasingly moving into conventional ethanol production. Valero took the plunge with its purchase of all those VeraSun plants back in March. Just last week, Murphy Oil (NYSE: MUR) picked up an ethanol plant of its own.

    The motivations behind all of these corporate actions become clearer when you consider the peak gasoline point of view.

    With even ExxonMobil, a diehard hydrocarbon company, moving into alternatives, you know the outlook for refined petroleum is dimming.

    That could make the case for avoiding the independent refining group. Then again, if there's an ongoing flight from the space, those like Holly (NYSE: HOC), who stick around to pick up the pieces, should be able to rack up some decent returns."

    http://www.fool.com/investing/general/2009/10/06/peak-gasoline-is-here.aspx

    John

  23. rufus wrote: About the Only Profit Valero is making right now, according to them, is coming from the ethanol plants they bought from the bankrupt Verasun.

    Looks to me like they made a 2Q profit in their retail business ($65 million) as well as their Mid-Continent ($18 million) and West Coast ($59 million) oil refining operations as well as their ethanol business ($22 million)
    http://phx.corporate-ir.net/phoenix.zhtml?c=100647&p=irol-newsArticle_print&ID=1312833&highlight=

  24. RR claims he wants to reduce the use of fossil fuel. So I went to the conference web site to see what I could learn.

    Existing Gasification Plants in the U.S. = 19
    Existing Gasification Plants in the U.S. running on fossil fuel = 19
    Existing Gasification Plants in the U.S. running on biomass = 0

    If it was purely left up to economics, then gasification plants would run on fossil fuels until the fossil fuels ran out. Likewise, if it was purely a matter of economics we would still produce most of our ethanol from fossil fuels just as we did before the subsidies and mandates made it more attractive to produce it from corn. My feeling is that at this year’s gasification conference, coal gasification is getting the most airtime, with biomass sometimes tacked on as a seemingly politically correct option.

    There are existing biomass gasification plants, and I was in a facility on Friday that was making liquid diesel from gasified biomass. To my knowledge, it would be the only one operating in the U.S., but several are being planned. Further, Choren has built the first commercial BTL plant in the world in Germany.

    But again, the right policies have to be in place to encourage this, or we would always take the cheap route (which may not be the wisest route in the long-run).

    RR

  25. O/T: I know Kinuachdrach will love this snippet about a new eco-friendly ad campaign by The Times of London:

    "Perhaps what the Times has noticed is that there's a lucrative market for environmental scare stories. What the advertisements are doing is targeting this segment of the superstitious middle class, which wants to believe that Thermageddon is nigh, or that oil will run out next week, or that a tsunami of non-biodegradable plastic refuse will engulf the family Volvo on its morning school run – shortly before it's zapped by deadly WiFi radiation."

    "No one today is as superstitious as the Grauniad-reading middle class, and the Times wants some of the action. And perhaps some of those adverts for "survival seeds" you hear on US talk radio."

  26. Yep, just like the oil companies. Funny how it works that way.
    Play nice. At this rate Big Oil will soon be the only producer of ethanol…

    Wonder how the subsidy/mandate debate will go then…

  27. John-
    IBM is announcing with some fanfare a two-year program to develop a 500-mile range car battery. Lithiun Air battery.
    Man, oh, man if this works….

    "Last week, a consortium of some of the nation's leading scientists and engineers reportedly met in California to develop a new battery pack for electric cars. Sponsored by IBM and its Big Green Innovations program, the so-called Battery 500 team hopes to create a power pack capable of propelling a vehicle for up to 500 miles.

    To reach this lofty goal, IBM's group is focusing on lithium-air technology, which uses lithium anodes electrochemically coupled to atmospheric oxygen through an air cathode. These batteries are thought to be ideal for EV applications due to their superior energy density – IBM's scientists say up to 10 times that of today's lithium ion batteries – and high specific energy."

    Evidently, this prospect is real enough, that some people are working on the details of how to charge such a monster quickly enough.

    Really, 220-three phase is barely good enough. And who wants to handle 440?

    On the other hand, the number of electrocutions would probably be less than the number of people immolated every year now in their cars, which is about 3,000…..

  28. “Further, Choren has built the first commercial BTL plant in the world in Germany.”

    I start to get excited when the same company builds the second one. That is why I post a link to EPI with 94 projects including in Germany.

    Choren post one project:

    “The net electrical output amounts to approximately 10 MW with electrical efficiency of up to 35% related to the feed material’s energy content.”

    Not bad but not very impressive. Sometimes taking the most expensive route is not the wisest route.

  29. “number of people immolated every year now in their cars, which is about 3,000”

    I find this hard to believe not counting special effects on TV.

  30. From the article: "Exxon reports that a new plant, based on 2nd generation technology with better heat integration and process efficiency, has been built in Shanxi, China."

    Now that's important! Last week, China completed its first Airbus jet. The world does not stand still, and the race will still go to the fastest — especially if there are those who don't realize they are in a race.

  31. Okay Ben,

    Yes, it's interesting that IBM is getting into the battery thing. Any Grove former head of Intel suggested that Intel get into the battery biz. Grove is a fan of electric cars.

    IBM also has a bunch of people working on the Smart Grid as does Sun Micro, GE and other IT companies.

    I thought EXXON CEO Rex Tillerson's statement was pretty amazing:

    "motor vehicle gasoline demand is down, is headed down, and is going to continue to head down."

    John

  32. Benny,

    There are lots of "Man, oh man if this works…" technologies being dreamed up and developed right now.

    The most exciting ones have nothing to do with wind, solar, biofuels, or batteries.

  33. CORRECTION: …the taxpayer may not have to foot the bill for as many millions of dollars for subsidies as he would for mandates…

    What I am saying is that if economic viability is out of the question, with a subsidy you may have to pay zero because producers probably won't make any product and try to sell – thus collecting no subsidy. However, if it is a mandate, when economic viability is out of the question the taxpayer may get royally shafted by paying far above the going price for a comparable fuel.

    RR

  34. In fact the company is presenting at the conference.

    I saw their presentation today. It was one of the better ones I saw. In fact, I just got off the phone with someone who wanted to know what I thought about what they had presented.

    Black liquor gasification is really picking up steam. In fact, I discussed it in the book chapter I just finished on wood and energy.

    RR

  35. Looks to me like they made a 2Q profit in their retail business ($65 million) as well as their Mid-Continent ($18 million) and West Coast ($59 million) oil refining operations as well as their ethanol business ($22 million)

    Now someone just needs to figure out how much ethanol they sold, and whether they would have made any money without the subsidy.

    RR

  36. Did you see that GAO has issued a report recommending elimination of the blenders tax credit for ethanol saying it is no longer needed as a stimulus since the ethanol industry is reaching maturity?

    Of course, the ethanol industry disagrees.

    Funny how that works. The ethanol industry loves to say that this subsidy really benefits the oil industry, yet any time someone talks about taking it away, they are the ones who start screaming. Maybe they just really love the oil industry and don't want to see them get shafted?

    RR

  37. RR:

    The tax benefit for ethanol is taken by the blender or refiner who purchased EtOH and blended it into gasoline.

    This exact same tax subsidy is what props up the wholesale rack price for EtOH to levels which it would not otherwise rise to without this particular tax subsidy.

    Thus the tax credit taken by the blender shows up in the fermenter's bottom line. Pretty simple. I think we've talked about this before…

    -Cliff

  38. Benny Cole wrote number of people immolated every year now in their cars, which is about 3,000

    More like under 500, and that should include smoke inhalation besides immolation.

    http://www.nfpa.org/assets/files//PDF/VehicleFactSheet.pdf
    U.S. fire departments responded to an average of 306,800 vehicle fires per year in 2002-2005… Highway vehicles *1 accounted for… 471 (90%) of the associated deaths….
    *1 Highway vehicles include cars, trucks, recreational vehicles, motorcycles, and other vehicles intended for road use. “Highway vehicle fire” describes the type of vehicle. It does not mean the fire occurred on a highway.

  39. The Mandates kept the ethanol producers alive during the "Crash." During that time most of the benefit of the Tax Credit went to the Blenders.

    Now, Demand is picking up, and most of the "goodies" are accruing to the "Producers."

    The main person to benefit from all this has been "ME."

    Those that have "Lost" have been Taxpayers that don't drive, and anyone who owns Oil Fields (or who works for Companies that Do.)

  40. The ethanol industry loves to say that this subsidy really benefits the oil industry, yet any time someone talks about taking it away, they are the ones who start screaming.

    You'd think the ethanol industry would jump at the chance to show they are a mature, thriving industry that can now make it on its own. All the GAO wants to do is kick them out of the nest and see if they can fly on their own.

    That's something every business has to eventually do. And something most businesses look forward to doing.

  41. “Kit P, that list is incomplete.”

    Well Tmonkey thanks for the link. I linked a list of about 100 projects for one small company. You linked a demonstration project built with DOE funding. When you read the reports about how well the project worked the conclusion is 'that pig can not fly'.

    I read about 10 demo projects a week that cost 10 x times what a text book projects costs. Commercial biomass projects will not have fool cells or gasifiers. I would throw about $40K of solar PV on the roof just to keep the green weenies happy. No need to hook the solar panels, they are just fluff.

  42. Will we see more interest in CTL production with Honeywell and Rentech in the near future?

    DES PLAINES, Ill., Oct. 7 /PRNewswire-FirstCall/ — UOP LLC, a Honeywell (NYSE: HON – News) company, announced today that it has expanded its alliance with Rentech, Inc. to support clean fuels production, adding UOP gas processing technology for the treatment of synthesis gas, or syngas, from sources such as biomass, natural gas and coal.

    http://finance.yahoo.com/news/Honeywells-UOP-and-Rentech-prnews-3797660320.html?x=0&.v=1

  43. Rufus~

    What your telling me then is that instead of the corn ethanol industry being vital, robust, mature and wanting to prove that by stepping out on their own to prove they've got moxie; that they'd rather sit back and suckle from the public trough?

  44. Thanks for the link Clee, you do good research.

    Notice that only about 11% of the deaths (6-7) were a result of a malfunction or mechanical failure. I would suspect that most people are not trained to know when to fight a fire and when to walk away. I have put out a small engine fire while working on the car next to the house. I have also approached a burning car at a dead run carrying a fire extinguisher. Another man got their first and put out the fire out. We both thought we saw a child in the car. It was a life like doll.

    Unless you know what you are doing run away from a gasoline fire.

    Anyone dumb enough to buy a BEV is not smart enough to plug it in.

  45. Well, yeeah

    D'oh

    Wendell, the ethanol industry has to depend on its mortal enemy to distribute, and sell its product.

    Trust me, they'll take all the help they can get. I don't know why you all worry about it. It's a "done deal." Count up the number of Senators from states that grow corn.

    By the way, I read (somewhere) yesterday, that we'll be shipping a couple of loads of ethanol to Brazil. How's about "them" apples?

  46. By the way, I read (somewhere) yesterday, that we'll be shipping a couple of loads of ethanol to Brazil. How's about "them" apples?

    That is rather difficult to believe since the cost of producing ethanol in Brazil is so much lower than growing corn and distilling it here.

    How about pointing us to where you read that?

  47. I don't have the foggiest where I read it. It's not hard to believe, though. Their market is expanding, rapidly, and even though they have a lot of refineries under construction, imbalances happen.

    Just think in terms of "Canada exports oil to us from the tar sands, and then imports oil from Africa on the East Coast." The energy market is a Big, and fluid market.

  48. Robert,

    There's a really good framework that explains why companies often fail to make technology transitions. It was advanced to provide a way to anticipate what might happen in a market.

    It's called "Seeing What's Next" by Clayton Christensen. The first book, "The Innovator's Dilemma" describes in great detail across many industries how the leaders in a market – like steamshovels, failed utterly to migrate to hydraulics. It's fascinating.

    Someone who understands the industry's players well could use this to figure out who might transition, when, and how (acquisition, etc.).

    I'd certainly be fascinated to read your analysis using such a framework…

    Thanks again for the great blog!!

  49. Dennis Moore-
    Well then, tell us. What are the exciting new technologies. I love the new stuff.
    If you know more than IBM about lithium air batteries, tell us.

    Clee-
    You are right. Years ago, I read that 10 percent of the 30,000 dead on US roads every year was due to fire. Obviously, that fig is wrong–although it appears more people burn to death in cars than apartments. (PS, death by smoke inhalation is death by fire–no distinction ir warranted).
    The point is this: Gasoline is probably more dangerous to use than pressurized CNG. Yet there seems to be scare-talk that CNG is dangerous, along with methanol.
    Who plants these urban myths?

  50. And, btw, there probably isn't as much cost difference as you think there is. It's to the "enemies of ethanol's" interests to promote that line of thought; but, I've seen numbers of around $1.60 gallon (may be correct, maybe not,) and that's a little higher than corn ethanol, at present.

    Remember, most of that sugar cane is harvested "by hand." They basically pay "slave labor" wages, but that can't last forever. Also, most of that ethanol is, presently, shipped by truck, I think. That's expensive.

    In addition, you can't "store" sugar cane. You have to harvest it, process it, and then store the ethanol. Now, it's true they can get two, or three crops down there, but, still, it's kind of inefficient.

  51. And, btw, there probably isn't as much cost difference as you think there is.

    Then why have Big Corn and Big Ethanol dug in their heels so far about maintaining the tariff protecting them from Brazilian sugar ethanol?

    If production costs were nearly the same, the transportation costs of bringing Brazilian ethanol here would price it out of the U.S. market without the need for a tariff.

  52. First Rule: Protect your "Subsidies." It's free money.

    Second: I don't think there's ever been a dime of tariffs collected on Brazilian ethanol. An amount equal to 7% of the previous year's U.S. production can be brought in free from tariff through the "Carribean Basin Initiative."

    They ship the Brazilian ethanol up to Trinidad, or the Dominican Republic, or Haiti, or somesuch, "finish" it, and ship it to the U.S. (secondary tariff-free.)

  53. BTW, remember, you're dealing with "Agricultural" products. One year, corn is high, sugar is cheap, and Brazilian ethanol works good. Another year (like this year) corn is cheap, sugar is high, and Cane juice might not work so well.

    The wholesale price of ethanol has jumped the last couple of weeks. A few months ago it was very low (and, gasoline was Lower.) It's not a "simple" market.

  54. Anonymous Dennis Moore said…

    Benny,

    There are lots of "Man, oh man if this works…" technologies being dreamed up and developed right now.

    The most exciting ones have nothing to do with wind, solar, biofuels, or batteries.

    October 06, 2009 4:55 PM

    ——————————–

    How about some of the desalinization advances coming on-line ? Most of our modern industrial processes require significant electrical and/or water in-puts.

    How about the new low pressure, two phase osmosis process or the ceramic water turbines that re-process a portion of the formerly wasted brine ? A mere 40 % recovery rate for desalinization plants is being vastly improved upon.

    Considering the fact that there are some 600 or more desalinization plants in the U.S., and considering how vital water is to both agriculture and industry, then surely water is pertinent to the general energy discussion: "Energy Potpourri"

    The rise of civilization itself depended upon agricultural production sufficient to sustain all the specialists who made so-called civilization possible.

    No water means no agriculture. and no agriculture means no pyramids.

    They figured that out a long time ago in ancient Egypt which periodically suffuered droughts. The Anasazi in the American southwest also found that out as did the Mayans.

    No agriculture means an end to civilization.

    Even our present, highly complex and technical civilization does not run on oil. It runs on water.

    John

  55. Benny Cole wrote: EV applications … the number of electrocutions would probably be less than the number of people immolated every year now in their cars, which is about 3,000…..

    and later: The point is this: Gasoline is probably more dangerous to use than pressurized CNG. Yet there seems to be scare-talk that CNG is dangerous, along with methanol.
    Who plants these urban myths?

    Huh. I thought the point was about BEV and electrocutions. Now it's about CNG and explosions? Either way, I have no idea which one is safer per refill/recharge or per vehicle mile travelled, or whatever is the appropriate statistic, and I take it that don't know either, since you said, "probably" in both the BEV and CNG cases. So it seems rather premature for you to be accusing nameless people of planting myths when you don't even know if they are actually myths or not. If they are myths, point us to the refuting data. Those highway vehicle fire statistics could include CNG fires and lithium battery fires, for all I know.

  56. "How about pointing us to where you read that?"

    don't you know that Rufus doesn't have to cite sources? If he thinks he recalls something positive about ethanol, that's good enough to spread the news, unless it is bad news.

  57. Clee-
    Since CNGs and BEVs are rare in the US, I doubt there are many non-gasoline vehicle fires. Those 500 people a year are getting fried by gasoline. (BTW, see below, the EPA says it is 1,400 people a year).

    As for urban myths, there are posters on this site who have suggested that CNG leads to immolations, and that BEV-users will get electrocuted. We had a methanol scare as well, and I have seen all three scares on other energy websites.
    In general, I decline to name other posters, as it can develop a useless catfight. I prefer to state my case, and read other people's cases. But I have noticed a consistent hysteria about methanol, BEV electrocution and CNG explosions, all unwarranted.

    There are 10 million CNG cars on the road globaly, and they are proven technology. Will BEV-users get electrocuted? Seems unlikely. Plugs can be designed so the prongs are embedded deeply.
    Methanol is not dangerous unless imbibed–sheesh, methanol is window cleaner, and in spray lacquer, sold widely. Methanol is used in toy airplane engines, used by little boys.

    BTW, here is a 1986 report on vehcile fires. From the EPA, and it is a fascinating read.

    It says there are 500,000 vehicle fires a year. Who knew?

    ""In 1986, there were 500,000 vehicle fires and 1,400 vehicle fire fatalities in the United States.
    Gasoline was the first material to ignite in 180,000 of these fires and many of the other fires
    ultimately involved gasoline.
    Gasoline-ignited fires in 1986 involving cars, buses, or trucks resulted in 760 deaths, 4,100
    serious injuries, and $215 million in property damage.
    Projections indicate that casualties would drop dramatically if methanol were substituted for
    gasoline as the country’s primary automotive fuel. Looking just at vehicle fires in which gasoline
    is the first material to ignite, a switch to methanol could save an estimated 720 lives,
    prevent nearly 3,900 serious injuries, and eliminate property losses of millions of dollars a
    year.
    Methanol’s fire safety advantage over gasoline stems from several physical and chemical properties
    (see figures on page 3):
    • LOWER VOLATILITY (Figure 1)
    Methanol does not evaporate or form vapor as readily as gasoline does. Under the same
    conditions, exposed gasoline will emit two to four times more vapor than will exposed
    methanol.
    • HIGHER FLAMMABILITY REQUIREMENT (Figure 2)
    Methanol vapor must be four times more concentrated in air than gasoline vapor for ignition
    to occur.
    • LOWER VAPOR DENSITY
    Gasoline vapor is two to five times denser than air, so it tends to travel along the ground to
    ignition sources. Methanol vapor is only slightly denser than air and disperses more rapidly
    to non-combustible concentrations.
    • LOWER HEAT RELEASE RATE
    Methanol burns 25 percent as fast as gasoline and methanol fires release heat at only oneeighth
    the rate of gasoline fires.
    These properties together make methanol inherently more difficult to ignite than gasoline and
    less likely to cause deadly or damaging fires if it does ignite. Methanol is the fuel of choice for
    Indianapolis-type race cars, in part because of its superior fire safety characteristics.'

    Well, there you have it. Gasoline is a very dangerous fuel.

    http://www.epa.gov/OMS/consumer/08-fire.pdf

  58. No water means no agriculture. and no agriculture means no pyramids.
    Unlike oil, water is not converted to thin air when it is used. Water can be recycled nearly endlessly, and usually without the use of high energy processes, like desalination. Seawater desalination is especially expense, due to the high levels of salts @~35 g/L.

    The city of Windhoek, Namibia has been augmenting their potable water with recycled sewage for 42 years.

    The free market, BTW, is great for solving the problem that you anticipate (effect of high energy costs on water supply). High energy costs would make seawater desalination uncompetitive and direct augmentation more competitive – how much would you pay for the "yuck" factor?

    Here is an example of a project in South Africa where it is planned to supply 20 ML/d (~5.3 mgd) of potable water by treating coal mining effluent. For reference: Coal mining effluent tends to be real nasty.

    The project is economically viable due to a combination of factors, including lack of raw water sources, the project would extend the life of some existing mines and provide access to previously flooded coal reserves.

    So relax: water shortages are NOT a part of your future…

  59. Opto said:

    "So relax: water shortages are NOT a part of your future…
    ——————————-

    What ?

    The so-called "future" has already arrived. That's why they are building de-salinization plants in California right now.

    Not enough water from the poor Colorado River to support the voracious appetite of "Angelinos"

    I think it was Napoleon who said: "An army travels on its belly".

    Whatever one might think of Napoleon politically, or historically, I think Napoleon had that one right,

    No civilization can maintain itself without the "fuel" of Civilization, which is food, which ultimately is dependent on water.

    We do not eat oil.

    Can we do without oil ? Of course. We did so for thousands of years before oil ever came along.

    Will oil deliver us from drought ?

    I doubt it. It never did in the past, long before there were concerns about "Global Warming/Climate Change and all that crap.

    John

  60. Well, there you have it. Gasoline is a very dangerous fuel.

    Benny~

    Had the EPA existed 120 years ago, they would have never let gasoline become the liquid fuel of choice. It is far too dangerous.

  61. Optimist-
    Well, I might surprise you. I think the Tesla is a nice toy for rich guys, but not much of a real solution. It is too expensive! No cargo space! When it runs out of juice, you cannot fire up an onboard re-charger, ala GM Volt.
    I see a good future for the GM Volt-type car. if they can go 60 miles on the charge, and the price is only $5k more than simple ICE.
    We are not so far off those standards.

  62. “The point is this: Gasoline is probably more dangerous to use than pressurized CNG.”

    Benny your logic is flawed. Products sold to the public must meet safety standards. The motoring public assumes a certain level of risk when they leave their house. Harnessing the energy required get from one place to another in a short period of time requires storing dangerous amounts of energy. The cost of meeting safety standards may preclude certain technology from the market.

    It is not how dangerous something is, it is the cost of making it safe to use.

  63. Brazilian ethanol traders said several companies have been analyzing the possibility of importing the fuel, but at current prices, such deals are not feasible.

    Hmmmm…

  64. “It says there are 500,000 vehicle fires a year. Who knew?”

    Yes, 320,000 was started by something other than gasoline!

    After Clee post up to date information from an organization dedicated to fire safety, Benny post 20 year old junk from a government agency that has no responsibility for safety. According to NFPA, 25% of vehicle fires are caused by electrical malfunction.

    The safest fuel is diesel. We know how much EPA likes diesel.

  65. I was looking at this:

    Ethanol prices at main ports in northeast Brazil were currently around 70 to 72 cents per liter on a free on board basis, or $2.65 to $2.73 a gallon, according to trade sources.

    By comparison, U.S. ethanol prices at the Gulf of Mexico were quoted substantially lower at about $1.92 per gallon FOB, but imports into Brazil are subject to a 20 percent import tariff which narrows the price spread.

  66. The so-called "future" has already arrived. That's why they are building de-salinization plants in California right now.
    AFAIK, there is ONE seawater plant that's (hoping to) have made it through the permitting process.

    OTOH, there is the huge GWR system, which uses treated sewage to replenish groundwater.

    Not enough water from the poor Colorado River to support the voracious appetite of "Angelinos"
    Again, the Free Market should be allowed to do its thing. Price the water what it is worth, and watch conservation happen…

    We do not eat oil.
    Maybe not. But we DO eat natural gas, at least in the form of fertilizers used to achieve those high yields Rufus keep yapping about…

    Will oil deliver us from drought?
    Not familiar with ME seawater desalination plants, then?

    Come on, John, there is NO water shortage. Just scaremongering…

  67. No civilization can maintain itself without the "fuel" of Civilization, which is food, which ultimately is dependent on water.
    Not necassarily.

    A few years ago I attended a seminar where they claimed to have developed crop plants that could grow on seawater, without the crop being affected. I am guessing that food prices aren't high enough to make the application of this technology worthwhile. Just yet…

    Think about that for a second: if we start farming the oceans, were won't run out of food for several decades, if not centuries.

    Make peace eith it, John: we have the technologies to support far more than the mere 6 billion humans currently alive. And with more humans around, we'll invent even more technologies.

    The question is whether we have the political will to make sure everybody gets a fair deal, to prevent major wars and fight terror. Now that is an all together different question.

  68. I see a good future for the GM Volt-type car. if they can go 60 miles on the charge, and the price is only $5k more than simple ICE.
    There is a slight chance that the Volt will meet all the hype GM is laying in front of its door. Slight. And that's assuming GM survives 2010. So wake me up when the Volt shows up in showrooms and meet half the hype…

    In related news, not everybody shares the-future-is-electric hype: Even if oil prices hit $200 a barrel by 2020, Lux figures electric cars will make up less than 8% of global new-car sales. If oil stays where it is today, electric cars could make up a mere 3% of the market. With oil at $70 or $140 a barrel, hybrids will likely carry the day. Only with $200 oil will all-electric cars take off.

  69. "There are 10 million CNG cars on the road globaly, and they are proven technology."

    Benny — careful! You are on the road to becoming Benny "Rufus" Cole. Enthusiasm is good, but don't trivialize real issues.

    Most of the CNG vehicles in the world are "dual fuel" — standard gasoline vehicles retrofitted to run on Compressed Natural Gas as well. Which is necessary, since they don't go very far on CNG — typically 100 miles.

    Much of the time, those CNG vehicles are being driven on gasoline. This is one of those things that makes it tough to get a handle on what is happening in the marketplace.

    If you think the high pressure refueling issue for CNG is trivial, visit your local Fire Department. Ask them show you the equipment they use to refill (non-combustible) air bottles to 1,500 psi. Most people are quite impressed.

    Of course CNG vehicles could be a big part of a solution to our energy challenges. Just like nuclear-powered Coal-To-Liquid could be. There are also lots of real issues that need to be addressed, but those are technical problems — the human race knows how to solve technical problems.

    The show-stoppers are the political problems — and it is not at all clear that the human race knows how to solve that kind of issue.

  70. Kinu-
    Sheesh, already installed here in Los Angeles at a gas staion on the corner of Olympic and La Cienega is a CNG pump open to the public, that pumps at 3500 psi. Clean Energy Fuels put it in, done deal. It cost $750k.
    Hey, I wish I could drive a V-8 on leaded gas with a big-boobed blonde at my side. What I wish and what is going to happen in the marketplace are two distinct things.
    People will drive CNGs if pumps are around, and gasoline costs $7.00 a gallon.
    Not as much range. But safer than gasoline.
    BTW, the EPA report on methanol is fascinating. And, we can make methanol from NG.
    Really, we hardly need oil. It is just inertia, and, as you rightly point out, government dufus-ness that is keeping us trapped.
    Bush got us a hugely upsized ethanol program. Boy, that solved nothing, and made some things worse (sorry, Rufus).
    Let's see if Obama can do worse. Maybe he can.

  71. No problem, Benny. The only thing is, ethanol has all those advantages of Methanol, plus higher octane, plus it's not toxic,

    and it requires Less natural gas (in some cases, a Lot less) to make.

  72. Benny Cole wrote: People will drive CNGs if pumps are around, and gasoline costs $7.00 a gallon. Not as much range. But safer than gasoline.

    How popular is CNG in Europe where gasoline already costs $7.00/gal?
    http://www.eia.doe.gov/emeu/international/gas1.html

    You gave a link suggesting that methanol is safer than gasoline, but I haven't seen any comparisons of CNG vs gasoline car safety. I did run across a study estimating that CNG school buses "are more prone to fire fatality risk by 2.5 times that of diesel buses"
    http://papers.ssrn.com/sol3/papers.cfm?abstract_id=877116
    But of course that still doesn't say whether CNG cars are safer or more dangerous than gasoline cars.

  73. Benny you want something to get excited about?
    The ExxonMobil coal to syn gas to methanol to gasoline process that RR mentions is interesting and it supports my belief that we should be making methanol first and then whatever secondary product that the market will support.

    But to do any type of CTL you need to dump a lot of CO2 in the process. Without debating AGW, I just think that is an inefficient use of carbon atoms. So you need a source of Hydrogen near the CTL plant. The best way to do that would be with nuclear power. The way to do that is the next gen nuke plant then you can use all of the Carbon by saturating it with Hydrogen. a sigificant portion of the energy in your fuel would be from the nuclear source.

    I also like heat engines. I am a fan of a modern steam engine (I have provided links for this in the past), mostly because it would be a real flex fuel vehicle. If the fuel burns, the car goes. methanol, ethanol, gas, diesel, kerosene, fryer grease, CNG, propane, etc. or any mixture

    Here is one heat engine that I really like. It is the JTEC it is a solid state device that turns heat into electricity. Now you could have a liquid fueled electric vehicle without an ICE generator.

    For nuclear to electricity, I like things like the traveling wave reactor. It breeds its fuel, what is now called waste becomes the fuel. Very exciting.

    And finally in our Quest for the Holy Grail of energy. Fusion with a host of small fusion alternatives to the ITER program. Many dream about Polywell, and if it works like the late Dr. Bussard figured, the world will change overnight.

    This is the one I wish for, but when I am wishing, I always remember this, you can wish in one hand…

  74. “still doesn't say whether CNG cars are safer or more dangerous”

    Of course not, that is not the purpose of a PRA.

    “The risk result was found to be affected most by failure rates of pressure relief valves, CNG cylinders, and fuel piping”

    The school bus maintenance manager would use this information to increase inspections and maintenance for those component as part of the school system reliability assurance program (RAP).

    We will have to ask Benny about his RAP.

    Benny is another from California who does not know that natural gas is a fossil fuel but does not worry about safety of CNG but thinks nuke plants are dangerous.

  75. Just a couple of thoughts for Benny regarding compressed natural gas and also methanol in comparison. And we've talked about these issues before…

    Personally, I would not purchase nor want to be driving alongside of anybody motoring with CNG at 3,500 psi. Somepin' – anything goes wrong and there will be one hellava explosion from these bottled, gaseous pressures.

    In contrast, you mentioned many wonderful things about methanol from the EPA website regarding vapor pressures, it being harder to ignite, combusting cooler, etc. What you didn't include in that list were a few other points:

    And I reference the word methane (as in gas) and methanol (as in liquid). And the only difference between a molecule of methane gas or a molecule of liquid methanol is only a simple Oxygen atom. Their chemical formulas are CH4 and CH3OH.

    The methane gas needs to always be contained under pressure whether in a pipeline or in a composite-wound cylinder bottle. In contrast, the liquid methanol containing that one oxygen atom is quite stable at atmospheric pressures and temps.

    When ignited after an accident or crash of some kind, the liquid methanol alcohol while combusting much cooler than gasoline or even methane (ie: a slower, cooler burn rate) the methanol flames (nearly invisible because they are that clean) can be easily extinguished with a simple spray of water.

    Being a polar molecule because of that extra oxygen atom, oxycarbon methanol – unlike hydrocarbon methane or gasoline – will immediately dilute in a simple spray of water and it's flames, if ignited, then easily becomes extinguished.

    Finally, simply hose a methanol spill down with lots of water and it dilutes and will feed trees, grasses, bugs and microbes with a free lunch and thus it quite easily biodegrades.

    These are just a few more reasons to embrace methanol which takes about 2.2x the volume to add up to the more dangerous, yet higher BTU content of gasoline.

    One other element to consider:

    Catalytically smash two C1 methanol molecules together and you've produced a very lowcost, synthetic C2 ethanol. Hit that C2 via GTL processes with a C1 again and produce a C3 propanol, a C4 butanol, a C5 pentanol, etc. Therein you have immediately increased the BTU content of the liquid mix of alcohols whereby 2.2x volumes of methanol are quickly diminished in comparison to the BTU's contained within a gallon of oily gasoline. Capiche?

    -Cliff

  76. BEYOND CELLULOSIC

    http://ethanolproducer.com/article.jsp?article_id=6021&q=&page=all

    Probably the best insider's ethanol biofuel article that I've read during the past year. Four 'beyond cellulosic' next generation biofuel companies are profiled rather well. Worth a read.

    My primary comment here is about Enerkem, a profiled Canadian group working to synthesize higher mixed alcohols (beyond cellulosic) via GTL methods and claiming only methanol and ethanol.

    You'll learn that they are doing a two-step GTL back-end behind gasification to syngas front-ends, then creating methanol first in reactor A) and then converting this MeOH to ethanol in reactor B).

    This conversion to ethanol in reactor (B) produces a blend of higher alcohols which Enerkem and others are NOT identifying. Enerkem isn't on the cutting edge here where others are quietly demonstrating the means to highgrade a C1 methanol molecule much higher, to C5 or C8 or C10 in just a single reactor vessel only. Big difference effecting the bottom line considerably.

    Comparisons to 3 other alternative fuels techs are very well done.

    Also reading in print here is a forecast for 20,000 EtOH gallons per acre via algae production right next to another firm's algae forecast for 3,000 annual gallons per acre. Both of these hyped numbers are insignificant even though one forecast is 7x the algae fuel volume of the other.

    People don't realize A) the cost to build/operate these algae beds and lakes or new algae panels – and how little 3,000 or even 20,000 gallons of annual EtOH volume (per annual acre constructed and continously farmed) really are in the big scheme of things. 

    It would take 2.2 acres of constant algae care and annual feeding to then produce just one semi-truckful per year of EtOH fuel in one case – or maybe 1/3 acre to produce just one semi-truckful per year of EtOH fuel in the other preposterous case. 

    In comparison: One 15,000 bpd GTL plant (similar to what Enerkem and Range and others are developing) on 20 virgin acres operating continuously would output 215 mgpy or the algae equivalent EtOH fuel volume needing 72,000 acres or maybe 10,000 acres of algae buildout scenario in comparison. 

    Plese try to imagine the thousands of staff needed to operate miles and miles of engineered algae plant life secreting ethanol from CO2 and sunlight inputs.

    Can you imagine the scale of 10,000 acres to 72,000 acres to produce the fuel volume quantities of just one 15,000 bpd GTL train situated on 20 acres where the plant itself might be spread across just 2 acres with the rest being rail, tanks, evap ponds, buildings, semi-truck loading, etc.?

    Or thousands of employees vs: about 70 or 80 for the same volume outputs of an even stronger BTU biodegradable new fuel? Or continous, commercial fuel outputs 24×7 vs: only via sunlight with CO2 piped in from someplace else? Please don't lose perspective here when reading stockbroker hype claims of proponents.

    The technical descriptions and rather accurate reporting of this ethanol editor at the link above was rather a dream read in comparison to the daily hype from BioFuels Digest which isn't accurately interpreted by most readers and investors. Nuff said…

    -Cliff

  77. The concern over the hazards of methane is generally all BS. It has to be handled properly (similar to any other combustible material) and that is all.

    In my last plants we reformed 3 million SM3 per day of methane 330 days a year. The product gases being H2+CO for reduction of iron ore.

    In the event of a leak the methane is up and away – quickly at that.

    We had an earthquake once which caused the entire pipeline network to go down, lifting every safety valve around – that was a bit noisy for a while.

  78. Dennis,

    Do you know anything about the Cyclone engine ? It is an external heat, modified closed loop steam cycle, I think. It supposedly runs on just about any fuel.

    I went up to their website a while back and they don't give many actual details.

    I'd be interested to hear your thoughts on it.

    John

  79. Cliff-
    Well, you may be driving alongside such vehicles already—the Los Angeles MTA busses have been using CNG for decades, w/o incident. Many fleets in SoCal do, for air pollution reasons. They seem to work fine.
    There are 10 million CNG vehicles in use globally. If there were chronic dangers, I think we would know.
    Natural gas, when leaking, tends to go up, into the air. Gasoline, when leaking, tends to go down, and form puddles or pools.
    CNG cars are already widely used in Europe–and you know how regulation and safety happy they are.
    There is already a 3500 psi pump in West Los Angeles, at a commercial gasoline station.

    As for the price of CNG in Europe, that depends on supply there and taxes there. They love fuel taxes.
    In Utah and Oklahoma, CNG is cheap, along the equivalent of 60 cents a gallon.
    Here is a used-car dealer selling CNG cars off the lot for under $10k, Today. Now. Not maybe, not woulda-coulda-shoulda-but now: cngvehicles.net.
    We (in the USA) have epic supplies of CNG, thanks to the brilliant efforts of shale gas guys. They deserve the Nobel prize, now being handed out.
    Methanol strikes me as another excellent route to go, and RR says methanol can be made from natural gas rather cheaply.
    Both CNG and methanol suffer from the shortcoming of reduced range (as Kinu points out at every opp.).
    Yes, in the perfect world, I would drive leaded gasoline in a V8 convertible with a big-boobed blonde at my side, no air pollution controls at all.
    But what will work in large scale?
    I contend CNG and methanol are terrific, and doable.
    The PHEV-gasoline or PHEV=methanol match-up look good as well.
    Ethanol? I will let Rufus handle that. Not my cup of tea.
    In any event, I come back to my basic theme: Who cares about Peak Oil? It is not important. We are leaving the Oil Age, and it is ending with a whimper, not a bang. There is no doom future that makes sense. We have options galore, on both the demand and supply sides–and happily enough, all solutions seem to lead to a cleaner, less-polluted world.
    Bring it on, I say.

    PS to Cliff: Not being an Italian Chemist, I am not sure I "capiche" your entire entry. But, I am more than happy to eat Italian food!

  80. “The concern over the hazards of methane is generally all BS.”

    We can only hope that Russ has no safety responsibilities. The reason to be concerned about methane is that it explodes. The reason to be concerned about H2 is that it detonates. The reason to be concerned about CO is that it is very toxic. It is not similar to any other combustible material, the hazard is invisible.

    The last metal processing facility that I evaluated used anhydrous ammonia to produce H2 and N2 for metal reduction. As a result of the team’s recommendations, one of the processing lines has to be shut down and redesigned after operating for 30 years.

    So if Russ wants to put his kids on school busses that blow up to save a little money, maybe we could start building nuke plants without containment buildings because concerns are BS.

    I do have an issue with the EPA making the workplace more dangerous when regulating insignificant pollution issues. A few years ago there was a big transformer fire. There was a beautiful picture of a billowing fire in the background with a lime green fire truck in the foreground. The fire fighters were watching because that is all they could do. The BPA spokesperson Crystal Ball (you can not make up stuff like this) was answering environmental concerns about PCBs by saying they had been removed. Again fire safety is trumped by stupid regulations.

  81. Well, while you guys dream about methanol, and CNG, and Batteries, and Rare Earths, and Lithium

    Ol' Rufus is "Driving" on Ethanol. (and, to a lesser extent, so are you.)

  82. BEYOND CELLULOSIC

    http://ethanolproducer.com/article.jsp?article_id=6021&q=&page=all
    Nothing new, though, is there? Besides "Beyond cellulosic" is misleading. Some of these technologies will eat cellulosic's lunch, leaving cellulosic in the research lab, where it belongs.

    The article makes some good points about why gasification is superior to hydrolysis. Sentiments shared by RR.

    The second (syngas -> methanol) and third (methanol -> ethanol) steps are a bit more foggy. If the second step can be performed at high efficiency, why bother with the third? From what little we know at this time, I would have to assume Range Fuels' technology (syngas -> mixed alcohols) (if it is legally theirs) is superior.

    Coskata's process makes no sense to me. Why take syngas and ferment it? Not only will biological transformation reduce yield and conversion rate (meaning bigger reactors) but now the ethanol is in a watery solution, requiring expensive separation.

    Photosynthetic technologies all suffer from the same (unavoidable) bottleneck: sunlight is diffuse. Diffuse sunlight means that the most likely system to be successful would be a low tech, low cost system that can be applied to a HUGE area (and I mean HUGE, as in several hundred square miles, leaving open ocean as the only potential candidate). A system of shiny new (read: expensive) plastic tubes will never come close…

  83. Ol' Rufus is "Driving" on Ethanol. (and, to a lesser extent, so are you.)
    Your tax dollars at work, eh? In this case your taxes are used to reduce the life of your ICE…

  84. John asked about the Cyclone engine. When I talk about a modern steam engine this is what I am thinking about. All I know about this is from the web, mostly their website and press releases, so take it for what its worth. I have no unique insight or indepth engine knowledge.

    They have two types of engines, the green revolution engine (high efficincy)and the waste heat engine (low efficiency).

    Their website is a mix of reasonable technical information, with lots of pictures and videos, but little or no data. There is also a large amount of green marketing that tends to get eco-kooky.

    They claim they are better than an ICE, because you don't need a transmission, and there is no oil, it is water lubricated. The emissions are lower due to longer burn time at lower temp and pressure. The water/steam is in a closed loop system, so you don't need to add water. They claim it can be scaled from a weed wacker to a tank. Also there is the runs on any fuel that burns angle.

    All this is possible, they say, due to new materials and modern precision engineering so that the engine can handle very high temperature and pressure steam, and a design that recycles the heat at every opportunity.

    They are looking at military applications with the any fuel and lower heat signature advantages. and some small engine applications (lawn mower) to meet Calif. emissions. I think they hope to compete with deisels with an emissions advantage.

    I admire the inventor is Harry Schoell, as he seems like the kind of guy who can turn his ideas into reality.

  85. Opto,

    I forgot to mention some of the new desalinization technologies are less expensive than water from the Colorado river,

    River water (if you can get it) at about .67 a cubic meter vs high tech dealinization plants at about .64 cents a cubic meter.

    Yup, technology can do amazing things.

    But, Technology is the product of human ingenuity. You better keep the population well watered and well fed or there will be no tech progress.

    That's why seemingly obscure and bizarre issues like water for human beings, agriculture and industry are so important.

    John

  86. At least, Those particular tax dollars aren't going to fight an endless War for Oil in the Middle East. What was that subsidy last year? $200 Billion?

  87. Dennis,

    I didn't quite understand their web-site either.

    Maybe they are trying to keep the technology under cover. (I don't really blame them)

    When you consider that our nuclear subs are nuclear/steam hybrids it makes you wonder if the days of steam are over,.

    Also electrical production from steam turbines.

    John

  88. optimist-
    The great thing about the PHEVs is that all major auto makers are bringing them to market, not just GM. It appears they are inevitable. Certainly, if OPEC maintains a steady diet of price scares and unreliable supply.
    Who wants to rely on a bunch of baboons for your energy supply? Do you? You love Chavez? How about Mexico's hopelessly and corrupt government? Nigeria?
    Libya? Iran? Bush's pals in Saudi Arabia (they of the 1979 oil embargo)?
    Forget it. The world is moving on.
    Optimist, if you are an oil speculator, you may have another price spike or two left, and play 'em hard. Oil is a fossil industry.

  89. I forgot to mention some of the new desalinization technologies are less expensive than water from the Colorado river,
    Like I said: treated sewage is cheaper still…

    But, Technology is the product of human ingenuity. You better keep the population well watered and well fed or there will be no tech progress.

    That's why seemingly obscure and bizarre issues like water for human beings, agriculture and industry are so important.
    I guess I don't see why you'd get pessimistic based on this line of reasoning… Technology (and ingenuity) is what will prevent us from running out of water or food. Afterall, the Green Revolution was possible thanks to… Technology!

  90. At least, Those particular tax dollars aren't going to fight an endless War for Oil in the Middle East. What was that subsidy last year? $200 Billion?
    Low blow!

    No, Mr. Cheney, invading Iraq was NOT the way to ensure cheap oil, as was brutally clear in 2008. Ever wonder if the established oil companies were in favor of the invasion? Ever wonder why the French were so much against it?

    Remember, it was all about our safety. Smoking gun in the form of a mushroom cloud, and all that. Remember Colin Powell's proof to the UN: Two Iraqi's talking about hiding IT. Only Colin failed to mention in an oppressive Muslim country IT could be anything from your Playboy collection to (you'll like this one) your equipment for making moonshine. (No, Rufus, they were not going to put that moonshine in the tank of a Flexfuel vehicle…)

    Consider that $200 billion a tax on the gullible, who thought that this was a way to show 'em how strong we are. In fact, the editorial pages of the WSJ is still making that argument, for crying out load…

  91. The only thing is, ethanol has all those advantages of Methanol, plus higher octane, plus it's not toxic…

    Rufus~

    But methanol can do one big thing that ethanol can't — it will work in a fuel cell.

    And methanol's toxicity is a red herring. It is toxic, but so are virtually all liquid fuels. (Every year I read of college kids dying of ethanol poisoning during rush week.)

    As far back as I can remember I've kept a jug of methanol in my garage (that would be window washer fluid) and no one has died from it yet.

  92. The great thing about the PHEVs is that all major auto makers are bringing them to market, not just GM.
    It's all showboating, Benny. Like they are all working on hydrogen (harp music in the background) engines. Some auto companies can (still) afford the showboating. GM really can't, but it's all they have to show for now…

    Optimist, if you are an oil speculator, you may have another price spike or two left, and play 'em hard. Oil is a fossil industry.
    I'm not. Perhaps I should be.

    It may be a fossil industry, but it will remain a very profitable one. Especially when economic growth returns (assuming it does, in spite of the prostitutians' best efforts).

    And it may only be one spike, but if that spike lasts long enough (2050 and beyond?) and goes high enough ($1,000/bbl and beyond?) Big Oil will buy the Next Big Thing. Using spare change.

    None of which means I like Comrade Hugo anymore than you do, Benny.

  93. The Department of Energy's loan guarantee program, producers say, has been particularly flawed. No advanced biofuel makers, aside from a partnership between BP PLC and Verenium Corp., have so far won approvals.

    "We received a 'Sorry, Charlie' letter," said Bill Schafer, a senior vice president of Range Fuels Inc., which is now building a cellulosic facility in Soperton, Ga., slated for completion early next year.

    He said that under the program, biofuels companies must compete directly against solar, wind and even compressed natural gas — all energy technologies that, unlike advanced biofuels, have already been built at commercial scale.
    They have to compete for loans?!? How unfair is that! Uncle Sam actually said no to some of them? How dare he? It's not like it's real money, or anything like that…

    Reminds me on a joke doing the rounds in my college days: Some beautiful girls are spoiling their pleasant apearance with negative language, using words such as "no" and "don't"…

  94. I don't know nearly enough about Methanol to be "against" it, Wendell. Admittedly, I'm not a great fan of replacing one fossil fuel with a product made from another fossil fuel, but I wouldn't equate a little nat gas-derived methanol as being "the end of the world," either.

    We'll see.

  95. Edit: It didn't really say, "gasoline;" it said "fuels."

    But, somehow I interpolated that into gasoline. Sounds kind of like "gasoline," though.

  96. Ever wonder if the established oil companies were in favor of the invasion?

    I don't know of any that were. And Shell and BP were vocally against it, worrying that it might destabilize the region…

    RR

  97. What I am saying is that if economic viability is out of the question, with a subsidy you may have to pay zero because producers probably won't make any product and try to sell – thus collecting no subsidy. However, if it is a mandate, when economic viability is out of the question the taxpayer may get royally shafted by paying far above the going price for a comparable fuel.

    It will be interesting to see how much we pay for cellulosic ethanol when the mandate kicks in next year, or if there will be virtually no product to pay for despite the 100 million gallon mandate.

    Just what is the penalty that blenders face for not meeting the cellulosic ethanol mandate?

    Isn't the $76 million funding or Range Fuels and the subsequent denial of additional funding a separate issue from the mandate, that you can't blame the mandate for?

  98. Opto.

    I'm not pesimistic at all,

    I realize that "water" is not a big problem in Wash,DC

    But it is in California and out West

    Nothing is a problem in the Nation's Capitol.

    They will simply vote themselves increased retirement benefits and exclude themselves from the rotten SS Program just as they propose to do with the so-called National Health care.

    Why have they weitten themselves out of these programs ?

    The answer is simple.

    They have set up their own Congressional programs quite apart from SS and or Medi-Care, ?

    Simple…. The bastards who impose their laws upon us realize that their programs are a crock of crap and suck and want nothing to do with them,

    One thing Democrats and Republicans share alike is their self indulgence and "self-preservation"

    They want nothing to do with SS or Obama's health program. I wonder why?

    John

  99. One thing Democrats and Republicans share alike is their self indulgence and "self-preservation"
    Amen to that!

    Nothing is a problem in the Nation's Capitol.
    Which is why I suggest that we don't look to the capital for solutions, but rather at the Free Market. And while no market is totally free, generally the less interference by the prostitutians, the better.

    But it is in California and out West
    The US west is in the midst of the biggest drought in 500 years, if some scientists are to be believed. Couple that with huge population growth and you are sure to develop growing pains.

    But like I said, price the water right, and conservation is sure to follow. In fact, in LA people are conserving based on a mere ad campaign. Talk about a cheap solution…

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