Biofuel Developments

I woke up in Switzerland this morning after having spent the past 3 days in the Netherlands. Later today I travel to Germany. The weather here is cold. I love Europe, but do not miss riding my bike in rain that is 1 degree above freezing (as I had to do in the Netherlands on Tuesday). Switzerland is blanketed with snow; the country from the air looks like a Christmas card. I have been told that there is even more snow in Dresden, which is my next stop.

I have been trying to keep up on energy news, and there have been some interesting developments. The previous essay has also hit the 200 comment mark (Blogger is clearly not designed to deal with over 200 comments), so it’s time to put something else out there. A number of people have either commented here or sent me an e-mail about the recent LS9 news:

Bacteria rebuilt to make oil

Researchers have engineered a common type of bacteria to produce biodiesel and other goodies from plain old plants. The microbial trickery, detailed today in the journal Nature, promises to add “nature’s petroleum” to America’s energy supply within the next few years.

“We’ve got a billion tons of biomass every year that goes unused,” said Jay Keasling, a co-author of research study and chief executive officer for the U.S. Department of Energy’s Joint BioEnergy Institute, or JBEI. “We’d like to turn that into fuel.”

Keasling emphasized that the study published in Nature was a “proof of concept” rather than the demonstration of a commercially viable process. He and his colleagues are looking for a process that would utilize as much of the feedstock as possible, and not just the hemicellulose. “We got about 10 percent of the theoretical maximum yield, and we will continue to work on this to try to increase the yield,” he said.

One of the funders for the research is LS9, a California-based biotech company that intends to market fuels and other microbe-produced chemicals. “I’m reasonably optimistic that we’re going to have high-level production of these kinds of biofuels in the next couple of years,” Keasling said. Check out this Berkeley Lab news release to learn more about the research.

I have written a number of articles about LS9 (see LS9’s Oil-Crapping Bugs from three years ago), which I could summarize in this way. There are metabolic pathways that produce molecules that are very close to the structure of fuels. Our bodies produce fats, which aren’t chemically that far removed from diesel. It is probably technically possible to tweak those metabolic pathways to produce drop-in replacements for transportation fuels.

On the other hand, it is going to be technically quite challenging. So I deemed this a very interesting approach (in fact I have called it a Holy Grail), but I don’t place the odds of commercial success very high. If enough companies are attempting this, maybe someone will make it work, but the odds for any individual company to succeed in this area will be low in my opinion.

Then there was Shell’s announcement on a sugarcane ethanol JV in Brazil:

Shell, Cosan Sign $12B Brazilian JV Pact

LONDON (Dow Jones)–Shell International Petroleum Company Ltd, a unit of Royal Dutch Shell PLC (RDSA), and Cosan S.A. (CZZ) said Monday they have signed a non-binding memorandum of understanding, or MoU, to form a $12 billion joint venture in Brazil for the production of ethanol, sugar and power, and the supply, distribution and retail of transportation fuels.

-Shell will also contribute its 50% share interest in Iogen and its 14.7% share interest in Codexis.

Sugarcane ethanol is also a story that I have covered in great detail:

Brazilian Ethanol is Sustainable

The key to the success of sugarcane ethanol as a true competitor to fossil fuels is the fact that massive amounts of bagasse end up at the sugarcane plants. That bagasse is then essentially free fuel for driving the ethanol process – and the logistical issues of getting biomass to the plant are already worked out. If you had to go out and harvest bagasse for use as fuel, then it would be a totally different process. But all of those logistical steps – including the labor and energy of getting the bagasse to the plant – are already being done as a result of processing the sugarcane.

At the plant, the bagasse has been pulverized and washed during the processing of the sugarcane, so it is a relatively clean fuel that has had many ash components washed out. Burning bagasse for fuel means that sugarcane ethanol isn’t nearly as dependent on cheap fossil fuels as is the case with some flavors of ethanol. For this reason, I am a fan of sugarcane ethanol as a model of how to do biofuels in a sustainable manner (not that sugarcane production as is often practiced is completely sustainable, but it is definitely in the right direction in my opinion).

On the other hand, we have to bear in mind that tropical countries have certain advantages with respect to rainfall and solar insolation, and just because Brazil can do it doesn’t mean temperate climates can follow the same model:

http://rrapier.com/lessons-from-brazi

That’s all the time I have for now. Bis bald!

83 thoughts on “Biofuel Developments”

  1. I do have doubts about Amyris. If they have a yeast that makes diesel instead of ethanol,why the need for a pilot and commercial plant? Seems they could go commercial with any old ethanol facility. Better yet,they could just sell their proprietary yeast. What ethanol refiner wouldn't rather make diesel?

  2. Paul, regarding your comment at the end of the last thread:

    Ethanol is selling for $1.78 in Chicago. That is before any tax credits have been applied.

    Gasoline is $2.00, wholesale,

    and the last I looked that "efficient" Brazilian ethanol was selling (in Brazil) for $3.26 gallon, wholesale.

    Things are, actually, changing quite a bit. 🙂

  3. Ethanol is selling for $1.78 in Chicago. That is before any tax credits have been applied.

    No matter how many times you claim this, it isn't true. The price ethanol sells for is directly related to the credit the blender will get for it. He is willing to pay more, because he knows he will get $0.45/gallon back. If you took that credit away and had no mandates, the price of ethanol would crash from where it is (and ethanol producers would start going out of business in droves).

    As far as Brazil goes, if you take all the taxes and subsidies out of it, there is no way that corn ethanol can compete with sugarcane ethanol made from molasses and fueled by bagasse.

    RR (in a cold hotel room in Germany)

  4. That still looks like a dollar difference even with the blenders credit added Robert. Are you sure sugar is still competitive with the recent price increases? What if it doubled in price again?

  5. Maury, that's why I specified molasses. When sugar is expensive, then it makes more sense to make sugar. But ethanol is usually of higher value than the molasses, especially when the fuel is free.

    RR

  6. RR wrote:

    “For this reason, I am a fan of sugarcane ethanol as a model of how to do biofuels in a sustainable manner ..”

    and

    “For this reason, I am a fan of sugarcane ethanol as a model of how to do biofuels in a sustainable manner ..”

    “there is no way that corn ethanol can compete with sugarcane ethanol made from molasses and fueled by bagasse ..”

    Here is the deal. Producing energy is not a sport. The Cleveland Indians competes with the NY Yankees with one title going to the best team but a nuke plant in Ohio does not compete with a nuke plant in NY. Both nuke plants can in fact be world class with out diminishing the other.

    The point here is that there are many model for producing energy and it is important to apply the model where you live. If Brazil has a process improvement that can be applies to the US, great but other wise who cares about what they do in Brazil.

  7. And, RR, you continue to miss the point. The point being, that you can produce corn ethanol, profitably, and ship it to Chicago for $1.78. Whether Exxon really wants to market it is another matter.

    The biggest problem with "Cane" ethanol is you can't "store" the cane for more than a couple of weeks. That means the refineries lie idle for most of the year.

    As for co-products: DDGS contain about 8,400 btus/lb. But, unlike bagasse, they are too valuable to burn. We would rather burn nat gas, and eat the steak (at present, anyway.)

  8. Another thing: One man with a 12 row combine can harvest 24,000 bushels of corn in a day. Poet would produce 72,000 Gallons of Ethanol out of that One Man's Daily Labor.

    It takes a Lot of Brazilian workers to harvest enough Cane in one day to produce 72,000 gallons of ethanol. I would guess between 50, and 100.

    Those people have to eat, and support their families. I've never seen that included in the EROEI calculations.

  9. I agree with Kit. I have nothing against Cane ethanol for Brazilians. If it works for them, Great.

    However, we would be exporting Corn ethanol to Brazil, right now, if they didn't have very high (20%) Import tariffs, and if they didn't, in other way, make it very difficult to do business.

  10. Oh, and in case you're interested. Corn is selling, today, for $3.54/bu in Chicago, and Beans are at $9.08.

    We had "beans in the teens" back in the late seventies IIRC.

  11. As for co-products: DDGS contain about 8,400 btus/lb.

    Rufus~

    If this boom in building corn ethanol stills continues unabated, we will someday have huge piles of unclaimed, unwanted DDGS surrounding the stills. It will look like the piles of tailings one sometimes sees around old mine shafts.

    There may come a day when they have to dry and pelletize DDGS so people can burn it in their stoves; throw that surplus DDGS into a gasifier; or have the ethanol stills use it as their source of thermal energy for the distillation process.

  12. “As for co-products: DDGS contain about 8,400 btus/lb.”

    The purpose of plants is to produce food and fiber.

    We used to have a family tradition of having dried sweet corn and stewed tomatoes on Thanksgiving. We would help our grandmother dry sweet corn but we stayed out of her way when she was canning. We had enough vegetables from the garden to last all year.

    That was about fifty years. I have to admit that industrial agriculture produces canned and frozen corn that is a lot tastier. Feed DDGS to nature's industrial size protein converter and we get low cost meat. I can remember when steak was a luxury and not a choice.

    I think the US model of feedlot steak and ethanol is great. For those who like walking and beans and rice, that is ok once in a while too but bot for a standard of living. For those who like to keep the poor in low standard of living, move to Brazil and practice elitism. I like to see my coal miners driving huge 4wd PU with 'I love coal' bumber stickers.

  13. Recession isn't a problem Rufus. China will loan us the money to defend those oil supplies…..so China can get all the oil it needs…..to make us more and more trinkets…..that we can buy with money we don't have.

    Simple.

  14. The purpose of plants is to produce food and fiber.

    OK, I'll disagree with that.

    All the petroleum we've been using for the last 130 years came from plants that died millions of years ago.

    Are you saying those plants grew, and absorbed energy from the Sun for no purpose ~ that their existence and transformation into hydrocarbon fuels had no purpose?

  15. I have been saying this for years. Sugarcane will probably never be beat for liquid fuel produced by biomass.

    It's all good as long as we ignore the fact that expansion of sugarcane has to come at the expense of arable land, carbon sinks, and biodiversity.

    An analogy would be to asses the value of war by looking only at the incomes of morticians and surgeons.

  16. A caveat. Palm oil used for biodiesel can give cane ethanol a run, but has similar, if not worse, drawbacks.

    Also, many have predicted the ramifications of crop failures on biofuel prices.

    Essentially, since price stability is the real goal of energy independence, then dependence on a fuel that fluctuates in price even more than fossil fuels is not going to give us that.

  17. I dunno, Brazil has over 150 Million Acres lying Fallow in the Cerrado, alone.

    And, Our Corn, and Soybean acreage is falling (as is Brazil's,) not increasing.

    Biodeeversitee is probably going to be okay.

  18. However, we would be exporting Corn ethanol to Brazil, right now, if they didn't have very high (20%) Import tariffs, and if they didn't, in other way, make it very difficult to do business.
    More entertainment from Rufus. I guess US import tariffs on Brazilian ethanol is just a figment of Big Oil's imagination.

    Ever considered calling NBC? I hear they're looking for late night comedians. So much the better if you are actually funny.

  19. Optimist, our import duty is about $0.54/gal. Brazil's is 20%.

    Our corn ethanol is selling at the port on the Gulf Coast for $1.90.

    They've had a poor sugar harvest, and a couple of weeks, ago, their ethanol was selling at their port for $3.26.

    The news has been full of stories of people trying to figure out how to get permission to ship to Brazil.

    Why would you want to insult someone when you don't know the facts?

  20. Minor point — RR said: "The previous essay has also hit the 200 comment mark (Blogger is clearly not designed to deal with over 200 comments), so it's time to put something else out there."

    You said this before and I'm not sure which of is is missing something. Blogger paginates the comments into 200 comments per page, and puts up "Newer" and "Newest" links when you exceed 200 comments. (Indeed the previous post got 203 comments so far, so 200 certainly isn't the limit). I've seen comment pages on other blogs with many, many hundreds of comments, all working with no problem. In fact — despite Blogger's several warts — it's an improvement over systems like Haloscan which only supported an ever-growing single page, so when you hit 3,000+ comments (which I've seen) it all gets grindingly slow.

    Just saying.

  21. Ok, so NEITHER Brazil or the US want any ethanol imports. And neither has any import tariff on oil, suggesting they would rather import that.

    Shell's $12bn investment is interesting, at the same time as they have canned any further investment in Cdn oilsands.

    Recent oilsands projects have suffered disastrous cost overruns, so investing in distribution and retail infrastructure in Brazil is probably a safer bet.

    And this will earn them brownie points with the Brazilian government for getting in on the offshore oilfields. And that's a much safer place to be than Iraq, Nigeria, Venezuela, Russia, etc.

    For all their success with ethanol, oil still rules their roost.

  22. Love the comfort level in those German hotel rooms! That type of thing has never been considered too important in Germany as best İ could tell!

    Went to the dentist 1 time there as well – only one time though!

  23. You said this before and I'm not sure which of is is missing something. Blogger paginates the comments into 200 comments per page, and puts up "Newer" and "Newest" links when you exceed 200 comments.

    But you only see "Newer" and "Newest" if you go to post a comment. If you are just reading comments, the new ones aren't visible, and there is no indication that they are there.

    RR

  24. “Love the comfort level ..”

    Comfort level is a matter of a individual's body regulation and what you get used to. My wife likes it cold so therefore I like it cold. I do have a nice collection of sweat shirts and socks.

    The last time I has a problem with cold hotel rooms was Las Vegas. I would set the temperature at 72 which would adjust me for work. Just because I was working for the DOE and there was a electricity shortage in California did not require the government to conserve. The reason for keeping it cool was the supper computers. Of course before we has supper computers, we did the same work with slide rules and used common sense. You get the same answer a lot cheaper.

    When I would get back to the hotel it would 100+ outside and 60 in the room with the curtains open. The whole idea is to make it more comfortable to stay inside and gamble instead of going hiking in Red Rock State park.

  25. RR said: "But you only see "Newer" and "Newest" if you go to post a comment. If you are just reading comments, the new ones aren't visible, and there is no indication that they are there."

    Say if I just click the comments link at the bottom of the previous article, just below the top of the page that comes up (admittedly not hugely in your face) is:

    1 – 200 of 203 Newer› Newest»

  26. Say if I just click the comments link at the…

    True. But if you just click on Comments at the end of the article, you don't see it. That's the problem. You have to click on the link to post a comment before you can see it. At least that is the case with Firefox.

    RR

  27. Hi Robert,

    I was wondering if you had any thoughts on the recent oiddrum article about Petrobus declaring 2010 the peak oil year?

    The graph on the decline rates, post peak, literally took my breath away. I guess I'm still hoping the ASPO has it right and we will have a slow decline.

    Thanks
    OD

  28. Under the category of biofuels development, I maintain that doing is a necessary part of process improvement. LCA is a tool to measure and improve performance. This why I support government policy of providing modest support of new energy facilities. We do not know what the winners and looser will be if the race is not started. Amory Lovins was basically wrong about nuclear power.

    I think that biodiesel will be a winner. An updated life cycle assessment (LCA) of soybean production and products can be found at GCC.

    http://www.greencarcongress.com/2010/02/updated-life-cycle-analysis-of-soybean-production-and-products-show-environmental-improvements.html#more

  29. I'm not as worried about peak oil as I once was OD. It would have hit us a lot harder if we hadn't gotten aggressive with biofuels. Or if PHEV's and EV's weren't about to hit showrooms. I don't think we'll have a problem living on half the oil we're using today.

  30. Maury, I'll have some of what you're snorting! Ethanol displaces a few percent of gasoline production. Biodiesel displaces a fraction of a percent of diesel use. Electric vehicles are practically non-existent. If you started having a decline of several percent per year in crude oil availability you would be little better off than thirty years ago. Sure, you would manage on half the oil — but it would be through conservation, not alternatives.

  31. RR said: "But if you just click on Comments at the end of the article, you don't see it. That's the problem. You have to click on the link to post a comment before you can see it. At least that is the case with Firefox."

    I only see one link to click. Let's you read and/or post comments. There is a "Newest" link. That's what I see with Internet Explorer. I wonder if things size differently in Firefox or something. R-squared is using a different comments layout to most Blogger comments I see, where the "Leave your comment" section is at the end instead of in a second column. Maybe the "Newer" link gets truncated or covered up in some browsers.

  32. How bout dem Saints?

    Pete,we're getting a million more barrels of fuel each day from the same amount of crude we used ten years ago,mostly thanks to ethanol. I think we can make it 5M bpd in the next 10 years. We can save another 5M bpd with EV's and PHEV's.

  33. “a few percent “

    I do not think that PeteS understands how large the US is or the productivity of Americans. A few years after the 2005 energy bill we have reached a blend wall with ethanol.

    There is no energy shortage in the US and only a small segment of US workers are needed to produce it. It would be helpful to have a consistent energy policy to avoid boom bust cycles.

  34. Hi Maury,

    I'm not the doomer I once was, meaning I don't see a major die off, at least for most of North America, but I just don't see how we can keep happy motoring.

    Hoping you are right!

    OD

  35. There is no energy shortage in the US and only a small segment of US workers are needed to produce it. It would be helpful to have a consistent energy policy to avoid boom bust cycles.

    Right now maybe, but what happens when oil production does decline? It seems probable this will happen w/in the decade.

    OD

  36. "Sure, you would manage on half the oil — but it would be through conservation, not alternatives."

    I would agree with this – conservation, in all it's forms (including recession induced demand destruction) has achieved the lion's share of the reductions to date.

    Less planes are flying, less F350's and Hummers are driving, even the military is using fuel efficient drones instead of fighter jets!

    I'll grant that ethanol has made a contribution, though exactly how much is very debatable. If we assume that it is one for one on an energy basis (and we know it is less than that), ethanol accounted for 4% of total gasoline, and 2% of total oil consumption.

    if we are at peak oil, what has helped the US cope is a worldwide recession, that has curbed (though not eliminated) oil wasting habits everywhere.

    In the near term (i.e. the rest of this decade), high efficiency (incl hybrid and diesel) vehicles will save much more oil than electric cars.
    Here in Vancouver, a good, and growing portion of the city's taxi fleet are hybrids – the reported fuel savings are about 7,000 gal/yr. Payss for the new car in less than two years. There are now over 200 of them in service , so there is 1.4 million gallons a year saved. They also achieve service lives of 2-300,000 miles on the one engine and battery pack.

    Change over all of the (estimated) 200,000 taxis in north america, and you are looking at 1.4 BILLION gallons a year of savings – equal to 25% of 2008 ethanol production.

    And that is only one example. Add in all the urban car fleets (postal, UPS, city, etc) and it adds up fast. There is lots of low hanging conservation fruit yet to be picked – we will reduce our oil usage faster than biofuels are displacing it.

  37. If you read the rest of the oildrum article you will notice that, understandably, the graphs leave off unannounced megaprojects and doesn't include any estimate of what may come…so it functions more as a worse case scenario. Yet there is the Brazil deepwater and Iraq…the projects suspended in the Canadian tar sands…and if Venezuela and Iran manage to free themselves from their corrupt governments (which seems to be brewing) all the oil sitting under them, including the Venezuelan oil sands that are larger than Alberta's and easier to get. And who knows what breakthroughs technology wise will come on supply and demand sides? Just five years ago Matt Simmons was predicting a natural gas cliff…thanks to the rapid spread of shale gas tech we're now set for over a century. The biotech stuff is tantalizing…will it make a dent? And then theres the EV's and PHEV's…just a few more years of research and we may crack the really hard obstacles.

    On the pure demand side, some analysts say OECD demand has already peaked. It'll keep trending down as the baby boomers retire and give up their commutes and constant driving around for a more sedate life. Meanwhile developing countries are in the enviable position of just starting to make their capital investments in infrastructure, so higher prices should steer them away from America's wasteful system.

    Will it be enough to equal the x number of Saudi Arabia's we'll need? Who knows? My prediction lines with OD's…society won't collapse…but we won't be driving SUV's on hour long commutes anymore.

    JR

  38. Maury: "Pete,we're getting a million more barrels of fuel each day from the same amount of crude we used ten years ago,mostly thanks to ethanol."

    Maury, no doubt RR will come along and say this too: you made that claim some time back, it was refuted (or at least seriously challenged), and you just let some sort of statute of limitations expire before trotting it out again!

    (Congrats Saints btw .. well deserved)

    Kit P: "I do not think that PeteS understands how large the US is or the productivity of Americans."

    You sound uncannily and increasingly like the Radio Moscow International propaganda broadcasts I used to hear on the big old valve longwave radio in the 1970s, so I guess it is too much to hope that you would actually address the point.

    Paul: "I would agree with this – conservation, in all it's forms (including recession induced demand destruction) has achieved the lion's share of the reductions to date."

    I think that's how it will continue for some time to come… enforced conservation seems inevitable in the "Peak Lite" scenario envisaged by RR.

  39. Maury, no doubt RR will come along and say this too: you made that claim some time back, it was refuted (or at least seriously challenged), and you just let some sort of statute of limitations expire before trotting it out again!

    Yes, it is a very silly comment. No doubt Maury was inebriated from celebrating the Super Bowl win. I am freshly arrived back in the U.S. on Sunday afternoon, and got to watch it in a hotel room in Ohio. Great game, and congrats to the Saints.

    To Maury's comment, right now we are producing just under 700,000 barrels per day of ethanol – which has the energy content of about 450,000 bbl/day of gasoline (or of about 400,000 bbl/day of all finished crude products). So even if all the energy inputs were free, ethanol couldn't displace more than about 400,000 bbl/day of crude based on current production rates.

    But Maury is a true believer. Expect that claim to be trotted back out again and again. I explained to Maury where a lot of that extra gasoline came from, but he either doesn't believe me, or he just doesn't want to so he rejects the explanation.

    That's all the time for now. Trying to put something new up, but not much time.

    RR

  40. "right now we are producing just under 700,000 barrels per day of ethanol – which has the energy content of about 450,000 bbl/day of gasoline"

    784,000 bpd in Nov.,the latest month I could find stats for. I assume we're getting the rest from coking units or other processing gains.

    No reason to get all snippety here guys. I didn't say anything about energy content,or claim ethanol could serve you breakfast in bed. I said we're getting another million bpd of fuel from the same amount of crude.

    We used 25M fewer barrels of crude this Nov. than we did in 1999.

    http://tinyurl.com/yhj6s7r

    We got 20M more barrels of refined product this Nov. than we did 10 years ago.

    http://tinyurl.com/yhmxdc8

    More fuel from less oil. That's all I'm saying folks.

  41. "So even if all the energy inputs were free, ethanol couldn't displace more than about 400,000 bbl/day of crude based on current production rates."

    It's 500,000 bpd,even with a 35% energy penalty. I don't know about you,but I'd just as soon not shut that well down with peak oil about to bite us in the butt. As for inputs,I don't really care whether we use natural gas to make ethanol or convert our cars to run on NG. Either way,we reduce our dependence on crude. It's very early in the biofuel game. Corn ethanol is 1st generation. Let's revisit this discussion after we get to 3rd or 4th generation. And no,we can't just skip steps because you guys don't like the politics….LOL.

  42. "You said it was mostly from ethanol."

    Yes Robert. 784,000 bpd of the 1,000,000 bpd is from ethanol. Energy content has nothing to do with the volumes of liquid going in and out of refineries.

  43. Maury, please show your work if you are going to make claims like this. Identify the dates that are talking about, show the change in the crude/finished product mix, and the show how much ethanol energy we produced during that time. You will find that it isn't 500,000 bpd even if you assume all the energy inputs for supporting the ethanol infrastructure were free.

    RR

  44. 784,000 bpd of the 1,000,000 bpd is from ethanol.

    Again, not true so please show your work. I am about to step out for the day, but will try to pick this back up if you have shown some work that we can have a look at. Oh, and by "show your work" I don't mean just repeat your claims. Put something out there that we can work with.

    Also, to suggest that energy content has nothing to do with the volume going in and out of the refinery is silly. I can easily produce a whole lot more volume at a much lower energy content – but what exactly does that accomplish?

    RR

  45. Robert,I gave the links for crude usage and finished product totals. Compare any month or year you like. We're getting more from less. I used a 10 yr. comparison. A 6 year comparison is even more striking. Here's the link that shows 784,000 bpd of ethanol for Nov.

    http://tinyurl.com/yjj7wz9

  46. "Again, not true so please show your work."

    Ther's no work to show. The numbers speak for themselves. 20M MORE barrels of fuel from 25M LESS barrels of crude.

    Don't make me bang my head against the wall Robert. Those 784,000 bpd of ethanol aren't evaporating before they make it out of the refinery.

  47. I used a 10 yr. comparison. A 6 year comparison is even more striking.

    That is why I said show your work. Please use the exact time range for both ethanol and crude. By that, I mean you can't use today's ethanol production if you are using last year's crude numbers (which is what I think is what you are doing).

    We can compare any numbers you like, but we need to compare apples to apples. Now that really is my last message, as I am off into the cold Ohio winter.

    RR

  48. "I mean you can't use today's ethanol production if you are using last year's crude numbers"

    Actually,I can. The reason I do that is to show we're getting more fuel today than we did with last year's crude numbers.

    We know how much ethanol is going into the refineries. It's safe to assume most of it comes out the other side blended with gasoline. All that's left is to do the energy content calculations. 784,000 barrels of ethanol provides over 500,000 barrels of crude equivalent.

    I suppose we could shut that production down and import it from Saudi Arabia instead. Why would anyone in their right mind choose to do that though?

  49. That's not what he's saying Maury. He is saying you can't use this year's ethanol production rate to offset a crude number from last year. That should be apparent. You can use a 2009 ethanol number if you are using a 2009 crude number.

  50. "He is saying you can't use this year's ethanol production rate to offset a crude number from last year."

    But that's the whole point. We're using less crude today. We're getting more fuel today. What changed from yesterday to today? Oh yeah,we're using more ethanol.

    "You can use a 2009 ethanol number if you are using a 2009 crude number"

    That would accomplish exactly nothing. This whole exercise began with Robert's claim that ethanol is accomplishing diddly squat. The only way to establish whether or not his claim is valid is to compare today's fuel production with pre-ethanol numbers. Don't take anyone's word for it. Go to the links provided and see the difference for yourself.

  51. You still don't get it. What he is saying is the time spans must be consistent. If you compare crude over a specific period, ethanol has to be over the same period. If your crude period is from 2005-2008, then you need to use ethanol numbers through 2008 and not 2010. You can't use a January 2010 ethanol number unless you have the January 2010 crude number.

  52. "If you compare crude over a specific period, ethanol has to be over the same period."

    We've been over this before. We used 1.5 billion gallons of ethanol in 1999 and 11 billion gallons last year. But,the '99 figure is backed out completely when we account for the MTBE no longer being used. It has the effect of starting from zero.

    We know 784,000 bpd of ethanol doesn't diasappear down some rat hole at those refineries. It gets blended with gasoline. Do the energy content calculations and ethanol gives us at least 500,000 bpd of crude equivalent. Robert made the claim that ethanol's contribution was so small as to be white noise in the background. That's clearly not the case.

  53. Where would we get another 500,000 barrels of crude if we halted ethanol production today? Who exactly has the spare capacity? Oh yeah….the Wahhabi's. The very people who want to cut our heads off with pocket knives. Thanks,but no thanks.

  54. Your MTBE assumption is bass ackwards. It was made from domestic natural gas, and therefore ethanol's starting point is really 1.5 billion in 99 plus the MTBE displacement. That is the maximum possible import number that could have been displaced.

  55. You are also begging the question on the Saudis. That is the entire question, is it not? Your comments presume that you have proven something that you have not.

  56. It doesn't matter what the MTBE was made from. It's use was replaced with ethanol. It doesn't matter anyway. 500,000 bpd of crude equivalent is nothing to sneeze at. We need every drop of it…..and a whole lot more.

  57. Maury I don't know if you are playing dumb, but repeating a claim doesn't make it true. I think it is proven beyond any doubt that the number isn't 500,000. Even the raw number wasn't that high, and you didn't account for crude inputs. So you don't help your cause by exaggerating it.

    The other thing is that whether something is white noise doesn't depend on how large the number is, it depends on how large the scale is. Those graphs RR posted of ethanol versus crude show that it is noise relative to petroleum consumption.

  58. Now that you mention it though,we didn't hear all this sqawking when MTBE was being made from natural gas. Make some ethanol with it and people go ballistic. Double standard if you ask me.

  59. "I think it is proven beyond any doubt that the number isn't 500,000."

    Please show us how 784,000 barrels of ethanol becomes LESS than 500,000 barrels of crude equivalent anonymous. YOU CAN'T DO IT. Nobody can.

    "and you didn't account for crude inputs"

    There are no crude inputs. Zilch. None. Nada. As a matter of fact,there are no inputs of any kind at the refinery.

  60. Did I mention that natural gas was renewable?

    SIOUX FALLS, S.D. – POET Biorefining – Chancellor, S.D. and the city of Sioux Falls, S.D. have taken "green" to a new level with the completion of a landfill gas pipeline that is now providing methane gas to help power daily operations of the 105 million gallon per year (MGPY) POET ethanol plant.

    http://tinyurl.com/yfgdwxs

  61. “conservation, in all it's forms (including recession induced demand destruction) has achieved the lion's share of the reductions to date.”

    The problem with so called conservation is not it is not sustainable. If I add more insulation and buy a more efficient heat pump that is sustainable. If I live closer to work and therefore drive less; then that is sustainable. I choose to conserve.

    If I lose my job and do not drive to work, that is not conservation. It is not something that I want to sustain. If I get a new job that is much farther from my house, I will use more fuel to commute.

    California likes to brag about conservation efforts. The year I left 5 million people joined me. I did not use less electricity, I just used it some place else.

    At least in the electricity generating industry, there have been huge improvement in productivity with the same assets and new more efficient power plants. For nuke plants, it is equivalent to building 26 new nukes. I know of gas fired power plant that doubled output with the same amount of fuel. Every MWh produced by wind is natural gas not being burned.

    Then of course there is ethanol and biodiesel. It appears that we have built production facilities faster than the distribution network can keep up.

    I must agree with Maury, there is no reason to think that their will be an energy shortage. Producing energy is more complex than conservation. However, suspect advocates of conservation as a solution do not really understand how angry people get with government that fails to keep the lights on.

  62. That's all I'm saying Kit. Oil isn't the only energy out there. As supplies dwindle,the price will rise. That makes biofuels and electricity more affordable in comparison. Each can be made from multiple domestic sources. Our energy supplies will be more secure as a result. People will make the switch when it suits their pocketbooks. There wasn't much to switch to 10 years ago. Showrooms will be full of EV's and PHEV's in a couple of years. Cellulosic fuels will also arrive shortly. Even wood gasification will be competitive with $5 gas. We're better prepared for peak oil today. I like our odds.

  63. "Showrooms will be full of EV's and PHEV's in a couple of years. "

    Maury, I just don't agree with this statement. None of the mainstream car mfrs have a mass production EV ready to go. The volt is still the only PHEV. Tesla will have their four door electric car out in 2012, but in volume of thousands per year. Most of the mfrs only have one or two hybrids amongst their dozen or more models, and it's been over a decade to get to that point.

    The best we can expect in a couple of years is that there will be one mass produced EV and PHEV available, but for them to take over the showrooms, i.e. sell more than the IC engined vehicles, not until the end of the decade, I'd say.

  64. OK Maury, I am in my hotel room for the night. I won't be staying up late, as I have to get up at 4 a.m. But let's rock and roll.

    First, explain what your claim is. We will take this systematically. Please specify exactly what you are claiming, and that is what I will address. Be specific.

    If you are claiming what I think you are claiming, refuting it is a piece of cake. But I want to be sure before I put any time into this.

    RR

  65. I'll keep it simple for you Robert. My claim is that 784,000 barrels of ethanol is the equivalent of at least 500,000 barrels of crude oil.

    I'm also gonna go out on a limb and claim that's not an insignificant amount of energy. That it's more than white noise in the background.

  66. Paul,the Golf and Volt PHEV's should both be out later this year. Volvo has one coming next year. Toyota and Ford have fleet sales of PHEV's already. The choices will be there when gas prices get crazy again.

  67. I'll keep it simple for you Robert. My claim is that 784,000 barrels of ethanol is the equivalent of at least 500,000 barrels of crude oil.

    I'm also gonna go out on a limb and claim that's not an insignificant amount of energy. That it's more than white noise in the background.

    About to board a plane, but let me try to get these knocked out. Oil has an energy value of 5.8 million BTUs/barrel, which works out to be 138,095 BTUs/gallon. Ethanol is 76,000 BTU/gal. 784,000 barrels of ethanol then has the energy equivalence of 431,470 barrels of crude oil. So your claim is false.

    On the 2nd one, whether something is or is not white noise is only dependent upon what you are comparing it against. The number 1 million is not white noise when compared to 2 million, but it may be when compared to 10 trillion. When you look at the graph of just raw ethanol versus raw crude oil, it is indeed a small blip on that graph. And yet we still haven't accounted for energy inputs into the process of growing and harvesting the corn, etc.

    We can dig deeper, but it's not going to get any better for you. But if we continue, we are going to be systematic. If I can't even get you to acknowledge a basic mathematical error on equating ethanol to crude oil, there is really no point.

    RR

  68. You got me on a technicality Robert. I should have said the equivalent of 500,000 barrels of refined crude oil or 550,000 barrels of gasoline.

    It's probably true that 500,000 bpd seems insignificant when 20,000,000 bpd is needed. We're the #3 producer of crude,and even that amount of crude seems insignificant.

    Still,500,000 bpd would meet half the fuel consumption of Australia or Taiwan. Or all the needs of Malaysia or Greece. Or the demand of both Norway and Israel. It ain't just white noise.

  69. It ain't just white noise.

    We will have to dig a bit deeper before that can be determined. So now that we have established the energy equivalence, we need to determine (per your method) just how much oil imports could have theoretically have been displaced.

    So are we agreeable to look at the past 10 years change in refinery inputs and outputs, the change in clean product yield, the change in ethanol output, and the impact of MTBE? If we look at each of these, then we can come to a number of what might have been displaced. I can tell you it is going to be a lot smaller than the 500,000 you keep tossing out there.

    If you respond too late, though, it will probably be the day after tomorrow. Once again, I have a 6 a.m. flight and I will be in the air all day (or stranded somewhere).

    RR

  70. Maury,
    it's good that those cars will be available, but let's not kid ourselves that they will make a big dent in total fuel consumption. If we take a very optimistic approach, let's assume that they get;
    – 1 million sales a year (10% of all new sales), and,
    -The drivers are able to use zero gasoline.

    Then they have displaced 0.5% of the 200 million vehicle fleet, each year. After ten years, they are at 5% of the fleet, (and have sold 10x as many hybrids as in the last ten years)
    So, the average for those ten years is 2.5% of the vehicles using zero fuel.

    So the best case is a 2.5% drop in the gasoline consumption of the country, currently at 10mbd, to 9.75 – probably close to the ultimate oils savings from ethanol that RR is calculating.

    This is a start for sure, and is heading in the right direction, but it does not alleviate any near term oil supply crunch.

    For the next decade, it might be a different story, but for this one they will be a very small minority of the vehicle fleet.

    I do hope that the PHEV's are flex fuelers…

  71. "So are we agreeable to look at the past 10 years change in refinery inputs and outputs, the change in clean product yield, the change in ethanol output, and the impact of MTBE?"

    To be honest,I can't see why any of that is necessary Robert. We know how much ethanol makes it to refineries for blending. We know the energy content relative to gasoline. It's a simple calculation to figure how much gas and/or MTBE is being displaced. We know it takes natural gas to make ethanol. But,natural gas isn't the problem. Peak oil is.

    If you want to talk about white noise,let's talk about the fuel farmers use. How much less would they use if we quit making ethanol? I think the answer is close to zero. A few million acres would be switched to another crop,that's all.

  72. It does look hopeless when you look at just changes in the transportation fleet Paul. But,we know people change driving behaviors when fuel prices soar too. The Hummer tends to stay in the garage on Sundays. And biofuels that are too expensive today become more affordable as the price of oil rises. We'll adopt to peak oil. It's not like we have a choice.

  73. To be honest,I can't see why any of that is necessary Robert

    I'll stifle my laughter … but as one who agrees with RR's perspective on this topic I would like to see any and all FACTS filtered out in the dialog.

    Then it is that much easier to sort out the remaining OPINION.

    Thank you Robert for taking the time for this exercise.

    RBM

  74. To be honest,I can't see why any of that is necessary Robert.

    I just thought you might want to know whether the claims you keep repeating have any substance to them. We can determine that. We can see without a doubt that at a minimum your 500,000 bbl/day claim is exaggerated.

    Also, the number you keep repeating for the amount of ethanol produced doesn't jive with the statistics at RFA. Their number for 2009 is almost 100,000 barrels lower than the number you keep using. So another number there appears to be exaggerated.

    RR

  75. NEW YORK (DTN) — Total U.S. ethanol production jumped 636,000 bbl, or 45,884 bpd, to 23.592 million bbl, or 786,400 bpd, in November as plants boosted run rates by 6.08 percent to an average of 92.53 percent of operable capacity, according to a Telvent DTN analysis of its own data as well as data out today from the Energy Information Administration.

    http://tinyurl.com/yjj7wz9

    Robert, 786,000 barrels of ethanol penalized 30% for energy content equals exactly 550,000 barrels of gasoline equivalent. That's enough fuel to meet the needs of Ireland,Denmark AND New Zealand. For a gas guzzler like the US it seems a drop in the bucket,but we have to start somewhere.

  76. So Maury, you took a 1-month rate and used it as your baseline ethanol production rate? I don't think that's really a good idea, as it may represent an anomaly. Besides that, if you are trying to get a comparison against gasoline, I would never take an instantaneous rate of gasoline production for that. We need to look at year over year.

    Now, having said that, I still challenge your contention. It takes gasoline and diesel to support the ethanol infrastructure, so 786,000 barrels doesn't displace a proportional amount of gasoline anyway. Ethanol that wasn't produced doesn't need petroleum to support it. In reality, we really don't know to just what extent the ethanol infrastructure is supported by petroleum.

    That's why I look to the data. If we are producing 786,000 barrels, did our gasoline demand drop by that amount (corrected for energy content)? We can look to the data to see, we don't have to make assertions about what should have happened.

    I missed commenting earlier on "Khosla is a smart guy." Bill Gates is a smart guy who had a large loss in Pacific Ethanol. Why do you think that is? Consider this. If Khosla is so smart (and I agree that he is), would you let him do heart surgery on you? After, he is a smart guy. But that should drive the point home.

    One thing about rich guys that I have seen: Some of them think that because they got rich in one field, they can jump to another field and have the same success. That's why you see people like Dan Snyder putting together a crappy Redskins team.

    RR

  77. "If we are producing 786,000 barrels, did our gasoline demand drop by that amount (corrected for energy content)? We can look to the data to see, we don't have to make assertions about what should have happened."

    I don't think that's possible Robert. Gasoline demand has a lot more factors than ethanol to consider. I'm sure you're not willing to give ethanol credit for last year's drop in demand.

    Here's something from the EIA you can puzzle over if you like. US oil production is projected to rise 190,000 bpd this year. They project liquid consumption to rise by 180,000 bpd in the US. Yet,they predict a drop in import demand of 150,000 bpd. Where do you think that extra 140,000 bpd is coming from Robert? My guess is 100,000 bpd from ethanol and some additional biodiesel.

Comments are closed.