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By Robert Rapier on May 13, 2010 with 59 responses

Annual Energy Outlook 2010

The Energy Information Administration just released their Annual Energy Outlook for 2010:

Annual Energy Outlook 2010

It is about 220 pages long, and therefore I haven’t had a chance to read it thoroughly. But in my skimming of it so far, there are a few interesting items to note. One of the things I was most curious about was whether they would show this scary graph that appeared in the 2009 Annual Energy Outlook:

World's Liquid Fuel Supply Projections to 2030

Let that sink in for a just a minute. What that says is that global production in 2030 is forecast to be 43 million barrels, demand is forecast to be 105 million barrels, and we really don’t have any idea how we are going to cover 62 million barrels per day of demand by 2030. We are going to need a lot of oil to cover the depletion, so it is up to “unidentified projects” – or we will deal with huge shortages.

Certainly there will be plenty of projects that haven’t been identified that will contribute to supply. But the key question is “Will those be enough?” This is especially true in light of the current mess in the Gulf of Mexico, because a lot of that new oil was expected to come from offshore. But as I originally predicted, I think this blowout in the gulf really slows things down. A relevant news story on that theme from today:

BP Disaster Strands Billions of Barrels of Offshore U.S. Crude

A regulatory crackdown on offshore oil drilling after the fatal rig explosion in the Gulf of Mexico will delay development of U.S. deposits with billions of barrels of crude and may spawn industry job cuts.

“This oil spill was a disaster for the industry,” said Gianna Bern, president of Brookshire Advisory & Research in Flossmoor, Illinois, and a former BP crude trader. “It will ratchet up public debate on deep-water drilling by a couple of notches and put a lot of projects conceivably on the back burner.”

So this would seem to make last year’s graph even more ominous. But alas, so far I have not found that graph in this year’s report. In fact, for the most part this year’s report is pretty upbeat about future prospects. It suggests that CTL, GTL, and BTL will start to make significant contributions to global fuel supplies. It also suggests that in the U.S. high oil prices will finally make oil shale economical. This of course repeats the 100-year-old mantra about oil shale being just around the corner.

The report suggests that the 2022 cellulosic ethanol mandate will not be met “because economic and technological factors prevent cellulosic biofuel production from providing the credits that would be needed to meet the requirement.” They do forecast that by 2035 we will have figured it out and that “ultimately surpasses the RFS requirement as higher oil prices and lower production costs improve their competitiveness.”

Let me say that I have a lot of respect for the EIA, and use them extensively for data. I know they put a lot of hard work into this report. However, some of their predictions have become a running joke. If you want to have some fun reading, go back and look at some of their historical predictions from say, 2001. For instance, I always get a kick out of this graph, which makes an annual appearance:

It is always the same story. Sure, production has fallen in the U.S. for the past 35+ years, but starting next year things are going to turn around. You can see this same graph in every recent Energy Outlook. Then production falls for another year, and they move the line forward and forecast that the next year will be the turnaround year.

One other graph of note concerns their projections for growth of CTL, BTL, and oil shale.

I agree with them that there will be growth in CTL and BTL as conventional oil depletes, but I am still skeptical about whether oil can be produced from shale with a positive energy balance.

Anyway, lots of material to sort through, but I mainly wanted to call attention to the report so people can begin to digest it.

  1. By Benny BND Cole on May 14, 2010 at 2:54 pm

    I think there have been dire predictions about future energy supplies ever since the late 1970s.
    The price mechanism works wonders. For example, crude oil demand globally has been flat now for several years, and, of course, is in long-term decline in Europe and the United States.

    Also, a quibble: Speaking as an economist, there is no such thing as energy “shortages.” There is such a thing as higher energy prices, or lower energy prices. I know RR is using “shortages” as short-hand for a range of conditions marked by high and erratic prices. Still, it is a enervating concept, best left to the doomsters.

    And really–will high and erratic prices of oil lead to high and erratic prices of natural gas or nuclear power? Wind power? Solar? Not likely.

    I think in 15 years you will see France and Japan a long way down the nuke-PHEV road.

    If lithium batteries double in capacity and usefulness, I think they become very viable. The trade press says lithium batteries improve at about an 8 percent annual rate. So, we are talking nine years away, by this admittedly crude measure.

    Higher crude oil prices may actually set us forth on a cleaner and more-prosperous future, especially in the United States, an oil-importing nation. We may respond to higher oil prices by boosting domestic energy production and importing far less.

    Gee, I wonder what Rufus will say.

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  2. By OD on May 14, 2010 at 2:55 pm

    So is that huge gap of oil left to be found or just projects that haven’t been identified? I ask because I remember reading a very thorough pdf from I believe Mr. Whipple of the ASPO(don’t quote me i’m not 100% sure!) and it did have that same massive gap, yet only a sliver of it was oil left to be found, the rest was basically where we knew reserves already exist but projects haven’t been announced yet to drill for it. Which is not really surprising since lead times seem to be 2-4 years out. So that drop off is to be expected, I would think.

    I also have to wonder what such graphs would have looked like 5 years ago, because it is my understanding decline rates have been running at 3% for quite sometime now. We have so far had enough new oil to replace that decline and then some. I have also read time and time again cheap oil in the 90s really hurt production. I guess we will see if that is a myth or not.

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  3. By OD on May 14, 2010 at 2:55 pm

    I only wish I could be as optimistic as you Benny! I hope you are right.

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  4. By Rufus on May 14, 2010 at 2:55 pm

    You know what Rufus will say. :)
     

    This problem has already been solved. Time to start thinking about Phosphorous.

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  5. By Douglas Hvistendahl on May 14, 2010 at 2:56 pm

    Households should work on this now. Local food production, more efficient transportation choices, solar building heat (including DHW), and several other choices are economical now, provided the household thinks in terms of investment, rather than expenses. Our own house is primarily living from my wife’s social security, and using mine for an ongoing investment plan, including many of the above.
     

    Note: the Mother Earth News magazine started working on answers for future oil supply problems thirty years ago. A good resource!

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  6. By Wendell Mercantile on May 14, 2010 at 2:56 pm

    …and we really don’t have any idea how we are going to cover 62 million barrels per day of demand by 2030.
     

    Methane clathrates.

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  7. By Rufus on May 14, 2010 at 2:57 pm

    Two things have happened in the last month, or so. GM announced that their new engine to be previewed in the Buick Regal this fall will achieve within 5% the mileage with E85 as with Gasoline, and that the next iteration will be EQUAL to gasoline.

    Second, Fiberight announced that they are NOW producing ethanol from Cellulose, and that when their plant reaches full production they will be producing ethanol from Municipal Solid Waste for $1.65/gal.

    Once we add that to what Novozymes, Poet, Dupont-Danisco, and Genera have been saying (approx. $2.00/gal ethanol from ag waste, and switchgrass) we realize that this deal is done.

    Now, it’s just a matter of “building out” as needed.

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  8. By DM on May 14, 2010 at 2:57 pm

    The blow out in the Gulf of Mexico will slow off-shore drilling in the U.S. and perhaps some other OECD countries like Norway, but it will go ahead in non OECD countries like Brazil, and especially Angola and the rest of West Africa, because potential revenues will trump environmental risks (even if a lot of those revenues end up in Swiss bank accounts).

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  9. By Wendell Mercantile on May 14, 2010 at 2:58 pm

    because potential revenues will trump environmental risks

    DM,

    The same will be true for drilling in the Gulf of Mexico. Despite the alarm the enviros claim over the BP incident, I haven’t seen any reduction in the millions of cars (most carrying only one person) that zip back and forth between home and work everyday in this country. People are going to drive, and if it’s a choice of giving up their cars or not drilling in the Gulf, drilling wins out.

    People can complain all they want about Big Oil, but the oil companies and politicians are only supplying what people demand. And the demand for oil to make motor fuel will far outstrip the desire for pristine beaches along the Gulf coast.

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  10. By Benny BND Cole on May 14, 2010 at 2:59 pm

    OD- Optimistic? Maybe I am. But the number of serious R&D outfits working on lithium batteries, on several continents, is remarkable. It’s not just the US anymore–you have China, Korea, Japan, and Western Europe engaged in this.

    I won’t go into my natural gas spiel, but obviously, we have gobs of the stuff.

    And China? They are a mercantile nation. You think they want to import oil? Be at the mercy of erratic thug states? Pollute their air ? They may turn on a dime and mandate PHEVs at some point. What would that do to oil demand?

    It’s a Brave New Wolrd out there.

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  11. By DM on May 14, 2010 at 2:59 pm

    Wendell Mercantile,

    You are probably right about the long term, but I think there will be a delay in new U.S. off shore oil developments, which will mean increased reliance on imports unless the U.S. can increase oil production from other sources.

    Interestingly the EIA data seems to show that US crude oil production had stabilized over the last year, and I think all liquids production actually increased thanks to natural gas liquids and corn ethanol.

    http://www.eia.doe.gov/dnav/pe…..S1&f=M

    It will still be hard to meet those EIA forecasts for increased U.S. crude production though, especially if off-shore development is delayed.

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  12. By DM on May 14, 2010 at 2:59 pm

    “So is that huge gap of oil left to be found or just projects that haven’t been identified?”

    My interpretation was that it just shows projects which have been publicly identified, because it seems to be generally consistent with the wiki of oil mega projects added on to fields currently in production.

    http://en.wikipedia.org/wiki/O…..gaprojects

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  13. By od on May 14, 2010 at 8:02 pm

    Thanks DM. I wonder how often the megaprojects is updated. The Industry Taskforce on Peak Oil released their report in February showing production being stable through 2015 then dropping off slightly. I wonder who has the most updated info?

    Warnig PDF..

    http://peakoiltaskforce.net/wp…..b20101.pdf

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  14. By od on May 14, 2010 at 8:07 pm

    Benny, everything you say is of course true. I just feel like we are in a huge race against our most valuable resource.. time.

    One thing that is very interseting to me is the go-to report for all things peak oil, The Hirsch Report, almost entirely dismisses electric cars having any effect on mitigation. If there truly was a breakthrough in electric cars, it could drastically change the 20 years the report calls for for a ‘smooth’ transition, into 8-10.

     

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  15. By Benny BND Cole on May 14, 2010 at 9:25 pm

    OD-
    The price mechanism generally brings about smooth transitions. Right now, it may not seem so–we had erratic speculation-manipulation on the NYMEX, playing havoc with oil prices in 2008. But if we gradually move to higher oil prices, then we will see gradual adjustments in demand.
    GM introduces its Volt late this year, and the Nissan LEAF is here already. The Prius gets 50 mpg.
    I would say we are in better shape than ever before, should oil become a more-expensive commodity. In the late 1970s, when last we heard the gloomsters predict doom, we had nothing like that.
    And we still have our epic supplies of natural gas, which can be used in CNG cars, or converted to methanol.
    BTW, Nissan claims they are lowering the lithium battery cost of production by more than one-half. Remember, we have had more than eight decades to refine and lower costs per unit on ICEs.
    If battery cars can gain a foothold, then industry will also constantly appraise ways to lower production costs, while improving output.
    My last comment is not that of a gimlet-eyed business guy, but an environmentalist: Jeez, I just read that someone buying a new mid-price car had to go to some lengths to not get a fancy-schmancy GPS and sound system, in order to save $5,000 off list price. And I have read people pay $5k for nice leather seats.
    Surely, we can afford $5k batteries in our cars, if they all but eliminate demand for oil, and radically reduce urban air pollution.
    Personally, I think we can have much cleaner air and a higher standard of living with PHEVs.

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  16. By Kit P on May 15, 2010 at 8:36 am

    Let see if there is a problem producing
    energy. The US is #1 in making electricity. We produce more
    electricity with nuclear power and wind than any country in the
    world. We are building more. We have ample supplies of coal and
    natural gas. The US electricity generating industry does it safely
    with insignificant environment impact.

     

    The US is #3 in producing oil. We
    could be #1 if that was a policy priority. The US is #1 in producing
    biofuels. Safety and environmental issues related to transportation
    is not from production of the energy. For every energy worker that
    dies in an accident 10,000 die customers die on the road. We do a
    much better job with transportation emissions. However, since most
    people are unwilling to to simple thing like car pool, I am not too
    worried about finding solutions if production can not keep up.

     

    I do not see a problem providing an
    adequate supply of energy. I have not started to list the thing we
    could do like BEV. The reason we do not do some things is not
    because we can not do it but because we choose a better way.

     

    For example, we produce 20 % of out
    electricity with nukes and 0.05% with solar. However, if you lived
    off grid solar might be a better way to produce electricity.

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  17. By paul-n on May 15, 2010 at 12:16 pm

    Everyone (even the EIA) is entitled to their own opinions, but no one is entitled to their own facts.

     

    The EIA is a good source of facts, for most non OPEC energy data, but as RR points out, their predictions are definitely seeing the world through rose tinted glasses.

    So world oil demand, if unconstrained, will continue to grow – safe prediction

    World oil production will start declining at some time, if it hasn’t already – safe prediction, just a question of time.

    The US *can* easily increase its production of liquid fuels (ethanol, methanol, oil shale, CTL, etc) IF it is  prepared to pay the price.

    That price is likely at least $100bbl equivalent, but more likely $150/bbl ( my prediction)

    The US probably cannot meet all its CURRENT oil demand through the above alternatives, at any price. (my prediction).

    The difference between today’s price ($75) and $150 is only $2/gal, less than the fuel tax in most european countries.

     

    So here is my prescription – put an import tariff or carbon tax on imported energy (which means oil) to get the price to $150/bbl or thereabouts.

    This will give enough “price certainty” for real investment in all the alternatives. It will also make EV’s and PHEV’s more attractive. Most importantly, it will increase pressure on cities to do more transit projects, which, of course, can be funded by the the import tax.  Part of the tax is paid out as a tax rebate to everyone to help with the higher fuel costs, but with the high unit cost, there is a good incentive to conserve/replace oil consumption.

    So that means gasoline would be $5/gal, still $2/gal less than most European countries.  If everyone knows that this price is here to stay, they will start to take action, instead of the current policy of waiting for the price to come down again.

    There is so much low hanging fruit on oil consumption, that a 25% reduction could be made in fairly quick order (5yrs).  Of the remaining 15mbd, the target would be to have 5 of that from alternatives, 3 mbd of imports from Canada/Mexico and the remaining 7 from domestic production.  And then you have oil independence.

    And at that point, it doesn’t really matter what the rest of the world does, or how much they pay for their oil, as the US controls it;s own energy future.  (some part of that comes from Canada, but the US pretty much controls Canada anyway, it just doesn’t tax us {yet} )

     

     

     

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  18. By paul-n on May 15, 2010 at 12:37 pm

    On the BP well causing an offshore slowdown, this is already happening, of course, with the US gov putting things on hold.  The same is also happening in the Canadian Arctic.  All the majors, including BP, have drilling leases in the Beaufort Sea, but these have been put on hold over the question of dealing with a blowout.  

    The offshore drilling season up there is only (reliably) two months, barely enough to drill one well.  If there was a blowout, it would likely happen towards the end of the season, and mitigation operations would quickly be stopped by the ice, and a relief well could not be started until the following year.  One scenario the oil companies admit to, a blowout well could take three years to control, and this in an area where none of the oil will biodegrade because it is too cold.

    No drilling is planned for until 2014, but it might be some time longer before it actually happens.

     

    Meanwhile, the talk in Calgary is that oilsands expansion plans are being dusted off, at the quiet request of the oil majors…

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  19. By Kit P on May 15, 2010 at 12:42 pm

    “safe prediction, just a question of
    time.”

     

    PualN do you have a list of stupid
    things to say from the liberal doomer play book or do you just make
    this stuff up as you go.

     

    It is a safe prediction because it has
    not happened yet but yo ho it is just a matter of time.

     

    Wait for it! Yes lets raise taxes to
    fix a future problem. Why do rich liberals always think the best way
    to protect the little guy is with very regressive taxes?

     

    I have a prediction. We could provided
    incentives in the 2005 Energy Bill to produce transportation fuel
    with biomass. Maybe by 2010 we could have E10 while spreading the
    cost to all taxpayers.

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  20. By od on May 15, 2010 at 2:51 pm

    Benny, I agree with you mostly, but disagree that the price mechanism will bring a smooth transition. It may, for developed countries, but if the price gets too high most 3rd world and poor countries will just be priced out completely, at least that’s how I see it.

    I am very excited about the LEAF, that will be our next car. Unless a better electric comes along before we buy.

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  21. By od on May 15, 2010 at 2:54 pm

    PualN do you have a list of stupid

    things to say from the liberal doomer play book or do you just make

    this stuff up as you go.

     

    Kitp, in what world do you live in that oil production never declines? Waiting until we are past peak to do anything is a good idea in your book? Isn’t that sort of like applying sunscreen after you already have a sunburn?

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  22. By Benny BND Cole on May 15, 2010 at 6:46 pm

    OD-

    I am old enough to remember 1979 and the Limits to Growth, the Doomster Bible of the day. I was in the choir.

    Radically different from then is that we have PHEVs, BEVs, and natural gas to the moon. We have Prius. Back then we had nothing but AMC Pacers.

    I suspect China is going to put pressure on all materials. They are an incredible and growing economy. But pressure is not the end of the world. It just means higher crude oil prices. We can and will adjust.

    I agree with Paul N that gasoline much more heavily.

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  23. By Kit P on May 15, 2010 at 7:27 pm

    “Kitp, in what world do you live in
    that oil production never declines?”

     

    OD I never said oil production would
    never decline. Basing regressive tax policy on stupid predictions is
    not a very good idea.

     

    “Waiting until we are past peak to do
    anything is a good idea in your book?”

     

    Who is waiting? I think corn ethanol
    is a great idea. OD said that his next car will be a Leaf. We can
    produce all the transportation fuel will ever need with nuclear
    power.

     

    “sunscreen”

     

    I remember a world before the advent of
    the polio vaccine. With sunscreen I could stay out in the sun longer
    but I was a adult before it became wildly available. What that means
    is that I am immune to fear mongering doomer theories.

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  24. By paul-n on May 17, 2010 at 2:30 am

    So Kit, you don’t like my idea of an import tax on oil – what say you then about the import tax on ethanol, currently at about $20/bbl?  That is artificially increasing the prices of ethanol, which has, wait for it, increased domestic production of such.  In fact, the entire ethanol industry, which you think is a good idea, is based precisely on using taxpayer support, and then a mandate that we must use its product (regardless of price) .  

    To be clear, an import tax on oil is paid for by oil users, not taxpayers. Those who reduce or eliminate their oil usage are helping their country, and pay little or no such tax.  It may be regressive, but it is not unavoidable.

     

    AS for a peak in (world) oil production, it is actually not that relevant.  if Kit doesn;t want to base policy predictions, then let’s base it on facts.  What is a fact is that US oil production peaked 30 yrs ago, and that the US relies on imports for 2/3 of its oil, which leaves it with very little control over a vital part of it’s economy.  

    A decision was made many decades ago that food self sufficiency is a national security issues, and that the US would always be food self sufficient, so no one else could control/cut off the food supply.  This is part of the reason why the US farm industry is subsidised to the point of over production.

    A similar level of importance has been placed on electricity production, that, presumably, is why Kit wants to build new nukes, rather than just buy more electricity from Canada – there is more control over domestic sources.

    Of course, Kit lives in a dreamworld;

    We can produce all the transportation fuel will ever need with nuclear power.

    Now, you can run a Leaf or a train on nuke electricity, but what about a plane or a ship?  You can use nuke electricity to make hydrocarbon fuel, of course, but at huge energy cost.  And if so many nuke plants were built, then where does all the fuel come from?  The US  is not uranium self sufficient today, let alone with a huge fleet of new nuke plants, so fuel must be imported – we have succeeded in replacing dependence on one imported fuel with another.

     

     

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  25. By Kit P on May 17, 2010 at 10:25 am

    “To be clear, an import tax on oil is
    paid for by oil users, not taxpayers.”

     

    These thing sound good to liberals.
    Raise taxes then blame the ‘big’ energy when those costs are passed
    along to consumers. The same for costly regulations. Those new
    scrubbers on my utilities coal plants is costing me $20/month. I do
    not have a problem with pollution controls just politicians who blame
    the ‘big’ energy companies.

     

    So yes I am in favor of incentives to
    increase domestic production and against regressive taxes.

     

    “mandate that we must use its product
    (regardless of price)”

     

    Of course that is not true. If you
    would bother to read the 2005 Energy Bill you would know that
    provisions are provided in the legislation to consider adverse
    consequences such as high price or excessive environmental impact.

     

    That is the thing, if something works
    like ethanol, I am for it.

     

    “imports for 2/3 of its oil”

     

    More like 1/3 and rationing could
    easily cover the lost of 1/3 during a national crisis.

     

    “A decision was made many decades ago
    …”

     

    By who? Clearly you can find a
    reference for this important policy. The US is self sufficient in
    food because we have a lot of farm land and productive farmers.
    PaulN confuses circumstances with policy.

     

    “A similar level of importance has
    been placed on electricity production ..”

     

    PaulN confuses France with the US.
    There is no policy against important electricity from Canada or
    Mexico.

     

    “presumably, is why Kit wants to
    build new nukes, rather than just buy more electricity from Canada”

     

    You have more to sell? Some of the new
    nukes plants being considered are planned for selling electricity to
    Canada. Most are new US nukes are planed in for the southeastern US.
    Do you have a plan to get the electricity from Canada to Florida?

     

    “Kit lives in a dreamworld ….or a
    ship”

     

    You know I used to be a navy nuke
    officer? Nuclear propulsion for ships is well established.

     

    Nuke plants can also make lots of
    hydrogen and the technology has been demonstrated in France and
    Switzerland. So nukes can fuel transportation if we run out of
    hydrocarbons.

     

    The US also has huge reserves of
    uranium. One of the largest in North America is just down the road
    from where I live. Virginia is current investigating lifting a ban
    on mining uranium. Mining coal is okay but mining uranium is not.
    Go figure!

     

    For those who do not know, 10% of the
    electricity in the US comes from weapons grade enriched uranium
    produced by the USSR. More than 15,000 commie nukes have been
    destroyed. Talk about beating swords into plows shares.

     

    “so fuel must be imported”

     

    Again not true. The US does import but
    it is not a must. Also uranium is not a significant cost in
    generating electricity.

     

    None of PaulN arguments has merit.
    What we could do in the future is only a consideration for what we
    should be doing now. We should be producing ethanol and are. We
    should be building more efficient POV and we are. We should be
    should be developing BEV and we are.

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  26. By Rufus on May 17, 2010 at 11:37 am

    So, let’s review the bidding. We’re down to about $2.00 gal to produce ethanol from cellulosic feedstocks (switchgrass, corn cobs, Municipal solid waste.)

    The new engines will, for all practical purposes, get equal mileage with ethanol as gasoline (with a bit more power.)

    We will, within a year, be getting about 15 Billion gal/yr from corn.

    Within 5 years we will be getting another 5 Billion from corn cobs.

    Municipal solid waste will give us 9 Billion gal/yr.

    We will need about 110 billion gpy from all sources.

    We can probably figure on 50 Billion gal/yr from domestic oil for well into the future.

    All we really need from switchgrass/miscanthus, etc is about 30 Billion gal/yr, or about 10 Million gpy from each county.

    This is like falling off a log. Figure a fairly low 500 gal/acre. We need 20,000 acres in each county. That would require an area with a radius of 3.15 miles with a distillery in the middle.

    A little less than 3% of available land in the county (the average county is about 1,100 sq miles.) And, of course, largely made up of the marginal land.

    No Imports. No shipping of ethanol through pipelines, or on trains. No fossil fuels used in the processing (virtually, none in the farming.) Locally produced, locally used.

    Wonderful for everyone except Exxon, Wall Street, Saudi Arabia Venezuela, and, of course, the Politicians.

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  27. By Rufus on May 17, 2010 at 11:44 am

    Two Years after inventing the electric light bulb, Edison had built 5,000 electric power plants.

    In the next 5 years we had built 127,000 More.

    All I’m talking about is building a lousey 3,000 little “cookie cutter” cellulosic refineries. We could do that in our sleep.

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  28. By Benny BND Cole on May 17, 2010 at 12:13 pm

    I gotta say, I admire Rufus’ spirit of “can-do-ism.”
    Consider that we have spent $1 trillion and counting in Iraqistan, and some say far more. Very shortly, we will spend about $1 trillion every year on national defense, homeland security and the VA.
    A good power plant costs about $1-2 billion. We have gobs of natural gas, and we have been building nukes for 50 years.
    With the slightest bit of intelligent leadership, the thought of an “energy shortage” becomes laughable.

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  29. By Rufus on May 17, 2010 at 12:35 pm

    During the depths of the Great Depression we built the Empire State building, Hoover Dam, and a County Courthouse in, virtually, Every County in the U.S.

    Don’t tell me we can’t put a li’l ol’ distillery in every county. Not with the 10 yr. Treasury Bond yielding 3.40%.

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  30. By Kit P on May 17, 2010 at 1:21 pm

    “With the slightest bit of
    intelligent leadership, the thought of an “energy shortage”
    becomes laughable.”

     

    There is no energy shortage. However,
    there is a surplus of lawyers, journalists, and politicians. Edison
    did not need to provide an EIS to make electricity.

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  31. By moiety on May 17, 2010 at 1:26 pm

    Rufus said:

    So, let’s review the bidding. We’re down to about $2.00 gal to produce ethanol from cellulosic feedstocks (switchgrass, corn cobs, Municipal solid waste.)


     

    Not even using the enzyme costs from a corn plant plus percieved cheaper raw materials costs are we at $2. Maybe at 2.50 but we still await industrial production (2011).

     

    As for the engine claims please reference. i have no doubt that they can increase mileage by 5% but then again increasing mileage from 32 mpg is pretty substandard considering mpg in Europe can start at 50 mpg for urban alone (and these are models from American car makers).

     

    Otherwise though fair post.

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  32. By Rufus on May 17, 2010 at 1:55 pm

    Fiberight is producing cellulosic ethanol, Now. They state that at full production they will be producing ethanol from MSW for $1.65/gal. These are “Real” people. Their top executives are from the “Waste management,” and Distilling Industries.

    The point is: with the new DI, Turbocharging technology the new engines will be able to get the same mileage with ethanol as they get with gasoline. GM put out a press release on the new Buick Regal. It will come within 5% in the first iteration, and will be “Equal” in the second. I imagine a big factor will be Delphi’s new “Heated” injectors, due out in the fall of 2011.

    It’s hard to compare Europe’s small cars with the USA’s small cars. Ours are heavier due to “Safety” Standards, etc.

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  33. By Wendell Mercantile on May 17, 2010 at 4:26 pm

    Don’t tell me we can’t put a li’l ol’ distillery in every county.

    Rufus~

    When is your county getting one? Why not make your county the pilot county?

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  34. By Rufus on May 17, 2010 at 4:28 pm

    Wendell, I just checked my bank account. What does – $37.05 mean?

    Maybe we’ll have to wait a year. :)

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  35. By Benny BND Cole on May 17, 2010 at 5:22 pm

    Rufus, you will get a kik out of this story: http://www.labusinessjournal.c…..uel-maker/
    Supposedly, L.A.-based firm Rentech will build $4 billion plant in Natchez, Miss. to produce synthetic fuel for jets. The wording is murky, but the fuel will be derived from a mix of coal, biomass and coke. So they say.

    The CEO, named D. Hunt Ramsbottom (you can’t make this stuff up) used to run an auto parts comapny.

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  36. By Rufus on May 17, 2010 at 8:15 pm

    $4 Billion?

    Jeez

    I think I’ll “wait and see.”

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  37. By DM on May 18, 2010 at 9:28 am

    That’s $4 billion for a ~30,000bpd capacity plant, about what you should expect for a Fischer-Tropsch operation in the U.S.

    http://www.rentechinc.com/natchez.php

    I notice that they are also using Robert’s “XtL” terminology on their web site.

    http://www.rentechinc.com/rent…..rocess.php

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  38. By Wendell Mercantile on May 18, 2010 at 11:17 am

    I just checked my bank account. What does – $37.05 mean?

    Somebody has to take the lead on the big plans you have for a distillery in every county. If not you, who will it be?

    That’s $4 billion for a ~30,000bpd capacity plant,

    Hmmm. They would have to make a pretty healthy profit on each barrel of fuel they sell to an airline to return that $4 billion in what most investment bankers would consider a reasonable time, wouldn’t they?

    Just did some quick figuring, and if they make a profit of $10 per barrel, it would take 36.5 years to pay back the $4 billion.

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  39. By Al Fin 2300 on May 18, 2010 at 1:20 pm

    Allergy’s “more efficient than gasification and Fischer Tropsch” coal to liquids technology claims to reduce the cost of coal to liquids from $100 a barrel down to $60 a barrel.  That is a very significant reduction if it proves true after scaling up the process.

    Technology Review article describing Allergy’s process: http://www.technologyreview.co…..rgy/24405/

    The EIA made a lot of assumptions to produce that graph.  There is very little reason to believe that most of their assumptions are accurate.Confused

    The DOE under Obama is as politicised as it has ever been.  It might be best to consider the report and graph as political arguments, rather than technical.

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  40. By Al Fin 2300 on May 18, 2010 at 1:22 pm

    Al Fin 2300 said:

    Allergy’s “more efficient than gasification and Fischer Tropsch” coal to liquids technology claims to reduce the cost of coal to liquids from $100 a barrel down to $60 a barrel.  That is a very significant reduction if it proves true after scaling up the process.

    Technology Review article describing Allergy’s process: http://www.technologyreview.co…..rgy/24405/

    The EIA made a lot of assumptions to produce that graph.  There is very little reason to believe that most of their assumptions are accurate.Confused

    The DOE under Obama is as politicised as it has ever been.  It might be best to consider the report and graph as political arguments, rather than technical.


    The company’s name is “Accelergy”, not “Allergy”.  That is not to say another company cannot come along to produce CTL and call itself Allergy.  But Allergy would be a silly name for a CTL producer.Wink

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  41. By rrapier on May 18, 2010 at 1:25 pm

    Fiberight is producing cellulosic ethanol, Now. They state that at full production they will be producing ethanol from MSW for $1.65/gal. These are “Real” people. Their top executives are from the “Waste management,” and Distilling Industries.

    You can take my word on this, or not. But what they are doing – and I know they are doing this because every single low dollar cost estimate for cellulosic ethanol does the same thing – is make what I think are fatal flaws on their biomass cost assumptions. If I assume someone is going to pay be $100 per to to take their biomass, then I can also claim very low ethanol production costs. But that doesn’t mean the process is energy efficient, or scalable outside some very small niches in areas that have a serious biomass disposal problem.

    All it takes to confirm this are some basic calculations on the cellulosic energy content of the biomass and going prices for biomass. You will see that the only way someone can come up with those low estimates is to make very aggressive assumptions. Everyone presumes that there are abundant supplies of low cost biomass (e.g., pine beetle kills) but the reality is that it costs money to collect it, transport it, and process it.

    But our political thinkers believe these same things about low-cost cellulosic being here, and so we aren’t adequately prepared for reality (IMO).

    RR

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  42. By rrapier on May 18, 2010 at 1:36 pm

    I notice that they are also using Robert’s “XtL” terminology on their web site.

    That seems to have really caught on. They now even have a summit called the XTL Summit:

    http://www.cwcxtl.com/agenda/index.aspx

    I should have trademarked it. :)

    RR

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  43. By DM on May 18, 2010 at 2:33 pm

    “They would have to make a pretty healthy profit on each barrel of fuel they sell to an airline to return that $4 billion in what most investment bankers would consider a reasonable time, wouldn’t they?”

    The operating costs are probably relatively low compared to the capital cost of the plant, but I think you are right to say that they will need a high operating profit on each barrel of fuel to earn a decent return on capital. If they can keep operating costs down near $30/barrel and sell refined product for $2/gallon ($84/barrel) they might be able to pull it off but I’m not sure how realistic those assumptions are.

    “I should have trademarked it”

    You really should have ;-)

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  44. By Wendell Mercantile on May 18, 2010 at 3:17 pm

    If they can keep operating costs down near $30/barrel and sell refined product for $2/gallon ($84/barrel) they might be able to pull it off

    If they can make $54/barrel, it would take 6.7 years to pay off the $4 billion capitol investment made in the plant. Of course, whomever they borrow the money from would like a return on their investment, so they are actually going to have to pay back more than $4 billion. (Unless of course, they can somehow get the US Government (i.e. taxpayers) to provide tax credits or subsidies*. Why does every synthetic fuel scheme seem to come down to tax credits and subsidies?)

    I now can see why Rufus isn’t ready to invest in a fuel distillery in his county. He’d obviously like someone to do it, but it won’t be him.
    _________________
    * A subsidy for one person, means a tax on someone else.

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  45. By Benny BND Cole on May 18, 2010 at 4:21 pm

    Wendall-
    Predictions are hard, especially about the future. But would $3 a gallon for jet fuel be unreasonable in the future? That reduces payback time to something fairly enticing.
    My big Q is can they really build the plant for $4 bil? Anything that large seem predestined for cost over-runs. And will it work?

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  46. By Wendell Mercantile on May 18, 2010 at 5:07 pm

    My big Q is can they really build the plant for $4 bil?

    Probably not. It’s the same deal as with nuclear reactors: Each plant now has to be designed for a specific site, and that means running into unknowns and cost overruns. For Rufus’s county distilleries; for a Fischer-Tropsch synthetic jet fuel plant; or for a nuclear plant we need the economies of scale that can only come with mass production and building the same design over and over again.

    Rufus’s county distillery idea won’t become reality until there is a factory in Kansas City (or somewhere) churning them out by the thousands and shipping them to be installed on prepared and ready pads in counties all across the nation.

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  47. By Oxymaven on May 18, 2010 at 9:24 pm

    It will be quite educational to watch a Fiberight in action, and see how close the reality can come to their claims.  I certainly wish them great success.  Maybe they can do what they say, but it will take a couple of years of operation showing a profit before I’d come anywhere close to thinking they have something that might be meaningful or different from the rest of the cellulosic wannabees.  Given the track record of the industry, it’s getting very difficult to put much faith in any of the claims.  Clearly the CapEx for all of these current approaches are problematic, and with the science and technology of 3rd / 4th generation ‘drop-in’ biofuels probably almost even with cellulosic ethanol, it’s not hard to see why most investors would just as soon sit on the sidelines and wait for something better to come along.  With ‘drop-in’ fuels, you don’t have to use a mystical ‘no mileage penalty’ engine to make it worth while (in other words, all of the existing 300 million vehicle fleet can use them, rather than the miniscule number of FFVs). 

    BTW, I’m also a huge skeptic of the Buick Regal claims, since the GM Saab BioPower clearly was just smoke and mirrors  If the Buick claims were real, there would be a lot more people talking about besides just Rufus.  I would also have to question some of the figures used in the statement (last paragraph) by Buick at http://tinyurl.com/2uuyoub   Also, my understanding is that any engine that is truly optimized to ethanol will perform poorly with gasoline, so it’s not really a FFV anymore.

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  48. By Rufus on May 18, 2010 at 10:50 pm

    Well, we’ll know in the Fall, won’t we?

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  49. By Wendell Mercantile on May 19, 2010 at 12:19 am

    Rufus~

    Do you have one of those new-fangled Regals (by the way, it’s actually an Opel Insignia) on order yet?

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  50. By Rufus on May 19, 2010 at 1:05 am

    I’m thinking about it, Mercantile.

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  51. By Rufus on May 19, 2010 at 1:08 am

    I’d be more likely to pick one up that’s about a year old, though.

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  52. By moiety on May 19, 2010 at 3:14 am

    Rufus said:

    Fiberight is producing cellulosic ethanol, Now. They state that at full production they will be producing ethanol from MSW for $1.65/gal. These are “Real” people. Their top executives are from the “Waste management,” and Distilling Industries.

     

    It’s hard to compare Europe’s small cars with the USA’s small cars. Ours are heavier due to “Safety” Standards, etc.


     

    Fiberight may have a good technology but since they will not publish their claims on their own site (as far as I can see) I have to doubt. Further remember that a lot of the waste such as the paper and cardboard will be optimully returned to the mill where it can be reporcessed or turned tyo higher value products than fuel. So there will be competition even for some of this biomass source.

     

    Your point on safety standards is rubbish. Europe have equally big cars but also a high prevelance of smaller more efficient cars. The safety standards across the continents are comparible unelss you want to reference your point.

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  53. By russ on May 19, 2010 at 7:46 am

    Moeity is correct – no big difference between cars safety wise except in US blog land.

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  54. By Wendell Mercantile on May 19, 2010 at 9:54 am

    I’d be more likely to pick one up that’s about a year old, though.

    Rufus,

    If the new Buick Regal/Opel Insignia is everything you claim, there won’t be any year-old ones on the market. People will like it so much, they won’t want to sell or trade them in.

    You’d better run over to your nearest Buick dealer and get your name on the waiting list. And then take an option on a piece of land to build your county’s local bio-fuel distillery.

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  55. By jeff on May 19, 2010 at 1:51 pm

    Taking note of the EIA’s US oil production forecast, it’s interesting to note that US production did increase a bit last year.

    http://www.eia.doe.gov/emeu/st…../Fig13.gif

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  56. By rrapier on May 19, 2010 at 2:13 pm

    Taking note of the EIA’s US oil production forecast, it’s interesting to note that US production did increase a bit last year.

    Jeff, there are a lot of little stripper wells that do become economical at very high oil prices. Those started to come online when oil prices raced higher. So there can definitely be a short term bump. But from that bump you will see the declines continue.

     

    RR

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  57. By Sam Geckler on May 19, 2010 at 3:53 pm

    Robert,

    Are saying that chart actually appeared in the AEO2009 or just that data that would allow you to make it? That chart would be a punch in chops from DOE, but I don’t see it in the AEO2009 report that is archived at the EIA.

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  58. By rrapier on May 19, 2010 at 4:18 pm

    Are saying that chart actually appeared in the AEO2009 or just that data that would allow you to make it?

    Sam, that graphic was plucked out of a slide from a presentation by Glen Sweetnam at the 2009 EIA conference. At that time Glen worked for the EIA, so that is essentially from the DOE. I will have to go back and look and see whether the slide was in there (which the note seems to indicate) or whether he created it from the projections.

    RR

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  59. By scarlett on May 28, 2010 at 8:20 am

    very informative i like it very much. production falls for another year, and they move the line forward and forecast that the next year will be the turnaround year.

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