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By Robert Rapier on Sep 1, 2011 with 62 responses

Investor Interest in U.S. Biofuel Production Set to Soar

I just finished writing the 4th chapter in my book tonight. This chapter was a primer on renewable energy, covering biomass, hydropower, wind, solar, geothermal, and ocean energy technologies. Interesting tidbit from this chapter: The world’s largest producer of geothermal power is the U.S. oil company Chevron. How many people would have guessed that?

The chapter kept me busy this week, but fortunately I have a timely guest post available. The following guest post from OilPrice.com addresses last week’s announcement of a potential half billion dollar investment by several government agencies to develop advanced biofuels.

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On 16 August President Obama announced that the U.S. Departments of Agriculture, Energy and Navy will invest up to $510 million by 2014 in partnership with the private sector to produce advanced “drop-in” aviation and maritime biofuels for military and commercial use. This builds on a directive Obama issued five months ago as part of his “Blueprint for A Secure Energy Future,” his administration’s policy for reducing U.S. dependence on foreign oil imports, which now cost more than $300 billion.

The plan envisages the three federal departments to invest a total of up to $510 million, which will require substantial cost sharing from private industry, with projected matching funds of least one to one.

President Obama declared, “Biofuels are an important part of reducing America’s dependence on foreign oil and creating jobs here at home. But supporting biofuels cannot be the role of government alone. That’s why we’re partnering with the private sector to speed development of next-generation biofuels that will help us continue to take steps towards energy independence and strengthen communities across our country.”

Secretary of Agriculture Vilsack said, “Our goal is to create and stabilize an advanced biofuels industry. This is not a fly by night effort – it’s a commitment to a real energy future. The president has asked us to make the US more competitive, and to give us real diversification in our energy choices.” Secretary of the Navy Mabus added, “We simply buy too much fuel from out of the country. The supply shocks, the price shocks, it’s simply unacceptable to the military. For every dollar increase in the cost of a barrel of oil, it costs the Navy $30 million.”

The third federal department involved in the initiative, Secretary of Energy Steven Chu noted, “These pioneer plants will demonstrate advanced technologies to produce infrastructure-compatible, drop-in renewable fuels from America’s abundant biomass resources. It will support development of a new, rural-focused industry that will replace imported crude oil with secure, renewable fuels made here in the U.S.”

While it remains to be seen how the joint investments between the U.S. government and private sector will work in practice, the announcement nevertheless represents an unprecedented commitment by several federal departments to stimulate the production of renewable biofuel energy, which is a godsend for many start-up companies which have up to now found it difficult to locate capital to ramp up production.

There are many reasons why production of drop-in biofuels in the United States has been limited up to now. Two of the most significant roadblocks have been a dominant influence of the U.S. bioethanol industry and lobby, which until now has crowded out consideration of other options, as it currently has a hammerlock on issues of importance to farmers, including subsidies and federal crop insurance.

A second inhibiting factor is the sheer diversity of feedstocks, which range all the way from timber milling byproducts to algae. No single biofuel feedstock has as yet emerged as the clear initial winner, although it appears increasingly evident that camelina may soon come so.

And finally, last but certainly not least, the small amounts produced thus far of drop-in biofuels, the majority of which have gone to both civilian airlines and the Department of Defense for evaluation and testing have been labeled “designer” fuels, as their prices are multiples per gallon higher than traditional fossil fuel, which depending on the feedstock, have ranged between $65 and $100 per gallon. Supporters of biofuels argue that the high prices up to now are a factor of limited production rooms and that mass production will lower unit costs, but the fact of the matter remains that the high prices have been a significant impediment to developing full-scale commercial production of drop-in biofuels up to now.

The Department of Defense’s Defense Energy Support Center (DESC) is the sole purchaser of fuel for the U.S. military and federal law requires it to pay a fixed price for fuel. In its latest publication for FY 2011, the DESC pays $3.03-$3.46 per gallon of JP-8, the military equivalent of a Jet A-1, civil aviation fuel. That said, the need is there, as JP-8 is the most widely used fuel in the U.S. military, accounting for about 65 percent of. DoD’s fuel needs, which uses about 4.6 billion gallons (146 million barrels) of fuel each year and given the need to begin production of sufficient volumes of biofuel, it would seem that the DESC price limitations are unlikely to be ironclad.

Wall Street’s big money boys, the Carlyle Group and Goldman Sachs, have already begun discreetly investing in biofuel production in the U.S., but given the size of the recent government’s pronouncement, there is still plenty of largesse to go around. Smart investors will be watching developments closely.

Source: http://oilprice.com/Alternative-Energy/Biofuels/Investor-Interest-in-U.S.-Biofuel-Production-Set-to-Soar.html

By. John C.K. Daly of OilPrice.com

  1. By takchess on September 1, 2011 at 9:48 am

    More electric cars please………

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  2. By Rufus on September 1, 2011 at 10:41 am

    Just One “E85-Optimized” Car, please.

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  3. By Wendell Mercantile on September 1, 2011 at 11:06 am

    E-85-Optimized? I want to see Rufus on a 10-speed bicycle. Heck, it’s pretty flat in the Delta, a one-speed might even work for him.

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  4. By Rufus on September 1, 2011 at 11:27 am

    Of all the things you “want” to see, that one is probly the most unlikely to happen. :)

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  5. By paul-n on September 1, 2011 at 12:18 pm

    So yet more governmnet money has been made available for biofuel development.  Hopefully this time they will not just give it to whoever has the greatest hype/PR machine.  In fact, the ideal selection process already exists – just have them make their pitch on Shark Tank, and, to make them sweat a little more, do it live to air – none of this backroom stuff.

    The other condition for this funding should be that it is anything BUT ethanol- the gov has given out plenty for that already.

    As for Takchess’ electric cars, the military is already looking at that for “on-base” vehicles – most of which do short trips and never leave the base area.

     

    Since the military already has a fixed price fuel scheme, they should simply replicate this for biofuels – post a price of, say $6/gal, for bio -JP-8, and $5-gal for bio-fuel oil , (to meet the technical specs) and see who turns up with product to sell.  At those prices, equal to $240 and $210/bbl, that is well above the claims of many companies, who all say they will be competitive at less than $100/bbl.

    Then, with a guaranteed market and a guaranteed price, it is time for these companies to start producing fuel, not hype.

     

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  6. By Benny BND Cole on September 1, 2011 at 12:22 pm

    I do like the idea of a PHEV that runs on pure ethanol. Then you can use a higher-compression motor.

    If a next generation PHEV gets 60 miles on the charge, and has a small onboard motor to go another 150 miles on ethanol, we would hardly need any imported oil.

    Lithium batteries look like they will about double in capacity in next 10 years. And we know how to build ethanol motors. This is all very doable.

    Not sure we can run our US fleet on biofuels otherwise–biofuels will have trouble getting up to 20 percent of demand.

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  7. By Rufus on September 1, 2011 at 12:32 pm

    If Honda can make a CNG vehicle for sale in selected Western States, I don’t see why Ford, or GM couldn’t make an E85 Vehicle for sale in Iowa/Minnesota/Nebraska/The Dakotas.

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  8. By Rufus on September 1, 2011 at 12:44 pm

    A Ford Focus, or Chevy Cruze that gets 40 mpg on E85? It would have to be a Winner.

    $0,07/mile?

    Or, a small pickup that gets 30 mpg on E85.

    $0.10/mile, or less?

    Would be cheap to build. Wouldn’t need a turbocharger. Just a small engine with a high compression ratio.

    There are over 400 Stations in Minnesota that sell E85, and over 170 in Iowa.

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  9. By Tim C. on September 1, 2011 at 2:32 pm

    $510 million, wow! That’s almost as much as Obama gave to Solyndra.

    This plan “will support development of a new, rural-focused industry that will replace imported crude oil with secure, renewable fuels made here in the U.S.”
    Translation: This plan will make the rural, red parts of the country just as dependent on Washington as the urban, blue parts of the country are today. The biofuels industry, and all the rural jobs therein, will require constant subsidies, mandates, and regulatory support from Washington to compete with fossil fuels. That means more votes for Democrats in flyover country.

    “It remains to be seen how the joint investments between the U.S. government and private sector will work in practice”? No, it doesn’t remain to be seen. Solyndra, Evergreen Solar, Range Fuels, et al, have shown us how the joint investments will work in practice. Heres’ how they will work: Based on hype and a bogus technoeconomic analysis, a small company scores big government bucks and matching private venture capital. A plant is built, and begins losing money as soon as it opens. Good money is thrown after bad, until the plant closes, and the company goes belly up. At least a dozen US green energy companies have followed this trajectory already; watch for dozens more in the years to come.

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  10. By takchess on September 1, 2011 at 4:01 pm

    Perhaps Tim C’s comment should read.
    That’s about 1% of what we’ve misspent on the war.

    U.S. Has Misspent $60 Billion in Wars 9/1/2011 10:12:22 AM

    http://online.wsj.com/video/us…..tary+fraud

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  11. By mac on September 1, 2011 at 5:14 pm

    Ben said:

    “Lithium batteries look like they will about double in capacity in next 10 years. And we know how to build ethanol motors. This is all very doable.”

    ——————————————————————————————–

    New companies like Sakti and See-O are working on solid state electrolytes for Li-ion batteries. They are at the pilot plant stage. A solid state electrolyte chemistry eliminates the problem of electrolyte pastes (sometimes water based) from drying out, cracking within the battery cell and diminishing the capacity of re-chargeable battery cells over time.

    Solid state Li based companies project about a 50% gain over present Li technology.

    This certainly beats ICE refinements proceeding at a pace of about 1% per year.

    Also, I see that bio-fuel production is up 17% year on year. An electric-bio-fuel hybrid PHEV ? Not so far fetched…………..perhaps.

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  12. By rbm on September 1, 2011 at 6:26 pm

    I want more tranparency not less:

     

    Questions Raised After DOE Hides Costs Of Energy Projects

     

    NEW YORK -(Dow Jones)- The Department of Energy has removed from the public eye the total cost of renewable energy projects backed by billions of dollars in federal loans, in response to requests from recipients.

     

    The loan guarantee program, which has come under fire by a Republican- controlled Congress, has committed more than $30 billion to 42 renewable energy projects since 2009, when the federal stimulus bill allocated capital for this purpose. Each project is listed in detail on the DOE’s website, but the costs were recently taken down.

     

    http://www.nasdaq.com/aspx/sto…..y-projects

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  13. By mac on September 1, 2011 at 7:13 pm

    You folks whine and howl about subsidies to re-newables.

    Let the U.S. Navy, Marines and Army withdraw from the mid-east.

    All these costs are pertinent to the discussion.

    Just exactly how much do we spend guaranteeing our access to oil versus so called “subsidies” for oil alternatives ?

    We are right now subsidizing oil.

    OOoops…………………..

    I just conveniently forgot that…………………….

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  14. By biocrude on September 2, 2011 at 2:47 am

    Great article RR, and my first question is for the Forums: Why would our military be interested in renewable fuels?

    How about this reason?

    Secondly, say all you want about negatives regarding the ethanol industry, but it does help diversify our transportation sector off of petroleum. And, maybe due to RR’s request for more E85 in the Midwest, this was out today.  If you had an engine that was optimised for ethanol, you wouldn’t have the mpg penalty, and thus most of the arguments against ethanol would be eliminated.

    Lastly, Tesla is reporting quite confidently that the Model S will have a 300 mile range.  Even if that is half right, that is still a very impressive range for an EV, and would be a great option for a lot of Americans.  (Granted it is still ~$60k, but the the important part is the technology and that it will trickle down to other vehicles.)  

     

    Remember, the Chinese character for “Crisis” is a combination of two other Chinese characters: Danger & Opportunity.

     

     

     

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  15. By Anon on September 2, 2011 at 8:48 am

    RBM said:

    I want more tranparency not less:

     

    Questions Raised After DOE Hides Costs Of Energy Projects

     

    NEW YORK -(Dow Jones)- The Department of Energy has removed from the public eye the total cost of renewable energy projects backed by billions of dollars in federal loans, in response to requests from recipients.

     

    The loan guarantee program, which has come under fire by a Republican- controlled Congress, has committed more than $30 billion to 42 renewable energy projects since 2009, when the federal stimulus bill allocated capital for this purpose. Each project is listed in detail on the DOE’s website, but the costs were recently taken down.

     

    http://www.nasdaq.com/aspx/sto…..y-projects


     

    http://www.cleantechblog.com/2…..ch+Blog%29

     

    We have a whole collection of biofuels stocks to discuss now.

    Solazyme (NASDAQ:SZYM) – half of its 52 week, less than a buck over its low. Not.

    Kior (NASDAQ:KIOR) – Somebody correct me, but did the filings really
    indicate Khosla put money IN to this IPO?  And it got off at low end of
    the range even after that? From one of their filings: ”In conjunction
    with the Issuer’s IPO, an entity affiliated with the Reporting Persons
    purchased 1,250,000 shares of Class A common stock, resulting in an
    increase in beneficial ownership by the Reporting Persons by that
    amount. The purchase was made at the initial public offering price of $15.00 per
    share, for an aggregate purchase price of $18,750,000. The source of
    funds used to purchase the shares of Class A common stock was Khosla’s
    personal assets.” At least it’s money where it’s mouth is.  Not.

    Amyris (NASDAQ:AMRS) – 58% of its 52 week high, 20% over it’s low. Not.

    Gevo (NASDAQ:GEVO) – 40% of its 52 week high, c. 20% off it’s low. Not.

    Codexis (NASDAQ:CDXS) – 55% of its 52 week high, c. 20% off it’s lows. Not.

    I’d comment on the fundamentals of each one, but I don’t want you to
    think I’m depressed.  Oh, by the way.  Did I ever tell you the story
    about the cleantech sector’s magically changing cellulosic biofuels
    business plans to “cellulosic bio-anything-but-fuels” plans as people
    finally woke up and realized how tough using lousy feedstocks and high
    cost processes in a commodities market actually is.  Of course, careful
    you don’t change from targeting fuels to making feedstock for dirt cheap
    who would want to be in that business commodity chemicals or specialty
    chemicals with a global aggregate gross margin market less than your
    cash on balance sheet.

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  16. By Rufus on September 2, 2011 at 10:44 am

    The “Seventies” gave us the Volkswagen.

    I expect the “Teens” to give us a small, cheap, E-85 Optimized, vehicle.

    I might have missed my prediction. It’s looking, now, like the first Negative GDP print might come in this quarter, not the 4th qtr.

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  17. By paul-n on September 2, 2011 at 1:31 pm

    The “Seventies” gave us the Volkswagen.

    The Volkswagen actually started in the 40′s – was initiated by Adolf Hitler

    I expect the “Teens” to give us a small, cheap, E-85 Optimized, vehicle.

    Rufus, maybe you should take a holiday to Brazil, where they have had ethanol small cars for over two decades now.  Every single small car being sold there is capable of running on any mix from 20 to 100% ethanol.  

     

     

    Note that mots of the major manufacturers are represented here.

    Here, if you want to drive an E85 car you can only do so in a midsize or larger -or van/pu/suv because of the insane CAFE rules.

    A small car with a high compression turbo engine running on E85 would be very economical.

    In fact, one specially built small car running a turbo charged high compression engine on E85 got 100mpg – what are we waiting for?

     

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  18. By Rufus on September 2, 2011 at 1:51 pm

    Yeah, Paul, I know the “people’s car” was around a long time before the seventies; it’s just that the oil shocks brought them to our (Americans’) attention, in a massive way, then.

    I’m not thinking of a flexfuel, Paul. I’m thinking of something really cheap, and efficient. A small, high-compression engine, Dedicated to E-85.

    With a Big, Red Warning Sign on the fuel door: Danger! Gasoline Will DESTROY YOUR ENGINE!!!

    :)

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  19. By paul-n on September 2, 2011 at 2:34 pm

    I’m thinking of something really cheap, and efficient.

    I’m sure some of those Brazilian cars are just that.  Their version of flex fuel means 20-100% ethanol – they can’t run on gasoline or it will destroy the engine.

    So the car you want already exists!

    If a small, no(or low) frills, dedicated E-85 car came out that sold for $12k, or so, and got 40-50mpg on E85, I think it would start to sell.

    One question mark would be the long term future of ethanol.  Since the industry always says that puling the credit/mandate will destroy the industry, why would you want to buy a car (E-85 only) that is dependent upon a fuel that the makers say can only exist as long as government charity for it exists?

    The ethanol fuel indfustry needs to show that it can and will stand alone, independent of what gov does or doesn’t do, otherwise, you are making a bet on future gov policies, and what car buyer (or maker) wants to do that?

    A good start would be E-85 stations that are NOT attached to gas stations.  The industry needs to develop a portable E-85 station – say a tank and equip that is set up in 20′ shipping container, made to look nice, (even like a midwestern barn?) that can be placed anywhere.  Plug in the electricity and you are ready to go.  Completely independent of the oil cos.

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  20. By Rufus on September 2, 2011 at 2:50 pm

    Interesting idea, Paul.

    And, you probably have articulated the number one problem. Tom Coburn, and cohorts have managed to introduce a tremendous amount of anxiety into the ethanol story. At least, Honda (and the 600, or so, people who buy their gasser) knows/know there Will be nat gas in five years.

    Spending $12,000.00 on a car dedicated to a fuel as disparaged as is ethanol in Republican/Tea Party quarters would, indeed, be a leap of faith.

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  21. By rrapier on September 2, 2011 at 4:32 pm

    Anon said:

    We have a whole collection of biofuels stocks to discuss now.

    I’d comment on the fundamentals of each one, but I don’t want you to

    think I’m depressed.  


     

    This poses a huge dilemma for me. There are certain companies of which I am absolutely certain will go bankrupt. I could short these companies and make a bundle. Pacific Ethanol, for instance, was once valued at $1 billion. I wrote an article detailing some of their fundamentals and declaring the stock grossly overvalued — even though Bill Gates was an investor. They ultimately went bankrupt, but are still operating. Today’s market cap? $9 million.

    Now I know people who did short them on the basis of my article, and they did make a bundle. I know a brokerage who advised their clients to short on the basis of my article. But what if I had shorted them? Then I can no longer write objectively about them. So it’s a dilemma for me. If I short these stocks I have an ethical obligation to report that, but in doing so I might influence the decisions of other investors. If I shorted and didn’t report it, then I can’t write about the company (if I want to maintain any semblance of integrity). I don’t want to be an active participant in a company’s demise, so I sit with my hands tied, knowing I could make money but having no ethical route to doing so.

    RR

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  22. By mac on September 2, 2011 at 5:00 pm

    Biocrude said:

    “Remember, the Chinese character for “Crisis” is a combination of two other Chinese characters: Danger & Opportunity.”

    ——————————————————————————————–

    Glad to see that you have buffed up on your Chinese pictographs.

    Here’s another interesting one:

    In Chinese script the word Ship is comprised of the following components:

    boat + eight + mouth (family member) = Ship

    “The origin of this word becomes more meaningful after reading the following verse. Genesis 7:7 – And Noah and his sons [Ham, Shem, and Japheth] and his wife and his sons’ wives with him, went into the ark, to escape the waters of the flood.”

    “The word ‘mouth’ is often used to describe number of family members. For example, the phrase ‘One family of four mouths’ means a family with four members. Four couples in Noah’s family have a total of eight members.”

    I am not a “religion-fanatic” but I found this boat pictograph to be interesting. Someone pointed this out to me several years ago. The Chinese language is full of surprises like this as is the pictographic language of ancient Egypt.

    Whether you believe in a world-wide flood or not, pictographs like the one for “crisis” and “boat” are fascinating in their own right.

    Sorry for the diversion.

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  23. By Wendell Mercantile on September 2, 2011 at 5:05 pm

    A good start would be E-85 stations that are NOT attached to gas stations. The industry needs to develop a portable E-85 station – say a tank and equip that is set up in 20′ shipping container, made to look nice, (even like a midwestern barn?) that can be placed anywhere. Plug in the electricity and you are ready to go. Completely independent of the oil cos.

    Excellent idea Paul. But too innovative for the ethanol industry. They still aren’t ready to take off the training wheels.

    Plug in the electricity and you are ready to go.

    * Or set up wind turbines and solar panels if they really wanted to show their moxie.

    * Or if ethanol really made thermodynamic sense, use some of that ethanol in fuel cells to generate their own electricity.

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  24. By Benny BND Cole on September 2, 2011 at 5:26 pm

    RR-

    As a financial reporter, I faced the same ethical problems you do now. I am proud to say I simply did not own any individual stocks, and what I wrote was always what I believed.

    I admire you for making the same decision.

    I think the payoff is in KISS–Keep It Simple Stupid. And it is simple to forgo conflicts of interest. A simple life is an easier life.

    I could use a couple hundred grand however. That would make life simple too.

    Keep up the terrific work. I think many readers somehow intuit that whatever RR writes, he is sincere. He could be wrong, anyone can be wrong. But it is an honest and well-grounded assessment. That has made RR the nation’s premier energy commentator today.

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  25. By mac on September 2, 2011 at 5:38 pm

    ” Or if ethanol really made thermodynamic sense, use some of that ethanol in fuel cells to generate their own electricity.”

    What about solar furnaces ? That can generate heat to 1,000 deg, F. Surely that’s enough heat to crack alcohol. (174 deg. F) and to dry ddgs.

    No natural gas inputs need be involved in the distilling and no need to dry out DDGS with fossil fuels such as natural gas.

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  26. By Optimist on September 2, 2011 at 8:55 pm

    Translation: This plan will make the rural, red parts of the country just as dependent on Washington as the urban, blue parts of the country are today. The biofuels industry, and all the rural jobs therein, will require constant subsidies, mandates, and regulatory support from Washington to compete with fossil fuels. That means more votes for Democrats in flyover country.

    Hi Tim,

    You really need to get out from under that rock more often. The red parts of the country are already living off federal subsidies, as a quick review of generous agricultural subsidies would show. Paid for by those disgusting liberals living in the blue parts of the country.

    So here’s my question to you: You think if those flyover people had to work for a living they’d be more inclined to vote blue?Wink

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  27. By paul-n on September 3, 2011 at 1:57 am

    too innovative for the ethanol industry. They still aren’t ready to take off the training wheels.

    This is the part where I think the ethanol industry is shooting themselves in the foot.  Who wants to commit to a product, that requires long term  byuing (e.g. an E-85 only car) when the mfr is still on training wheels?

    Who bought the first gen of Blue Ray or HD-DVD?  The sensible decision is to see which one becomes commercially successful, and then buy.  So too with ethanol, if you had to choose between ethanol and something else (gasoline or diesel, or even CNG), who would choose ethanol when the industry constantly says that any fiddling of their subsidies/mandate will kill the industry?

    That is why they have the flex fuel engines, so you aren;t hobbled to E-85, but then you lose most of the potential advantages of that fuel. 

    When the ethanol industry is ready to throw off the training wheels, then people might be interested – but the training wheels have been there for 30+years now – how long do they need?

     

    Or set up wind turbines and solar panels if they really wanted to show their moxie.

    Yep, that would be pretty easy to do  - an ethanol fuel pump needs minimal electricity, especially if the tank is above ground.  Plenty of area on the roof of a 20′ container.  Then you really could put them anywhere, any time.  

     

    ” Or if ethanol really made thermodynamic sense, use some of that ethanol in fuel cells to generate their own electricity.”

    What about solar furnaces ? That can generate heat to 1,000 deg, F. Surely that’s enough heat to crack alcohol. (174 deg. F) and to dry ddgs.

    Mac, Wendell was talking about producing electricity to run a retail ethanol pump, not distill the stuff.

    That said, yes solar thermal would work well for distillation, you don;t even need a furnace, the rooftop variety evacuated tubes will get you enough heat to distill ethanol, when the sun shines.  Could also dry the DDG’s too, though this would start to take a bit of land area.

    Still, if these guys are using solar for steam enhanced oil recovery, for less cost than NG, it can be done for ethanol;

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  28. By mac on September 3, 2011 at 3:03 am

    Paul N,

    Thanks for reference to advanced solar steam recovery for wells. Often refineries purchase steam from outside sources for steam reforming of natural gas into hydrogen. Whether it would be economical for refineries to create their own “solar” steam rather than buying it, I don’t know. Robert might know the economics about that.

    Ethanol fuel cells are a bit more problematic than PEM methanol fuel cells, but Wendell makes an interesting and amusing point about using alcohol based fuel cells and firing up portable E-85 stations using ship containers.

    Here’s a reference from MIT Technology Review on the subject. of ethanol fuel cells.

    http://www.technologyreview.co…..rgy/22041/

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  29. By drunyon on September 3, 2011 at 2:09 pm

    Mac: interesting article on a new catalyst for breaking the carbon bonds in ethanol.  I did note when searching for “Radoslav Adzic ethanol fuel cell”, there were no more recent articles I could find.  The article noted many more challenges to go (especially replacing very expensive Rhodium).  Possibly not much progress has been made in the last two years.

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  30. By mac on September 4, 2011 at 9:28 pm

    Paul,

    Recently the heavy oil resources in Venezuela were re-classified as “technically recoverable”. Chavez now officially sits on the world’s largest oil reserve exceeding even Saudi reserves.

    Could solar steam be used to recover the heavy oils in tropical Venezuela with lots pf sun ? Probably so. Perhaps solar steam would work even in Canada where discussion is going on right now regarding further Canadian natural gas exports to the U.S., considering the size-able Canadian demand for nat gas at the Alberta tar sands. The article you referenced contends that it is cheaper to use solar steam recovery than to waste nat gas to accomplish exactly the same thing.

    Would it be cheaper to simply burn natural gas in internal combustion engines ? or is it more economical to use natural gas to extract heavy oils, refine them and then burn the refined gasoline and diesel in the internal combustion engine ?

    Either way, we are burning up the natural gas.

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  31. By paul-n on September 4, 2011 at 10:17 pm

    Re-classified by whom?  Just becasue Chavez says that do you believe him?

     

    Technically recoverable is quite meaningless – there is Helium-3 on the surface of the moon that is technically recoverable, but only at (literally) astronomical cost.

    It is economically recoverable that constitutes real reserves, and I suspect Chavez is just doing this to make his people feel good about him.

    solar steam would certainly work for assisting recovery in Venez, or even in Canada – Ft McMurray is actually a very sunny place – just bitterly cold in winter (down to -38C, which is also -38F)

    But just because it would work does not make it economical – though if NG goes up to $10, then it probably would be.

     

    I certainly agree that, in many cases, it IS cheaper to just burn the NG direct, rather than convert it into liquid fuels.  But, then you start to run out of NG faster.  Cdn oilsands production uses 1/3 of a bbl worth of NG to make 1 bbl of oil, so you are levering you NG supplies by 3:1 – that is good if NG is in short supply.  You could also burn the bitumen itself for the process energy, and if NG was expensive enough, they might do that.

     

    The problem with NG for vehicle use in N. America is the conversion cost – it is about $7k for a car, compared to $4k in Australia, and $2k in Pakistan (which has, I think, the most NG vehicles in the world).  The high cost here is mostly due to excessive gov regulations which have made it so expensive that kits/cars are not mass produced, thus denying economies of scale.

    For this reason, I am a strong advocate of CNG for co-fuelling of heavy vehicles – trucks and trains, where the one engine does a  lot of miles, and thus recovers the conversion cost fairly quickly.  Like these guys – http://www.cleanairpower.com

    Doing it for small cars that don’t do a lot of miles is a waste of the CNG hardware, but taxis would see a good payback – all taxis in Australia have been propane for at least 30 years.  For every taxi on the road it would save about 20gal fuel per day, so if the US has 200k taxis then that is about 80,000 barrels/day saved – 13% of Alaska’s current production!  

    My thinking is to use NG for oil production where it can be done, as that is displacing oil imports, and still use CNG for the specialised vehicles.  We will run out of money for oil imports before we run out of NG.

     

     

     

     

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  32. By mac on September 5, 2011 at 6:17 am

    Paul N.

    The re-assessment of Venezuelan oil reserves comes from the USGS apparently and not Chavez. Here’s the article as it appeared in the BBC news feed.

    Venezuela oil ‘may double Saudi Arabia’

    “Venezuela holds the largest oil reserves outside the Middle East

    A new US assessment of Venezuela’s oil reserves could give the country double the supplies of Saudi Arabia.

    Scientists working for the US Geological Survey say Venezuela’s Orinoco belt region holds twice as much petroleum as previously thought.

    The geologists estimate the area could yield more than 500bn barrels of crude oil.

    This assessment is far more optimistic than even the best case scenario put forward by President Hugo Chavez.

    The USGS team gave a mean estimate of 513bn barrels of “technically recoverable” oil in the Orinoco belt.

    Chris Schenk of the USGS said the estimate was based on oil recovery rates of 40% to 45%.

    Petroleos de Venezuela SA (PDVSA), Venezuela’s state oil company, has not commented on the news.

    However, Venezuelan oil geologist and former PDVSA board member Gustavo Coronel was sceptical.

    “I doubt the recovery factor could go much higher than 25% and much of that oil would not be economic to produce”, he told Associated Press news agency.

    Venezuela holds the largest oil reserves of any Opec country outside the Middle East. Saudi Arabia has proven reserves of 260bn barrels. ”

    ———————————————————————————————
    As you can gather from the article, there is some skepticism about the USGS estimate, even from a Venezuelan geologist.

    Using CNG for trucking fleets, taxis and other vehicles that put on a lot of miles makes some sense. It’s about 3,000 miles from coast to coast and it would only take about 30 CNG refueling stations strategically spaced every 100 miles or so on the inter-state highways to get the trucks from LA to NYC. A few hundred nation-wide CNG refueling stations might do the trick. No need to rip out the pumps at all 125,000 or so U.S. gas stations and replace them with CNG pumps.

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  33. By paul-n on September 5, 2011 at 12:47 pm

    I stand corrected.  One really has to ask why the domestic geoligical survey dept of the US gov is wasting time on overseas oil reserves – maybe it is the US gov trying to make its people feel good that there is lots of oil?!

    The Venez. geologist is right though, much of it woul be uneconomic to produce.

    Still, when the time comes that the US invades V. at least they know there will be lots of $200/bbl oil there – if V hasn;t sold it all to China first.

     

     

    As for the CNG, I think this is a rare case where some gov subsidy/stimulus would be well worth it.  Put out say $2m per CNG station to be built on the Interstate, pay a subsidy of $10k per heavy truck that converts, and have a CNG tax of double the current road tax on diesel.  

     

    A couple of hundred stations across the country would do nicely.

    After all, when you see where most of the truck ton miles occur, it becomes pretty easy to see where you should put the stations

    Also makes it easy to see where you should put your efforts on expanding freight rail, but that’s a whole differetn story….

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  34. By mac on September 5, 2011 at 3:28 pm

    Paul said:

     

    “As for the CNG, I think this is a rare case where some gov subsidy/stimulus would be well worth it.”

     

    I agree.

    A good idea might be to set up CNG trucking corridors along all the major interstates,  With taxies and busses and trains running on CNG, the U.S. would enjoy significant enegy security.  At least some Bozo in the middle east could not shut down the entire U.S. infrastructure on a whim.

    Complete and total energy independence and self-suffuciency ?  Probably not, but at least the U.S. would not face a total energy meltdown which is what we are looking forward to now, with our current oil only maniacal deception and dependence.

     

    People cry and howl about how this would be communism or socialism.  But look, this is exactly what we did during WWII.  The government rationed gasolline.  We stopped making automobiles during the war and made tanks instead.  And sugar and coffee were rationed. No one said “This is communistic”  Everybody simply did what the situation required.  World War II was indeed a time of sacrifice.  In contrast, I don’t see how putting up a few hundred CNG stations for truckers is much of a sacrifice at all considering the huge potential benefits.

     

    Would this result in complete, total and absolute energy independence ?  Probably not, but at least diversifying the energy sector to include bio-fuels, electricity, CNG, methanol and mixed alcohols would make falling asleep at night a bit easier.

     

     

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  35. By Kit P on September 5, 2011 at 7:32 pm

    “The world’s largest producer of geothermal power is the U.S. oil company Chevron. How many people would have guessed that?”

    According to Chevron. The PR people at Calpine might disagree.

    “The “Seventies” gave us the Volkswagen.”

    More of a marketing achievement than an example of good engineering delivering a good product to meet an economical need. When I lived Spain the VW stood out as a big bloated curiosity relative to all the little econo boxes.

    “Still, if these guys are using solar for steam enhanced oil recovery, for less cost than NG,”

    Paul, I could not find any evidence that your picture is anything more than a clever computer generated graphic. The web sight is long on PR and short of project details.

    “Perhaps solar steam would work even in Canada”

    It does not work anyplace. Yet!

    I can provide examples of places where geothermal and biomass steam plants have been running for thirty years. What have learned from solar steam is that it does not work very well, It is not just a matter of economics.

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  36. By paul-n on September 6, 2011 at 2:44 am

    Re: the solar steam project in Bakersfield;

    Paul, I could not find any evidence that your picture is anything more than a clever computer generated graphic. The web sight is long on PR and short of project details.

    It’s the real deal.  Here’s a link to how it was reported by the Bakersfield press;

    Other speakers at Thursday’s event echoed that point. Rep. Kevin McCarthy, R-Bakersfield, additionally applauded GlassPoint’s ability to develop the project without using government money. The CEO of the California Independent Petroleum Association, Rock Zierman, added that growing domestic oil production reduces need for imported fuel.

     

    GlassPoint President and CEO, Rod MacGregor, left, Berry Petroleum Company Executive Vice President and Chief Operating Officer, Michael Duginski, center, and Congressman Kevin McCarthy, right, tour the new Glasspoint Inc.,/Berry Petroleum 21Z solar project in McKittrick, Thursday.

    Of course, a demo project and photo ops doesn;t mean the thing works as well or as cheap as they say, but it does seem to work, and oil extraction is a great use for intermittent steam, as it is the total BTU’s per week/month/year that matter, not 24hr operation.

    The Bakersfield oil is very heavy – not much lighter than Canadian oilsands actually, so they have been using steam floods for decades -often coal fired, but less so now.

    I am sure the real cost is higher than NG, at current prices, but Glasspoint obviously offerecd a good deal just so they can say it is cheaper and get some attention.  

     

    The real test is, as always, whether the thing gets replicated.  So far they have just one follow up order from Oman.  If Berry Petroulem does not order an expansion after two years of the pilot plant then the evidence is in.  At least, unlike Solyndra, Range Fuels, etc, they haven’t used $$ of gov money for this.

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  37. By rrapier on September 6, 2011 at 10:02 pm

    Kit P said:

    “The world’s largest producer of geothermal power is the U.S. oil company Chevron. How many people would have guessed that?”

    According to Chevron. The PR people at Calpine might disagree.


     

    I doubt that. According to Calpine’s website, their total geothermal capacity is 725 MW. Chevron’s plants in SE Asia have a capacity of 1.3 MW. So it really isn’t even close. But I have to remind myself that for you “world” is pretty small. You might be discounting SE Asia as part of the world.

    So unless this is another case of you trying to convince people that you are smart by just babbling the first thing that pops into your head, this might be a good time to produce references to back up your insinuations.

    RR

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  38. By Kit P on September 7, 2011 at 6:06 pm

    “It’s the real deal.”

    Is contradicted by,

    “Of course, a demo project and photo ops doesn;t mean the thing works as well or as cheap as they say, but it does seem to work, and oil extraction is a great use for intermittent steam, as it is the total BTU’s per week/month/year that matter, not 24hr operation.”

    Paul I think we have a different idea about what is real and what is PR. It is like when RR writes,

    “I doubt that.”

    Units of production for electricity are in MWh. When I read xx MWh produced over xx years, then I know they are in the business of power producing .

    “and photo ops doesn;t mean the thing works as well or as cheap as they say”

    If all you have is photo ops it is a good bet that it does not work.

    “this might be a good time to produce references to back up your insinuations”

    RR should not being writing books if on renewable energy if he does not know the differenced between production and capacity. Capacity factor is the measure of how well it works.

    Over and over I have stated that those with there roots in the transportation fuel industry fail in the power industry because they do not understand that simple concept. Is Chevron a player or is it just so much greenwashing?

    It is just greenwashing. That is just my opinion. Chevron does not come to mind when I think of renewable energy nor does any oil company.

    To be fair, when a power company produces 75% of its electricity with coal and less than 1% with wind but puts a picture of a wind turbine (photo shopped next to dairy cow) on it annual report, that is just greenwashing.

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  39. By rrapier on September 7, 2011 at 9:53 pm

    Kit P said:

    “this might be a good time to produce references to back up your insinuations”

    RR should not being writing books if on renewable energy if he does not know the differenced between production and capacity. Capacity factor is the measure of how well it works.


     

    LOL! You are so predictable. I knew that’s how you would reply when I wrote it. Literally, I kid you not, when I wrote that I thought “In his reply he still isn’t going to back up his assertion. He is just going to come back condescendingly explaining that capacity is different from production.” You did not disappoint. I bet it would be fun to have you review my book: You would tell everyone that all of the numbers are wrong and offer nothing to contradict them. That’s just what you do.

    But you are the one making insinuations. If you wish to imply that Calpine is producing more electricity than Chevron with just over half of Chevron’s capacity, then the burden of proof is on you to produce the evidence. Chevron claims to be the world leader. Calpine does not. If you look at what they claim, they say things like “largest producer in the U.S.” or “largest producer at one site.” Since you wish to claim something to the contrary, produce the actual production figures. You must have them, right? Otherwise you would just be blowing hot air, and we know you wouldn’t do that.

    So, the burden of proof is on you. I know you like to throw things like this out there and not back them up, but I am calling you on this one. I am stating flat out that you do not know what you are talking about, and have gotten caught not knowing what you are talking about. Prove me wrong or admit you don’t actually have anything that contradicts what I said. In fact, you and I both know you don’t; it’s just another example of you wasting my time with inane ramblings and then searching for any nugget to latch onto in my reply. 

    If Chevron does not come to mind when you think of renewable energy — but Calpine does — then you obviously didn’t know as much as you thought. In any case, it’s something you would have learned in my book. You got it for free.

    RR

     

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  40. By mac on September 7, 2011 at 9:58 pm

    Paul,

    You mentioned trains running on CNG. Here’s a couple articles on trains in India turning to CNG/diesel dual fired engines.

    http://www.expressindia.com/la…..ck/502914/

    http://articles.timesofindia.i…..wered-cars

    Since about 2005 there has also been a train running on CNG in Peru. The idea of trains running on CNG may seem far-fetched but the idea appears to be practical and economical. The Napa Valley CA wine train runs on CNG.

    ‘CNG locomotives are operated by several railroads. The Napa Valley Wine Train successfully retrofit a diesel locomotive to run on compressed natural gas before 2002. This converted locomotive was upgraded to utilize a computer controlled fuel injection system in May 2008, and is now the Napa Valley Wine Train’s primary locomotive. Ferrocarril Central Andino in Peru, has run a CNG Locomotive on a freight line since 2005 CNG locomotives are usually diesel locomotives that have been converted to use compressed natural gas generators instead of diesel generators to generate the electricity that drives the motors of the train. Some CNG locomotives are able to fire their cylinders only when there is a demand for power, which, theoretically, gives them a higher fuel efficiency than conventional diesel engines. CNG is also cheaper than petrol or diesel.” (WIKI)

    http://www.greencarcongress.co…..first.html

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  41. By rrapier on September 7, 2011 at 10:01 pm

    I fished the previous reply out of the spam folder. I don’t think it was published before.

    RR

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  42. By Kit P on September 8, 2011 at 12:46 pm

    “If Chevron does not come to mind when you think of renewable energy — but Calpine does — then you obviously didn’t know as much as you thought. In any case, it’s something you would have learned in my book. You got it for free.”

    Actually FP&L & Duke comes to mind when I think of developers and producers of renewable energy. Two of the three leading venders of nuke reactors are also leading venders in renewable energy systems.

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  43. By mac on September 16, 2011 at 9:02 pm

    Gas Station of The Future ?

     

    File:Piracicaba 10 2008 151 Gast station selling four fuels.jpg

     

    Typical Brazilian fuel station with a choice of four fuels available:
    diesel (B3), gasoline (E25), neat hydrous ethanol (E100), and natural
    gas (CNG). Piracicaba, São Paulo, Brazil

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  44. By paul-n on September 17, 2011 at 12:07 am

    If Brazil can do it….

     

    How much would US reliance on oil imports be decreased if a serious CNG program had been started a decade or two ago?

     

    here is what a well designed, small, efficient CNG vehicle was able to do 12 years ago, when GM did a CNG version of their EV-1

    EV1 CNG

    The compressed natural gas (CNG) variant was the only non-electric vehicle in the line-up, even though it employed the same up-stretched platform. It used a modified Suzuki 1.0-liter turbocharged 3-cylinder all-aluminum OHC engine installed under the hood. Due to the high octane rating of the CNG (allowing for a greater compression ratio), this small engine was able to deliver 72 hp at 5500 rpm.

    The batteries were replaced with two CNG tanks capable of maximum operating pressure of 3000 psi. The tanks could be refueled from a single nozzle in only 4 minutes. In-tank solenoids shut off the fuel during refueling and engine idle, and a pressure relief device safeguarded against excessive temperature and pressure. With the help of a continuously variable transmission, the car accelerated 0 to 60 mph (96.6 km/h) in 11 seconds. The maximum range was 350 to 400 miles, and fuel economy was 60 mpg (in gasoline equivalent) .

    With CNG prices in California as low as $2/Gal (gasolien equivalent) that car would cost about 3.5c/mile, compared to 12c/mile for a car doing 30mpg, and about 2c/mile for an EV doing 4mi/kWh and 8c/kWh.

    Given that it solves the range anxiety, and is MUCH cheaper to make, the CNG car looks like the 80/20 sort of solution.

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  45. By Kit P on September 17, 2011 at 12:35 pm

    Forget CNG in the US for POV. The reason is the US is a rich country and consumers reject CNG. With very good reason too, liquid fueled ICE is just better.

     

    “and is MUCH cheaper to make, the CNG car looks like the 80/20 sort of solution. ”

     

    Oh horse feathers Paul! Every time I do the calculation I can buy gas to drive a Corolla 300,000 by skipping the higher cost of marginally better economy but much more expensive choices. Fleet owner that put 500k miles on an engine and have a 100 of them may see lower cost.

     

    Notice I said ‘may’! NG is the most volatile fuel choice. As long as production of NG exceeds demand and we do not have to import via LNG or CNN it is fine. However, I think the electric industry can burn it faster than drillers can produce it.

     

    Good for NG producers bad for American consumers.

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  46. By paul-n on September 17, 2011 at 1:46 pm

    Well, the US may be a rich country, but that doesn;t mean everyone within it is rich.  If they were, they wouldn’t complain endlessly about fuel prices when they are already the lowest in the western world.

     

    As for the calculations, the first problem (in the US) is that CNG conversions are artificially expensive, though this may change.  they are about $7k, but the same conversion on the same car is about $4k in Australia – where they (and LPG) are more common.

     

    I agree that a typical corolla driver and/or one that lives as close to their work as you do, would not see any benefit.  But there are plenty of others, in the US car centric world, that could.  On current prices $2/GGE CNG and $3.85 for gasoline, a 25,000 mile per year driver of a 25mpg vehicle is saving about $1800/yr.  a big PU getting 15mpg will save about  $3k/yr.  Either of those numbers will pay off a conversion in a reasonable time.  Taxis and fleet cars will do better.

     

    The electric industry probably will keep increasing NG use, which is too bad, as it is very good for many things, and a transport fuel is one of them – in the right applications.  Much better than mid east oil.

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  47. By Kit P on September 17, 2011 at 4:14 pm

    Paul your are making up silly scenarios again.

     

    “But there are plenty of others ”

     

    It takes all kinds I suppose but it sure looks like there are a lot of people who will spend ‘about $4k’ on fancy wheels and then wonder why there ride gets jacked.

     

    The point I am making is that people do things for a variety of reasons. If you drive 25k miles a year and you want to reduce the amount of fuel you use; then you would buy something like a VW TDI or a Corolla not something that gets 15 mpg.

     

    “Either of those numbers will pay off a conversion in a reasonable time. ”

     

    A reasonable time is what? If the ‘$7k’ will fuel my Corolla for 300k miles it does not matter if I put the mileage on in 5 years of 10 years. A POV is different than a stationary power plant. How long a POV lasts depends on how many pot holes you hit.

     

    “Taxis and fleet cars will do better. ”

     

    Really! On my list of used cars not to buy right after driven by teenage boy. Do you know what POS means? How long mechanical equipment last depends on how you take care of it. A friend and I took the boys skiing a while back in his POS which was the same year as my Toyota PU. When we got back I let him drive my PU which had twice as many miles. It was still rode well and you could not hear the engine when idling.

     

    The point here is that you should be skeptical of Pickens wanting to sell you NG. Good ideas do not require a hard sell. NG could have marginal benefits for some but NG is not a good transportation fuel. Same with electricity for those who might thing I am super critical of competing sources of energy.

     

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  48. By paul-n on September 17, 2011 at 7:12 pm

    If you drive 25k miles a year and you want to reduce the amount of fuel you use; then you would buy something like a VW TDI or a Corolla not something that gets 15 mpg.

    If you business is delivering or carrying things, then a Jetta or Corolla probly won’t do the job.  There are many small (and large) businesses that could benefit from a viable CNG option, from taxis to dleivery vans to heavy trucks.

    Just because a solution does not fit all does not mean it does not fit any.

    A reasonable time is what?

    For most businesses that is 3-4yrs.  The 25,000 mile.yr PU/van doing 15mpg could save about $12k over 4 years  - I think a lot of businesses would be interested in that.

    Taxis and fleet cars… On my list of used cars not to buy right after driven by teenage boy.

    Then don;t buy them.  The objective is to make the taxi or fleet a more competitive business, not provide you with a good selection of used cars.

    Do you know what POS means?

    Why yes, it mean Point Of Sale – I never have quite worked out why you use it as an adjective for vehicles, since you are not in the business of selling them.

    The point here is that you should be skeptical of Pickens wanting to sell you NG.

    Why yes, but I’d still rather have the option of buying NG from him than oil from overseas.  if the fuel must be bought from dubious characters, it might as well be domestic where the money (mostly) stays here and provides at least some jobs.

    Good ideas do not require a hard sell.

    I’ll remember that next time I see any promoting of nuclear power

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  49. By Kit P on September 18, 2011 at 2:35 pm

    “If you business is delivering or carrying things, then a Jetta or Corolla probly won’t do the job. ”

     

    Then it would not be a POV would it? I am not disagreeing with you about commercial vehicles however I would think you could find some real data on that. No, not the foo foo press releases indicating so much greenwashing but some actual data.

     

    “Just because a solution does not fit all does not mean it does not fit any. ”

     

    Wrong again Paul. The absence of evidence is indeed evidence. CGN has been around since before you were born and it has never caught on in the US. Fleet mangers get stuck on the time with stupid ideas that come done from some MBA or politician. Go ahead and look up the numbers again, CNG is an insignificant part of the mix.

     

    Why? Because CNG is not a good transportation fuel.

     

    “Why yes, it mean Point Of Sale ”

     

    No it meas piece of excrement. If you drive by my house you would see that there is a faded red POS PU in my drive way and another faded red POS PU parked in my neighbors backyard. The difference is that my PU only looks like a POS. It is good running order. It is cheap and reliable transportation for getting to work. Although the PU had high mileage (200k) when I bought it, the original owner took good care of it.

     

    Equipment broken down along the side of the road is expensive. I do not know how long fleet operators keep trucks before replacing them. Is the higher capital cost justified by the fuel savings? I do not know Paul, but I know that you are making up stuff. Again!

     

    “Why yes, but I’d still rather have the option of buying NG from him than oil from overseas. ”

     

    That is why I like corn ethanol. Like I said, I am skeptical of NG to meet increased demand without resorting to LNG imports and maintain the current $4-6 MMBTU. Again!

     

    “I’ll remember that next time I see any promoting of nuclear power ”

     

    Tell me Paul have you every heard me suggesting build nukes in West Virginia or the Powder River Basin? Coal, NG, and nukes are a very good way of making electricity. We are fortunate to have these options.

     

    I will try to be less subtle. The decision for stationary power plants must consider costs for 60 years based on the public good. Fleet operators must consider costs for just a couple years. The case for CGN is weak.

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  50. By rrapier on September 18, 2011 at 3:14 pm

    Kit P said:

    Wrong again Paul. The absence of evidence is indeed evidence. CGN has been around since before you were born and it has never caught on in the US. Fleet mangers get stuck on the time with stupid ideas that come done from some MBA or politician. Go ahead and look up the numbers again, CNG is an insignificant part of the mix.


     

    I don’t know how many times I have to tell you that your tiny piece of the world is not the world, but lots of countries use CNG extensively. When I was in India, CNG vehicles ferried me all over the city.

    Why? Because CNG is not a good transportation fuel.

    I suppose that’s why there are millions more CNG vehicles in the world than there are E85 vehicles. Those vehicles didn’t have to be subsidized, nor did the fuel. It was just a cost effective fuel for their needs.

    “Why yes, but I’d still rather have the option of buying NG from him than oil from overseas. ”

    That is why I like corn ethanol. Like I said, I am skeptical of NG
    to meet increased demand without resorting to LNG imports and maintain
    the current $4-6 MMBTU. Again!

    Of course that ethanol you like so much is heavily dependent upon natural gas, and it costs about $25 per MMBTU. You should know this. No, the real reason you like corn ethanol has nothing to do with objective analysis. It’s just something you decided to like, and so you apply laughably different standards when you look at it. But as we saw from your definition of scam the other day, it would certainly fit the definition you set out to declare that solar power is a scam: Exaggerated benefits and cost savings.

    Let’s compare:

    CNG vehicles: Nearly 13 million vehicles worldwide, running on natural gas at $5 per MMBTU. Kit does not like and declares that these are no good.

    E85 vehicles: About 8 million on the road, most of them not using E85. When they do, it costs $25 or so per MMBTU. The vehicles themselves are subsidized and the fuel is subsidized. The fuel itself is dependent upon $5 MMBTU natural gas. Kit likes this.

    Other ethanol vehicles: Most of the vehicles on the road can run some ethanol. Again, the fuel is mandated and subsidized, dependent upon natural gas, and several times more expensive than CNG. Kit thinks this is awesome.

    Conclusion: Kit wears blinders.

    RR

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  51. By rrapier on September 18, 2011 at 3:18 pm

    Kit P said:

    Wrong again Paul. The absence of evidence is indeed evidence. CGN has been around since before you were born and it has never caught on in the US. Fleet mangers get stuck on the time with stupid ideas that come done from some MBA or politician. Go ahead and look up the numbers again, CNG is an insignificant part of the mix.


     

    This ethanol you like so much, do you know the history there? It was around since Paul was born as well. It never got any traction at all, even after years of subsidies. When it was finally mandated, it finally caught on. This must have been a stupid idea, then, since the only way we started using it was to force us? I can tell you that if we mandated that 10% of our transportation fuel was CNG, you would suddenly see it catch on ala ethanol.

    Again, your lack of objectivity is so laughable it is hard to believe you are serious.

    RR

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  52. By Kit P on September 18, 2011 at 8:59 pm

    “I don’t know how many times I have to tell you that your tiny piece of the world is not the world, ”

     

    Really! How far do you think that the ‘they do it in India’ argument will get you in the US? I am always interested in better ways of doing things.

     

    “Of course that ethanol you like so much is heavily dependent upon natural gas, ”

     

    NG is a good stationary boiler fuel. So is coal. It makes sense to me to use these fuels to make a good transportation fuel.

     

    “CNG vehicles: Nearly 13 million vehicles worldwide,”

     

    So not very many vehicles worldwide. This is kind of my point. When people do something if it is a better mousetrap it becomes more popular. I did read RR link for possible reasons to use CNG. Air quality in big cities is one reason. The same reason that low sulfur diesel is now mandated in the US. So what are some of the problems from RR’s link?

     

    “Also, in Pakistan and India[27][28], there have been on-going (last several years now) series of CNG/LPG fuel shortages which periodically waxes and wanes, getting the fuel into a tank can be a major problem.”

     

    Ouch! Then RR writes but I do not think he was referring to the policies for places like India,

     

    “Again, the fuel is mandated ”

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  53. By rrapier on September 18, 2011 at 9:09 pm

    Kit P said:

    “I don’t know how many times I have to tell you that your tiny piece of the world is not the world, ”

     

    Really! How far do you think that the ‘they do it in India’ argument will get you in the US? I am always interested in better ways of doing things.

     


     

    If you are really interested in better ways of doing things, perhaps you might ask yourself why some countries have done things differently. Unless of course you believe the American way is the best way by definition.

    “Of course that ethanol you like so much is heavily dependent upon natural gas, ”

    NG is a good stationary boiler fuel. So is coal. It makes sense to
    me to use these fuels to make a good transportation fuel.

    Coal is not a good transportation fuel, but natural gas is. So no need to convert it into something that sells for five times the price when it functions perfectly well on its own. 13 million vehicles attest to that.

    “CNG vehicles: Nearly 13 million vehicles worldwide,”

    So not very many vehicles worldwide. This is kind of my point. When
    people do something if it is a better mousetrap it becomes more
    popular. I did read RR link for possible reasons to use CNG. Air
    quality in big cities is one reason. The same reason that low sulfur
    diesel is now mandated in the US. So what are some of the problems from
    RR’s link?

    Only in Kit’s world is 13 million vehicles not a lot. But I am sure he thinks 8 million E85 vehicles demonstrate what a good fuel ethanol is.

    “Also, in Pakistan and India[27][28], there have been on-going (last
    several years now) series of CNG/LPG fuel shortages which periodically
    waxes and wanes, getting the fuel into a tank can be a major problem.”

    Ouch! Then RR writes but I do not think he was referring to the policies for places like India,

    Ouch? Again, you may not realize this, but there are often fuel shortages of many kinds in developing countries. When there is a shortage, yes, indeed there can be a problem getting the fuel into the tank.

    I will repeat: The ethanol you like so much only gained traction when it was mandated. So you can’t use that excuse for why ethanol has been more successful as transportation fuel. CNG has not had the same kind of political support.

    RR

     

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  54. By Wendell Mercantile on September 18, 2011 at 9:18 pm

    Kit P. said, When people do something if it is a better mousetrap it becomes more popular.

    Natural Gas for Trucking Building Momentum

    And as far as I can tell, they are doing it w/o a mandate. They are doing it because they think it is a better mousetrap.

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  55. By Kit P on September 18, 2011 at 10:46 pm

    Wendell did you read the article you linked?

     

    “That’s up from just 1,950 last year, slightly less than 1% of North American sales.”

     

    I always find it interesting when the facts in an article do not fit the agenda of the journalist. To be precise, the journalists is predicting momentum.

     

    “The Frost & Sullivan report said while a basic Class 8 diesel tractor costs $100,000 to $150,000, but natural gas engines add $28,000 to $72,500, depending on the type of natural gas ignition technology used. ”

     

    Are you sure there are not mandates?

     

    “In some areas, government programs are helping out. ”

     

    Not that I have a problem with incentives to help with higher capital costs get the ball rolling but 99% of choices are the better mouse trap which is diesel.

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  56. By rrapier on September 19, 2011 at 1:55 am

    Kit P said:

    Not that I have a problem with incentives to help with higher capital costs get the ball rolling but 99% of choices are the better mouse trap which is diesel.


     

    That is simply a function of price. With the current price differential, natural gas is a good choice for fleets.

    RR

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  57. By Wendell Mercantile on September 19, 2011 at 1:47 pm

    Kit P.

    If I was independent operator who had to use a truck to go anywhere in the country, I’d certainly go with diesel. I’d know fuel would be available anywhere.

    If I was a fleet operator driving set routes on a regular basis, natural gas could be attractive. For example: Driving a regular route between Denver and Chicago; or, operating a fleet of coal trucks carrying coal from a mine to a power plant; or, operating a fleet of trucks that delivers lumber and building supplies in a specific urban/suburban area.

    One would think that natural gas would be a good option for FEDEX and UPS, and FEDEX does have natural gas-powered trucks (CNG, LNG, and LPG) in its fleet, although none so far in the U.S.

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  58. By paul-n on September 19, 2011 at 11:24 pm

    Well, these days, finding the CNG locations is easy – just go to http://www.cngprices.com/ and take a look at the map -not only comes up with the stations, but also the prices.  If you were operating in southern California, or Teaxas/Oklahoma, there are lots of CNG stations.

    The fact that diesel is a better transport fuel is not the point.  It is when CNG becomes cheap enough to overcome its own disadvantages that it can/will be adopted.  For vehicles that use lots of fuel -high mileage or heavy vehicles, that point is getting close, and some are past it.

    I am certainly saying it should be unioversally used or that it is a good option for ordinary commuters.

    But compared to the circuitopus routes to turn NG into liquid fuel, be it ethanol, methaonl of F-T liquids, using the CNG directly, where appropriate seems a much better way to go.

    If CNG was given the same mandate as ethanol – i.e. that 13bn gallons a year had to be used – then I suspect we would see quite a few CNG vehicles on the road (or rails).

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  59. By Kit P on September 20, 2011 at 10:38 am

    “One would think that natural gas would be a good option”

     

    If you live someplace with a large amount of stranded NG like Iran. It is not ‘simply a function of price’ because CNG is not as good a transportation fuel as diesel.

     

    “If CNG was given the same mandate as ethanol ”

     

    Paul you do understand that NG is a limited resource fossil fuel just like oil. West coast liberals get confused about that. The natural gas industry struggles to meet demand but want to increase demand so the can gouge Americans. In case anyone is confused, ENRON was a natural gas company that did not exemplify public service and reasonable profits.

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  60. By paul-n on September 20, 2011 at 12:03 pm

    Paul you do understand that NG is a limited resource fossil fuel just like oil.

    Yes indeed.  And, just like oil, it can be carried on board a vehicle for fuel.

    It is a waste to burn it for electricity, when it could be powering vehicles. If enough vehicles were powered with CNG, there would be quite a dent in US oil imports.

     

    If the nuclear electricity industry got off its butt and built a bunch more reactors to replace all the NG powerplants, there would be plenty of NG for transport.  There is the key for energy independence for the US, niot Picken’s plan of relying (only) on wind turbines.

    And without all that demand from NG powerplants, it would be a cheaper transport fuel too.

    It would seem the most limited resource is the resourcefulness of the nuke industry when it comes to building new plants.  I can’t think of any other industry where nothing new has been built in decades – what are you guys waiting for?

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  61. By rrapier on September 20, 2011 at 1:24 pm

    Kit P said:

    “One would think that natural gas would be a good option”

     

    If you live someplace with a large amount of stranded NG like Iran. It is not ‘simply a function of price’ because CNG is not as good a transportation fuel as diesel.

     


     

    Not as convenient under our current infrastructure, which is a reason it trades at a deep discount to diesel. Whether to switch comes down to the price (i.e., how steep the differential happens to be, how many miles the fleet drives, and how sure the operators are about future differentials). So yes, a function of price (well, the overall price you pay, not just the $/MMBTU).

    RR

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  62. By Kit P on September 21, 2011 at 11:21 am

    “ I can’t think of any other industry where nothing new has been built in decades – what are you guys waiting for? ”

     

    Demand for one thing! In case you missed it, the US economy has tanked.

     

    Again Paul your perception is wrong. There are at least 3 new designs of BWRs and 6 new designs PWR not counting what the Russian are doing or the Chinese have cloned. ABWRs are up and running as well as 1400 MWe PWRs. Currently in the world, 4 – 1600 MWe PWRs are under construction as well as 4 – 1200 MWe AP1000 PWRs

     

    In the US, 4 – 1200 MWe AP1000 PWRs have started construction. Also two partially constructed plants are being finished. All in the southeastern US. That is 6 reactors with a high certainty of coming on like by 2020. There are also 30+ new reactors that are being reviewed by the US NRC which has a huge backlog of work.

     

    There is some uncertain when construction will start. The COL process allows 20 years for construction to start. If demand increases and shale gas gets hammered with expense new regulations, then more of the 30+ new reactors will come on line before 2020. There is a lot of pent up industrial capacity in the US so we have a long way to go before we are limited by resources.

     

    One of the things about standard design and modularization is that expensive components is schedules can be adapted to the economy. Reactor vessels ordered for US plants are going into plants in China.

     

    Many countries rely on the US NRC for safety reviews. China does not have the regulatory staff to support their aggressive new build program. This is a big issue. My company has already lost $20 billion in orders because it will not lower standards. Russia and South Korea can build reactors cheaper to standards of the 90s. No one is going to build a reactor less than 100 miles of DC or NYC without a concrete reinforced protection building around the containment building. Everyone is pretty sure that single containment building can withstand an air plane crash but flying air planes into building on purpose is no longer a hypothetical threat.

     

    The other thing to keep in mind is what is the best mix of generation. We need enough nukes to provide base load demand for most of the year. Cheaper CCGT that provide base load demand part of the year makes a great deal of sense. The problem comes when new power plants of any kind are not built and old SSGT are sucking all the gas out of the pipelines and storage in the summer or winter. A 1000 MWe SSGT uses the same amount of gas as a 2000 MWe CCGT. So if the cost of one is $50/MWh then the other is $100/MWh. This assumes low NG prices.

     

    Building the right amount of nukes and wind turbines keeps the cost of NG lower.

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