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By Robert Rapier on Oct 21, 2014 with 20 responses

EPA’s Sleight of Hand on Cellulosic Fuel Rule Change

A few years ago, I wrote a post about the US Environmental Protection Agency’s (EPA) attempt to mandate a non-existent fuel into existence, and then fine refiners for not buying this fuel. That post was called “Why I Don’t Ride a Unicorn to Work“, and was designed to call attention to federal biofuel mandates that weren’t grounded in reality.

But what if I call a rhinoceros a unicorn? Does that mean unicorns then exist?

This week we have a guest post from Todd “Ike” Kiefer, who argues that this is effectively what the EPA has done. By declaring that the definition of cellulosic biofuels is ambiguous, the EPA has signaled that non-cellulosic feedstocks can qualify for full cellulosic tax treatment. Mr. Kiefer explains.

Previously Mr. Kiefer wrote an article highly critical of the Navy’s efforts promote biofuels in a periodical that is sent to Congress and top military leaders. The article was entitled Energy Insecurity: The False Promise of Liquid Biofuels (discussed here). His biography can be found at the end of the article. CONTINUE»

By Robert Rapier on Oct 16, 2014 with 21 responses

LanzaTech’s Vulnerability

It’s been years since I looked at this article I wrote on LanzaTech in 2007, but today I was made aware that it’s been linked to from an article in Biofuels Digest: Junk or treasure? Looking at carbon monoxide and LanzaTech. LanzaTech CEO Jennifer Holmgren had some comments referencing my previous article that are worth addressing. So let me summarize.

LanzaTech proposes to take waste carbon monoxide from sources like steel manufacturers and ferment that to produce ethanol. Holmgren says that the bacterium they use for their fermentation, Clostridium autoethanogenum, is highly ethanol tolerant. The scientific literature mentions tolerance in the 2% to 4% range, and says that the ethanol production rate slows down beyond 4%. I did see one patent application where they mentioned ethanol via this process in the 5.5% to 6% range.

To my knowledge LanzaTech hasn’t publicly stated the ethanol concentrations they achieve, and this prevents really rigorous calculations. Holmgren states that we needn’t make assumptions since “distillation energy requirements are textbook calculations and easy to calculate.” This only true if we know the ethanol concentration in the solution being distilled. As Holmgren’s own link showed in her response, it takes nearly twice as much steam to distill a 5% ethanol solution as it does a 10% ethanol solution. But without knowing for sure what their ethanol concentration is, we can’t know the energy requirement. So, I gave an example in my previous article to illustrate my point, which is this. CONTINUE»

By Robert Rapier on Oct 15, 2014 with 23 responses

Saudi Arabia Still Calling the Shots

The US Shale Oil Boom

There have been a lot of stories over the past few years about the implications of the US shale boom. To review for those who might have been living in a cave for the past 5 years, the marriage of horizontal drilling and hydraulic fracturing (fracking) has reversed 40 years of declining US oil production and created a shale oil and gas boom.

As amazing as it would have seemed a decade ago, US oil production is increasing at the fastest pace in US history. In the past 5 years US oil production has increased by 3.22 million barrels per day (bpd). The overall global oil production increase during that time was only 3.85 million bpd, meaning the US was responsible for 83.6 percent of the total global increase over the past 5 years.

US Oil Production 1965 through 2013 Fracking

CONTINUE»

By Robert Rapier on Oct 9, 2014 with 31 responses

The Bell Tolls for KiOR

A Lesson Learned

If there’s one thing billionaire venture capitalist Vinod Khosla has learned over the past decade, it’s that the oil companies aren’t as stupid as he thought. In 2004, Khosla was telling anyone who would listen to him that the only things standing in the way of running the entire country on biofuels were the oil companies, and a lack of funding. He set out to change both of those things, vilifying the oil industry at every turn, and convincing Congress to shell out tax dollars so he could show the dinosaurs in the oil industry how Silicon Valley rolls.

The result has been a debacle, with billions of investor dollars and tax dollars flushed down the toilet. What Khosla didn’t appreciate is that he isn’t smarter than the people in the oil industry. It’s just that the computing and information technology industries were still relatively new, and a great deal of innovation was still taking place in a young field with lots of room for innovation. The oil industry is 150 years old, and while the fracking boom shows that innovation still takes place in the oil industry, it is a very mature industry. Thus change tends to be incremental, not exponential. Almost everything that appears novel to an outsider like Khosla has almost certainly been investigated by multiple companies.

But Khosla convinced a lot of influential people that the energy industry just needed a visionary like himself to shake things up. He gave lots of talks and testified before Congress. He created ludicrous projections for how quickly cellulosic ethanol could scale up. (See my article “Vinod Khosla Debunked.”) Investors (including taxpayers via Congress) couldn’t give him money fast enough, and he proceeded to blow through it as he learned some hard lessons in the energy business, sometimes “inventing” things that had been around for a long time. CONTINUE»

By Robert Rapier on Sep 30, 2014 with 8 responses

US Crude Oil Exports Headed to South Korea

The Ban on Crude Exports

One of the 2014 predictions that I made back in January was “The crude oil export ban will not be lifted in 2014.” The present ban on US crude oil exports dates to the The Energy Policy and Conservation Act (EPCA) of 1975. The act effectively bans crude oil exports to all countries except Canada. The export of refined products, such as gasoline, diesel, and jet fuel is allowed.

But given that the US is still a net importer of crude oil to the tune of ~5 million barrels per day (bpd), on the surface it seems silly to entertain the notion of exporting crude oil. The problem essentially comes down to the location of the crude being produced, and the configuration and location of US refineries. Prior to the shale oil boom, crudes processed by refiners had been getting heavier and more sour (i.e., contained more sulfur). As a result, refiners had invested heavily in equipment that could process these types of crudes.

Enter the shale oil boom, which has been producing ever-greater volumes of light, sweet crude since 2008. There is a limit to how much of this crude can be processed by refineries that have been configured to process heavy, sour crudes, and as a result some areas of the country are oversupplied with lighter oil. This in turn has led to discounts — sometimes very large — of light, sweet crudes relative to heavier crudes that are internationally traded. CONTINUE»

By Robert Rapier on Sep 20, 2014 with 28 responses

The Most Consumed Fuel by State

I saw a very interesting graphic several days ago that shows the most consumed fuel in every state in the US:

Most Consumed Fuel by State

Image Credit: Movoto

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By Robert Rapier on Sep 11, 2014 with 26 responses

Another Record Year for CO2

Introduction

This is the 4th installment in a series that examines data from the recently released Statistical Review of World Energy 2014. The previous posts covered the world’s growing fossil fuel consumption:

Today I examine the implications of that growing fossil fuel consumption by looking at carbon dioxide emission trends. The key points in the report include: CONTINUE»

By Robert Rapier on Sep 3, 2014 with 44 responses

Guest Post: U.S. Renewable Energy Industry Dominated By Monopolism and Cronyism

This week we have a guest post for readers. The following article was written by S. Michael Holly, the Chairman of Sorgo Fuels & Chemicals, Inc. Sorgo has developed technology for the production of ethanol, electricity and protein from sweet sorghum. Mike was formerly an alternative energy engineer and business analyst with the Minnesota Department of Energy and Economic Development. He holds masters degrees in chemical engineering and business administration from the University of Minnesota.

My standard disclaimer applies: Publication of a guest post does not imply endorsement. Rather it indicates that I think the subject matter is worthy of debate and discussion. However it is clear the the US government discriminates against various energy sources. Among renewable electricity producers, some receive higher tax credits and subsidies than others. This has long been the case with biofuels as well. Governments preferentially subsidize certain pathways that in many cases have little chance of commercial success, yet they have allowed themselves to be fooled by vested interests. CONTINUE»

By Robert Rapier on Aug 28, 2014 with 29 responses

Global Biofuels Status Update

Introduction to the GSR

Today I want to take a deep look at the global biofuels picture, drawing mainly from the Renewables 2014 Global Status Report (GSR) that was released in June by REN21, the Renewable Energy Policy Network for the 21st Century. I had intended to draw data primarily from the recently released Statistical Review of World Energy 2014, but I believe that the GSR is the most comprehensive report available when it comes to the global renewable energy picture. The GSR has more complete renewable energy data than the BP Statistical Review, but both reports complement each other. Full disclosure, however, I have been a contributor to the GSR for the past five years.

Before I begin, let me introduce REN21 and what are they trying to achieve. From the foreword to the 215-page report: CONTINUE»

By Robert Rapier on Aug 13, 2014 with 31 responses

Why Natural Gas Prices Collapsed

Over the course of the next two columns, I plan to finish up the recent look at BP’s Statistical Review of World Energy 2014. The final two columns will focus on renewable energy, and carbon dioxide emissions.

Today I want to provide an update on the natural gas picture, as prices declined sharply at the end of July. I have laid out the argument since last winter that because of the deep inventory hole that developed over the course of the exceptionally cold winter, natural gas prices would remain high relative to last year, and that as a result natural gas producers would likely report higher year-over-year profits. (For background on the inventory picture, see my February column Natural Gas Inventories are Headed Toward Zero). CONTINUE»