R-Squared Energy Blog

Pure Energy

The Dominant Fuel in 2030

I just spent a fruitful week in Canada, learning about some of the biomass resources in Alberta. There are some interesting opportunities there for the right technology, and I expect that I will be making future trips up there.

One of the questions I was asked this week by one of my new Canadian friends was “Do you believe fossil fuels will still be the dominant power source in 20 years?” Without hesitation, I said “Absolutely.” Others around the table nodded their heads in agreement, and the questioner said “So do I.” It isn’t that this is what we want, but this is how we see it. Government agencies like the EIA see it the same way. While they show renewable energy growing, there is a very long hill to climb before they begin to challenge fossil fuels for supremacy.

I think the question was meant to gauge whether I am realistic about the potential contribution of biofuels in the years ahead. I believe that I am. While I believe that biofuels – or more appropriately renewable energy in general – will eventually become our predominant source of energy, that is going to take a long time. I also believe that it is going to happen by necessity – because of the depletion of fossil fuels – rather than a breakthrough that makes something like algal biofuel as cheap to produce as petroleum. Regardless, we need to pave the path to that potential future today, so when the need is pressing we aren’t scrambling to come up with solutions.

Speaking of algae, you may have seen the story on ExxonMobil plunking down $600 million for algal biofuel development. When I was in Canada, someone referred to this as “Dead Money Walking”:

Exxon’s algae

Exxon, the west’s biggest oil company, has launched a new research programme into producing biofuels from algae, in a break from its general antipathy towards alternative energy.

At first sight, this looks a pretty bizarre thing for the company to be doing. Rex Tillerson, Exxon’s CEO, has been consistently sceptical about biofuels, even the advanced “second generation” variety. (Or, as Steven Chu, US energy secretary, described them to the FT, “fourth generation” biofuels.)

Incidentally, I did an interview in the airport yesterday on “4th generation biofuels.” I told the interviewer that I hate that term “4th generation biofuels.” Can we at least wait until we see what the 2nd generation really looks like?

But back to the ExxonMobil story. I am highly skeptical of the conventional paths to produce biodiesel from algae. In fact, John Benemann recently commented here that if you really want to know where algal biofuels stand, offer to buy some for $100/gal. He said you can’t get it. On the other hand ExxonMobil is certainly not stupid, so you have to wonder about their angle. The reporter I spoke with asked about algal biofuel, and I did say that I could see one circumstance in which it might work. If you could engineer/breed algae that excreted oil, you could potentially collect it by skimming it instead of collecting and pressing the algae. That would potentially be a much lower cost fuel, provided the production rates were decent.

Finally, it looks like I have 100 responses to the previous open thread, and I presume at least some of those are questions for me. I will try to work my way through those over the next few days. First, as indicated before I will speak with POET tomorrow about their ethanol work, and I will report on that conversation here in the next couple of days. If you have anything that you would like to ask them, let me know in the comments and I will try to get your questions answered.

July 17, 2009 Posted by | algal biodiesel, Canada, ExxonMobil, john benemann, POET | 35 Comments

Forbes Making Misleading Claims

Forbes magazine is making claims that the U.S. is exporting oil to other countries:

America’s Oil Export Problem (Yes, Export)

The U.S. could cut oil imports by nearly 15% tomorrow without using less gasoline, invading a foreign country or driving up prices at the pump. How? By cutting exports.

This will come as a surprise to many, but in the past four years U.S. oil and petroleum exports have reached four consecutive record highs–at least since the early ’80s. In 2007, the U.S. exported 1.43 million barrels of oil per day; up by roughly half a million barrels of oil per day since 2004.

As I said when Jon Tester made similar claims, that’s utter rubbish:

First off, here are the numbers from the EIA on exports from the U.S. of petroleum and petroleum products. What is the #1 destination for these exports? Mexico, one of our largest suppliers of crude oil. #2? Canada, our largest supplier of oil. And what are we sending them? Here, again, is the breakdown. The #1 product that we are supplying? Petroleum coke. #2? Residual fuel oil.

Misleading arguments simply give comfort to those who would argue that energy independence is within our grasp. After all, we are exporting all of this oil to other countries! But such arguments misrepresent the situation we are in.

The argument is correct on one point. Exports of high sulfur diesel did increase when the ultra-low-sulfur-diesel specs went into effect in the U.S. in 2006. However, in 2007 they were back down to the 2005 levels. Further, the total is still only a fraction of the ‘barrels’ of petroleum coke that are factored into the total ‘petroleum’ exports.

But the sound bite message that most people will come away with from articles like this is that we could go a long way toward energy independence if we just stop exporting oil. Just like we could be energy independent if those darn environmentalists would move out of the way and let us drill into our remaining oil reserves. The fact is, the problem of energy independence is so much greater than that. Drilling would be a drop in the bucket (albeit one that I favor). Exports are a drop in the bucket, and the countries that receive the exports – primarily Canada and Mexico – provide us far more petroleum in return.

October 2, 2008 Posted by | Canada, Mexico, oil exports, oil imports | 196 Comments