Energy generation water consumption

[ Notice how much water biofuels use, especially soybeans for biodiesel

Alice Friedemann   www.energyskeptic.com  author of “When Trucks Stop Running: Energy and the Future of Transportation”, 2015, Springer]

Notes from “Working Document of the NPC Future Transportation Fuels Study. Topic Paper #31 Water Usage“. July 17, 2012 by John Wind and Ray Dums, 21 pages.

Figure 3. Well-­‐to-­‐Tank (WTT) Hydrocarbon Transportation Fuel Pathways – Fresh Water Consumption (Gal/MMBTU)

Figure 3. Well-­to-­Tank (WTT) Hydrocarbon Transportation Fuel Pathways – Fresh Water Consumption (Gal/MMBTU)

 

 

 

 

 

 

 

 

 

Figure 4. Power Generation Pathways – Life Cycle Water Consumption (gal/MWh)

Figure 4. Power Generation Pathways – Life Cycle Water Consumption (gal/MWh)

 

 

 

 

 

 

 

 

 

Figure 6. Well-to--Tank (WTT) Water Consumption for Various Biofuel Pathways

Figure 6. Well-to–Tank (WTT) Water Consumption for Various Biofuel Pathways

 

 

Figure 7. Well-to-Wheels (WTW) Water Consumption for Fuel-Vehicle Systems

Figure 7. Well-to-Wheels (WTW) Water Consumption for Fuel-Vehicle Systems

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Water is used in significant quantities for producing energy. It is an essential part of the fuel lifecycle, from feedstock production to conversion to final fuels and power. Because water is a limited resource essential for sustaining life, an understanding of water requirements for different fuel options is required. In order to understand the relative impacts of water use in the production of transportation fuels, it is first important to place this use within the context of total global and U.S. water supply and dispositions.

Water resource use is generally described by two measures: volumes withdrawn and volumes consumed.

Water consumption, a subset of total water withdrawn, is the more appropriate measure for resource utilization as this represents water that is removed from the watershed and thus made unavailable for future use. Consumption happens when water evaporates or is contaminated to the point of being unusable. In industrial and thermo-electric applications, for example, this is typically due to evaporative losses in cooling processes. Waste water discharges of fresh water to oceans or disposal to saline aquifers also represent losses of water from a watershed because the freshwater is no longer available for use.

In addition to quantifying volumes of water, the quality of water is an important concern. Fresh water is the most significant since it represents a small fraction of the total global water resource and is critical for sustaining life. Processes that consume fresh water are highly scrutinized and must be evaluated to determine if the use of water resources is prudent.

Figure 1 provides the breakdown between fresh water withdrawn and consumed in the U.S., along with primary end users of that water. In total, approximately 100 billion gallons of fresh water is consumed per day, whereas the total withdrawals are 345 billion gallons per day.

Irrigation for agriculture is the dominant consumer of fresh water in the U.S.

Thermo-electric power generation withdraws about a third but consumes less than a 20th of water resource.

Industrial processes and mining, which includes extraction and processing of fossil hydrocarbon fuels, account for a small fraction of fresh water use.

Freshwater Withdrawals/Consumption (2005 data)

  • Domestic  1%/7%  Public Supply 13%    Thermoelectric 41%/4%       Irrigation 37%/81%
  • Mining    1%/1%  Industrial 5%/3%       Aquaculture       3%        Livestock 1%/3%

Figure 1. U.S. Freshwater Withdrawals and consumption. Source: USDOE, Energy Demands on Water Resources. Report to Congress on the Interdependency of Energy and Water, 2006. http://pubs.usgs.gov/circ/1344/pdf/c1344.pdf Kenny, J.F., et al. Estimated Use of Water in the United States in 2005. Circular 1344. USGS, U.S. Department of the Interior. Reston, Virginia. 2009. 2 Wu, Consumptive Water Use in the Production of Ethanol and Petroleum Gasoline, Argonne National Laboratory, 2009. ANL/ESD/09–1

Fossil Fuels

Water use associated with transportation fuel production varies greatly between fuel types and is dependent upon the method of extraction and refining. Crude to fuel pathways discussed here include the refining of crudes from conventional, water flood, CO2 flood, and steam flood recovery mechanisms.

Pathways using unconventional resources are oil sands (in situ and mining) and the FT (Fischer–Tropsch) coal-to-liquids and gas-to-liquids processes. Literature values for the water use in gallons per MMBTU fuel produced are given as ranges for each pathway and pathway components (upstream versus downstream). In this report, upstream denotes all processes prior to refining and/or conversion, and downstream denotes processes from refining to distribution. Upstream processes consume more water than their downstream counterparts in the crude oil pathways. All pathways are shown in Figure 3.

Care must be taken when interpreting the water consumption ranges for the different pathways. The broad ranges can be based on regional differences in reservoir characteristics and how the water is recycled, re-used, or treated. Moreover, oil and gas field production characteristics change significantly over time, so the water requirements for a given production technology depend on the site–specific reservoir characteristics, which are a function of the age and production history of the field.

Crude Oil and Natural Gas Pathways

Petroleum extraction consumes relatively little fresh water. Fresh water is used for well construction processes such as drilling and completion in oil and gas resource development. Primary oil and natural gas production, which uses natural reservoir pressure to flow fluids to the wellbore, requires little water.

Secondary methods of recovery, such as water flooding, require increasing amounts, as fresh water may sometimes be required to augment the volume of saline produced water that is re– injected back into the reservoir for pressure support. According to a study of U.S. oil production, the majority of the produced water (approximately 70%), is re–injected to maintain reservoir pressures. The remainder is either cleaned and discharged, or injected into disposal wells.3

Enhanced oil recovery (EOR) methods, such as CO2 or steam injection consume varying amounts of fresh water depending on the process.

Unconventional sources of petroleum such as Canadian oil sands consume varying amounts of water depending on the recovery process. A recent analysis estimates the range of well-to- tank fresh water consumption for crude oil produced onshore in the U.S. is between 22 and 53 gallons per MMBTU, with a technology weighted average of 34 gallons per MMBTU.4 Combining offshore production (as primary recovery with no water consumption) with the onshore production provides a range of fresh water consumption for all U.S. crude oil between 17 and 40 gallons per MMBTU, with a technology weighted average of 27 gallons per MMBTU, including downstream refining.

Crude oil refining consumes fresh water for cooling, boiler feed water, crude desalting, and other processes. This requires refineries to be located in areas with access to stable supplies of water. Refineries typically have extensive water treating facilities and discharge processed/cleaned excess water to surface streams or lakes.

Natural Gas

Conventional natural gas production requires very small (assumed to be negligible) amounts of water for well drilling and completion. Natural gas processing plants use water for cooling and power generation.

The development of shale gas resources requires water for hydraulic fracturing of the shale formations to increase the permeability and enable gas to flow to the producing wells. Over the life of a shale gas well, the water consumption is surprisingly small, though significant volumes are needed over short time periods for hydraulic fracturing. Producers are reusing more of the flow-back water at subsequent fracking sites. The requirements for water quality for the fracture fluids are still being optimized, moving towards higher limits on total dissolved solids (salinity), thus enabling greater reuse of flow-back water. More detail on shale gas production is provided in a recent NPC report.5

Hydrogen from Natural Gas

Natural gas is the feedstock for the primary method of hydrogen production used in petroleum refining, and potentially for use as a transportation fuel. For hydrogen production by steam methane reforming (SMR), the greatest water consumption is in the production of high–pressure steam and, to a lesser extent, the reforming and water gas shift reactions.7 Typically it takes 40-50 gallons of water to produce an MMBTU of H2 fuel. 8,9

Electricity

Thermo-electric generation is one of the major users of fresh water in the U.S. Although it comprises over 33% of all water withdrawals, it only accounts for 4% of fresh water consumption

Biofuels

The United States’ Renewable Fuels Standard (RFS) mandates significantly increased production and use of first-generation and advanced biofuels. Water is intimately tied to the major components of the biofuel production chain –used directly during feedstock production and conversion, and impacted by erosion, runoff, and industrial discharges. Existing demands and impacts on fresh water resources will be increased by the biofuel production mandated by the RFS.

The projected increase in production of biofuel feedstocks between 2006 and 2030 is expected to result in an additional 6.4 billion gallons per day of water withdrawals in the United States. Associated with this withdrawal will be an increase of 5.2 billion gallons per day of water consumption, an increase of over 5% from current total U.S. water consumption (see Figure 1). Compared to the water needed to grow the feedstock, water withdrawals and consumption related to feedstock processing are minor, as they increase from 0.09 to 0.5 and from 0.07 to 0.4 billion gallons per day, respectively.20 Water consumption increases will vary by region and may represent a significant impact on water supplies in areas that are already water-supply stressed.

Biofuel Consumptive Water Use

Water consumption in the biofuel value chain is caused by evaporated and transpired irrigation water, pollution, and water lost during industrial processes within biorefineries. Evaporation during cooling is the primary source of water consumption in biorefining. Water use in biorefineries may also include feedstock cleaning, fermentation, and other processes. A typical biofuel water balance is shown in Figure 5.

Feedstock Production

With the complete implementation of RFS2 in 2022, cellulosic feedstock and corn production for biofuel is expected to approximately double water use compared with biofuel water use in 2006. The increase is likely to be caused by the future production and processing of cellulosic feedstocks.

Corn ethanol production is not likely to contribute to the increased water demands as most corn acreage that would be brought into production for ethanol is already irrigated for other uses. Any feedstock (cellulosic biomass or corn) which is dependent on precipitation rather than irrigation will be advantaged from a water resources perspective.23

Production of the same feedstock in different climates results in a range of water consumption profile values for each crop. For example, water consumption for corn production in three areas of the Midwest with different water balances is shown in Table 2.24 In production regions that are more arid, farmers rely more on irrigation.

Though precipitation is not the only determining variable, this general relationship between precipitation and irrigation requirements applies to most crops.

Table 2. Precipitation and Irrigation Needs (Wu 2009)

Region                  Precipitation ……..Irrigation

………………………………(inches)……… (gal per MMBTU Ethanol)

  • Lower Midwest…. .. 37.8..…………. 93
  • Upper Midwest… ….29.5….……… 183
  • Western Midwest ..21.7…….. 4,218

Thermo-chemical and biodiesel conversion pathways have lower water requirements than fermentation pathways. The FAME process of biodiesel production and the hydroprocessing of bio-oils require very small water inputs due to the nature of the conversion processes.

Water Consumption Ranges for Selected Biofuel Pathways

While the amount of water (precipitation and irrigation) needed to grow biomass feedstocks dwarfs the amount of water used during conversion, certain feedstocks do not require irrigation (i.e., forest residues and dedicated feedstocks grown in regions with enough precipitation to meet the demands of growth). In these instances, the biomass conversion component of the value chain will be the dominant factor in determining total water consumption.

Water Availability

Biofuel production will have to compete with industrial and power generation requirements, municipalities, and other demands for limited water resources. In general, surface and ground water resources experience regional pressure in most areas of intensive agriculture in the U.S.32 Since annual precipitation and groundwater recharge are finite in all places, increased agricultural consumption associated with feedstock production should be carefully evaluated. Water withdrawals and environmental discharges associated with biorefineries should also be considered. Geographies with stressed water resources can be severely impacted if total water requirements are not thoughtfully considered. Nebraska, Kansas, Colorado, Texas, the Dakotas, eastern Washington and Oregon have stressed or unbalanced water resources (more consumption than recharge) and rely primarily on irrigation for crop production. During periods of drought in any geography, biofuel crops require additional irrigation support to maintain yields. Depleted water resources (Ogallala aquifer, etc.) may not satisfy demand, which will limit the productivity a and sustainability of biofuel production.33

FROM OTHER SOURCES: ENERGY USED IN DRINKING AND SEWAGE TREATMENT

According to the Electric Power Research Institute (EPRI), 4% of America’s electricity is used on drinking water and sewer treatment facilities. In the past, gravity moved water and sewage.  Our modern systems use so  much energy because 85% of the electricity goes to the pumps that lift and move water and sewage along, often upwards against the flow of gravity, especially in cities that use groundwater.  Although the initial groundwater may be shallow, over time as typical unsustainable use grows, the wells need to be drilled deeper and deeper, requiring more and more electricity to pump up.

The most extreme example of this is California’s pumping of water 2,000 feet up from the central valley over the Tehachapi mountains, perhaps the most energy-intensive water supply in the world, and uses 20% of all of California’s electricity generation to do so.

Electricity is also needed to pressurize water to get it to flow through a massive underground pipe network at pressures high enough to guarantee the water will flow to faucets on higher floors of buildings and be strong enough to fight fires.  In the past, water flowed out at street level to shared fountains.  Since the water infrastructure is falling apart, a great deal of water is lost through leaks, further increasing the amount of electricity that must be used.

Sewage treatment plants are always at the lowest elevations, but even so, electricity is used for pressurized force mains to get sewage over hills, or to flow faster so it doesn’t back up in flat areas.

Climate change in the East and Midwest is likely to cause 30% more sewer overflows and consequent pollution problems.

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Hirsch, R.L. Mitigation of maximum world oil production: shortage scenarios

Notes from: Hirsch, R.L., 2008. Mitigation of maximum world oil production: Shortage scenarios. Energy Policy, 36(2): 881–889. 

World GDP Growth & World Oil Production Growth Have Tracked For Decades:world GDP and oil prd match

 

A 1% change in current world oil production equates to over 800,000 barrels per day (bpd).

To save that level of consumption through increases in the efficiency of the world’s light duty vehicle fleet (automobiles and light trucks) would require more than a decade, assuming crash program implementation.

Production of 800,000 bpd of substitute liquid fuels would require coal-to-liquids (CTL) plants costing $100 billion and over a decade under the best of conditions.

Thus, small percentages of world oil production and demand represent large economic impacts and very large levels of mitigation hardware and investment.

As a limiting case for decline rates, giant fields were examined, and decline rates of 8-16% were evident after plateaus in well-managed cases. Actual oil production from Europe and North America demonstrated significant periods of relatively flat oil production (plateaus). However, before entering its plateau period, North American oil production went through a sharp peak and steep decline. Examination of a number of future world oil production forecasts showed multi-year rollover / roll-down periods, which represent pseudo plateaus.

Potentially overwhelming all else, considerations of resource nationalism posits an Oil Exporter Withholding Scenario, hastening the onset of decline and exaggerating world supply decline rates.

Oil Exporter Withholding Scenario

Peak Oil & Exporter Strategies
Peak oil is not yet real to most people & countries
When realized (likely sudden), panic could cause shortages & oil prices to rise rapidly (1973 & 1979)
For oil exporters: Another large windfall

Some exporters will likely reduce exports
Less need for income due to their new windfall
Internal oil consumption rising
Realization that national oil resources are finite
Conserving for the future makes good sense

oil exporter withholding scenario

Oil Shockwave: A scenario analysis of multiyear oil supply disruptions on the U.S. economy.

  • 4% global oil shortfall lead to an oil price to ~$160 / bbl.
  • U.S. economy goes into recession / millions of jobs lost.

Participants:  Carol Browner, Robert Gates , Richard Haass, General P.X. Kelley, Franklin Kramer , Don Nichols, Gene Sperling, Linda Stuntz & James Woolsey

Decline Rates in Selected Giant Oil Fields 8-16%

Decline Rates in Selected Giant Oil Fields 8-16%

Posted in Peak Oil, Robert Hirsch | Comments Off on Hirsch, R.L. Mitigation of maximum world oil production: shortage scenarios

Coal-to-liquids (CTL) can not compensate for declining oil & natural gas production

Notes from 23 page: Höök, M. & Aleklett, K. 2010. A review on coal-to-liquid fuels & its coal consumption. International journal of energy research Vol. 34 10:848-864

Annual decline in existing crude oil production is around 4-8%, equivalent to an annual production decrease of 3-7 Million barrels per day (Mb/d) [14].

If 10% of world coal production were diverted to CTL, only a few Mb/d could be produced.

This prevents CTL from becoming a viable mitigation plan for liquid fuel shortages on a global scale, and therefore unrealistic to claim CTL provides a feasible solution to liquid fossil fuel shortages created by peak oil when it can only be a minor contributor.

Sasol in South Africa gets one barrel of CTL synthetic fuel per 0.73- 1.04 tons of bituminous coal, i.e. a conversion ratio of 1-1.4 barrels/ton coal. This puts a strict limitation on future CTL capacity imposed by future coal production volumes.

Water will also limit volumes of CTL produced: Water is a vital part of the process, either as hot steam or as a feedstock for hydrogen production. Water for cooling and the boiler must also be provided, and for a larger plant the amount of water consumed can be very large. The water consumption for a 50,000 b/d facility with American coal would be in the region of 40,000 to 50,000 cubic meters per day [36]. In addition, the grinding of coal and mixing it with water will consume both water and energy.

Capital will also limit CTL plants, which are very expensive [40]

  • 20,000 b/d      $ 1.5-$ 4 billion
  • 80,000 b/d      $ 6-  $24 billion
  • 1,000,000 b/d $60-$160 billion

Liquid hydrocarbon fuels can be obtained from various feedstocks, ranging from solids to gases. Coal-to-Liquids (CTL) is a technology based on the liquefaction of coal using three basic approaches; pyrolysis, direct coal liquefaction (DCL) and indirect coal liquefaction (ICL) [6]. Gas-to-Liquids (GTL) and Biomass- toLiquids (BTL) are related options, based on feedstock other than coal. Generally, synthetic fuel properties can be made almost identical to conventional petroleum fuels.

South Africa developed CTL-technology in the 1950s during an oil blockade and CTL now plays a vital part in South Africa’s national economy, providing over 30% of their fuel demand [10].

The annual decline in existing crude oil production has been determined as 3-7 Mb/d [14]. Similar production volumes would be challenging to offset, either partially or in full, by new CTL-projects.

Pyrolysis

The oldest method for obtaining liquids from coal is high temperature pyrolysis. Typically, coal is heated to around 950° C in a closed container. The heat causes decomposition and the volatile matter is driven away, increasing carbon content. This is similar to the coke-making process and accompanying tar-like liquid is mostly a side product. The process results in very low liquid yields and upgrading costs are relatively high. Coal tar is not traditionally used as a fuel in the transportation sector. However, it is used worldwide for manufacturing roofing, waterproofing and insulation products and as a raw material for various dyes, drugs and paints. Mild temperature pyrolysis uses temperatures of 450-650 °C. Much of the volatile matter is driven off and other compounds are formed through thermal decomposition. Liquid yields are higher than for high temperature pyrolysis, but reach a maximum at 20% [21]. The main product is char, semi-coke and coke (all smokeless solid fuels). This technique has mostly been used to upgrade low-rank coals, by increasing calorific value and reducing Sulphur content.

Pyrolysis provides low liquid yields and has inherently low efficiency. Furthermore, the resulting liquids require further treatment before they can be used in existing vehicles. A demonstration plant for coal upgrading was built in the USA and was operational between 1992 and 1997 [21]. However, there is little possibility that this process will yield economically viable volumes of liquid fuel. Consequently, further investigation and analysis of coal pyrolysis is not undertaken.

Direct coal liquefaction (DCL)

This process is built around the Bergius-process (Formula 4), where the basic process dissolves coal at high temperature and pressure. Addition of hydrogen and a catalyst causes “hydro-cracking”, rupturing long carbon chains into shorter, liquid parts. The added hydrogen also improves the H/C-ratio of the product. Liquid yields can be in excess of 70% of the dry weight coal, with overall thermal efficiencies of 60-70% [22, 23]. The resulting liquids are of much higher quality, compared to pyrolysis, and can be used unblended in power generation or other chemical processes as a synthetic crude oil (syncrude). However, further treatment is needed before they are usable as a transport fuel and refining stages are needed in the full process chain. Refining can be done directly at the CTL-facility or by sending the synthetic crude oil to a conventional refinery. A mix of many gasoline-like and diesel- like products, as well as propane, butane and other products can be recovered from the refined syncrude.

Indirect coal liquefaction (ICL)

This approach involves a complete breakdown of coal into other compounds by gasification. Resulting syngas is modified to obtain the required balance of hydrogen and carbon monoxide. Later, the syngas is cleaned, removing sulfur and other impurities capable of disturbing further reactions. Finally, the syngas is reacted over a catalyst to provide the desired product using FT-reactions (Formula 1).

In general, there are two types of FT-synthesis, a high temperature version primarily yielding a gasoline-like fuel and a low temperature version, mainly providing a diesel-like fuel [26]. More details on FT-synthesis via ICL- technology have been discussed by others [6, 26].

The main candidates for future CTL-technology are DCL and ICL. In essence, DCL strives to make coal liquefaction and refining as similar to ordinary crude oil processing as possible by creating a synthetic crude oil. By sidestepping the complete breakdown of coal, some efficiency can be gained and the required amount of liquefaction equipment is reduced. Coal includes a large number of different substances in various amounts, several unwanted or even toxic. Some substances can poison catalysts or be passed on to the resulting synthetic crude oil. Ever-changing environmental regulations may force adjustment in the DCL process, requiring it to meet new regulatory mandates, just as crude oil processing has to be overhauled when new environmental protocols are introduced.

In comparison, ICL uses a “designer fuel strategy”. A set of criteria for the desired fuel are set up and pursued, using products that can be made in FT synthesis. Many of the various processes will yield hydrocarbon fuels superior to conventional oil derived-products. Eliminating inherent noxious materials in coals is not just an option; it is a must to protect the synthesis reactor catalysts. Far from all ICL-derived products are better than their petroleum- derived counterparts when it comes to energy content or other characteristics. Comprehensive comparison between DCL and ICL has been performed by other studies [22, 29-30]. In general, it is not easy to compare them directly, as DCL yields unrefined syncrude while ICL usually results in final products.

ICL has a long history of commercial performance, while DCL has not. Consequently, the economic behavior of a DCL-facility has only been estimated while ICL-analyses can rely on actual experience.

System efficiency. It is widely believed that DCL is more energy-efficient for making liquid fuels than ICL, justified by the simplicity of DCL’s partial breakdown compared to the complete coal reconstruction used in ICL. Several other features, like environmental impact, flexibility and reliability of process, should also be taken into account for a more complete systematic view of the technology options. The estimated overall efficiency of the DCL-process is 73% [31]. Other groups have estimated the thermal efficiency between 60-70% [21, 30].

SHELL estimated the theoretical maximum thermal efficiency of ICL to 60% [32, 33]. The overall efficiency of ICL (making methanol or di-methyl-ether) is 58.3% and 55.1% [30]. Tijmensen et al. [34] give an overall energy efficiency of ICL of about 33-50% using various biomass blends. Typical overall efficiencies for ICL are around 50%. Detailed well-to-wheel analysis of energy flows for ICL diesel has been done by van Vliet et al. [35] Caution must be exercised in making efficiency comparisons, because DCL efficiencies are usually for making unrefined syncrude, which requires more refining before utilization, and ICL efficiencies are often for making final products. If the refining of DCL products is taken into account, some ICL-derived fuels can be produced with higher final end-use efficiency than their DCL-counterparts [30]. It is also sometimes unclear, whether the extra energy needed for process heat, hydrogen production, and process power is included in the analyses, making efficiency comparisons even more delicate.

Process requirements

CTL requires more than coal to produce usable fuel. Heat, energy, catalysts and other chemicals are necessary to maintain functioning production. Water is a vital part of the process, either as hot steam or as a feedstock for hydrogen production. Water for cooling and the boiler must also be provided, and for a larger plant the amount of water consumed can be very large indeed. Water consumption is approximately equivalent for DCL and ICL. The water consumption for a 50,000 b/d facility with American coal would be in the region of 40,000 to 50,000 cubic meters per day [36]. Therefore, water availability is an essential factor to be considered during placement of CTL-facilities. Grinding of coal and mixing it with water will consume energy and water.

DCL or ICL refining and product upgrading requires additional heat, energy and hydrogen. This extra energy requirement is up to 10% of the energy content of the syncrude and can also be provided by coal. Additional energy must be also provided to reduce GHG and other emissions, if environmental concerns are to be taken in to account.

System costs. The capital cost of a facility is usually the largest cost, with operation/management costs coming second. The coal costs are usually around 10-20%, varying due to local supply, quality etc.

Using 40 Mt as a lower limit and 57 Mt as an upper limit for Sasol coal consumption, one can compute that one barrel of synthetic fuel consumes 0.73- 1.04 tons of bituminous coal, i.e. a conversion ratio of 1-1.4 barrels/ton coal. This agrees with the estimates of other studies, but tends to be in the lower range. Differences between technical and Sasol-derived estimates reflect disparities between theory and practice. Suboptimal conditions, losses, leaks and similar are unavoidable parts of reality, especially when performed on a large industrial scale. Including coal quality issues, refining and further treatment, also makes it reasonable to expect lower yields. Hence, the empirical Sasol conversion ratios are deemed reasonable. Similar conversion efficiencies are also realistic for future large scale CTL-industries, especially since ICL is the more likely future CTL-technology development path.

Outlooks that present CTL as a mitigation or even a solution to the problem of declining conventional oil supply will be closely inspected. For instance, the National Petroleum Council [8] presents a number of production forecasts, where the main message is that peak oil can be partially solved by substantial CTL- development in the USA. We intend to quantify what required coal volumes are needed to offset decline in existing crude oil production. This sheds some new light on the discussion of future CTL potentials and requirements. Furthermore, it is also useful information for policy makers when planning for the future, as the achievability of replacing oil with derivatives of another finite resource on a large scale can be disputed if sustainable development is the ambition.

Hirsch et al. [7] assumed annual future construction of 5 CTL-plants, each with a capacity of 100,000 b/d. No coal consumption figures or conversion ratios are given. Using Sasol experience, corresponding increase of annual coal consumption is 133-190 Mt. This is equivalent to ~2.5% the world production of coal for 2007 [64]. This is a significant increase, but probably doable if proper investments are forthcoming. The National Coal Council [64], also mentioned in [8], foresees a production of 2.7 Mb/d by 2025 and presents 430 Mt as the corresponding coal consumption, which equals a conversion ratio of 2.3 barrels/ton coal. Using Sasol experience, coal requirement would be 700-1000 Mt, almost twice as much as the National Coal Council assumes.

In conclusion, the National Coal Council’s estimate is optimistic when compared to actual experience, and will probably require a dramatic increase in process efficiency and improved technology or use of high quality coals with excellent liquefaction properties. The National Petroleum Council [8] also present a CTL forecast of 5.5 Mb/d by 2030 with corresponding coal consumption of 1439 Mt, originally performed by the Southern States Energy Board [65]. The conversion ratio is 1.4 barrels/ton, in agreement with Sasol experience, but it should be noted that the consumption figure from Southern States Energy Board [65] is leaning toward the optimistic side. Using the Sasol model, estimated coal consumption becomes 1466-2100 Mt, which is more than the entire current coal production of the US [63]. This CTL forecast is entirely unrealistic, since it is not feasible to divert all coal to new CTL facilities, or to double the US coal output in 20 years [66, 67].

The Annual Energy Outlook 2007 (AEO2007) Reference Scenario features a CTL production of 2.4 Mb/d globally and 0.8 Mb/d in the USA [68]. No coal consumption figures are provided for global CTL production, but the USA CTL industry is estimated to consume 112 Mt, which equals conversion ratio of 2.6 barrels/ton coal. It should also be noted that coal consumption for CTL has decreased 50% in AEO2007 compared to 304 Mt, which is twice as much as the EIA assumes. It should be remembered that a significant share of American coal is subbituminous coal, i.e. more low-ranking than the South African coals that Sasol utilize. In essence, the EIA must be assuming that future American CTL- industry will be twice as efficient as Sasol. Given the fact that Sasol is a world leading CTL-enterprise, the EIA assumption seems very optimistic. The Annual Energy Outlook 2009 (AEO2009) has reduced US CTL production in the Reference Scenario to only 0.26 Mb/d by 2030 [69]. The coal consumption presented is only 24.6 Mt, which would equal a conversion ratio of 2.9 barrels/ton. Corresponding coal usage would be 68-95 Mt, using the Sasol model. Although the expected CTL capacity has been reduced, the conversion ratio has increased compared to earlier estimates and is even further away from the real numbers. We can only conclude that the conversion ratios used by EIA seem extremely high and lack any real counterpart. The EIA seems to be using purely theoretical values, rather than sound numbers derived from practical experience. AEO2007 [68] foresees a global CTL-production of 2.4 Mb/d in the reference case, and this would annually consume 640-912 Mt of coal. This is equivalent to around 12% of the current world production of coal. AEO2009 [69] has lowered the global CTL/GTL-production to only 1.6 Mb/d, without showing individual contributions to this figure. The reduction is justified by concern for CO2 emissions. The global CTL production in AEO2009 would require something in the range of 400-500 Mt coal annually, using the Sasol model.

Annual decline in existing crude oil production is around 4-8%, equivalent to an annual production decrease of 3-7 Mb/d [14].

Such massive volumes are theoretically possible to produce, but would require astronomical investments regardless of the chosen technology. Related coal usage would be 782-2555 Mt, using the Sasol model. Such vast volumes of coal cannot be realistically liquefied just to offset a single years decline in existing world oil production. Consequently, it must be asked whether the investment and the coal itself can be used more efficiently in ways other than CTL and if other mitigation strategies should be preferred.

These findings also have repercussions for future climate policies, as several of the Intergovernmental Panel on Climate Change (IPCC) emission scenarios [70], used for projections of temperature increases and anthropogenic emissions, depict significant contribution from CTL in the future. In the dynamic technology scenario group (A1T), liquid fuels from coal are assumed to be readily available at less than US$30/barrel with prices falling even further. The environmentally B2 scenario family sees CTL production costs decline from US$43/barrel to US$16/barrel. Details on conversion ratios are not given, nor related coal consumption volumes. As an example, the B2 Message scenario gives a global CTL production of 32 Mb/d (71.8 EJ) in 2100, which is more than the 23.2 Mb/d (52 EJ) derived from oil production in the same year. Equivalent coal consumption would be 8342-11680 Mt, using Sasol conversion ratios, and still very extensive even if better efficiencies were reached in the future. The world coal production is given as 300 EJ in 2100, meaning that 24% goes to CTL. Can so much coal be really produced and diverted to CTL in a realistic case or should some emission scenarios be revised? Either way, more details should be shown regarding assumed conversion rations, technologies and other factors. In summary, we find that many forecasts or scenarios do not discuss CTL coal consumption or conversion ratios in any detail.

The US has the world’s largest coal reserves and has been subjected to many CTL feasibility studies and projects. In 1980, Perry [71] pointed out that the construction of a synthetic fuels industry will be very costly and will provide only a small amount of increased energy independence. This situation has obviously not changed as Couch [22] states that replacing only 10% of the US transport fuel consumption with CTL would require over US$70 billion in capital investments and about a 250 Mt of annual coal production increase. Achieving required increases in coal production has been deemed questionable by other studies [66, 67]. Correspondingly, Milici [61] concluded that the US coal industry only could handle liquefaction of 54-64 Mt coal annually without premature depletion of the coal reserves, and states that attempts to replace all oil imports would deplete the national coal reserves by 2100. The resulting volumes of synthetic fuels are insignificant compared to the present and expected demand.

World oil production currently stands at more than 80 Mb/d [63]. The total cost for replacing a significant amount of the world’s oil production by CTL would be astronomical, regardless of the chosen system approach. Necessary investments for a large CTL industry are evidently colossal, but the greatest issue lies perhaps in coal consumption. Coal will account for a large part of the costs, and with the required volumes being vast, accompanying changes in coal price and additional costs of increasing coal feedstock production will greatly affect the future economics of CTL. This is a topic that deserves more attention in future studies. In addition, the social and environmental impacts of large scale development of CTL must be considered. The political challenge of becoming very reliant on such a carbon dioxide-intensive fuel as coal is a major obstacle for many countries where greenhouse gas emissions are an important issue. Even if CCS and/or low emission CTL technologies are implemented, the vast required coal amounts will create serious environmental impact due to mining. Obtaining public acceptance, and later political acceptance, for CTL might become challenging because of its unavoidable environmental impact. 40% of the world coal production is required (Table 4). Clearly, this cannot be regarded as feasible in any realistic case. Even if technical efficiencies were achieved, significant shares of world coal would disappear into CTL-plants for a relatively modest contribution to world oil supply. If a 10% share of world coal production could be diverted, it would limit the CTL-production to only a few Mb/d at most. Consequently, it is unrealistic to claim that CTL provides a feasible solution to liquid fuels shortages created by peak oil. For the most part, it can only be a minor contributor and must be combined with other strategies.

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Critique of LCA & EROI Wind research

[This paper criticizes  LCA and EROI wind studies]

Notes from 22 page: Davidsson, S., Höök, M., Wall, G. 2012. A review of life cycle assessments on wind energy systems. The International Journal of Life Cycle Assessment.

Figure 1. Short term (0-5 years) and medium term (5-15 years) outlook and risk for neodymium and other elements for clean energy as identified by US Department of Energy (2010).

Figure 1. Short term (0-5 years) and medium term (5-15 years) outlook and risk for neodymium and other elements for clean energy as identified by US Department of Energy (2010).

 

 

 

 

 

 

 

 

 

Energy systems based on wind, as well as other renewable energy sources, are often automatically assumed to be sustainable and environmental-friendly sources of energy in much of the mainstream debate. However, all systems for converting energy into usable forms have various environmental impacts, not to mention a requirement of natural resources. It is essential to have consistent evaluation methods for analyzing all aspects of a given energy source.

Without such methods, it is difficult to compare them and make the right decisions when planning and investing in energy systems for the future.

Future growth of any new energy systems, in this case wind power, will require energy, as well as other resources during the expansion phase, and these implications need to be considered when planning future developments. A need for meticulous environmental impact assessments and energy performance evaluations can be seen here.

It could be questioned how certain it is that the materials will in fact be recycled in 20 years, or more. For some materials making up large parts of a wind turbine, i.e. steel, copper, aluminum and other metals, it is highly likely that the materials will be recycled in the future, but it is not certain. The economics of recycling scrapped wind plants are also uncertain and it is entirely possible that the cost of dismantling and extracting the recyclable parts will be prohibitively high in the future, especially for wind farms located in remote or off-shore areas. For example, the Tehachapi Pass in California contains “bone yards” of abandoned wind turbine hardware that has been lying around without being recycled (Pasqualetti et al., 2002).

Even if decommission is usually mandatory in operating permits, the total costs of decommissioning may not be covered due to price inflation, low capacity, unexpected circumstances (e.g., hurricane destruction), or a combination of such events (Kaiser and Snyder, 2012). It is possible that recycling can become uneconomic compared to abandonment under certain conditions, which is important to remember as decommissioning is dependent on a number of highly uncertain parameters that can have significant direct or indirect impacts on cost.

Material recovery at the end of the life cycle cannot be guaranteed as expressed by Crawford (2009), who also stresses that the environmental credit should rather be given to products using the recycled material.

Jacobson and Delucci (2011) states that Earth has somewhat limited reserves of economically recoverable iron ore, over a 100–200 year perspective at current recovery rates, but also mention that most of the steel will be recycled. What is not mentioned is that the steel consumption is already rising fast. ESTP (2009) projects the global steel consumption to be over 2000 Mt by 2050, compared to just below 1400 Mt in 2010. This growth, coupled with the fact that recyclable steel has often been held up for many decades before finally being recycled, makes the total part of steel production coming from recycled steel is fairly low, only around 45% in Europe (ESTP, 2009).

Such real world recycling shares appears to be in significant disagreement with some of the very high recycling percentages used in the reviewed studies.

Kubiszewski et al. (2010) compiled 50 EROI studies and found values ranging from 1.0 to 125.8 with an average of approximately 18.

It is difficult to see how the higher figures could be using the same concepts and parameters as the lower ones. It should be added that many of the results in these studies are old, and that LCA methodology has evolved since they were done. However, a large spread in results is still seen in the fairly new studies reviewed in this paper (Table 3).

Improving the treatment of energy

There is significant problem that EROI or EPBT is sometimes presented as primary energy using thermal equivalents, and sometimes using direct equivalents, making comparisons very difficult, especially since is sometimes difficult to even interpret if the conversion were done. As an example, Lee et al. (2006) and Lee and Tzeng (2008) presents an EPBT of 1.3 months – equivalent an EROI of 185 – far superior to all other reviewed studies. It seems like they use direct energy payback time without any conversion to thermal equivalents, but still compare their result to Schleisner (2000), who converts produced electricity to primary energy. It is quite odd that an energy performance many times better than Schleisner (2000) – and literally all other previous LCAs on wind energy –is not reflected upon. Instead, it is claimed that performance of wind power systems implemented in Taiwan is among the best in the world (Lee et al. 2006). Drawing these conclusions without analyzing other reasons for the variations, such as methodological differences, should be considered highly questionable.

This is just one of example how a LCA study can make flawed and even misleading comparisons and conclusions.

Regarding energy use during the life cycle, we find no consensus on how different energy carriers should be treated. How this is done is generally not clearly described in published studies either. The total amount of primary energy used is often presented, and in some cases this is also divided into different energy carriers. However, energy carriers used varies between studies making comparisons difficult. For electricity, national generation mixes are typically used, if anything is mentioned at all. How much of the total energy used was originally electrical energy is not plainly presented in any of the reviewed studies, making it difficult to investigate the impact of using of different electricity mixes. Guezuraga et al. (2012) showed that switching generation mix could alter the results by around 50%, indicating the importance of this factor.

Improved handling of non-energy resources

The need for non-energy resources does not seem to be seen as an important factor in most studies, and is usually not considered or discussed in any detail. When they are, intricate impact methods expressing resource depletion in antimony equivalents per kg is sometimes used even though this likely will be challenging to grasp for laymen and planners. Material resource use is a trivial issue for LCA according to Weidema (2000). In contrast, Finnveden (2005) suggests that resource use, although it should not be included as an impact factor in the LCIA, could be included in the LCA and states that LCA potentially can be a useful tool for discussing both environmental and resource aspects of products. Another significant problem is the use of end-of-life recycling crediting. It can be argued, for many reasons, that environmental effects of recycling that may occur in 20 years should not be credited the environmental impacts apparent today. However, most of the reviewed studies credit future recycling in some way. The implications of the recycling crediting on the results are often difficult to interpret, but for some of the results, the effect appears to be significant. For instance, energy use in Guezuraga et al. (2012) is increased by 43.3% when no recycling of materials is considered.

Final recommendations

The most troublesome part we found is the lack of transparency regarding fundamental and underlying assumptions, calculations and conversions done in the reviewed LCAs. Mitigating this issue will not only improve clarity, but is also likely to strengthen the credibility of LCA methodology. The LCA society should clearly strive for better agreement on which methods are to be used for evaluating renewable energy resources. This is not just desirable, but crucial, to be able to accurately evaluate and present the environmental performance of wind energy. Also, the use of natural resources, like REEs, should be clearly mentioned in the assessments to enable evaluating of possible bottlenecks in future production.

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Posted in EROEI Energy Returned on Energy Invested, Wind | Comments Off on Critique of LCA & EROI Wind research

Would Tesla, SolarCity or SpaceX exist without $4.9 billion in government subsidies?

[ Tesla has made no new battery breakthroughs. Batteries aren’t much better today than they were 200 years ago.  All Tesla did was build a better battery management system (BMS) by stringing tiny batteries together — thousands of them.  But the BMS sucks up half the energy keeping the batteries from degrading from cold, heat, overcharging, exploding, plus the electricity needed in the car for lights, heating, cooling, GPS, and radio/music.

I think anyone invested in Tesla will lose their money some day.

Since batteries are never likely to be cheap or powerful enough to move autos, it is hard to imagine how Elon Musk will NOT default on his loans in the future.  Here ares some articles about why Tesla may not be a good investment:

When it comes to Superchargers, Tesla (NASDAQ:TSLA) has never disclosed exactly how much they cost to build and operate. This can lead to confusion. The company’s statements could make an investor (or any reader, really) believe that the feature costs about $500 per car, but that is not the case at all: When you actually do the math, you discover the real cost is thousands of dollars per car. Since Tesla seems unwilling to clear up the misunderstanding, I will. All the numbers and charts used in this article can be seen in this Excel….

Alice Friedemann   www.energyskeptic.com  author of “When Trucks Stop Running: Energy and the Future of Transportation, 2015, Springer]

April 13, 2017. Excerpt from the SRSRocco report:

For those who are enamored by the wonderful “High-tech” stuff going on at Tesla Motors, please read the following article by Wolfstreet, What Tesla’s “Inexplicable” “Ponzi Scheme” Valuation Says about the Stock Market:

Tesla shares rose to $313.38 this morning, giving the company a market capitalization of about $51 billion, surpassing GM for a moment as the most valuable American automaker. This left some industry insiders wondering about tulip bulbs.

However, unlike GM, Tesla hasn’t gone bankrupt despite its massive losses and negative cash flows. Why? Because Tesla is able to extract new money from investors and lenders. So it won’t run out of money. As it burns that cash, it gets more cash so that it won’t have to go bankrupt. Companies only go bankrupt when investors and lenders, trying to cut their losses, say, “no more.” Then the money-losing companies cannot fund their operations any longer and instead hire bankruptcy lawyers.

…. In comparison with GM, Tesla is ludicrously overvalued. But it’s not “inexplicable.” It’s perfectly explicable by the wondrously Fed-engineered stock market that has long ago abandoned any pretext of valuing companies on a rational basis. And it’s explicable by the hype – the “research” – issued by Wall Street investment banks that hope to get fat fees from Tesla’s next offerings of shares or convertible debt.

Hopefully with a little more work on that technology, Tesla Motors will finally become profitable at some time in the future.  However, I wouldn’t hold my breath on that one.  This stock is a perfect indicator of what is fundamentally wrong with the broader markets.  And that is…… they are totally INSANE.

Hirsch, J. May 31, 2015. Elon Musk’s growing empire is fueled by $4.9 billion in government subsidies. Los Angeles Times.

Tesla, SolarCity and SpaceX have collected or received a commitment for $4.9 billion in government support A looming question: Can Elon Musk’s companies slash development costs before public largesse ends?

Los Angeles entrepreneur Elon Musk has built a multibillion-dollar fortune running companies that make electric cars, sell solar panels and launch rockets into space.

And he’s built those companies with the help of billions in government subsidies.

Tesla Motors Inc., SolarCity Corp. and Space Exploration Technologies Corp., known as SpaceX, together have benefited from an estimated $4.9 billion in government support, according to data compiled by The Times. The figure underscores a common theme running through his emerging empire: a public-private financing model underpinning long-shot start-ups.

“He definitely goes where there is government money,” said Dan Dolev, an analyst at Jefferies Equity Research. “That’s a great strategy, but the government will cut you off one day.”

The figure compiled by The Times comprises a variety of government incentives, including grants, tax breaks, factory construction, discounted loans and environmental credits that Tesla can sell. It also includes tax credits and rebates to buyers of solar panels and electric cars.

A looming question is whether the companies are moving toward self-sufficiency — as Dolev believes — and whether they can slash development costs before the public largesse ends.

Tesla and SolarCity continue to report net losses after a decade in business, but the stocks of both companies have soared on their potential; Musk’s stake in the firms alone is worth about $10 billion. (SpaceX, a private company, does not publicly report financial performance.)

Musk and his companies’ investors enjoy most of the financial upside of the government support, while taxpayers shoulder the cost.

The payoff for the public would come in the form of major pollution reductions, but only if solar panels and electric cars break through as viable mass-market products. For now, both remain niche products for mostly well-heeled customers.

Musk declined repeated requests for an interview through Tesla spokespeople, and officials at all three companies declined to comment.

The subsidies have generally been disclosed in public records and company filings. But the full scope of the public assistance hasn’t been tallied because it has been granted over time from different levels of government.

New York state is spending $750 million to build a solar panel factory in Buffalo for SolarCity. The San Mateo, Calif.-based company will lease the plant for $1 a year. It will not pay property taxes for a decade, which would otherwise total an estimated $260 million.

The federal government also provides grants or tax credits to cover 30% of the cost of solar installations. SolarCity reported receiving $497.5 million in direct grants from the Treasury Department.
That figure, however, doesn’t capture the full value of the government’s support.

Since 2006, SolarCity has installed systems for 217,595 customers, according to a corporate filing. If each paid the current average price for a residential system — about $23,000, according to the Union of Concerned Scientists — the cost to the government would total about $1.5 billion, which would include the Treasury grants paid to SolarCity.

Nevada has agreed to provide Tesla with $1.3 billion in incentives to help build a massive battery factory near Reno.

The Palo Alto company has also collected more than $517 million from competing automakers by selling environmental credits. In a regulatory system pioneered by California and adopted by nine other states, automakers must buy the credits if they fail to sell enough zero-emissions cars to meet mandates. The tally also includes some federal environmental credits.

On a smaller scale, SpaceX, Musk’s rocket company, cut a deal for about $20 million in economic development subsidies from Texas to construct a launch facility there. (Separate from incentives, SpaceX has won more than $5.5 billion in government contracts from NASA and the U.S. Air Force.)

Subsidies are handed out in all kinds of industries, with U.S. corporations collecting tens of billions of dollars each year, according to Good Jobs First, a nonprofit that tracks government subsidies. And the incentives for solar panels and electric cars are available to all companies that sell them.

Musk and his investors have also put large sums of private capital into the companies.

But public subsidies for Musk’s companies stand out both for the amount, relative to the size of the companies, and for their dependence on them. 

“Government support is a theme of all three of these companies, and without it none of them would be around,” said Mark Spiegel, a hedge fund manager for Stanphyl Capital Partners who is shorting Tesla’s stock, a bet that pays off if Tesla shares fall.

Tesla stock has risen 157%, to $250.80 as of Friday’s close, over the last two years.

Musk has proved so adept at landing incentives that states now compete to give him money, said Ashlee Vance, author of “Elon Musk: Tesla, SpaceX, and the Quest for a Fantastic Future,” a recently published biography.

“As his star has risen, every state wants a piece of Elon Musk,” Vance said.

Before his current ventures, he made a substantial sum from EBay Inc.’s $1.5-billion purchase of PayPal, the electronic payment system in which Musk held an 11% stake.

Soon after, he founded SpaceX in 2002 with money from that sale, and he made major investments and took leadership posts at Tesla and Solar City.

Musk is now the chief executive of both Tesla and SpaceX and the chairman of SolarCity, and holds big stakes in all three, including 27% of Tesla and 23% of SolarCity, according to recent regulatory filings. The ventures employ about 23,000 people nationwide, and they operate or are building factories and facilities in California, Michigan, New York, Nevada and Texas.

Tense talks

The $1.3 billion in benefits for Tesla’s Nevada battery factory resulted from a year of hardball negotiations.

Late in 2013, Tesla summoned economic development officials from seven states to its auto factory in Fremont, Calif. After a tour, they gathered in a conference room, where Tesla executives explained their plan to build the biggest lithium-ion battery factory in the world — then asked the states to bid for the project.

Nevada at first offered its standard package of incentives, in this case worth $600 million to $700 million, said Steve Hill, Nevada’s executive director of the Governor’s Office of Economic Development.

Tesla negotiators wanted far more. The automaker at first sought a $500-million upfront payment, among other enticements, Hill said. Nevada pushed back, in sometimes tense talks punctuated by raised voices.

“It would have amounted to Nevada writing a series of checks during the first couple of years,” said Hill, calling it an unacceptable risk.

With the deal imperiled, Hill flew to Palo Alto in August to meet with Tesla’s business development chief, Diarmuid O’Connell, a former State Department official who is the automaker’s lead negotiator.

They shored up the deal with an agreement to give Tesla $195 million in transferable tax credits, which the automaker could sell for upfront cash. To make room in its budget, Nevada reduced incentives for filming in the state and killed a tax break for insurance companies.

Nevada Gov. Brian Sandoval and Musk sealed the agreement in a Labor Day phone conversation. Hill said it was worth it, pointing to the 6,000 jobs he expects the factory to eventually create. Elon Musk’s companies benefit from subsidies SpaceX, Elon Musk’s rocket company, cut a deal for about $20 million in subsidies from Texas to build a launch facility there. (Brian van der Brug / Los Angeles Times)

The state commissioned an analysis estimating the economic impact from the project at $100 billion over two decades, but some economists called that figure deeply flawed. It counted every Tesla employee as if they would otherwise have been unemployed, for instance, and it made no allowance for increased government spending to serve the influx of thousands of local residents.

A $750-million factory

Musk has similar success with getting subsidies for a SolarCity plant in Buffalo, N.Y. The company currently buys many of its solar panels from China, but it will soon become its own supplier with a new and heavily subsidized factory.

An affiliate of New York’s College of Nanoscale Science and Engineering in Albany will spend $750 million to build a solar panel factory on state land. SolarCity estimated in a corporate filing that it will spend an additional $150 million to get the factory operating. lRelated Elon Musk unveils Hyperloop design

When finished in 2017, the 1.2-million-square-foot facility will be the largest solar panel factory in the Western Hemisphere. New York officials see the subsidy as a worthy investment because they expect that it will create 3,000 jobs. The plant will replace a long-closed steel factory.

“The SolarCity facility will bring extensive benefits and value to this formerly dormant brownfield that provided zero benefit to the city and region,” said Peter Cutler, spokesman for Empire State Development, New York’s economic development agency.

SpaceX, though it depends far more on government contracts than subsidies, received an incentive package in Texas for a commercial rocket launch facility. The state put up more than $15 million in subsidies and infrastructure spending to help SpaceX build a launch pad in rural Cameron County at the southern tip of Texas. Local governments contributed an additional $5 million.

Included in the local subsidies is a 15-year property tax break from the local school district worth $3.1 million to SpaceX. Officials say the development still will bring in about $5 million more over that period than the local school district otherwise would have collected.

“That’s $5 million more than we have ever seen from that property,” said Dr. Lisa Garcia, superintendent of the Point Isabel Independent School District. “It is remote…. It is just sand dunes.”

Crucial aid

The public money for Tesla and SolarCity factories is crucial to both companies’ efforts to lower development and manufacturing costs.

The task is made more urgent by the impending expiration of some of their biggest subsidies. The federal government’s 30% tax credit for solar installations gets slashed to 10% in 2017 for commercial customers and ends completely for homeowners.

Tesla buyers also get a $7,500 federal income tax credit and a $2,500 rebate from the state of California. The federal government has capped the $7,500 credit at a total of 200,000 vehicles per manufacturer; Tesla is about a quarter of the way to that limit. In all, Tesla buyers have qualified for an estimated $284 million in federal tax incentives and collected more than $38 million in California rebates.

California legislators recently passed a law, which has not yet taken effect, calling for income limits on electric car buyers seeking the state’s $2,500 subsidy. Tesla owners have an average household income of about $320,000, according to Strategic Visions, an auto industry research firm.

Competition could also eat into Tesla’s public support. If major automakers build more zero-emission cars, they won’t have to buy as many government-awarded environmental credits from Tesla. Five takeaways from Elon Musk’s conversation with analysts Five takeaways from Elon Musk’s conversation with analysts

In the big picture, the government supports electric cars and solar panels in the hope of promoting widespread adoption and, ultimately, slashing carbon emissions. In the early days at Tesla — when the company first produced an expensive electric sports car, which it no longer sells — Musk promised more rapid development of electric cars for the masses.

In a 2008 blog post, Musk laid out a plan: After the sports car, Tesla would produce a sedan costing “half the $89k price point of the Tesla Roadster and the third model will be even more affordable.”

In fact, the second model now typically sells for $100,000, and the much-delayed third model, the Model X sport utility, is expected to sell for a similar price. Timing on a less expensive model — maybe $35,000 or $40,000, after subsidies — remains uncertain.

“Some may question whether this actually does any good for the world,” Musk wrote in 2008. “Are we really in need of another high-performance sports car? Will it actually make a difference to global carbon emissions? Well, the answers are no and not much…. When someone buys the Tesla Roadster sports car, they are actually helping to pay for the development of the low-cost family car.”

Now Musk is moving into a new industry: energy storage. Last month, he starred in a typically dramatic announcement of Tesla Energy-branded batteries for homes and businesses. On a concert-like stage, backed by pulsating music, Musk declared that the batteries would someday render the world’s energy grid obsolete.

“We are talking about trying to change the fundamental energy infrastructure of the world,” he said.

Musk laid out a vision of affordable clean energy in the remote villages of underdeveloped countries and homeowners in industrial nations severing themselves from utility grids. The Nevada factory will churn out the batteries alongside those for Tesla cars.

What he didn’t say: Tesla has already secured a commitment of $126 million in California subsidies to companies developing energy storage technology.

jerry.hirsch@latimes.com

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How different nations have coped with oil shortages

Preface. In this article, Friedrichs shows how differently Cuba, North Korea, and Japan coped after a sudden loss of most of their oil.  I first became aware of how essential oil was for nations when I read Daniel Yergin’s 1991 “The Prize: The Epic Quest for Oil, Money & Power” which goes into how oil motivated both Japan and Germany to start wars to gain access to oil.  Here are a few more examples:

  • Albert Speer, German Minister for Armaments and War Production, in his post war interrogation: “The need for oil certainly was a prime motive” in the decision to invade Russia. Germany entered North Africa to secure N. African and Middle-eastern oil; and entered Russia after the Caspian / Baku oilfields.
  • Dick Cheney, 1990 .. before Gulf War I: “We’re there because the fact of the matter is that part of the world controls the world supply of oil, and whoever controls the supply of oil, especially if it were a man like Saddam Hussein, with a large army and sophisticated weapons, would have a stranglehold on the American economy and indeed on the world economy.”
  • WW II was won by oil as much as by any other factorDuring the war, the US produced 880 million tons of oil, Russia 100m tons .. Japan 5, and Germany 30 (20 by new coal-to-liquid technology).

Related Posts

Alice Friedemann  www.energyskeptic.com  Author of Life After Fossil Fuels: A Reality Check on Alternative Energy; When Trucks Stop Running: Energy and the Future of Transportation”, Barriers to Making Algal Biofuels, & “Crunch! Whole Grain Artisan Chips and Crackers”.  Women in ecology  Podcasts: WGBH, Jore, Planet: Critical, Crazy Town, Collapse Chronicles, Derrick Jensen, Practical Prepping, Kunstler 253 &278, Peak Prosperity,  Index of best energyskeptic posts

***

Jörg Friedrichs. 2010. Global energy crunch: how different parts of the world would react to a peak oil scenario. Energy Policy 38 (8): 4562-4569. 9 pages.

Excerpts:

Oil is a finite resource, so given the importance of oil, the precautionary principle mandates to take warnings of peak oil seriously and assess possible consequences.

While a global peak of oil production would by definition be a planetary event, reactions would differ in different parts of the world. Since globalization has been fuelled by cheap and abundant energy, traded as a commodity on a free market, increasing conflict over scarce energy would undermine the very foundations of the world-wide social, economic, and political normalization processes that have been observed over the past few centuries.

I focus on oil importing countries, which constitute the vast majority of states. Because an event comparable to peak oil has never happened at the global level, I study cases where oil supply disruptions in the order of 20% have occurred at the national level.

1) Japanese PREDATORY MILITARISM before and during the Pacific War. The specter of future resource shortages had played an important role in shaping Japan’s imperialist strategy ever since the end of World War I. When an American oil embargo became imminent, in 1941, Japan pre-emptively attacked the US Naval Base at Pearl Harbor and radicalized its war of conquest in order to gain access to the rich oil supplies of the East Indies.

2) TOTALITARIAN RETRENCHMENT in North Korea after the end of the Cold War. When subsidized deliveries of oil and other vital resources from the Soviet Union were disrupted, the ‘‘Hermit Kingdom’’ reacted in a shockingly reckless way. Elite privileges were preserved in the face of hundreds of thousands of North Koreans dying from hunger. While this may be morally repugnant, it clearly represents another possible reaction to a peak oil scenario.

3) Socioeconomic adaptation in Cuba. Cuba lost their subsidized deliveries from the Soviet Union. While this plunged Cuba into a deep crisis, there was no mass starvation comparable to North Korea. Instead, Cubans relied on social networks and non-industrial modes of production to cope with energy scarcity and the concomitant shortage of food. They were actively encouraged to do so by the regime in Havana.

We can easily imagine additional trajectories, such as the mobilization of national sentiment by populist regimes.

After the American War of Secession, the South of the United States was deprived of slaves as the backbone resource of its socioeconomic way of life. One would expect this to be the easiest case for a smooth energy transition. After the Civil War, Southerners only had to look to the North of their own country for investment and innovative technologies. Nevertheless, the modernization of ‘‘Dixieland’’ took at least a century. Since a similar ‘‘upgrade’’ does not seem to be available in the event of peak oil, one should not be overly optimistic about a smooth transition to a post-oil (or post-carbon) society.

Predatory militarism: Japan, 1918–1945.

In September 1945, Japan was so fuel-starved that it was difficult to find an ambulance with sufficient fuel to transport Premier Tojo to a hospital after his attempted suicide. Pine roots had been dug out from mountainsides all over the country in a desperate attempt to find a resinous substitute to fossil fuel. Much of the Japanese air force and navy had been sacrificed in kamikaze raids, at least in part because there was not sufficient petrol to refuel planes and ships to return from their sorties and keep fighting (Yergin, 1991: 362–367).

The main lesson the Japanese military had taken home from World War I was that a country cut off from raw materials was bound to lose in a military contest. In their view, Germany had lost because it did not muster the necessary industrial base or access to foreign markets to achieve wartime autarky. To be prepared for a total war, resource-poor Japan would therefore have to control access to strategic resources. Only a self-sufficient economic bloc in East Asia would sufficiently prop up Japanese industrial capacity to secure the desired status of a great power (Barnhart, 1987: 9–21; Beasley, 1987). It was precisely to prevent fuel starvation and dependency on other strategic resources that Japan embarked on aggressive military campaigns. After a liberal interlude in the 1920s, the next decade saw the invasion of Manchuria (1931) followed by the invasion of China (1937). The paramount goal was to achieve self-sufficiency in an economic bloc that was later, in 1940, to be proclaimed as the ‘‘Greater East Asia Co-prosperity Sphere’’.

Instead of becoming more self-sufficient, Japan grew even more dependent on the importation of critical commodities – especially from the United States. The situation was particularly dire for petroleum, which was completely indispensable as a military transportation fuel. Since the US was the dominant producer of petroleum at the time, Japan was heavily dependent on American oil deliveries. Japan imported 90% of its oil, of which 75–80% was shipped from California. For the critically important gasoline, the dependence was even higher (Miller, 2007: 156–157).

The only alternative to importing oil from the US was looting it from Borneo and Sumatra in the East Indies.

Totalitarian retrenchment: North Korea, 1990s.

While Japan in the 1930s and early 1940s went on conquest to assert its status as a great power and secure foreign supplies, the totalitarian regime of North Korea in the 1990s retrenched in order to preserve elite privileges after the demise of the Soviet Union. Between 1995 and 1998, a terrible famine led to the starvation of an estimated 600,000 to 1 million people, or 3–5% of the population (Goodkind and West, 2001: 234). This was in glaring contradiction to the country’s self-proclaimed national ideology of self-reliance (juche). In line with that ideology, up until the 1980s the regime had heavily invested in coalmines and hydropower to satisfy North Korea’s enormous energy needs.

Furthermore, Pyongyang had developed a toxic industrialized agriculture to feed the highly urbanized North Korean population. Farming in North Korea was based on irrigation, mechanization, electrification, and the prodigious use of chemicals. In 1990, estimated per capita energy use was twice as large in North Korea as in China and over half that of Japan (Williams et al., 2002: 112). All of this came to naught with the demise of the Soviet Union, when it turned out that oil was the Achilles heel of the North Korean economy. Since North Korea does not possess any proven reserves of petroleum, oil was mostly imported from the Soviet Union in exchange for political allegiance. In 1991, Russia stopped subsidized exports of oil and other inputs to North Korea. Two years later, Russian exports to North Korea were down by 90% ( Haggard and Noland, 2007: 27–32). This had dramatic effects. While the North Korean regime reserved most remaining fuel for the military, the rest agricultural production. Already in 1991, Pyongyang launched a ‘‘Let’s Eat Two Meals a Day’’ campaign.

After a series of decent harvests due to favorable weather conditions in the early 1990s, severe floods and droughts led to the North Korean Great Famine between 1995 and 1998 (Haggard and Noland, 2007: 73–76).

The Great Famine of Korea from 1995 to 1998 is a paradigm example of how the lack of a key resource such as oil can have momentous repercussions. Most obviously, North Korean land machines depended on oil. Without fuel, tractors and other machines were not running.

The next problem was transportation. Fuel was needed to bring fertilizer and other inputs to farms, and agricultural products to urban consumers. Fuel was also needed to ship coal from mines to fertilizer plants, where coal was converted into soil nutrients.4

Fuel was further needed to get coal to power stations for electricity generation. Thus, electricity was yet another problem. Without sufficient electricity, irrigation pumping and electrical railways became intermittent. This further affected transportation. Without reliable trains, it became even more difficult to bring coal to fertilizer plants or power stations, to transport fertilizer to farms, and to get agricultural products to urban consumers (Williams et al., 2002).

Thus, interlocking energy shortages combined with food shortages and a general decline of infrastructure to produce an almost hopeless situation.

The consequences were worst in agriculture where there was plummeting food production, considerable loss of arable land, and a rapid depletion of soil fertility. Restoring soil fertility would have required large amounts of lime, which however could not be transported without fuel. In a desperate attempt to replace land machines, draft oxen slowly became more numerous. But, unlike tractors, work animals compete with humans for food. The energy crisis also compelled many poor people to rely on biomass for cooking and heating. Unlike fossil fuel, however, the extraction of biomass reduces soil fertility, which in turn aggravated the agricultural crisis.

As a result of such interlocking vicious circles, the production of rice and maize fell by almost 50% between 1991 and 1998.

North Korea has even become a nuclear power, which sometimes enables Pyongyang to extort international concessions. While such brinkmanship may be morally repugnant, Korean-style totalitarian retrenchment is without doubt one possible response to a severe energy supply disruption.

Socioeconomic adaptation: Cuba, 1990s.

Cuba faced an energy supply disruption in the 1990s similar to the one experienced by North Korea. If anything, the Cuban supply shock was more severe, with the CIA estimating the decline of fuel imports between 1989 and 1993 at a whopping 71% (quoted in Dıaz Briquets and Perez Lopez, 2000: 250). Subsidized energy supplies from the Soviet Bloc ceased to 100%.

In 1990, Fidel Castro was forced to proclaim a national emergency called the ‘‘Special Period’’. The crisis devastated the entire Cuban economy. Machines lay idle in the absence of fuel and spare parts. Public and private transportation was in shambles. Workers had difficulties getting to their jobs. Factories and households all over the island were struck by unpredictable electrical power outages (Pe´rez-Lo´pez, 1995: 138–140). As in North Korea, the most painful effects were felt in the food sector. The nutritional intake of the average Cuban – especially protein and fat – fell considerably below the level of basic human needs (Alvarez, 2004: 154–169). Consumers resorted to chopped-up grapefruit peel as a surrogate for beef, and some people started breeding chicken in their flats or raising livestock on their balconies (Pe´rez-Lo´pez, 1995: 138). Nevertheless, people in Cuba were not dying from malnutrition and starvation; homeless people and gangs of street children, turned into scavengers, were not characteristic features of Cuban townscapes. Nor were violence, crime, desperation, and hopelessness characteristic features of Cuban neighbourhood life (Taylor, 2009). This is in remarkable contrast to North Korea.

To some extent, Cubans were helped in their efforts to cope with the crisis by a benign climate, revenue from tourism, remittances, foreign investment, and international aid. Also, the regime in Havana was more humane than its counterpart in Pyongyang. After some initial tinkering, it undertook cautious reforms. The country was opened for tourism, parts of the informal sector were legalized, and various forms of local self-help were encouraged (Pe´rez-Lo´pez, 1995). However the real miracle was done by the Cuban people. Against all odds, ordinary people managed to get along due to the remarkable cohesion of Cuban society at the community level. Although Cuba is highly urbanized, the typical barrio is an urban village.

Households are tightly embedded in neighborhood life. Most families have lived in the same home for generations. The typical Cuban household is shared by an extended family. Cuba’s multi-generational family households include aunts, uncles, and cousins. People cultivate close relationships with friends and relatives inside and outside the barrio (Taylor, 2009).

This local solidarity, or social capital, helped them to make ends meet during the ‘‘Special Period’’. As one inhabitant of a vulnerable neighborhood put it, the crisis brought people closer together because it forced them to rely on one another (quoted in Taylor, 2009: 140).

Traditional knowledge was also decisive in feeding the population. Although most land had been collectivized after the revolution of 1959, about 4% of Cuban farmers had kept their plots. Another 11% was organized in private cooperatives (Burchardt, 2000). The survival of traditional family farms alongside industrial agriculture turned out to be an important asset. Independent farms were more resilient to the crisis than state farms because they operated with less fuel and agrochemical inputs. Cuba’s remaining family farmers kept important traditional knowledge that could now be recovered. Other formerly independent farmers had moved to state farms or urban areas, where they provided valuable know-how for self-provisioning and urban agriculture. Urban agriculture was a local self-help movement, facilitated by the availability of traditional knowledge in combination with organic technologies and the Cuban-specific rustic ingenuity. Idle stretches of land between concrete blocks or in urban peripheries were turned into organic gardens. Vacant or abandoned plots in close vicinity to people’s homes were transformed into garden sites. People occupied these urban wastelands to grow vegetables and other foodstuffs. By the mid-1990s, there were hundreds of registered horticultural clubs in Havana alone.

The United States and China

Given their military capabilities, the United States and China would be the most obvious candidates for a ‘‘Japanese’’ strategy of predatory militarism. The US may be tempted to use its unrivaled power projection capacity to secure privileged access to oil. It has happened sometimes in the past, and may happen more often in the future, that US decision makers find military coercion more effective than trade. China is no match for the US, but it would be capable of using its military muscle to secure access to oil and gas in Central Asia.

The United States combines extreme dependency on foreign oil deliveries with an unrivaled capability to project military power.

When the oil market comes under pressure because of tightening supply, the US will continue to defend it for a while. But when soaring prices start crippling the national economy, US leaders may find that coercive diplomacy is more effective than free-trade rhetoric. The US is then likely to put the blame on foreigners and pursue a geopolitical strategy of ”energy security” to protect the American way of life (Klare, 2008). Why keep negotiating with recalcitrant leaders such as Chavez if there is a military option? This is not to say that the military option is easy, as the Iraq war has shown. However, military coercion is likely to gain ascendancy relative to free-market rhetoric as oil supplies become scarcer. The resource-rich neighbors of the US, Canada and Mexico, would become tied more closely to the American core.

In South America, mid-sized oil producing countries such as Venezuela and Ecuador might try to profiteer from soaring oil prices. If they engage in a strategy of brinkmanship and deny the US oil on favorable terms, their regimes may be toppled. This would further increase anti-American resentment in the region, but opportunistic elites might ultimately acquiesce to American hardball tactics. In the past, Latin American elites have often opportunistically colluded with the US. Eventually, resource-rich Brazil may be able to escape intervention due to its larger size and geographical distance from the US. If Brazil manages to offer sufficient benefits to neighboring countries, a regional state complex around Brazil may be possible. Otherwise, energy-poor Latin American states may enter a serious crisis. We may then see how much Cuban-style socioeconomic adaptation is possible in other Latin American societies.

The elites of oil producing countries such as Nigeria, Angola and Mozambique would keep selling their oil to the highest bidder, especially if the bid is backed by sufficient military clout and if there are no onerous obligations with regard to democratization and human rights. Unless the US insists on its dysfunctional democratization agenda, it will have better access to African resources than Europe, China, or Japan.

Europe

After peak oil, Western Europe would be in a difficult quandary. Although in principle Germany and France could easily arm, a credible military option is not available. Europeans have good historical reasons to dread predatory militarism, and the social consensus necessary for this strategy would not be forthcoming at the decisive initial stages of geopolitical positioning. In most of Western Europe, the path of totalitarian retrenchment does not seem to be available either. Concomitantly, Western European countries would be forced to strike opportunistic ”bargains” with Russia and the oil exporting countries of North Africa. Unfortunately, however, such deals are inherently fragile and subject to constant renegotiation. Investment in renewable energy and innovative technologies might somewhat mitigate the transition, but ultimately Europeans could hardly avoid a transition to a more community-based lifestyle. Despite the present affluence of Western European societies (or precisely because of it), this would be extremely painful

As a result, people would be forced to rely on local communities for their welfare if not their survival. However a regression to community-based values and a subsistence lifestyle would be difficult because the habits of industrial society are deeply rooted. Western Europe’s problems would be compounded by social segregation along immigrant groups and/or religious fault lines which, on the one hand, might enhance communal support for specific groups but, on the other, would conjure up severe conflict in Europe’s multiethnic societies. The situation of JAPAN would be similar to Western Europe. In both cases, the unavoidable transition to community-based values and a subsistence lifestyle would be very painful

Other Nations

A ‘‘North Korean’’ solution of totalitarian retrenchment that ‘‘screws’’ the population to preserve elite privileges is most likely in countries with a strong authoritarian tradition.

In consolidated democracies, totalitarian retrenchment is much harder to imagine.

Nevertheless, the history of 20th Century Europe shows that even democracies can and do sometimes degenerate into tyranny. It is difficult to predict to what point even in consolidated democracies political culture could deteriorate in a protracted and serious crisis.

For example, elites in the second-wave democracies of Latin America may have lesser qualms than their counterparts in Western Europe about ‘‘screwing’’ their own population to preserve elite privileges.

The paths of totalitarian retrenchment and socioeconomic adaptation are more easily available in EASTERN EUROPE and SOUTH EAST ASIA than in Western Europe and Japan.

Particularly but not exclusively in sub-Saharan Africa, state failure and conflict over scarce resources would become endemic. The inevitable end of the oil-based “green revolution” and the demise of international aid would wreak environmental havoc and human insecurity. The ecological situation would be aggravated by the soil being deprived of vital biomass as a combustible.

‘‘Cuban-style’’ socioeconomic adaptation is far more desirable

Many people in developing countries may be able to mitigate the effects of peak oil by reverting to community-based values and a subsistence lifestyle. Such a regression would be comparatively easy for people in societies where individualism, industrialism and mass consumerism have not yet struck deep roots. Socioeconomic adaptation would be more difficult for people in Western countries, where individualism, industrialism and mass consumerism have held sway for such a long time that a smooth regression is hard to imagine. And yet, survival in many presently industrial Western societies may ultimately depend on support from local communities and a subsistence-based lifestyle.

All of this can be formulated as three causal propositions, or ‘‘hypotheses’’.

Hypothesis 1. The greater a country’s military potential and the stronger the perception that force will be more effective than the free market to protect access to vital resources, the more likely there will be a strategy of predatory militarism.

Hypothesis 2. The shorter and the less a country or society has practiced humanism, pluralism and liberal democracy, the more likely its elites will be willing and able to impose a policy of totalitarian retrenchment on their population.

Hypothesis 3. The shorter and the less a country or society has been exposed to individualism, industrialism and mass consumerism, the more likely there will be an adaptive regression to community-based values and a subsistence lifestyle.

In the transition, large private Western companies such as Exxon and Shell would lose further ground to the state-controlled companies of oil exporting countries such as Saudi Arabia’s Aramco or Nigeria’s NNPC.

Hypothesis 4. In the event of peak oil, there will be winners and losers. It seems reasonable to expect a redistribution of power and wealth from oil importers to oil exporters, and from private to state-controlled companies.

It is far from my intentions to exclude the sudden appearance of a deus ex machina, such as the discovery of a new energy source or a revolutionary technological breakthrough. However, time is an issue. Exploration takes time, and the implementation of new technologies takes even more time. What takes most time of all, is the formation of the ”new consciousness” necessary for radical social change. This can be gleaned from yet another case study:

Dixieland. The socioeconomic backbone resource of the Old South was slaves. Precisely because the slave economy worked, white Southerners were willing to defend it in the bloody War of Secession of 1861-1865 (Fogel, 1989; Wright, 2006). The abolition of slavery after the War plunged the South into a deep crisis. The War was followed by the Reconstruction Era (1865- 1877), when the victorious North tried to enlist dissident elites and former slaves to impose its political and socio-economic institutions on a reluctant South. Despite the introduction of representation and suffrage for former slaves, reconstruction was mostly thwarted by the recalcitrance of traditionalist Southern elites. Developing energy technologies is never fast and easy, and even less so in times of crisis.

My conjectures rely on prior knowledge about historical and institutional path dependencies. While the long-term future is fundamentally open, in the short and medium term there are significant path-dependencies that make some trajectories far more likely than others. This applies to particular countries and regions. For example we roughly know which countries have large power projection capabilities, recent authoritarian traditions, and high levels of ”social capital”. We also know which regions possess significant reserves of energy resources, and how these resources have been managed in the past.

As a baseline, I need to make some assumptions about peak oil. I assume that, after a short plateau, oil production will fall by about 2-5% per year. I further assume that no adequate alternate resource and technology will be available to replace oil as the backbone resource of industrial society.

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Hydrocarbon liquids, drop-in fuels, oil refining, oil distribution, GTL, CTL

Notes from 41 page: National Petroleum Council. 2012. Chapter 11: Hydrocarbon Liquids. 

Figure 11-1. Energy Density

Figure 11-1. Energy Density

 

 

 

 

 

 

 

 

 

 

 

Hydrocarbon liquids have properties that make them high-quality transportation fuels and allow the supply chain to operate at large scale and efficiency, which reduces cost. A well-established distribution system ensures widespread availability.

The supply outlook for the United States and North America has improved in recent years. Oil production in the United States and Canada is expected to continue to increase with unconventional oil from tight oil, heavy oil, and oil sands playing an increasing role.

U.S. oil imports have decreased since 2005 and are forecast to continue to decline slowly to 2035. Key factors in reducing imports are recent reductions in demand, limiting future demand growth, and increasing U.S. oil and biofuels production.

Canada is the largest source of U.S. imports and is expected to become even more predominant in the future.

Long-term development of alternative hydrocarbon liquids (gas-to-liquids, coal-to-liquids, oil shale) will require higher prices than are currently forecast, unless capital costs are reduced significantly.

The refining industry should be able to manage changes in product demand over time.

Hydrocarbon liquids have unique properties that make them high-quality transportation fuels. One of the most significant properties is energy density, which is compared to other transportation energy sources in Figure 11-1. Other desirable characteristics include: Liquid form, easy to transport Adjustable combustion characteristics for use in a wide range of engines

The scale of the supply chain is large and touches every corner of the country. For example, approximately 168,000 miles of pipeline combine to deliver crude oil from producing fields and import hubs to refineries and products from refineries to distribution terminals. This infrastructure combined with linkage to an even larger global supply chain provides efficiency and diversity. Due to ease of transport, hydrocarbon liquids can be shifted globally and regionally in response to market forces and disruptions.

U.S. transportation fuel demand is approximately 14 million barrels per day (MMB/D). According to the Energy Information Administration’s (EIA) Annual Energy Outlook 2010 (AEO2010), gasoline for light-duty vehicles is 61% of the total. Although biofuel volumes have grown, petroleum-based hydrocarbons represent more than 95% of current supply on an energy content basis.

Unconventional oils are petroleum liquids not historically available to the supply chain due to low quality or restricted flow. Unconventional oil sources were traditionally more expensive than conventional resources but due to increasing oil price and technology improvements are becoming more competitive. Development of new unconventional oil plays is having a large impact on the U.S. supply chain leading to increased supply and investment. Unlike conventional oil, unconventional resources are most heavily concentrated in North and South America. North American unconventional resources include Canadian oil sands, Canadian heavy oil, U.S. oil sands, Canadian and U.S. tight oil, and U.S. oil shale.

The Venezuela Orinoco Heavy Oil Belt the predominant unconventional resource in South America. Application of technology is improving the prospects for development of unconventional oil, and such resources are playing an increasing role in North American oil production. The reader is referred to the 2011 NPC report for a more complete analysis on unconventional hydrocarbon supply and demand.

The process energy efficiency in converting natural gas to liquid products is 58–65%. There are GTL plants operating in Malaysia, South Africa,

Natural gas can also be converted to other transportation fuels such as methanol, dimethyl ether (DME), or methanol-to-gasoline (MTG). Both methanol and DME require significant fueling and vehicle infrastructure investments, which makes them less attractive than other liquid fuels produced from natural gas.

Methanol can also be used as a high-level blend with gasoline, but requires more extensive vehicle upgrading for use in a flexible-fueled-vehicle than ethanol. Since U.S. gasoline fuels currently contain up to 10% ethanol, addition of methanol would result in excessive fuel oxygen content. Therefore methanol would likely displace ethanol in the gasoline blend.

DME has high cetane and can substitute for diesel in compression ignition engines but would require significant vehicle and distribution infrastructure addition due to high vapor pressure (similar to LPG) and use of pressurized tanks.

Alternative hydrocarbon liquids can also be derived from coal. There are two main technologies available for coal conversion: indirect and direct liquefaction. Indirect liquefaction is similar to GTL. Coal is transformed into synthesis gas and then converted to liquid hydrocarbon fuels using the processes described above (FT diesel, MTG, methanol, DME). The direct liquefaction process shown in Figure 11-10 involves addition of hydrogen to coal to increase the hydrogen-to-carbon ratio from ~0.8 in coal to ~1.8 typical of various petroleum products. The potential for CTL is contingent on a number of factors: coal and petroleum prices, risk threshold, capital cost, and return on capital requirements. Coal is generally the least expensive fossil fuel but capital costs for CTL are higher than GTL due to extra steps needed to convert solid coal to synthesis gas.

Combined coal- and biomass-to-Liquids (cbtL). In this process, mixtures of coal and biomass are converted into liquid transportation fuels. The plant operates like a CTL plant except that biomass is gasified in addition to the coal. Coal provides the necessary scale, which improves economics compared to stand-alone biomass-to-liquids processes. Consolidating and transporting biomass is expensive, so the biomass fraction is generally limited to 15% of total input.

Liquid hydrocarbon fuels must have known and consistent properties for specific types of combustion systems.

Note: During World War II, the then-War Department delineated PADDs to facilitate oil allocation. Source: U.S. Energy Information Administration, “Number and Capacity of Petroleum Refineries,” as of January 1, 2010. TOTAL U.S. BARRELS PER DAY: 17,583,790 Art Area is 42p x 35p6 Figure 11-23. Fuel Refining Capacity by Petroleum Administration for Defense District (Barrels per Day)

Note: During World War II, the then-War Department delineated PADDs to facilitate oil allocation.
Source: U.S. Energy Information Administration, “Number and Capacity of Petroleum Refineries,” as of January 1, 2010.
TOTAL U.S. BARRELS PER DAY: 17,583,790
 
Figure 11-23. Fuel Refining Capacity by Petroleum Administration for Defense District
(Barrels per Day)

 

 

 

The refining industry also plays a role in other industrial value chains: asphalt for road construction and roofing, lubricants for use in transportation and industry, high-quality petroleum coke for use in the metals industry, waxes, solvents, and other products.

Many of these specialty products are difficult to manufacture and highly specialized.

Refinery processes can be divided into six categories: Separation of Crude Oil. 1. Separates crude into Restructuring Hydrocarbon Molecules. 2. Restructuring processes change molecular size or structure in a variety of ways. Some processes break apart bigger molecules while others combine small gas molecules to make liquids, and others change molecular structure. Treating. Examples are listed in Table 11-1.3. Treating processes are used to remove contaminants such as sulfur, nitrogen, and heavy metals, which are present in crude oil, blending Hydrocarbon Products. from various streams.

Refinery units are carefully integrated to provide high product yield with minimum waste and energy consumption. While each refinery is unique, refineries can be classified into three broad groups based on processing complexity, which in turn determines ability to convert crude oil into lighter transportation fuels. Hydro-skimming refineries contain a crude oil distillation unit (CDU) and naphtha reformers, which increase gasoline octane and produce hydrogen that can be used in desulfurization units. Medium conversion, or cracking, refineries have the same elements plus fluid catalytic cracking (FCC) and alkylation units, which allows greater conversion of crude oil to transportation fuels. High conversion refineries also have cokers, hydrocrackers, and hydrogen plants, as shown in Figure 11-22. High conversion refineries are common in the United States and convert large proportions of crude oil feedstock to transportation fuels and have greater ability to upgrade heavy or sour crude oil. Integration and optimization becomes more important as the number of process streams increase. Modern refineries contain networks of sensors, logic devices, and computers to control and optimize the complex reactions and flows within and among process and for logistics and planning of crude oil inputs and product output. industry State Geographic Distribution.

Many streams are blended to make gasoline and other hydrocarbon products.

Figure 11-28. Typical Refined Products Pipeline Batch Sequencing

Figure 11-28. Typical Refined Products Pipeline Batch Sequencing

Approximately 75% of the existing pipeline infrastructure was constructed between 1940 and 1980. The average pipeline lifespan is 33 years (Humphreys).  Pipelines accounted for 71% of all petroleum transportation in 2008, up from approximately 54% in 1990.

Figure 11-30. Total Petroleum Product Movement

Figure 11-30. Total Petroleum Product Movement

Figure 11-26. Major U.S. Product Terminals

Figure 11-26. Major U.S. Product Terminals

 

 

 

 

 

 

 

 

 

 

 

 

The Distribution of hydrocarbon liquid product terminals has grown to span the entire country, as shown in figure 11-26.

These terminals are located in demand centers and along pipeline routes to deliver hydrocarbon fuels and biofuels to the end customer. The legacy value of these terminals is significant, for a competing energy pathway to replicate this coverage and redundancy is a very large hurdle.

Depending upon the specifications of adjacent batches, it may be possible to downgrade the commingled product interface between two batches into a succeeding lower quality material (such as premium gasoline into regular gasoline). Downgrading from one batch to another cannot always occur. In those situations it becomes necessary to segregate the interface (called transmix) and arrange for it to be sent back to the refinery or other processing facility. Today, pipelines are controlled by the use of computers often referred to as programmable logic controllers (PLCs). The data from the PLCs are transferred by secured wide-area network to a centralized database. The data are then compiled and formatted in such a way that a control room operator can make decisions to start or stop the pipeline, adjust flow rates, raise or reduce the operating pressure, as well as open and close valves. The system of computers and the communications network is collectively referred to as a Supervisory Control and Data Acquisition (SCADA) system. The SCADA system can also feed various real time data into business computers to support pipeline scheduling, product accounting, and other business functions (Figure 11-29).

The volumes and the percentage of products transported within the Association of Oil Pipe Lines (AOPL) data do not include ethanol. Pipeline operators have been reluctant to ship ethanol, or gasoline-ethanol blends on a commercial scale due to ethanol’s corrosive properties and water solubility. Ethanol will clean the internal surfaces of a pipeline and can result in the pipeline becoming more susceptible to internal stress corrosion cracking, which is difficult to detect and manage. Likewise, ethanol has an affinity for moisture and is completely soluble in water. Water enters the pipeline system through terminal and refinery tank roofs and can be dissolved in fuels during the refining process. If the ethanol or gasoline-ethanol blend picks up water in the pipeline, it could “phase separate” resulting in off-specification product. An E10 gasoline-ethanol blend can typically contain up to 0.5 volume percent water at 60 F before phase separation occurs. Lesser amounts of water can induce separation at lower temperatures. Also, lower blend levels of ethanol such as 5.7% or 7.7% tolerate less water.

Trains, trucks, and water carriers are the primary means by which ethanol is transported from origin to market. The majority of the ethanol production is in the Midwest, with the heaviest demand along the East Coast, West Coast, and Southeast. In 2005, approximately 75% of ethanol produced was transported by rail. Implementation of the Renewable Fuel Standard calls for ethanol consumption to increase to 36 billion gallons (2.4 MMB/D) in 2022.

The ability to ship ethanol by pipeline or unit trains will be important to ensuring quick and affordable ethanol shipments. Unit trains are a more efficient mode of transportation than single manifest cars; however, the transportation of ethanol from trans-loading facilities to terminals by truck may become problematic in terms of highway congestion and air emissions. Technology improvements to address ethanol’s water affinity and corrosion issues could result in the wider use of pipelines to transport ethanol. The construction of new pipeline infrastructure or the expansion of existing pipeline infrastructure can be costly when considering right-of-way acquisition, intermediate tanks and terminals, as well as permits. Although this section of the report focuses on ethanol, the same issues are present when discussing the introduction, infrastructure, and logistics of other biofuels.

Conventional oil is increasingly located in remote areas or geographically concentrated in a few countries with large remaining resources. Access to these resources, technology development, and safe and environmentally sound operations are critical to meeting projected increases in demand. Unconventional resources are also important, with technology development to reduce cost and improve environmental Prudent Development performance an important challenge. The crude oil production profiles shown in Figure 11-19 foresee an increase in North American unconventional oil production. The crude oil slate shift will provide an incentive for upgrading of heavy crude oil in existing infrastructure. The most efficient disposition of this heavy crude oil production will likely be in existing high conversion refineries discussed previously in this chapter.

As the crude oil profiles change, so will the demand barrel as illustrated in the Reference and Alternative scenarios shown in Figure 11-31. The AEO2012 Early Release and the IEA outlooks show the potential pressure on refined gasoline from a volume and yield perspective due to light-duty fleet efficiency, increased biofuels, and growth in diesel for medium-/heavy-duty vehicles. The challenge for refining will be to make the product slates required by customer demands. Although the changes are substantial in some outlooks, they occur over a very long period, giving industry time to respond. The flexibility of the refinery fleet to manage this shift will be discussed in the next section.

Refinery Capability to Address Shape of Barrel Shifts

The U.S. refining industry has responded in the past to changing customer demand by shifting refinery yields.

Figure 11-31. Demand Shifts in Various Outlooks versus 2010

The result has been a higher overall yield of gasoline and diesel, with an increasing diesel fraction (see Figure 11-33).

The results of an EIA study show that U.S. refineries have the ability to increase annual average distillate yields on crude oil and unfinished oil inputs 3 to 5% with no or small investments for distillation improvements. There should be no near-term constraint in meeting slowly increasing distillate consumption, given the capability to adjust to market demands as evidenced in previous cycles and recent additions to capacity. In fact, distillate yield increases will likely enable U.S. refiners to increase distillate exports when economics are attractive.

According to the IEA’s 2010 World Energy Outlook, very large infrastructure investments will be needed globally to meet projected future oil demand, roughly $8 trillion over a 25-year period, as shown in Table 11-2. Most of the investment will occur outside OECD countries to find and develop new sources of oil production.

Spending in the United States is projected to be only 11% of the global total. The total cost of new infrastructure is roughly $10 per barrel produced and processed

Refinery capital investment will be required to: Upgrade capacity to meet increasing diesel demand Increase production of low sulfur distillate and marine fuel. Process heavy crudes over the 25-year outlook period.

Table 11-3. Key Variables for XTL Comparisons. CTL and BCTL cost over twice as much as GTL

Table 11-3. Key Variables for XTL Comparisons. CTL and BCTL cost over twice as much as GTL

 

 

 

 

 

 

 

Table 11-4. Alternative/Renewable Capital Infrastructure Requirements

Table 11-4. Alternative/Renewable Capital Infrastructure Requirements

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Major service station components that may need to be upgraded include: fuel dispensers, pumps, piping, and storage tanks. A wide range of costs is possible, depending on service station design and how much equipment needs to be replaced. Replacing a single dispenser costs $17,000 to $40,000. To replace underground equipment involves permitting and higher costs. Costs for a single dispenser and storage tank range from $71,000 to $185,000. Costs would be higher to upgrade an entire station. A typical station has four or more dispensers and two or more storage tanks.

There were 161,000 service stations in the United States in 2008, equivalent to 0.65 fueling stations per 1,000 vehicles. A typical dispenser lifetime is 10 years, while a storage tank can last 30 years.

Fatty acid methyl ester (FAME) biodiesel are not currently blended in refineries or shipped in most pipelines. This increases transportation cost relative to gasoline and diesel.

To improve distribution economics, biofuels would require additional processing either in stand-alone units or potentially as a refinery feedstock. Use of biomass-derived feedstock in refineries raises a number of issues. First, such stocks contain significant amounts of oxygen that must be rejected as water that refineries are not designed to handle. Second, pyrolysis of biomass to produce bio-oil yields many unstable compounds that refineries are not designed to process or remove. Third, many bio-derived nitrogen and oxygen compounds are poisons to the catalysts employed in the refining process. In addition, removal of the nitrogen, oxygen, sulfur, and unstable compounds requires hydrogen, which will increase supply costs at a refinery.

These hurdles will limit the amount of biomass-derived feedstock existing refining infrastructure can handle.

Potential for Hydrocarbon Liquids Production from Coal and Gas Resources. The conditions under which a large domestic industry to convert gas, coal, and biomass to liquids (XTL) might develop were investigated. Because few such plants have been constructed worldwide, there is considerable long-term uncertainty in the economics of XTL relative to petroleum and the large potential resource.

There is a considerable range of estimates of capital costs for the GTL plants that have been built and for those still in construction or in the planning stage. This range is between about $35,000/daily barrel for the Sasol Oryx plant that was constructed over 5 years ago and about $200,000/daily barrel for the Escravos plant in Nigeria. The Escravos project is expected to cost $8.4 billion for 33,000 barrels per day of GTL liquids product, and is 70% complete (although it was originally expected to cost ~$3 billion). The large Shell Pearl GTL plant that has recently completed construction in Qatar will produce 140,000 barrels per day of FT fuels and about 120,000 barrels per day of natural gas liquids. This plant is expected to cost in the region of $18 billion. There are many reasons for this large range including plant size, location, timing, project scope, products, gas processing needed, financing assumptions, etc.

Figures 11-35 and 11-36 show estimates of the RSP of diesel fuel produced from CTL and CBTL plants sized to produce 50,000 barrels/day of diesel fuel and naphtha based on the capital costs Zeus Syngas Refining

Carbon capture and storage (CCS) is used to capture the carbon dioxide produced during the conversion process. Note that CCS has a moderate impact on plant costs representing about 10% of capital expense. The base CTL capital cost is assumed to be $150,000/daily barrel and the high Capex is $300,000/daily barrel. If the coal price is $1.50/million BTU (equivalent to about $35 per ton) the RSP on a crude oil equivalent basis would be $120/barrel for the base Capex. For the high Capex case it would be over $220/barrel. The base CBTL capital cost is assumed to be $157,000/ daily barrel and the red line shows the high Capex case ($314,000/daily barrel). If the coal price is $1.50/ million BTU (equivalent to about $35 per ton) the RSP on a crude oil equivalent basis would be about $130/barrel for the base Capex. For the high Capex case, it would be over $230/barrel. In all cases, the potential Supply curves for xtL biomass feedstock cost was assumed to be constant at $71/dry ton.

The assumptions regarding Capex have a large effect on the RSP and hence on the economic viability of CTL and CBTL. Note that coal provides the necessary scale, which improves economics compared to stand-alone BTL. Transporting biomass is expensive so a BTL plant would operate at much smaller scale and much higher $/barrel capital cost than the CBTL plant analyzed here.

Figure 11-37 shows estimates of the RSP of diesel fuel (crude oil equivalent basis) produced from a GTL plant sized to produce 34,000 barrels per day of diesel and naphtha from about 300 million standard cubic feet per day of natural gas. With natural gas at $5.00/million BTU, the cost for diesel from a GTL plant with a capital cost of $70,000/ daily barrel is estimated to be about $90/barrel. If natural gas prices escalate to $10/million BTU, then the RSP on a crude oil equivalent basis increases to about $130/barrel. Costs are much higher for the high Capex case.

Figure 11-38 shows two potential diesel fuel supply curves for XTL to 2050. The gold curve uses the low capital cost case, and red the high cost case. Both cases assume the AEO2010 Reference Case for oil, gas, and coal pricing. As discussed above, projected volumes are sensitive to capital costs and relative costs of petroleum, gas, and coal. In the low capital cost case, a sizeable XTL industry develops producing 2 MMB/D of diesel by 2050. This represents 65% of U.S. highway diesel in the Reference Case and 26% of all distillate and would have a significant impact on oil imports and refining. Using the AEO2010 price outlook, GTL is more economic than CTL or CBTL. Roughly 70% of the XTL is from GTL. However, under the high Capex case, no XTL is produced. As expected, forecast oil prices also impact projected volumes. With low oil prices, no XTL is produced under the low oil price case, while 3 MMB/D is produced under the high oil price scenario. Based on this analysis, XTL can be considered a backstop that could supplement petroleum under certain economic conditions.

Production of alternative and renewable fuels will require varying levels of capital investment to integrate into the existing hydrocarbon fuels distribution system. This investment is above and beyond that required for fuel production and will depend upon whether the product meets current fuel specifications when used in existing infrastructure at high concentrations (neat) or as a blend product. Such fuels are referred to as “drop in” fuels. Specific capital required to establish alternative and renewable fuel manufacture is described elsewhere in this report. A qualitative summary of the infrastructure integration capital required for each fuel pathway is shown in Table 11-4.

Considering the large lower-cost resource base, and the legacy investment in refineries, existing infrastructure, and plentiful dispensing network, hydrocarbon liquids can be expected to continue to provide the majority of transportation fuel for the outlook period.

GHG emissions associated with use of hydrocarbon liquids are best analyzed on a well-to-wheel (WTW) basis, which includes emissions associated with production, refining, transportation, and use of hydrocarbon liquids. WTW GHG emissions for gasoline, as predicted by the GREET model, are shown in Figure 11-39. The petroleum life-cycle upstream of the vehicle is efficient and most of the energy content of petroleum is retained in the finished fuel such that over 80% of GHG emissions are associated with vehicle fuel use. Most of the remainder results from fuel production, which includes refining and product transportation. Feedstock production from crude oil production and transportation has the smallest emissions. As shown in Figure 11-39, improving vehicle efficiency can lower permile emissions significantly. Any reduction in demand reduces both vehicle and fuel-cycle emissions upstream of the vehicle.

References

Alberta Energy Research Institute. Life Cycle Emission Comparison of North American and Imported
Crudes. Prepared by Jacobs Consultancy and Lifecycle Associates, July 2009.

American Petroleum Institute. API RFS2 Comments, Attachment 4: E85 Retail Fueling Cost Study. 2009.

Association of Oil Pipe Lines and American Petroleum Institute. “In the Pipe” (newsletter). April 2006.

Association of Oil Pipe Lines. Liquid Pipeline Industry in the United States, Where It’s Been: Where It’s Going. April 2004.

Association of Oil Pipe Lines. Report on Shifts in Petroleum Transportation: 1990–2009. February
2012. http://www.aopl.org/pdf/AOPL_Shift_Report_Press_Release_Feb_7_20121.pdf.

Borensztein, Eduardo, and Carmen M. Reinhart. The Macroeconomic Determinants of Commodity Prices. University of Maryland. 1994.
BP. BP Statistical Review of World Energy. June 2011.

Clean Fuels Foundation and the Nebraska Ethanol Board. In cooperation with the U.S. Department of
Agriculture. E85 and Blender Pumps: A Resource Guide to Ethanol Refueling Infrastructure. 2011.

CME Group. The Role of WTI as a Crude Oil Benchmark. January 2010.

The Conference Board of Canada. “Getting the Balance Right: The Oil Sands, Exporting and Sustainability.” Briefing January 2010.

Congressional Research Service. Intermediate-Level Blends of Ethanol in Gasoline, and the Ethanol “Blend Wall.” October 2010.

Congressional Research Service. The U.S. Oil Refining Industry: Background in Changing Markets and
Fuel Policies. November 2010.

Europia. “White Paper on EU Refining.” 2011.

GREET Model: The Greenhouse Gases, Regulated Emissions, and Energy Use in Transportation
Model, Argonne National Laboratory. http://greet.es.anl.gov/.

Humphreys, S. June 2010. Economic Outlook Brightens For Pipeline Coating Developments. Pipeline and Gas Journal. Vol. 237 No. 6

Iandoli, Carmine L., and Signe Kjelstrup. “Exergy Analysis of a GTL Process Based on Low-Temperature Slurry F-T Reactor Technology with a Cobalt Catalyst,” Energy Fuels 21, no. 4 (2007):pages 2317-2324. http://www.chem.ntnu.no/nonequilibrium-thermodynamics/pub/176-Iandoli-EnergyFuels.pdf.

International Energy Agency. World Energy Outlook 2008.

International Energy Agency. World Energy Outlook 2010.

Japan Clean Air Program (JCAP). 4th JCAP Conference, June 1, 2005, Session 2 “3. CO2 Emissions
Study Workgroup Report.” http://www.pecj.or.jp/english/jcap/jcap2/jcap2_4th.html.

Japan Clean Air Program (JCAP). 5th JCAP Conference, February 22, 2007, Session 1, “2. Gasoline
Work Group Report.” http://www.pecj.or.jp/english/jcap/jcap2/jcap2_5th.html.

Jessen, Holly. “Riding the Rails.” Ethanol Producer Magazine. October 2006.

Kheshgi, Haroon S., Hans Thomann, Nazeer A. Bhore, Robert B. Hirsch, Michael E. Parker, and Gary
Teletzke. “Perspectives on CCS Cost and Economics,” SPE International Conference on CO2 Capture,
Storage, and Utilization, New Orleans, LA. November 2010.

Laboratory for Energy and Environment, MIT, Factor
of Two: Halving the Fuel Consumption of New US
Automobiles by 2035, 2007.

National Academy of Sciences, National Academy of Engineering, and National Research Council of
the National Academies, Liquid Transportation Fuels from Coal and Biomass: Technological Status,
Costs, and Environmental Impacts. 2009.

National Association of Convenience Stores. Challenges Remain Before E15 Usage is Widespread.
2011. http://www.nacsonline.com/NACS/Resources/campaigns/GasPrices_2011/Pages/
ChallengesRemainBeforeE15UsageIsWidespread.aspx.

National Energy Technology Laboratory and U.S. Department of Energy, Affordable, Low-Carbon
Diesel Fuel from Domestic Coal and Biomass, DOE/NETL 2009/1349. 2009.

National Petroleum Council. “Appendix C: History and Fundamentals of Refining Operations.” In U.S.
Petroleum Refining. June 2000.

National Petroleum Council. “Appendix D: The U.S. Petroleum Distribution System (A Tutorial).” In U.S. Petroleum Refining. June 2000.

National Petroleum Council. Hard Truths: Facing the Hard Truths about Energy. 2007.

National Petroleum Council. Prudent Development: Realizing the Potential for North America’s Abundant Natural Gas and Oil Resources. 2011.

National Petroleum Council. U.S. Petroleum Refining – Assuring the Adequacy and Affordability of Cleaner Fuels. 2000.

Petroleum Equipment Institute. Compatibility Assessment Survey. 2008.

Shell (website). “Pearl GTL: An Overview.” 2011. http://www.shell.com/home/content/aboutshell/
our_strategy/major_projects_2/pearl/overview/, and references in that website.

Solomon Associates, private communication.

U.S. Department of Energy, Alternative Fuels Data Center (website). “Propane.” http://www.afdc.
energy.gov/vehicles/propane.html.

U.S. Department of Energy, Oak Ridge National Laboratory, “Chapter 4” in Transportation Energy Data Book. http://cta.ornl.gov/data/chapter4.shtml.

U.S. Energy Information Administration. “Atlantic Basin Refining Dynamics from U.S. Perspective.”
Presentation by Joanne Shore and John Hackworth at Platts 4th Annual European Refining Markets
Conference, September 2010.

U.S. Energy Information Administration. Annual Energy Outlook 2010—With Projections to 2035.
April 2010.

U.S. Energy Information Administration. Annual Energy Outlook 2011—With Projections to 2035.
April 2011.

U.S. Energy Information Administration. Annual Energy Outlook 2012 Early Release. December 2011.

U.S. Environmental Protection Agency, and National Highway Traffic Safety Administration.
Draft Regulatory Impact Analysis, Proposed Rulemaking to Establish Greenhouse Gas Emissions
Standards and Fuel Efficiency Standards for Medium- and Heavy-Duty Engines and Vehicles,
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U.S. Environmental Protection Agency, National Highway Traffic Safety Administration, and California
Air Resources Board. Interim Joint Technical Assessment Report: Light-Duty Vehicle Greenhouse
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Emerging Technologies for Reducing Greenhouse Gas Emissions from the Petroleum Refining Industry. October 2010.

U.S. Environmental Protection Agency. Draft Regulatory Impact Analysis: Changes to Renewable Fuel
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Zeus Intelligence, Zeus Syngas Refining Report,
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Posted in Coal to Liquids (CTL), GTL Gas-To-Liquids, Oil | Tagged , , , , , | Comments Off on Hydrocarbon liquids, drop-in fuels, oil refining, oil distribution, GTL, CTL

Turlock AB 2514 California Energy Storage

Notes from 29 page: Turlock Irrigation district Energy Storage Study. 2014. Willie G. Manuel 9/17/2014

Recommendation. The analysis performed shows that the benefits of deploying various types of storage systems fall short of the capital cost of such systems. Furthermore, except for pumped storage systems, there is limited operational history on utility scale storage systems. Hence there is limited data on performance degradation, operation and maintenance expense, and the life of storage systems in utility applications. Given that the analysis show that storage systems are currently not cost effective and that there is limited operating history, staff recommends that the Board make a determination that it is not appropriate to adopt energy storage procurement targets at this time.

Li-on batteries typically have a life of 15-20 years and round trip efficiencies of about 83%.

This battery technology is currently the fastest growing segment for stationary storage

applications. They have been deployed in a wide range of utility energy-storage applications, ranging from a few kilowatt-hours in residential systems with rooftop photovoltaic arrays to multi-megawatt containerized batteries for the provision of grid ancillary services. Currently there are roughly 83 MW of Li-on based storage systems in operation in the United States.

Sodium sulfur batteries (“NAS”) use electrochemical reactions between sodium and molten sulfur to charge and discharge. They operate at fairly high temperature of about 300-350oC, are highly corrosive, have low power-to-energy ratios, life of 15 years, and round trip efficiencies of about 75%. There are currently 12 MW of NAS batteries that have been installed by U.S.utilities with about another 9 MW in-progress. Globally, there is 316 MW of NAS installed to date.

Flow batteries use a liquid electrolyte and an electrochemical cell to store/generate electricity. The liquid electrolyte is stored externally and pumped through the cell. This allows the energy capacity of the battery to be increased at a moderate cost making them suitable for long duration applications. These types of batteries are expected to last about 15 years and have round trip efficiencies of 70-80%. Relative to integrated battery technologies such as the Li-on and NAS, flow batteries tend to have a larger footprint due to the need for flow system components. Historically, flow batteries can experience irreversible capacity loss over time and thus have not been widely used.

The vanadium redox system is the more mature type of flow battery. In the United States, there is a total of 1 MW of flow battery based storage systems operational.

Some of the key advantages of flywheel energy storage are low maintenance, long life (some flywheels are capable of well over 100,000 full depth of discharge cycles and the newest configurations are capable of greater than 175,000 full depth of discharge cycles), and negligible environmental impact. They have high energy density and substantial durability whichallows them to be cycled frequently with no impact to performance. They also have very fast response and ramp rates. They generally can respond to regulation signals in milliseconds and can go from full discharge to full charge within a few seconds or less. Round trip efficiencies are between 70-80%. Flywheel energy storage systems (FESS) are well suited for high power, relatively low energy applications such as power quality maintenance and frequency response.

There are two flywheel installations operating in the United States for a combined total of 32 MW.

Compressed air energy storage (“CAES”) has been used since the 1870’s. However, the first utility scale deployment came online in the 1970’s. CAES stores energy by compressing and storing ambient air under pressure (typically at 1,015 psia) in an underground cavern or above ground pressure vessels or pipes. To generate electricity, the pressurized air is heated and expanded in a turbine that drives a generator.

There are currently only two operating utility sized CAES plants, the 321 MW plant in Huntorf, Germany (operating since December 1978) and the 110 MW plant in McIntosh, Alabama (with 18 years of operating history). These systems typically have round trip efficiencies of 42-55%.

Salt caverns in deep salt formations have traditionally been used. The use of natural aquifers and depleted natural gas fields are currently being studied. 3.4.

Thermal 3.4.1. Ice Thermal Ice storage supplements existing HVAC systems by creating ice during the off-peak periods which is then used during the on-peak periods to reduce the cooling load of the HVAC system.

There are currently 36 MW of ice storage systems online in the United States. These systems are designed to last 20-25 years.

Solar Thermal Solar thermal power plants store energy by heating a medium (typically oil or molten salt) to store thermal energy and later using such medium to generate steam that drives a turbine to produce electricity. In 2013 the 280 MW Solana Generation Station in Arizona came online. The project consists of a concentrated solar plant using parabolic trough coupled with six hours of storage capacity using molten salt. The 150 MW Rice Solar Energy Project to be located in Riverside County, CA also will consist of a concentrated solar plant coupled with molten salt thermal storage. The project is expected to be online in 2016.

Pumped Hydro Pumped hydro is one of the most established energy storage technologies and has been used since the 1920s. Energy storage is achieved by pumping water uphill (typically during the off-peak low energy cost periods) to an upper reservoir. When energy is needed the water pumped uphill is released and allowed to flow downhill through a hydro turbine. Pumped storage power plants are unlike traditional hydroelectric power plants in that they are a net consumer of electricity, due to hydraulic and electrical losses incurred in the cycle of pumping from lower to upper reservoirs. These plants typically have round-trip efficiencies of 76-85%.

Time-of-Day Arbitrage In this application, the storage device is charged during periods when electricity prices are lower (generally during the off-peak periods) and discharged during periods when electricity prices are higher (generally during the on-peak periods). This application also allows for efficient operations of baseload generation resources. Often baseload generation has to be operated at less efficient output levels during the off-peak periods. Installing a storage system may allow a baseload generation to generate at a higher output (more efficient) level during the off-peak periods resulting in fuel cost savings.

Peak Capacity. A storage system can be used to serve peak load and thus reducing the need for capacity from traditional generating resources. In this application, the storage system is charged in low load periods and discharged during the high load periods. This is somewhat similar to the previous application since generally low electricity prices occur during the low load (off-peak) periods and high electricity prices occur during the high load (on-peak) periods. This application also allows for efficient operations of baseload generation.

Ancillary Service. Western Electricity Coordinating Council (“WECC”) regulations require us to maintain minimum operating reserves that consist of regulating, spinning, and non-spinning reserves. Storage systems could be used to provide regulation, spinning, and non-spinning reserves and therefore freeing up capacity on existing generating resources for other uses such as power sales or reducing the need for additional generating capacity.

Load Following and Renewable Integration. In order to balance supply and demand, generator output is constantly varied to match demand. At TID, generally the output of Don Pedro or Walnut Energy Center (“WEC”) is varied up or down in order to balance the system. The constant movement of output puts additional wear and tear on the power plants particularly thermal units such as WEC.

Storage systems can be used to assist in balancing system supply and demand. The presence of intermittent resources (such as wind or solar) in a system presents additional challenges to balance supply and demand in an electric system. Storage systems can be located at or near intermittent resources to smooth the output from the intermittent resource prior to it entering the electric system thereby reducing system imbalance.

Voltage Support Storage systems could be used to assist in maintaining the electric grid’s voltage in lieu of traditional tools such as generators, capacitors, and voltage regulators.

Black Start. During catastrophic grid failures, a storage system can be used to energize the grid and provide station power so power plants can be brought back on-line. In this application, the storage system is charged and remains charged until a grid failure occurs.

Transmission and Distribution Upgrade Deferral. Transmission and distribution (“T&D”) facilities generally do not operate close to their capacity. In most cases the load on a T&D facility only approach capacity limits a few hours a year. Rather than increasing the capacity of the T&D facility that is reaching its limits, a storage device could be used to serve a portion of the load during the few peak hours in a year thereby delaying and possibly avoiding T&D upgrades. Hence, installing a storage system allows the T&D capacity to be optimized and could extend the life of the T&D facilities since the facility is not subjected to higher loading. Storage systems could also be designed to be mobile and therefore could be move around an electric utility system where it is needed. For example, a storage system could be installed to defer upgrades to a substation. Once that substation is eventually upgraded the storage system could then be moved to another substation.

Lithium-Ion Battery (without Regulation Reserve Sales) In this scenario we model a 30 MW Lithium Ion battery (“30 MW Li-on”) with 2 hour duration that can provide capacity, energy, regulation, spinning reserve, and non-spinning reserve. Sales of energy, spinning reserves, andnon-spinning reserves from TID’s generation resources and the storage system are permitted in this scenario. However, sales of regulation reserves are not permitted which reflects current operations. Below are the assumptions used for the 30 MW Lion: Technology Lithium Ion Capacity 30 MW Duration 2 Hours Capital Cost $1,800/kW ($900/kWh) Fixed O&M Cost $10/kW-yr Variable O&M Cost $0.3/MWh Project Life 20 years Battery Replacement Cost $244/kWh Battery Replacement Yr of Occurrence 11th year Roundtrip Efficiency 83% Debt Interest Rate (20 Yr Term) 4% Debt Interest Rate (10 Yr Term) 3% O&M Escalation Rate 2%/yr

As shown in Chart 1 below, adding a 30 MW Li-on into TID’s resource portfolio increases TID’s Net Purchase Power Cost (“NPP”) by $0.9-3.0 million per year. The 30 MW Li-on provided energy, capacity, regulation reserve, spinning reserve, and non-spinning reserve. However, the reduction in variable costs due to the addition of the 30 MW Li-on was less than the annual fixed cost of the 30 MW Lion (see Chart2 below).

Technology Lithium Ion Capacity 50 MW Duration 2 Hours Capital Cost $1,800/kW ($900/kWh) Fixed

O&M Cost $10/kW-yr Variable O&M Cost $0.3/MWh Project Life 20 years Battery Replacement Cost

$244/kWh Battery Replacement Yr of Occurrence 11th year Roundtrip Efficiency 83% Debt Interest

Rate (20 Yr Term) 4% Debt Interest Rate (10 Yr Term) 3% O&M Escalation Rate 2%/yr Adding the 50

MW Li-on into TID’s resource portfolio increased TID’s NPP by $2.0-5.2 million per year (see

Chart 1 above) again due to the fact that the savings in TID’S NPP is less than the annual fixed cost of the storage system (see Chart 3 below).

As can be seen from Chart 4, Chart 5, and Chart 6 below, permitting regulation reserve sales increase the value of the Li-on storage system because of higher value regulation reserve sales. However, despite allowing the higher value regulation reserve sales, adding the 30 MW Li-on and 50 MW Li-on into TID’s resource portfolio increases NPP by $0.6-2.6 million per year and by $1.2-4.4 million per year respectively. Chart 4

Flywheel As mentioned earlier, flywheel energy storage systems are well suited for high capacity low power quick response applications such as regulation. In this study we modeled a 30 MW flywheel with a 0.25 hour (“Flywheel”) that can provide capacity, energy, regulation, spinning reserve, and non-spinning reserve. Similar to the analysis done for the Li-on, the Flywheel was analyzed with and without regulation reserve sales. Below are the assumptions used for the Flywheel: Technology Flywheel Capacity 30 MW Duration 0.25 Hours Capital Cost $2,000/kW

($8,000/kWh) Fixed O&M Cost $5.8/kW-yr Variable O&M Cost $0.3/MWh Project Life 20 years

Roundtrip Efficiency 81% Debt Interest Rate (20 Yr Term) 4% Debt Interest Rate (10 Yr Term) 3%

O&M Escalation Rate 2%/yr Adding the Flywheel to TID’s resource portfolio increased TID’s NPP by $3.5 to 4.0 million per year without regulation sales modeled (see Chart 7 below), and by $3.3-4.0 million per year with regulation sales (see Chart 8 below). The

Flywheel provided energy, capacity, regulation reserve, spinning reserve, and non-spinning reserve. But, similar to the Li-on, the benefit (reduction in variable cost) provided by the Flywheel did not exceed the additional annual fixed cost of the Flywheel (see Chart 9).

Furthermore, the Flywheel provides minimal capacity value since it only had 0.25 hour duration.

Chart 7 Net Purchase Power Cost ($ Mil) $150.0

Thermal Storage. For this analysis, we assumed that 1,000 Ice Bear systems are deployed in the TID service area. The Ice Bear systems reduce afternoon cooling load by 6 MW combined for six hours. Below are the assumptions used for the Ice Bear systems: Technology Capacity Duration Capital Cost Fixed O&M Cost Variable O&M Cost Project Life Roundtrip Efficiency Debt

Interest Rate (20 Yr Term) Debt Interest Rate (10 Yr Term) Ice Thermal Storage 6 MW (combined)

  1. 00 Hours $1,700/kW ($284/kWh) $54/kW-yr NA 20 years 120% 4% 3% O&M Escalation Rate 2%/yr

As shown in Chart 10 and 11 below, deploying the Ice Bear systems resulted in an average increase in the NPP by $0.2 million per year. Similar to other energy storage technologies studied, the reduction in variable costs achieved due to the Ice Bear systems were less than the fixed costs of the Ice Bear systems deployed (see Chart 12 below).

5Transmission and Distribution Upgrade Deferral. When a substation approaches its limits generally a new transformer or new substation are added. Storage systems can be used to defersuch distribution system upgrades. For this analysis, we used the following assumptions:

Substation Size 25 Mva

New Substation Cost $6,000,000

New Transformer Cost $1,000,000

Substation Annual Load Growth 1.0% Technology Lithium Ion Capital Cost $1,800/kW ($900/kWh)

Fixed O&M Cost $10/kW-yr Variable O&M Cost $0.3/MWh Project Life 20 years Battery Replacement

Cost $244/kWh Battery Replacement Yr of Occurrence 11th year Roundtrip Efficiency 83% Debt

Interest Rate (20 Yr Term) 4% Debt Interest Rate (10 Yr Term) 3% O&M Escalation Rate 2%/yr

A review of historical substation loading shows that in order to effectively reduce the peak loading on a substation by 0.5 MW the storage system has to be able to discharge a minimum of 3 hours and to effectively reduce peak loading by 1.0 MW the storage system has to be able to discharge a minimum of 5 hours. Assuming an annual load growth of 1.0%, a 25 Mva substation’s load will grow 0.25 MW per year. Therefore, a 0.5 MW-3 hour duration storage system could defer a substation upgrade for 2 years and a 1.0 MW-5 hour duration storage system could defer a substation upgrade by 4 years. Deferring the installation of a 25 Mva substation results in an annual savings of $240,000/yr ($6,000,000 x 4%). The capital cost of a 0.5 MW-3 hour duration storage system is $1,350,000. Since the storage system can only defer the substation upgrade by

2 years the savings realized by deferring the substation upgrade is not sufficient to pay for the storage device. A 1 MW-5 hour duration storage system will have a capital cost of

$4,500,000. Since the storage system can only defer the distribution system upgrade by 4 years the savings realized by deferring the substation upgrade is not sufficient to pay for the storage device. Also, the savings calculated above assumed a new substation was installed. If a new transformer is added instead, the annual savings would be reduced from $240,000/yr to $40,000/yr ($1,000,000 x 4%) making the storage system an even less economic solution for the purpose of deferring the distribution upgrade. Some storage systems are designed such that theycan be moved to different locations to defer upgrades on several substations. But at current storage system cost, one would have to defer upgrades at more than a few substations to become cost effective. Even if a mobile storage system prove to be a cost-effective way to defer transmission and distribution upgrades there are currently no anticipated upgrades needed in TID’s transmission and distribution system that can be deferred by installing a storage system.

For example, TID has 22 distribution substations and only 2 experience peak loads that reach 80% of capacity.

 

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Carbon capture and storage (CCS) technology roadmap 2013 IEA

Notes from 63 page: IEA. 2013. Technology Roadmap Carbon capture and storage (CCS). International Energy Agency.

A total cumulative mass of approximately 120 Gt CO2 would need to be captured and stored between 2015 and 2050, across all regions of the globe.

Large-scale networks that transport billions of ton of CO2 annually between capture facilities and storage sites, within the same region and further afield, will need to be available to facilitate this rate of storage.

The total undiscounted investment in CCS technology from now until 2050 in the 2DS would amount to USD $3.6 trillion.

Demonstration is therefore an essential intermediate technical step with reduced risk exposure that facilitates learning-by-doing and culminates in a technology that can be sold in the marketplace with performance guarantees bankable for investors. Individual demonstration projects need be only at a scale that is sufficiently large to be representative of commercial operation. This provides the marketplace and the engineering community with new information on equipment performance,

Progress, although insufficient, has been made on a variety of fronts between 2009 and 2013 towards meeting some of the short-term milestones set in the IEA 2009 CCS roadmap,

Despite significant activity in some industrial areas, notably gas processing, CCS action in a number of key industrial sectors is almost totally absent (IEA/UNIDO, 2011). There is a dearth of projects in the iron and steel, cement, oil refining, biofuels and pulp and paper sectors. Only 2 possible demonstration projects at iron and steel plants, and one at coal-to-chemicals/liquids plants, are at advanced stages of planning (Global CCS Institute, 2013).

Save for use of CO2 in EOR, efforts in this area have not achieved meaningful results (Box 3). In addition to the challenge of achieving sufficient scale of CO2 use, quantifying any claimed reductions in net emissions – either through the long-term isolation of CO2 from the atmosphere or the displacement of additional fossil fuel use – is not always straightforward. This creates a substantial challenge to the business case for such applications. If it cannot be verified that the use of the captured CO2 permanently isolates it from the atmosphere, it is unlikely that the party capturing the CO2 would receive an economic benefit within a climate policy framework. The user of the CO2 would thus have to pay a price that covered the cost of capturing the CO2, and may furthermore need to agree to long-term contracts to provide sufficient certainty for the other party to invest in CO2 capture4.

In this same case, but when a carbon price is present and it is higher than the cost of CO2 capture and transport, the user of the CO2 would have to pay a price for the CO2 to cover the total penalty paid by the capturing facility, as the CO2 would be considered to be emitted. In another possible case, if a captured CO2 stream could be split between available geologic storage and utilization, the user may need to pay above the carbon price in order to make the sale of CO2 for utilization more attractive than its permanent storage.

Utilization of CO2has been proposed as a possible alternative or complement to geologic storage of CO2 that could enhance an economic value for captured CO2. Many uses of CO2 are known, although most of them remain at a small scale. Between 80 Mt and 120 Mt of CO2 are sold commercially each year for a wide variety of applications (Global CCS Institute, 2011; IPCC, 2005). These include use as chemical solvents, for decaffeination of coffee, carbonation of soft drinks and manufacture of fertilizer. Some of these applications, such as refrigerants and solvents, demand small quantities of much less than 1 MtCO2 per year (MtCO2/yr) while the beverage industry utilizes 8 Mt/yr. The largest single use is for enhanced oil recovery (EOR) which consumes upwards of 60 MtCO2/yr, mostly from natural sources (Box 5). Other emerging uses, such as plastics production or enhanced algae cultivation for chemicals and fuels, are still small scale or require years of development ahead before they reach technical maturity.

The main challenge is scale. Given today’s uses for CO2, the future potential of CO2 demand is immaterial when compared to the total potential of CO2 supply from large point sources (Global CCS Institute, 2011). Mineral carbonation and CO2 concrete curing have the potential to provide long-term storage in building materials. However, the mass of calcium carbonate that would result if the captured CO2 in the 2DS were used for carbonation would equate to nearly double the total projected world demand for cement between today and 2050.

Another challenge is what happens to the CO2 when it is used. In most existing commercial uses the CO2 is not permanently isolated from the atmosphere and does not assist climate change mitigation. Carbon used in urea fertilizers returns to the atmosphere during a plant’s lifecycle and fuels manufactured from CO2 release the carbon when combusted.

Status of capture, transport, storage and integrated projects today: CCS is ready for scale-up CCS involves the implementation of the following processes in an integrated manner: separation of CO2 from mixtures of gases e.g. the flue gases from a power station or a stream of CO2-rich natural gas) and compression of this CO2 to a liquid-like state; transport of the CO2 to a suitable storage site; and injection of the CO2 into a geologic formation where it is retained by a natural (or engineered) trapping mechanism and monitored as necessary

Capture technologies: well understood but expensive. The way in which CO2 can be captured depends fundamentally on the way that CO2 is produced at an industrial facility. In power generation and some other industrial processes (e.g. cement manufacture and fluid catalytic cracking in refining), CO2 is the product of combustion and is present in the mixture of flue gases leaving the plant. The separation of this CO2 requires modification of the traditional processes, often by adding an extra process step. In some other industrial processes, CO2separation is an integral part of the process. In both cases, additional steps will almost always need to be taken to remove some unwanted components from the separated CO2 (e.g. water) and to compress it for transport — all of which are commercially practiced today.

Beyond these general but very useful assessments, the current level of efforts around the world to identify specific storage sites will be insufficient for the rapid deployment of CCS (IEAGHG, 2011a). Exploring for suitable CO2 storage resources is an activity with an associated risk that a site will be found to be unsuitable (i.e. the risk of “drilling dry wells” in oil industry jargon). Today, the rewards for finding suitable pore space to store CO2 are small. There are no incentives for industry to carry out comprehensive and costly exploration works, and governments have generally not been proactive in commissioning such investigations. Yet the availability of specific storage sites that can accept CO2 injection at rates comparable to those of capture from large emission sources could limit CCS deployment.

Suitable geologic formation for CO2 storage must have sufficient capacity and injectivity to allow the desired quantity of CO2 to be injected at acceptable rates through a reasonable number of wells. It must also be able to prevent this CO2 (and any brine originally present in the formation) from reaching the atmosphere, sources of potable groundwater, or other sensitive regions in the subsurface (Bachu, 2008). In addition, the potential for interaction with other uses of the subsurface must be considered, such as other CO2 storage sites, oil and gas operations, or geothermal heat mining. One of the major technical challenges for CO2 storage is to ensure that geological formations can accept the injection of CO2 at a rate comparable to that of oil and gas extraction from the subsurface today.

Availability and characteristics of storage will have a strong influence on the cost and spatial patterns of deployment of capture and transport infrastructure (Middleton et al., 2012). It is expected that storage will be the part of the CCS value chain that will determine the pace of CCS deployment in some regions. Experience indicates that it typically takes five to ten years from the initial site identification to qualify a new saline formation for CO2 storage, and in some cases even longer. For projects using depleted oil and gas reservoirs or storing through EOR, this lead time may become shorter, but the storage capacities are usually more limited (CSLF, 2013). While the cost of storage is considered to be much lower than the capture cost, lessons from existing projects show that many years and often several hundred million dollars of at-risk funds must be made available for the development of a storage site (Chevron, 2012).

Assembling the parts still presents significant challenges. While many of the component technologies work at scale and are ready for deployment, there is limited experience in integrating the components into full-chain projects, as shown above. While technical challenges obviously remain in integrating the parts of the chain, the major impediment is the lack of policy and economic drivers. Lack of public support and poor understanding of the technology exacerbate the situation.

CO2 storage and EOR. Injection of CO2 to improve recovery of oil has been practiced commercially since the early 1970s in the United States. In 2010, there were nearly 140 projects under development or in operation globally. The majority of the projects operate in the United States, where they produce nearly 280,000 barrels of oil per day (Moritis, 2010). Projects in the Unites States inject over 60 MtCO2/yr, the majority of which should remain stored at the end of the project life. However, most of these projects use CO2 from natural geologic accumulations, and of those using anthropogenic CO2, few engage in sufficient monitoring, measurement and verification (MMV) to qualify as CCS.

Historically, CO2 is the largest expense associated with EOR projects, so most projects in operation today are designed to minimize the amount of CO2 used to recover a barrel of oil and, hence, the amount stored. While some CO2 storage projects can afford to purchase anthropogenic CO2, particularly from high purity sources (IEA/UNIDO, 2011), there are numerous commercial challenges and open questions surrounding storage in CO2-EOR projects (Dooley et al., 2010; MIT, 2010; IEA and OPEC, 2012). For example, as noted above, conventional CO2-EOR projects do not undertake MMV activities sufficient to assess whether storage is likely to be permanent; they also do not select and operate sites with the intent of permanent CO2 storage. Furthermore, because CO2-EOR consumes additional energy in the recycling of produced CO2 and results in production of additional oil that, when combusted, generates additional CO2 emissions, a CCS project involving CO2 -EOR (known as CCS-EOR) will deliver a smaller net emissions reduction than a comparable project storing CO2 in a saline aquifer (Jaramillo et al., 2009).

The lack of CO2 emissions constraints and financial incentives that could make CCS a competitive emissions reduction option is not the only barrier to private sector investment. As the previous chapter noted, the technical risks associated with installing or scaling up CO2 capture in some applications must be adeptly managed.

There are also significant commercial risks introduced by the storage component of the system, as not all storage reservoirs examined will be found to be suitable for storage. Some may be found to be unsuitable only after considerable sums have been spent on characterization, and some may perform more poorly than anticipated during operations (the case in the Snøhvit project in Norway). Furthermore, the involvement of many different parties in constructing and operating each part of the CCS chain will require that all these risks be managed through complex commercial arrangements.

Public attitudes towards CCS also play an important role. Some projects that envisaged onshore storage have faced prohibitive public opposition. Current research also indicates a varying degree of understanding and acceptance of CCS by the public in different countries and low awareness in general everywhere.

Identifying suitable storage capacity that can safely accept CO2 at desired injection rates and retain this injected CO2 is perhaps the largest challenge associated with CCS. This challenge is also exacerbated by the large amount of CO2 to be stored unless solutions are found to significantly reduce the amount of fossil fuels used globally in power generation and industrial processes.

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Climate-water impacts on electricity sector capacity expansion NREL 2014

NREL. 2014. Modeling climate-water impacts on electricity sector capacity expansion. To be presented at the ASME 2014 Power Conference Baltimore, Maryland July 28–31, 2014. National Renewable Energy Laboratory. 12 pages.

Excerpts follow:

ABSTRACT Climate change has the potential to exacerbate water availability concerns for thermal power plant cooling, which is responsible for 41% of U.S. water withdrawals. This analysis describes an initial link between climate, water, and electricity systems using the National Renewable Energy Laboratory (NREL) Regional Energy Deployment System (ReEDS) electricity system capacity expansion model.

Average surface water projections from Coupled Model Intercomparison Project 3 (CMIP3) data are applied to surface water rights available to new generating capacity in ReEDS, and electric sector growth is compared with and without climate-influenced water rights.

Climate impacts are notable in southwestern states, which experience reduced water rights purchases and a greater share of rights acquired from wastewater and other higher-cost water resources.

Thermal power plants require water for operations. Water use includes both “withdrawal” and “consumption,” where withdrawal is the amount of water removed from the water source for use (but then returned to the source, often at a higher temperature), whereas consumption is the amount of water that is evaporated, transpired, incorporated into products, or otherwise removed from the immediate water environment [1]. Water withdrawals for thermal power plant cooling account for 41% of total U.S. water withdrawals, making electric sector withdrawals the largest of any sector [1]. The electric sector consumes a smaller portion (~3%), but this consumption can have important regional implications in areas of water stress [2]. Thermal power plants account for 80% of U.S. electricity, meaning any short- or long-term disturbance in water resources can impact the reliability of electricity supply

[3]. Already, this vulnerability has caused power plant shutdowns or output reductions on several occasions, primarily during heat waves and drought [4–6].

Climate change has the potential to exacerbate power plant water availability problems by altering spatial and temporal distributions of freshwater resources and their thermodynamic properties, most importantly temperature [7]. Temperature is especially important because higher cooling water inlet temperature leads to less efficient cooling and potentially higher outlet temperatures, which are limited by Environmental Protection Agency (EPA) regulation.

Less water available for thermal cooling could produce operational difficulties or instigate legal disputes over water rights. The expectation of lower water availability could impact decisions on what types of power plants to install, where to install new capacity, and regulatory decisions on water rights availability to proposed power plants. Thermal power plant lifetimes vary greatly, but they are generally expected to be 30–60 years; new power plant construction decisions can therefore have lasting impacts

All major generating technologies are represented in the model, including nuclear, coal, natural gas combined cycle (GasCC), natural gas combustion turbine (GasCT), hydro, wind, solar, geothermal, biopower, and storage. Technology types are differentiated by costs and operating characteristics, and renewable resources have region-specific quantities and costs that comprise regional supply curves. Variable renewable resources such as wind and solar are further described by statistically calculated capacity value at peak for supplying planning reserves, induced operating reserve requirements, and curtailments. Existing fossil and nuclear capacity is retired based on proposed and lifetime-based retirements from Ventyx, and renewable technologies with lifetimes within the study period are assumed to be automatically rebuilt when their expected project lifespans are reached [16].

Thermal power generating technologies (nuclear, coal, GasCC, CSP-concentrating solar power) are distinguished by the following cooling technology types: once-through, cooling pond, recirculating tower, and dry (air cooling). Geothermal technologies are currently assumed to use dry cooling, but later model versions will allow alternative cooling technologies. Each power-cooling technology combination has a specific capital and operating cost, water withdrawal and consumption rate, and heat rate.

Water withdrawal rates determine the quantity of water rights that must be purchased when new capacity is installed. Water rights must be purchased in the balancing area where capacity is built, and each balancing area has a water rights supply curve with quantity and cost of the following water rights types: unappropriated fresh surface water, appropriated fresh surface water, shallow groundwater, wastewater, and brackish groundwater.

Existing data have not yet been transformed to physical water availability data necessary to inform such a constraint, and doing so is the subject of ongoing work.

Technology 2010 capital cost ($/kW)
Coal 2,940
GasCC 970
GasCT 830
Nuclear 4,800
Solar photovoltaic 4,210
Onshore wind 1,770

Table 1: Capital cost projections for select technologies in $/kW for the initial ReEDS solve year, 20102.

Water withdrawal and consumption rates for select technologies are shown in Table 4. Once-through systems withdraw 1 to 2 orders of magnitude more water than recirculating cooling, though recirculating cooling consumes substantially more water through evaporation. Water withdrawal and consumption rates for dry cooling are negligible. Generally, systems that withdraw less water are more costly and less efficient.

Power technology Nuclear Coal GasCC Water withdrawal/costs. Figure 1 provides a sense of national water rights availability and cost. Available rights are primarily unappropriated surface water in regions outside the southwest, groundwater in the eastern half of the country, and groundwater between the Pacific Northwest and Rocky Mountains. Wastewater and brackish groundwater resources are substantially more expensive but are well distributed across the country. Appropriated water is defined only for the western half of the country and has intermediate costs and relatively low availability in western states except California, where there is no available appropriated water. One model limitation is the omission of saltwater resources for coastal regions; the SNL work does not include salt water resources, and no other salt water resource assessment exists, so water rights estimates for coastal regions are likely lower than actual.

Only in regions lacking unappropriated water, where climate effects are imposed on appropriated and retired surface water rights, would the modifications to water rights be expected to alter electric sector development.

States where the modeled impacts on water rights are important include California, Nevada, Arizona, and New Mexico, which have no unappropriated water, and Texas, where unappropriated water is limited or unavailable in the southern and western portions of the state. Figure 4 plots cumulative rights purchased over time in these states, subsequently referred to as the southwest, for the baseline scenario along with the 2050 total for all scenarios. Unappropriated rights make up a notable fraction of the total, but these are all in Texas. Groundwater resources are an important source of electric sector water in the southwest, representing nearly a quarter of all new water rights, split primarily between Texas, New Mexico, and Nevada. Retired rights are most often used for new capacity, but 97% of retired rights are purchased in Texas and California. Outside of Texas and California, groundwater dominates, with lesser contributions from retired rights and wastewater..

In a given balancing region, GasCC capacity in 2050 differs across scenarios by less than 1 GW, which is generally small compared to total generating capacity in a region. Though expected water availability falls in climate change scenarios, there remains sufficient water rights at low enough cost such that even water-stressed regions experience little change in capacity expansion. New GasCC capacity might resort to wastewater under modeled climate change scenarios, but the costs of these alternative water resources are still very small compared to total capital costs; hence, they are not large enough to drive major changes in capacity expansion decisions.

Assumptions made to simplify this preliminary analysis tend to underestimate changes in water availability, particularly in the western states.

References

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[13] Tidwell, V. C., Kobos, P. H., Malczynski, L. A., Klise, G., and Castillo, C. R., 2012, “Exploring the water-thermoelectric power nexus,” J. of Water Planning and Management. 138(5), pp. 491–501.

[14] Macknick, J., Cohen, S. M., Woldeyesus, T., Martinez, A., and Newmark, R., “Water constraints in an electric sector capacity expansion model,” In preparation.

[15] Short, W., Sullivan, P., Mai, T., Mowers, M., Uriarte, C., Blair, N., Heimiller, D., and Martinez, A., 2011, “Regional energy deployment system (ReEDS),” NREL/TP-6A20-46534. National Renewable Energy Laboratory, Golden, CO.

[16] Ventyx Energy Velocity Suite, 2013.

[17] Tidwell, V. C., Zemlick, K., and Klise, G., 2013, “Nationwide Water Availability Data for Energy-Water Modeling,” SAND2013-9968, Sandia National Laboratories, Albuquerque, NM.

 

 

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