Anthony Warren and Mahmoud El-Halwagi

"Summary
 
The United States’ future economic security will remain linked to an efficient transportation system of air, rail, and highway vehicles that depend on a continuous supply of affordable liquid fuels with characteristics enabling vehicle manufacturers to meet increasingly stringent environmental regulations.  In the current supply/demand situation, the Nation’s transportation fuel requirements are met in part by crude oil and refined products from unstable regions of the world.  Crude oil delivery and refining in the Untied States is concentrated in the Gulf Coast region, which presents concerns regarding destructive weather conditions.  Additional challenges, including urban and regional air pollution, greenhouse gas emissions, and the availability and cost of transportation fuels, present unique issues that must be addressed to safeguard economic growth, social stability and public health.
 
Technology is now in hand for producing synthetic oil, and oil products from coal.  Liquid fuels from coal are clean, refined products requiring little if any additional refinery processing, are fungible with petroleum products and, therefore, can use the existing fuels distribution and end-use infrastructure.  There are preliminary analyses [Mitretek Technical Report 2005-08, “A Technoeconomic Analysis of a Wyoming Located Coal-To-Liquids Plan”] that indicate synthetic oil costs may drop into the $35 per barrel range after several initial higher cost plants are built.  This estimate assumes near-zero atmospheric emissions of criteria pollutants, assumes reduced water use through air coolers instead of water cooling, and assumes carbon capture and sequestration.  However, no commercial U.S. plants have been built.  The primary barrier to commercial introduction of the technology has been the volatility and uncertainty of world oil prices.  The private sector financial markets are best positioned to evaluate whether, when, and how to build coal to liquids plants given this market uncertainty.

At present, no requirements exist in the United States to manage carbon emissions from fossil fuel sources.  However, in full recognition of the importance of carbon management an extensive research and development program is underway to develop technology, processes and systems to capture and store the carbon dioxide produced during the conversion process.  The carbon dioxide could be stored in deep saline formations or sold for use in enhanced oil recovery operations.  It is possible that CTL plant emissions and the emissions from utilization of CTL products would be comparable to those associated with the production and consumption of petroleum-based fuels.

The greatest market barrier for CTL is the volatility and uncertainty of future world oil prices. The private sector is best positioned to evaluate market or oil price risk and respond accordingly with an appropriate deployment strategy.
 
Although past department efforts and some Congressionally directed funding has focused on production of liquid fuels from coal, the FY 2007 Budget does not support these activities.  Coal to liquids is a mature technology receiving funding from the private sector for evolutionary advances and incremental improvements and therefore not consistent with the Administration’s Research and Development Investment Criteria.  Although the FY 2007 Budget does not directly support CTL technology, there are some overlapping activities directed at electricity and hydrogen generation that the private sector could apply to reducing production costs and technical risks, and improving environmental performance of coal to liquids plants.  The FY 2007 Budget supports production of hydrogen from coal and some funding will be used for development of liquids that while not applicable for conventional internal combustion engines because their hydrogen content is too high, could be an efficient way to move fuel for hydrogen applications through existing infrastructure.  The FY 2007 Budget promotes the goal of reducing dependence on foreign sources of oil through development of technologies consistent with the Research and Development Investment Criteria, such as cellulosic ethanol, battery technology, and hydrogen, among others.  Over the mid to long term, these technologies could reduce demand for conventional sources of petroleum and ease pressures on world oil prices.
 
The resource exists, current technology is available and it is possible that continued evolutionary R&D will produce advanced processes that will continue to modify the private sector’s analysis of whether the economic and environmental performance of the processes used in the implementation of a coal-to-liquids industry for the production of alternate fuels justify plant construction, in tandem with the primary consideration of petroleum market risk.
 
If economic, these fuels could contribute to reducing our dependence on oil imports and significantly contribute to the Nation’s energy security."

First: "Although past department efforts and some Congressionally directed funding has focused on production of liquid fuels from coal, the FY 2007 Budget does not support these activities."

Why? When and how will that gross inadequacy be corrected?

Second: "At present, no requirements exist in the United States to manage carbon emissions from fossil fuel sources.  However, in full recognition of the importance of carbon management an extensive research and development program is underway to develop technology, processes and systems to capture and store the carbon dioxide produced during the conversion process."

They are still genuflecting to carbon "storage" - in obeisant service to Big Oil's scavenging efforts. Why - when the Department of Defense has patented technologies to capture Carbon Dioxide and recycle it into liquid fuels; and, when NASA is using Nobel Prize-winning technology to recycle it aboard the International Space Station - all as we have thoroughly documented; and, all in addition to the carbon-recycling potentials, also thoroughly documented, of liquefying botanical cellulose as a co-fed raw material, with coal, in an appropriate liquefaction process - of which, there are several?

Third: "The greatest market barrier for CTL is the volatility and uncertainty of future world oil prices."

Where, in the world, is there "uncertainty of future world oil prices"? Everyone, in the world, is pretty darned certain they will continue to do what they have always done: GO UP.

Finally, we already know that coal-derived liquid fuels are "economic" - the author's word. South Africa has demonstrated that fact for many decades. China is convinced. So, why don't we cut the BS and just let our coal people put our coal to work, and thereby reduce our "dependence on oil imports and significantly contribute to the Nation’s energy security"?

Does it just make too much sense? Is it too obvious? Or, as other evidence we've cited indicates, have some pretty slick Big Operators managed somehow to hide the facts from those of us who most deserve to know?