The Oil Drum

In recent days a series of media articles surfaced pointing to a concerning situation in China. The New Scientist reported:

At the end of a cold and stormy winter, the country has just 12 days of coal reserves at most power stations. Some provinces, including Hebei, bordering Beijing, have less than a week's coal left. This is a record low, the state electricity regulatory commission revealed on Tuesday.

I was complaining about the "Australian disease" in my post about coal to liquids last week, as it became clear just how much King Coal is coming to dominate the local economy.

Ross Gittens can see the sunny side of this though in today's Sydney Morning Herald, as he idly contemplates the de-industrialisation of the economy and the transformation of the nation into a giant quarry in "Everything's coming up roses", in which he predicts that we'll be "riding on the back of a coal truck" for the next few decades.

Global warming apparently isn't a problem in his eyes - or at least not one that people will bother to try and mitigate by burning less coal.

Energy Minister Martin Ferguson has been talking about gas to liquids (a subject covered here previously) as part of a strategy to address Australia's dependence on imported fuels. The minister has also previously expressed enthusiasm about coal to liquids projects (declaring at a recent CTL and GTL Conference "I regard this industry as the key to securing Australia's energy future"), so in this post I'll have a look at a few CTL projects currently at various stages of development around the country.

MARTIN FERGUSON: Just think about the competitive difficulties at the moment confronting Australian industry and the ordinary motorists given the price of oil. If we don't actually come to terms with investing in our future, then this is going to raise serious questions about our competitive position internationally in a tough global market in a very short period.

GREG HOY: According to the Minister, the best hope may lie in applying a new technology to Australia's vast reserves of natural gas and coal to create a new fuel for Australia's motorists and transport fleet.

GREG HOY: Crucial trials at Queensland's Linc Energy will begin before the end of the month, where a coal seem at Chinchilla, north-west of Brisbane, will be ignited underground like so, with compressed air forced through the seem to form a synthetic gas of steam and carbon, which as it exits will be converted from gas to a clear liquid diesel, with enormous production potential, the same technology we are told, can be applied to natural gas reserves.

MARTIN FERGUSON: So it's about exploration, plus encouraging investment in downstream processing in Australia on gas liquids and coal liquids and thereby creating synthetic alternative fuels.

GREG HOY: Once again, the sceptics do not share the Government's optimism that a solution to Australia's oil crisis is at hand.

JIM BUCKEE: The conversion of coal and gas, gas to liquids, for example, are quite energy expensive of themselves.

A week or so ago I wrote about the power supply debate going on in New England, with the controversy over the wind farm to be sited in the waters off Cape Cod. In that post I commented on the fact that, in response to an energy shortage that had appeared in 2004, the area had ensured additional supplies of LNG, and had converted some power stations so that, instead of relying on natural gas, they could also burn oil. The advantage of oil in this particular case is that it is somewhat more easily stored and thus is accessible when the gas lines are not available.

However I skated around the issue as to what would happen if there were neither oil nor gas available. This is not, unfortunately, a theoretical exercise. Chris Skrebowski has projected a supply shortfall by 2012. Yet already in India power plants are being idled because they cannot get enough LNG. And as for the supplies of oil, the likelihood of us being past peak by 2012 is increasingly real. So, that being the case, where can one look for alternate fuel. As articles in the New York Times and in the Washington Post have noted, for most of the rest of the world the short-term answer would appear to be from coal.

The ongoing energy supply problems that have emerged from continued growth of the economies of Southern Africa, and which I wrote about following my trip down there, may well be an early precursor to a future that many countries might come to face before too long. Signs that overall energy demands have been rising beyond the immediate capacity of local systems to provide supply can be transiently overcome by increasing imports of power. But when the supply of that power becomes threatened, or disappears due to factors that can range from the increasing domestic demand for power – which led South Africa to restrict exports – through the collapse of domestic order – the problems that Zimbabwe currently faces, or the inability to deliver available power (Mozambique has large hydro power reserves but cannot transmit the power to places such as Botswana) then suddenly the switches on the wall don’t work.

There are lots of excuses why not to make investments in new power plants based on domestically produced energy, particularly in a changing political climate, but the failure to properly prepare for the future by building anticipated capacity, or to assume the availability of foreign supply sources (such as increased volumes of LNG) that may not be around when needed may well mean that at some point in the non-too-distant future the switches on our walls may not work either.

The habit of bargaining has become so engrained that statements of shortage are quite commonly read as bargaining positions leading to a price hike, rather than that you literally can’t have any. But we are now in a time when the reality of growing shortages, and in more than just crude oil, is going to start imposing such a disconcerting awareness.

I was in Botswana the other week, and in two earlier posts I had mentioned the problems that that country suddenly encountered when the source for 75% of its electric power – Eskom of South Africa – started to use it as a load-sheddable part of its distribution chain. It has since given Botswana the amounts that it can expect over the next four years. From a supply of 410 MW in 2007; it will get 350 MW in 2008; 250 MW in 2009; and 150 MW in 2010 through 2012. While the country has in-house generation, it decided some time ago that it was less costly to import power than to increase internal supply. Now it will take some time to create that internal power, from coal, of which the country has a more than adequate supply. The expansion of the current plant, already in process, will not occur until 2010 , and was planned to only add 120 MW, less by then, than the lost imports. And current growth in demand has been at 5.6% per annum. It does not help that:

It has also emerged that at the beginning of this year, the desperate BPC signed a no guarantees contract that allows Eskom to cut power supplies to Botswana within as little as ten minutes notice.

Flying into Gaborone, the capital, from Johannesburg, after reading the articles that had lead to the earlier pieces, I had expected to see that there would be some impact on behavior. But, crossing the veldt, there were lace points of light that reached out as long as I could see the ground. Once landed the streets were lit, and gas stations were running normally (at about $1 a liter). Going into meetings the following morning, it seemed to have been, at that scale, an irritant. We continued to meet, and then the lights went out, and the air conditioner shut off.

The handwriting has been on the wall on this issue for a couple of years. In fact, I first mentioned it in March 2006 in Improving the Prospects for Grain Ethanol. Here is an excerpt of what I wrote:

This is an option that most environmentalists will abhor. However, it is the one most likely to take place in the short-term. The natural gas input into ethanol production is a serious long-term threat to economic viability. Since natural gas is a fossil fuel, and supplies are diminishing, it will put upward pressure on the price of ethanol over time. However, if the energy inputs could be produced from coal, ethanol prices would be insulated from escalating natural gas prices.

Using coal might also lessen the significance of the EROEI debate. If you take 1 BTU of (cheap) coal, and you get back 0.8 BTUs of (more valuable, liquid) ethanol, then EROEI doesn't have the same significance as when you use natural gas to produce ethanol. You converted the BTUs into a readily usable liquid form. This argument may be valid from an economic point of view, but it ignores the fact that coal is still an inherently dirty energy source. If coal remains abundant and cheap, coal economics will beat natural gas economics, but coal will increase the rate at which we put carbon dioxide into the atmosphere. If we come up with a viable method of sequestering the carbon dioxide produced at the power plant, then we might have a temporary economic solution (although we are still using up a non-sustainable fuel in the process).

PG here; this is a post from HO's Tech Talk series. This one was originally posted 5 FEB 2006. We encourage you, if you're interested, to look back at the entire extensive series under the tech talk tab up top under the banner.

Often when we talk about different fuels, the fuel itself is considered to be something that can easily be defined. However this is really not always the case, and today I would like to talk a little about types of coal, its content and the product size, and why this can make it a bit difficult to assess EROEI.

For those who wonder what is going on, this is a weekend tech talk, where some underlying aspect of fossil fuel energy is discussed. References to earlier posts are given at the end of this one, and the subjects are usually simplified to get across the basic ideas, within a reasonable amount of space.

Back when my grandfather was mining coal, with a pick and a shovel, he would very carefully separate rock from the coal as he picked lumps out from the solid. The reason for this relates to how he was paid. Before he began to fill a tub with coal, he would place a holder and a token with his mark on it at the bottom of the tub. Thus when it got to the surface, the teller would check that the tub only contained coal, and then would give him credit for the tub. But if the tub contained much stone, from the roof, or from layers of rock within the coal, then the tub would not be counted and my grandfather got no credit for it.

As I mentioned in my last post, this is the time for Seasonal travel, and so, for the first time it finds us, transiently, in Western Massachusetts. Picking up the local paper The Sunday Republican I discovered tht they are in the midst of a series on Energy in the 21st Century. The series began with an article on solar power , which was followed by one on nuclear power and then by one on the use of coal. The latest, which first caught my attention, is on power from water. There will be two more in the series, one next week on biofuels, and then one the following week on wind.