Synthetic Fuels Puzzle

There is an interesting question regarding the contribution that so-called “synthetic fuels” (i.e. those made from raw materials other than crude oil) could make to our motor fuels supply. Technology for several of these fuels has been commercialized, with substantial contributions from chemical engineers. However, the cost of making these and the capital cost for their production facilities is relatively high. So, they only make sense if crude oil price stays permanently high or if governments are willing to subsidize their production in the national interest.

Almost all automobiles, trucks, ships and some railroads run on liquid fuels derived from crude oil. There has long been a concern that, at some point in time, global crude oil supply and production will not meet demand, as “peak” oil production is reached. Meanwhile, prices have been on a steady rising trend, reflecting rapidly rising demand for motor fuels in China, India and elsewhere. When demand exceeds supply on a long-term basis, crude prices will rise rapidly. So, can we produce these fuels economically from other sources that are relatively much cheaper and broadly available in many parts of the world, specifically, coal or natural gas?  This is an area of considerable interest, but  also one with big questions, including believable supply-demand projections,  price forecasts, technology and the willingness to invest very large amounts of  capital, as required for plants making these synthetic fuels.

Germany  during World War II developed technology to make gasoline for its war machine from coal as a raw material, using so-called Fischer Tropsch technology, but
economics were not the issue. Germany  had been cut off from crude oil and had to find a way around that. In this  process coal is gasified with oxygen to produce “synthesis gas”, which is  further treated and then passed over a catalyst where the carbon monoxide and hydrogen are converted into a range of hydrocarbon fuels and oxygenated hydrocarbon liquids. These were further processed into fuels for fighter planes and tanks.

A few decades later, SASOL in South Africa used the same technology to build large plants to make gasoline and diesel fuel from its abundant and very inexpensive coal. The process worked well, but needed a government subsidy to  compete with imported crude oil. These plants continue in operation and supply  a significant percentage of South  Africa’s liquid fuel needs. (See also below)

In the 1980s, New Zealand built a plant to make  gasoline from natural gas-derived methanol using breakthrough Mobil (now  ExxonMobil) technology based on Zeolite catalysts. As with Germany, economics was not the issue: New Zealand had natural gas but no crude oil and so the government provided a subsidy to make the “synthetic” gasoline competitive with that produced from imported crude oil. Thus, a second process of potential broader future interest was born there.

Credit: Icis ChemicalBusiness

In Canada,  synthetic crude oil has for several decades been produced from so-called ar  sands. This is a huge resource in Athabasca, Alberta. It took pioneering work
by Suncor Company to eventually achieve commercial success as it produced synthetic “crude” from the heavy bitumens mined from the earth.. The technology involves
scooping up the tar sands with huge drag lines and heating it by burning natural gas, so that the bitumen can be separated and then processed into useful fuels. Now, close to one million barrels per day are produced from this
deposit by several firms.  There are major  environmental issues with both the mining and the fuels production process,  though they are being addressed for mitigation.

Two decades ago, Shell Oil reached back to the Fischer Tropsch technology to develop its so-called GTL (gas to liquids) process, which would convert so-called “stranded” gas in remote locations to motor fuels. A huge plant using this process was built in Qatar and is now in successful operations, with “synthetic fuels” shipped to world markets. The plant is partly based on SASOL technology. It was very expensive to build, but was an
astounding achievement.

In September of this year SASOL announced its intention to build a 96,000 barrels per day gas-to-liquids  plant in Lake Charles, La., based on its South African Fischer Tropsch process. Naphtha and diesel fuel will be produced in a huge plant estimated to cost $ 10 Billion. Decision to build this plant is based on the large quantities of inexpensive natural gas now being increasingly produced from U.S. shale deposits.

Biofuels are another form of “synthetic fuels”. In the U.S, a biofuels industry is growing rapidly, with increasing amounts of ethanol made from corn. The technology is fairly straight forward, involving fermentation. The ethanol is blended into gasoline up to 10% by volume. The process needs government subsidies to be competitive. The subsidy is partly justified, because gasoline blended with ethanol burns more cleanly, thus lowering harmful emissions.

China  is now building one or more plants to make gasoline from coal, using the ExxonMobil technology. In this country, a Houston-based firm called DKRW plans
to build such a coal-based plant in Wyoming.  The company and its partners say that the process is viable at current crude  oil prices. The plant is, however, very expensive to build, so financing has  been a big issue. And this technology produces a great deal of byproduct carbon dioxide, though it is planned to recover and inject this material into oil wells for tertiary recovery of crude oil.

Meanwhile, horizontal drilling advances in known hydrocarbon formations and the continuing discovery of new crude oil fields, both onshore and offshore have made projections of  “running  out of crude oil” less sanguine. Moreover, at this writing, the price of crude  oil is falling, as the world’s economies grapple with recession fears.

Today, probably less than one percent of total global motor fuels are based on the processes described above. It is certain that this figure will rise. How soon is hard to tell.

What is certain is that chemical engineering advances have made it  possible for the world to become  less dependent on crude oil, as supplies of this resource will eventually  decline.

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