In case of oil supply disruption, coal offers abundant alternative

 

The Patriot News

Tuesday, November 06, 2007

With the price of crude oil flirting with $100 a barrel and gasoline hitting $3 at the pump, it is clear evidence of the nation's vulnerability that the only thing that can ameliorate these high prices in the short-term is for the OPEC countries to boost production. And remember that OPEC is composed of some of our not-so-dearest-and-closest friends, such as Iran, Venezuela and Saudi Arabia.

"Energy independence," the most overused and misused words in American political rhetoric, is a meaningless concept. More than 60 percent of the nearly 21 million barrels of oil this country consumes daily comes from abroad. To be sure, Canada is our top for eign supplier, but the 12 countries that compose the Organization of Petroleum Exporting Countries provide more than double the oil that Canada sends to the U.S.

The underlying cause of rising oil prices is that oil production is barely meeting demand. That is a situation that, barring a recession, is unlikely to go away. It is worth noting that Christophe de Margerie, the CEO of Total, France's largest oil company, said recently that the world's capacity to produce oil will fall well short of official forecasts. The International Energy Agency predicts the world oil supply will reach 116 million barrels a day in 2030, similar to the forecast of the U.S. Department of Energy, but de Margerie says it is optimistic to think the world will actually reach 100 million barrels of oil a day. The world currently consumes about 84 million barrels a day.

Given rising oil prices and the vulnerability of the country to events that could disrupt foreign supplies, one would think the government would be pulling out all the stops to bring to fruition one potentially significant alternative source of liquid fuels. Coal, which the United States has in abundance, is the chemical equivalent of petroleum, except it is in solid form. The technology to convert coal to a liquid fuel has been known for more than 60 years. But a planned coal-to-liquid fuel plant in Schuylkill County, first proposed 15 years ago, continues to wait upon the Bush administration to come through with a promised loan guarantee.

The good news is that a final environmental impact statement has been released by the Department of Energy. It found no serious adverse consequences from the facility, which would produce 5,000 barrels a day of ultra-clean diesel fuel and 41 megawatts of electricity that would be put into the grid, utilizing waste anthracite coal as a feedstock.

John W. Rich Jr., owner of Waste Management and Processors, Inc., that seeks to build the estimated $1 billion project, told us that release of the environmental impact study removes one impediment but he continues to have no idea when DOE might come through with the needed loan guarantee. It could take another year after that, he says, to line up manufacturers of the plant's various components, competing with as many as 30 similar projects being launched in China, which is experiencing its own liquid-fuel emergency.

Some environmentalists object to the project, claiming it will add to global warming, though Rich says he thinks there is a regional market for the carbon dioxide the project would capture during the process. The fact is, however, this country cannot afford to ignore alternative sources of liquid fuels with the potential of coal. The Gilberton plant would be the first of its kind to be built in the United States. It makes eminent sense to build this and a few other similar projects to test the technology under various conditions to determine whether it can play a role in the nation's energy future in an environmentally acceptable manner.

The harsh reality that most Americans are unaware of is that this country is grossly unprepared to respond to a petroleum shortage and the steeply higher prices it would impose on consumers and the economy in general. While we should be doing everything reasonable to conserve and use petroleum more efficiently, there is no substitute for liquid fuels that will become available in the short-term. It could require a decade or two for a transition away from our almost total reliance on petroleum for transportation. We need to get started and the Schuylkill County coal-to-oil project is one of the obvious places to begin.