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Fuel Diversification: Coal-to-Liquids
September 15, 2006

Today, the world is at a crossroads. Explorers and geologists are struggling to find the new oil and natural gas resources needed to sustain the energy demands of modern society. Dwindling supplies and the ever increasing demand from almost every country in the world have put these fossil fuels in short supply. The consequences of this shortfall are apparent in day-to-day life. Blackouts, power surges, and a 300% increase in oil prices since 2001. We've essentially painted ourselves into a corner as modern civilization has become almost fully dependant on oil and natural gas. These fossilized fuels are the lubricant that greases the wheels of progress. And the catch-22 of it all...the never-ending use of these fossil fuels may doom us all.

Something must be done.

Kicking the Foreign Oil Dependency Habit
There are several different technologies currently being developed with the goal of breaking our oil addiction. One such technology is a process of turning solid coal into synthetic, liquid fuels.

Did I say coal?

It used to be the energy industryís four-letter word. But today, thanks to modern technology, thatís all changing. Coal-to-Liquid (CTL) technology is able to convert the black rocky fuel into valuable, high-quality synthetic fuels. These fuels include clean, sulfur-free synthetic diesel and jet fuel. The most common way to convert coal into liquid fuels is the Fischer-Tropsch process, named after two German scientists who developed the technique back in 1925. To create the synthetic fuel, coal is mixed with oxygen and steam at high temperature. Pressure is then added to produce carbon monoxide and hydrogen. The second step, called Fischer-Tropsch synthesis, uses a catalyst to transform the gas into a synthetic liquid, which is further refined into diesel or jet fuel. Along the way, mercury, sulfur, ammonia and other compounds are extracted and can be sold on the commodities market. Now, the diesel thatís produced using the Fischer-Tropsch process is a lot different than what you'd buy at a gas station today -- it's much better.

But wait a minute -- isn't coal filthy? Sure, if you're burning it and let the emissions fly into the atmosphere. But the Fischer-Tropsch process is different. The process actually traps the emissions and recycles them for use in other applications. Also, the Federal Clean Air Act, first passed as federal law passed in 1970, and last amended in 1990, is being taken more seriously than ever. The basic elements of the act include national ambient air quality standards for major air pollutants, hazardous air pollutants standards, state attainment plans, motor vehicle emissions standards, stationary source emissions standards and permits, acid rain control measures, stratospheric ozone protection, and enforcement provisions. Fuels produced from the Fischer-Tropsch process are very clean burning and substantially reduce emissions when compared to other fuels. They contain no sulfur, aromatic compounds or metals, and have a high octane number in comparison to standard diesel.

A Superior Product to Enhance Our Nationís Security

You see, the shelf life on normal diesel fuel is only about three to four months. But using the Fischer-Tropsch process, companies can produce a synthetic diesel with a shelf life of up to eight years! This will make these synthetic fuels the number one choice for military use and strategic reserves.

This would also enable the military to finally scrap the half dozen other different fuels they're currently using with a single battlefield fuel without having to switch engines or other parts as it works "as is" in any diesel engine in use today. And that has the government eager to get this technology rolling.

When the F-16 was developed in the early 70s, it was regarded as a superb dogfighter and marveled for its ability to execute turns at a stomach clinching G-force 9. But incredible feats like this don't come cheap. Get this -- when the F-16 fires up its afterburners, the fighter jet burns 28 gallons of jet fuel per minute! And you thought your Navigator was hard on gas.

With gas chugging rates like this, it's no wonder that the Air Force uses more than half (nearly 53%) of all the fuel consumed by the United States government each year. According to statistics released by the Pentagon, the Air Force consumed 3.2 billion gallons of aviation fuel in fiscal year 2005 and this fuel didnít come cheap. The total Air Force bill for jet fuel last year topped $4.7 billion! And that's with last year's average oil price of $56.49 a barrel. Nowadays oil is much more expensive. The Energy Information Administration expects oil to average below $68 this year. However, with the way things are looking we can most likely expect oil prices to average well above $70 a barrel for the year. Unfortunately for taxpayers like you and me, every increase of $10 per barrel of oil drives up Air Force fuel costs by $600 million per year!

Well, as it turns out that the Air Force is currently testing a technology similar to Coal-to-Liquids -- Gas-to-Liquids (GTL). This technology also uses the Fischer-Tropsch process to produce synthetic liquids but uses natural gas instead of coal. In a series of tests the Air Force will try to prove that the American military can fly its aircraft by blending traditional crude-oil-based jet fuel with a synthetic liquid made from natural gas. The Air Force says that by late this summer, a B-52 is scheduled to take off in an experiment in which two of the monster bomber's engines will burn jet fuel produced from natural gas. If the synthetic blend works, Air Force officials say they will to increase Gas-to-Liquid fuel use up to 100 million gallons in the next two years.

If these trials prove valuable, synthetic fuels could ultimately replace all conventional oil-based fuels for the entire military which means big business for the sector. While only small portion of total US demand for oil, the US Department of Defense (DoD) is the largest oil consuming government body in the US and in the world

While natural gas-based synthetic fuels seem great, coal-based synthetic fuels have huge advantages over natural gas-based fuels.

Cost Effective and Abundant
As it stands today producers can generate 42 gallons (one barrel) of synthetic fuel from 10,000 cubic feet of natural gas. But here's the catch: The total cost to make one barrel of synthetic fuel using natural gas is over $60 a barrel with most of the cost coming directly from the cost of natural gas. And as we know, today's natural gas prices are only temporary and set to increase. So synthetic liquids made from natural gas will be far be economic with $10 or $15 natural gas.

To produce the same 42 gallons of synthetic fuel from coal, the cost would be close to $10. Thatís a huge economic differentiation.

More importantly, the United States is essentially the Saudi Arabia of coal. The most recent estimates show that the United States contains roughly 267 billion tons of in-place coal reserves. That's nearly 30% of the entire world's recoverable coal! That means there's no need to import this key resource. We already have a massive deposits right in our backyard.

Also, oil prices are subject to geopolitical turmoil like the war in Iraq, the current issues with Venezuela, Chinaís growing energy demands and the nuclear standoff between western nations and Iran to name a few. Coal is locally available, cost effective and with the proper investments and focus can help us reduce our dependence on others for our energy needs.

Coal-to-Liquids technology isn't a magic answer to our energy crisis. It will, however, delay an impending energy catastrophe and should be considered a key transitional element of an overall strategy for our nationís energy independence.

Luke Burgess is the managing editor and publisher of GoldWorld.Com. He also writes a weekly column for EnergyAndCapital.Com, and WealthDaily.Net. Furthermore, Luke co-edits The Pure Energy Report and Secret Stock Files with Michael Schaefer and is the co-author of the upcoming book The Devil Weeps: The End of Cheap Oil.

Read/Post Comments (4)













Comments (4)

Doug Korthof from CA
9/15/2006 11:26:27 PM

The vegetation-shale oil-coal-oil-natural gas cycle, it turns out, takes millions of years. After being converted to natural gas, generally at very deep regions, the carbon dissipates into rock. As the rock resurfaces via tectonic movement and volcanic activity, the cycle may take billions of years.

Our extraction of oil, at the intermediate stage, it basically taking hundreds of millions of years of carbon "fixed" by photosynthesis and releasing that as CO2, in a period of just a few hundred years.

Adding coal or shale oil to that release of carbon just makes it more anomalous, and is no solution to the problem of getting back to the natural cycle.

As it is, we need hundreds of years of energy equivalent to the theoretical maximum that falls on earth by solar power to re-fix the CO2 and take it out of the atmosphere.

Yes, it is possible to burn gasoline, release the CO2, and then use massive solar grids to generate the energy for carbon "fixation", converting CO2 back into CxHx compounds, and then burning it again.

Just continuing to burn more coal, oil and natural gas, without fixing the CO2, will just make things even more out of balance.

Bill from IL
9/18/2006 3:29:11 PM

Sounds like a interest idea, at least as a partial fix. I'd rather however that more is put into renewable resources. Coal is more of a short term concept, a balanced and longer term idea needs to be pushed.

Bill Wolski from IL
9/22/2006 8:29:54 AM

Through our website usaenergyindependence.com we push all energy sources in a non partisan way. Fuel through coal liquefaction has been an excellent alternative source for many years. We applaud the military's recent efforts toward jet fuel from coal. It's about time we looked at all energy sources to make the U.S. truly energy independent.

Nick from MN
3/13/2007 9:46:39 AM

If we can support our own oil needs without importing it, why dont we stop importing it than?

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