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A synfuels era for the United States?
Eject el' ('oplver~.
tlt,,mt Vol. 23. No. l, pp. 1 9, 1982
0196-8904,83 010001-09S03,00 (~
Printed in Great Btitain. All rights reserved
(opyright i
1983 Pergamon Pre~ LAd
A S Y N F U E L S ERA FOR THE U N I T E D STATES? R O B E R T S. G O O D R I C H Department of Organization/Operations Research, CTA-ITA-IEMB, 12,200 S~o Jos6 dos Campos, S.P. Brazil
(Received 17 September 1982) Abstract--This article surveys the liquid fuels picture for the year 2000 and concludes that transportation fuels will represent the critical domestic energy resource for the future. The United States must develop a synthetic fuels industry if it is to meet its transportation fuel needs while seeking to reduce its dependence on foreign crude oil. Synthetic fuels from coal and oil shale (methanol, gasoline, and diesel fuel) and methanol from biomass are depicted as the emerging options of the future. Within these options, methanol-from-coal is highlighted as providing the most technically versatile, economically viable, and environmentally sound choice. Based largely on transportation needs, the article presents a methanol market demand forecast calling for the consumption of 25 billion gal/y by the year 2000--enough to supply a fleet of 25 million methanol cars and provide for considerable methanol usage in the industrial, utility, and chemical sectors. Thus, about one out of every six cars in the automobile fleet would be operating on methanol if this forecast holds true. A survey of the cost estimates for producing alternative transportation fuels in the future shows that methanol-from-coat could prove to be the least expensive motor fuel: roughly two-thirds of the price of gasoline from crude oil and one-half the price of methanol from biomass. The article also poses some of the challenges facing the synfuels industry if it is going to overcome the entry barriers facing the establishment of a new fuel in the liquid fuels market place. Liquid fuels supply ctemand scenarios fleet forecast Methanol car forecast
Synthetic fuels l'rom coal, oil shale, biomass
INTRODUCTION
Automobile
• Even though the total U.S. demand for petroleum may well decline in the future, there is near unanimous agreement amongst energy forecasters that the demand for liquid transportation fuels will increase significantly from its current low point. • Even the more optimistic energy supply/demand scenarios (meaning high supply and low demand) indicate that transportation fuel demand alone could more than account for the domestic U.S. petroleum production expected in future.
Soaring energy costs and fear of gasoline shortages are far removed from the public's mind these days. Gasoline prices dropped dramatically early this year and, although now headed up again, have given us a year's grace from their steady upward creep. World crude oil prices have stabilized, and most economists see only inflationary increases in crude oil acquisition costs for the next several years. In fact, the United States is now importing fully one-third less foreign oil than it was just a few years ago. Energy companies are predicting that U.S. oil demand will continue to slowly decline for the next five to ten years as Americans trim their energy consumption, and industry switches from petroleum to coal and natural gas fuels. As a result, the federal government and energy companies are currently withdrawing support for the fledgling synthetic fuels industry established only a few years ago. Why then, when all appears well on the energy front, should there be concern about the need for alternative fuels in the future? Basically, for the following reasons:
Thus, if U.S. industry is going to continue to use petroleum liquids as chemical feedstocks and nontransportation fuels, the United States will likely be faced with importing ever-increasing quantities of foreign crude oil or developing an alternative liquid fuels supply based on coal, biomass, and other nonpetroleum sources. This article will examine the need for liquid fuels in the future and propose that, for the United States, the emerging alternative liquid fuels option appears to be a synthetic fuels (synfuels) industry based on coal and oil shale. More specifically, methanol from coal is forecasted to support a sizable alcoholpowered car fleet by the turn of the century, as well as supplying fuel for industrial/utility market and feedstock for the chemical market.
• The United States is in a recession with its industrial economy operating at about 70~o of capacity. Much of our apparent energy conservation is due to this fact alone. Climbing out of this recession will substantially increase our energy consumption and put new pressure on energy prices.
THE LIQUID FUELS PICTURE Liquid fuels used by the transportation, industrial commercial, and residential sectors constitute a large 1
2
GOODRICH:
A SYNFUELS ERA FOR THE UNITED STATES?
Table 1. The liquid fuels picture: past consumption and future projections (units: mmboe/d = millions of barrels of oil equivalent per day)
A.
Liquidfuels demand Transportation sector Industrial, commercial, etc. Total demand
B.
Liquid fuels supply Domestic petroleum~a) production Synthetic/biomass fuels • Coal liquids • Shale liquids • Biomass liquids Total syn./bio, supply
C.
Year 2000 scenarios Med. I [2] Med. II [3] High [4]
1976
1980
Low [1]
9.2 8.3
8.5 8.2
8.2 4.5
9.0 5.5
9.4 7.1
12.0 9.8
17.5
16.7
12.7
14.5
16.5
21.8
9.7
10.2
9.8
8.7
7.1
7.0
0 0 0
0 0 0
1.2 1.2 0.5
1.1 0.4 0.5
0.9 2.0 0.5
0.7 2.0 0.3
0
0
2.9
2.0
3.4
3.0
Total domestic supply
9.7
10.2
12.7
10.7
10.5
10.0
Petroleumimports necessary
7.8
6.5
0.0
3.8
6.0
11.8
taqncludes natural gas liquids. Sources: Historical data from Refs [4] and [5]; year 2000 scenarios adapted by author from projections appearing in Refs [1], [2], [3] and [4] as indicated by superscript.
fraction of the total U.S. energy consumption. In 1980, for instance, 45~ of all energy consumed was in the form of liquid fuels; over one-half of this demand went to fuel the transportation sector. Thus, this end-use sector alone accounts for approximately 25~o of the nation's total energy consumption. Because transportation--so vital to a nation's wellbeing and economy--is almost entirely dependent on liquid fuels, most energy experts agree that liquid fuels represent the critical domestic U.S. energy resource of the future. To put this issue in perspective, Table 1 has been prepared to illustrate the past trends and future projections of liquid fuels supply and demand in the United States. Concentrating first on liquid fuels demand, we see that transportation fuel consumption declined 7.5~ between 1976 and 1980 and accounted for nearly all of the decrease in total demand experienced during this period. A doubling of imported oil prices and a drastic downturn in the nation's (and world's) economy during this period considerably slacked the nation's appetite for liquid fuels. In addition, planned conservation measures have taken much of the energy wastage out of the industrial and transportation sectors. As to the future, the Year 2000 Scenarios for liquid fuels demand appearing in Table 1 represent the range of forecasts generally found in the recent literature [1-4]. The Low Scenario of this set repre-
tComparing liquid fuels from diverse sources is like comparing apples and oranges: they must be converted to a common basis. All supply/demand figures in Table 1 have been converted to equivalent barrels of crude oil through the ratio of the gross heating values (energy content) of the various liquid fuels compared to that of crude oil.
sents a concerted national effort to achieve zero petroleum importation by the year 2000, and accomplishes this by assuming major efficiency gains in the transportation sector and massive conversion of residential, commercial, and industrial heating from oil to coal, natural gas, and electricity. The High Scenario assumes an unconstrained liquid fuels demand based, largely, on pre-1978 growth rates in these sectors. The most likely candidates for the future are the two mid-range scenarios, Medium I and Medium II, which project total liquid fuel demands on the order of 14.5 to 16.5 million barrels of oil equivalent per day (mmboe/d).t At best, then, the energy experts are forecasting a flat, no-growth situation for total liquid fuels consumption for the 20-year period between 1980 and the year 2000. However, within this nogrowth situation, the liquid fuels demand ascribed to the transportation sector is projected to increase back to its 1976 level of 9.2 mmboe/d. This turnaround in demand will occur because of an expanding population base and (hopefully) an improving economic siatuation, both of which require an increase in transportation activity. Increases in automobile fuel economy and other transportation system efficiencies--already factored into these mid-range scenarios--will only serve to keep the fuel demand from rising to something nearer the 12.0 mmboe/d level predicted by the High Scenario. Table 1 also presents liquid fuels supply scenarios in terms of domestic fuels and petroleum imports necessary to match the demand scenarios just discussed. The historical data for 1976 and 1980 show a declining reliance on imported crude oil even though the domestic production of crude oil increased only very slightly during this period. There is
GOODRICH:
A SYNFUELS ERA FOR THE UNITED STATES?
nearly unanimous accord among energy experts that domestic petroleum supplies will decrease in the future, even with increased exploration and drilling activity and advances in enhanced oil recovery techniques. The Medium I Scenario, for instance, forecasts domestic petroleum production of 8.7 mmboe/d, made up of 5.8 mmboe/d from conventional production, 1.4mmboe/d from enhanced oil recovery, and 1.5mmboe/d from natural gas liquids. As conventional petroleum production continues to decline in the United States, more and more emphasis will have to be put on enhanced oil recovery and the production of natural gas liquids. The synthetic/biomass fuels portion of the domestic liquid fuels supply represents the range of alternative source supply thought economically necessary and technically justifiable to decrease our dependence on imported crude oil. As we see, these scenarios call for 20 to 30~i; of our total domestic supply to come from coal, shale oil, and biomass. While other forecasts of alternative liquid fuel supplies may range as o / of our total domestic production, high as 50 to 7 5/o there are many technical, economic, and environmental reasons why such levels will not be attainable or even desirable. To complete the liquid fuels picture, we see in Table 1 that the petroleum imports necessary to balance supply and demand could range from zero to nearly 12 mmboe/d. Though possible, it is both technically and economically improbable that we will become independent of foreign oil by the year 2000. The mid-range scenarios represent the most probable range of foreign oil dependence (3.8-6.0 mmboe/d), with the Medium I Scenario posing a nicely balanced challenge between liquid fuels demand conservation and synthetic/biomass fuels development which admits to a reasonable necessity of crude oil importation. All further discussion of liquid fuels supply and demand in this article will be based on this scenario, unless otherwise noted. AUTOMOBILE FLEET GROWTH AND FUEL DEMANDS With this view of the overall liquid fuels picture in
3
mind, let us now concentrate on the single largest consumer of transportation fuels--the automobile. Since nearly 2 out of every 3 gallons of transportation fuel consumed is gasoline, we see from this fact alone that the automobile plays a dominant role in assessing the liquid fuels demand in the future. Also, if synthetic/biomass fuels are to penetrate the transportation fuels market, they almost certainly will do so through the fleet of otto-cycle vehicles made up of automobiles and light trucks. This section of the article will present a brief scenario of the growth of the automobile fleet and the expected demand for motor fuel to supply this fleet. Table 2 contains baseline data (1980) and forecasted estimates of the operating automobile fleet size, vehicle miles traveled, average fuel economy, and annual fleet fuel consumption. We see, for instance, that the size of the fleet is estimated to increase from its 1980 level of 105 million vehicles to approximately 140 million by the year 2000. Based on the automobile sales records of the last 2 years, the assumed growth rate of the fleet (1.4% per year) may seem too high. However, the United States is still a growing country and the population of licensable youth is expected to burgeon again before the turn of the century [4]. Also, it is assumed that the U.S. economy will continue to improve and reverse the recent downward trend in new car sales before the fleet population has had a chance to decline. Throughout the period in question, it is assumed that the typical automobile utilization rate will remain at the current level of 11,000 miles/y/vehicle. This, too, could change if motor fuel prices were to escalate rapidly in reference to an inflation index, or if collective transportation were to make unexpected inroads. However, the continued down-sizing of the U.S. fleet and resultant gains in vehicle fuel economy (mpg) should allow American drivers to maintain their motoring habits in the future. If this assumption is correct, total vehicle miles traveled by the automobile fleet should reach the 1.5 trillion mile level in the year 2000. The fleet average fuel economy (mpg) for automobiles is projected to nearly double from its 1980
Table 2. Automobile fleet growth and fuel demand forecasts 1980 Fleet size (millions) 105.0 Vehicle miles (trillions) 1.13 Diesel penetration 4°, (of new car market) Fleet average fuel economy (mpg) 15 Annual fleet fuel consumption 75.3 (billions of gallons) --gasoline~"~ 74.7 ~ i e s e l fuel~a~ 0.6 Fleet fuel consumption in millions of barrels/day 4.9
1985
1990
2000
113.6 1.25 I0°,i
121.8 1.34 15"~;
140.0 1.54 33~,
19 65.8
22.5 59.6
28 55.0
62.9 2.9
54.6 5.0
40.8 14.2
4.3
3.9
3.6
t~%ssuming little or no penetration of synthetic/biomass alcohols into fuel market. Sources: 1980 data from Ref. [5]; projections by author.
4
GOODRICH:
A SYNFUELS ERA FOR THE UNITED STATES?
35
I I I t I
30
25
|
•
l ]
ON-ROAD FLEET FUEL ECONOMY PERFORMANCE
, ~
/27.5 • •
I/
s
20
/19 /
2o S 15
,.,E., r I
/i --
T
~
10 1965
1970
" ~.~r,15
1975
!
I I I
I
I
1980
1985
1990
YEAR
1995
2000 615-59
Fig. 1. Automobile fleet fuel economy forecasts. Sources: adapted by author from Ref. [4], p. 42, and Ref. [51, pp. 2-13.
level of 15mpg, as shown in Fig. 1. Claims of 60-75 mpg cars on the market by 1990 notwithstanding, it must be remembered that the average vehicle in the operating fleet is roughly 6½-years old and that it takes considerable time for the newer, more fuelefficient models to work their way through the entire age distribution of the fleet. This is illustrated in Fig. 1, where the new car fuel economy projection (based on minimum values set by EPA regulations) leads the operating fleet average by some 10 to 15 years. Though fairly conservative in nature, these fuel economy projections are thought to portray realistically the rate at which the American driving public will reluctantly convert to the small, highly fuel-efficient automobile of the future. Returning to Table 2, we see that the fuel consumption of the automobile fleet is projected to steadily decrease from over 75 billion gal/y in 1980 to only 55 billion gal/y in the year 2000--even though 35 million extra cars are expected to be in circulation Synthesis Gas (CO/H 2)
by then. Based on the assumed percentage penetration of diesel-powered vehicles into the new car market, the consumption of diesel fuel by the automobile fleet will increase drastically in the future: from less than 1 billion gal/y today to over 14 billion gal/y by the year 2000! In addition to this changing pattern of gasoline and diesel fuel demand, our guiding liquid fuels scenario (Medium I) calls for the utilization of some 2.0mmboe/d of synthetic and biomass fuels. These should enter the transportation fuels supply stream as methanol, synthetic gasoline and diesel fuel, and perhaps minor amounts of ethanol. Thus, we can expect to see quite a change in the transportation fuel mix of the future. SYNFUELS: THE EMERGING OPTION Alcohols from biomass are often touted as the alternative transportation fuels of the future. In some
Methanol ~ ' Production
Fuel Methanol
COAL TRANSPORTATION SECTOR END USE
Liquids (Sy. . . . de) ~
Shale OIL SHALE
f
Liquids " (Syncrude)
Oil
/
Gasoline
Refining ~ , ~ Distillates
Fig. 2. Elements of synthetic fuels systems for supplying transportation sector.
GOODRICH:
A SYNFUELS ERA FOR THE UNITED STATES?
countries such as Brazil, alcohols have already penetrated well into the motor fuel market [6]. However, the situation in the United States--the leading exporter of agricultural products to the rest of the world--is such that our demand for liquid fuels far exceeds our agricultural capacity to supply a significant portion via the biomass route. Biomass fuel studies [7] have shown that production of ethanol from grain and sugar crops in amounts greater than 2 to 5 billion gal/y would begin to affect significantly food prices. Such amounts of ethanol could scarcely provide a 5% gasohol blend on a nationwide basis in the future and would do little to improve the overall liquid fuels picture. Production of methanol from all forms of biomass residues offers an enlarged resource base that avoids much of the food vs fuel controversy. However, as we shall see later, the cost of methanol produced in this manner will likely be twice that produced from coal. For the United States, then, the emerging alternative liquid fuels option seems to be a synthetic fuels (synfuels) industry based on coal liquids and shale oil. Alcohols from biomass, especially methanol from agricultural residues and nonfood crops, are seen to provide a critical bridging between the declining domestic petroleum production in the 1980s and the advent of a commercial synfuels industry in the early 1990s. The basic elements of a synfuels system for supplying liquid transportation fuels are illustrated schematically in Fig. 2. There are two routes for converting coal and oil shale into liquid fuels: direct and indirect liquification. The direct liquification route consists of producing synthetic crude oil (syncrude) and introducing this into the refinery stream for processing along with the natural crude oils, as shown in the lower half of the diagram. The other route consists of the indirect liquification of coal to methanol by first converting it to synthesis gas, as illustrated at the top of the diagram. Synthesis gas consists mainly of carbon monoxide (CO) and hydrogen (H2) and can be converted to methanol (CH3OH) in the presence of a catalyst at high pressure and temperature. The fuel-grade methanol produced may be either blended with gasoline or used straight as a (neat) transportation fuel. It is also possible to produce high octane gasoline from methanol by what is commonly known as the Mobil Proces, although this route requires approximately 2.4 gallons of methanol for each gallon of gasoline produced. While discussing Fig. 2, it is interesting to point out that coal yields about three times more syncrude per ton mined than does oil shale. Also, coal liquids have an aromatic base more suited for producing high octane fuels (gasoline), whereas shale oil with its paraffinic base is more suited to the production of tPlant sizes on the order of 1/4 to 1/2 this size will be typical until the methanol market is very well established, probably about the turn of the century.
5
high cetane distillates (diesel fuel). On the negative side, both of these syncrudes have a higher sulfur content than most natural crude oils and will thus require extra processing (upgrading) and sulfur dioxide emission control procedures in order to produce transportation fuels. On the whole, coal is a more versatile resource than oil shale since it may be converted to synthesis gas (and hence to synthetic pipeline gas and chemicals) as well as syncrude and methanol. METHANOL FROM COAL The technologies for converting coal and oil shale into liquid fuels are still described as emerging technologies even though the basic processes for these conversions are well understood and have been amply demonstrated. The Germans, for instance, produced large quantities of gasoline from coal during World War II using the Lurgi coal gasification process and the Fischer-Tropsch synthesis process. The South Africans are currently using these two processes for producing most of their gasoline, diesel fuel, and alcohols even though these technologies are now considered inefficient and obsolete. In the United States, a number of advanced coal gasification technologies are being developed specifically for the characteristics of American coals. These gasifier developments, combined with a new generation of the Fischer Tropsch synthesis process, will likely form the backbone of the U.S. synfuels industry in the 1990s. A major component of the U.S. synfuels industry of the future will be the coal-to-methanol process shown in Fig. 3. This block flow diagram illustrates the processing steps and material flow rates for a very large plantt which daily converts 39,000 tons of coal into 100,000 barrels of methanol [8]. The process is designed such that all of the energy consumed in the plant is derived from coal--about one-third of the total coal input. The coal is gasified to synthesis gas (mainly CO and H2) which also contains carbon dioxide (CO2), water vapor (H20), methane (CH4), and contaminants such as hydrogen sulfide (H2S). The hot gas is quenched to remove tars and oils formed during gasification and then purified to remove the H2S. The principal chemical reactions involved in the Fischer-Tropsch methanol (CH3OH) synthesis operation in the lower right-hand corner of the diagram are: CO + 2H2--*CH3OH CO2 + 3H2-~CH3OH + H20. These reactions take place at 500°F and 1500 p.s.i, in the presence of a copper-zinc catalyst, and require the CO shift conversion and methane reforming (to CO + H2) operations shown in order to achieve reasonable CH3OH yields. Even so, the overall thermal
6
GOODRICH: Waste heat
A SYNFUELS ERA FOR THE UNITED STATES? SO2 (15 t/d)
(290x109 Rtu/d)
NOx (25 t/d)
Particulates
Hydrocarbons
(2 t/d)
(0.4 t/d)
[-----
1
1
I
Coal Gasification
Purification, I CO Shift Conversion[
E
Steam and
Power Generation
39,000 t/d Y
I
Methane Reforming
l
I
--
Fuel Gas Production
[
Methanol Synthesis
I
[
Higheralcohols
I I
~ : 1
( 15,200 b/d )
Phenols (840b/d) (405 b/d )
Synthesis Gas Compression
(33%)
I BYPRODUCTS i =- Tar, oil 8~naphtha
t I
A m m o n i a 8~ Sulfur 1620 1 / d )
(PRODUCr Methanol I00,000 b/d )
I
Water requirements
Solid waste: coal ash
(13xi06 g/d)
(3,500 t/d)
Fig. 3. Simplified flow diagram of coal-to-methanol process (material flow rates given m tons, barrels, or gallons per day). Source: adapted by author from Ref. [8], p. 140.
efficiency of this dated process (simply defined as the heating value of the methanol divided by the heating value of the coal needed to produce it) is only about 4 0 ~ - - r a t h e r low. However, the new generations of coal gasifier and methanol synthesis technologies under development are specifically designed to eliminate the methane reforming and oil/tar separation steps, and to produce better yields of synthesis gas and methanol. When ready for commercial introduction about 1990, these new designs should prove to have significantly higher energy efficiency values. Typical emission levels of air pollutants expected from a plant using "best available" emission control technology are shown at the top of Fig. 3. The particulate emission level of two tons/day of (mainly) fly ash resulting from the combustion of coal, for instance, assumes a control level of 99.5~o using electrostatic precipitators. The emission levels of this plant would be roughly 1/5 those from an equivalent oil shale-to-syncrude plant. In addition, water requirements would be only 1/2 and the amount of solid waste generated only 1/40 of that from the above-ground oil shale retorting process. Unless an underground in situ shale conversion process can be commercially demonstrated, there is general agreement that the environmental impact of a synfuels industry based on coal will be considerably less than one based on oil shale. METHANOL MARKET FORECAST
There are many barriers to overcome in trying to establish a new fuel in the liquid fuels marketplace.
Major among these is the inevitable chicken-and-egg problem: who is going to gamble $1.5 billion (the approximate cost of a 50,000 barrel/day coal-tomethanol processing plant) to find out whether the methanol market is 100 million or 1 billion gal/y? Likewise, what automaker is going to produce methanol cars when there is no guarantee that adequate fuel methanol will be there when and where the customer wants it? Also, what auto buyer in his right mind would consider a methanol car if neither fuel supply nor continued production of these cars was reasonably guaranteed? Obviously, it will take the parallel commitments of both the methanol supplier and methanol user (the auto manufacturer and the car-buying public) to overcome this entry problem. Efforts along this line are already underway: • The Ford Motor Co. recently approached major oil companies about coordinating and sharing R & D efforts on the development and introduction of methanol motor fuel and methanol cars on a regional basis during the mid-to-late 1980s. • The California Energy Commission is conducting a 5 y, 5000-vehicle fleet testing program designed to establish customer acceptance of methanol-fueled automobiles. Whether these and similar efforts will be sufficient to convince private sector capital to invest in a new market remains to be seen. At this time, it appears the market for methanol motor fuel will not develop for another 8-10 years. However, as the following scenario [9] indicates, there are several other methanol
GOODRICH:
A SYNFUELS ERA FOR THE UNITED STATES?
markets which could be developed in the interim and used to leverage methanol-from-coal into a full-scale synfuels industry by the turn of the century. The future market for methanol will consist of three major segments: transportation fuel (both as a blending agent and neat fuel); stationary fuel (to fire industrial/utility turbines and boilers); and feedstock for the chemical industry. Table 3 presents a forecast of the potential demands of each of these market segments for the years 1985, 1990 and 2000. We see that the total methanol demand (currently less than 1 billion gal/y) is projected to rise slowly through 1990. Thereafter, it should begin to increase sharply to reach the 25 billion gal/y level by the year 2000 as the fuel market (transportation and stationary) rapidly develops and outstrips the chemical market. The stationary fuel market will emerge in the late 1980s as methanol is used to replace natural gas in industrial gas turbines and combined cycle systems. The utility segment of this market will then emerge as utility companies begin to use methanol to replace petroleum fuels and natural gas because of their escalating prices. During this entire period, the chemical market for methanol should grow steadily but modestly, reaching 5 billion gal/y by the year 2000. Use of methanol in the transportation sector should begin slowly in the mid-1980s as an accepted blending agent in gasoline and as a neat motor fuel for small captive fleets of vehicles. Once these fleets have been fully proof tested, the methanol car should begin to go public as fuel distribution is guaranteed by methanol suppliers on at least a regional basis. By 1990, blend sales will account for only 50~o of the total methanol motor fuel market as methanol car production and showroom sales are firmly launched. During the last decade of the century, public acceptance of methanol-fueled cars should continue to increase significantly. By the year 2000, the methanol motor fuel market should reach a sales volume of 10 billion gal/y, almost entirely in the form of neat methanol for the growing methanol car fleet. When compared to the total automobile consumption forecasted for that year (Table 2), this would mean that approximately one gallon out of every five sold at the pump would be methanol. Not all of this forecasted methanol market will be supplied by coal. Natural gas should remain the predominant feedstock through the mid-1980s. Then, as natural gas prices continue to escalate and the older processing facilities are phased out, methanol from biomass and coal will begin to enter the fuel stream. By the late 1990s, as much as 90~o of the total methanol market will be met by coal processing plants. However, this forecast is contingent to some degree on the eventual outcome of the Alaskan natural gas pipeline project. There are serious doubts that this troubled $43-billion pipeline venture will ever be completed, though currently set for 1989. Rather than transport or flare the gas, the decision may be made to process it to methanol and then
-7
move the methanol in batches through the existing crude-oil pipeline to the lower 48 states. Estimates indicate that at least 6 billion gal/y of methanol could be supplied from this source alone by the mid-1990s, and that it could be priced to sell between 2/3 and 3/4 of the price of unleaded gasoline. Even so, natural gas may well become too valuable a fuel/feedstock to allow 40~o of its energy content to be lost through conversion to methanol.
DEVELOPMENT OF THE METHANOL CAR FLEET
Both Ford Motor Co. and U.S. Environmental Protection Agency officials have gone on record saying that methanol cars and motor fuel are the clear choice for alternative transportation forms of the future. Methanol-powered cars will have superior performance characteristics and a much easier time complying with EPA exhaust emission standards than their gasoline counterparts. Cold starting and engine wear problems should be overcome with increased R & D efforts and fleet testing during the mid-1980s, and new generations of the methanol engine will eventually achieve the fuel economy (mpg) level of the gasoline version. According to Ford officials, the use of neat methanol will allow cost reductions on the emission control systems needed to meet the clean air regulations and result in simpler and cheaper cars in the future. The methanol motor fuel demand forecast outlined in the previous section is based on the slow but steady realization of these opportunities and, of course, the parallel development of a nationwide fuel supply at competitive prices. This being the case, methanol supply of 10 billion gal/y in the year 2000 should support a methanol car fleet of approximately 25 million vehicles based on an average (per vehicle) methanol consumption rate of 400gal/y. This fleet size estimate assumes all the fuel methanol will be used as a neat motor fuel (not blended) and the methanol fleet will attain the same average utilization rate (miles/y/vehicle) and fuel economy (mpg) as the fleet average given in Table 2 and Fig. 1. The methanol market demand forecast for transportation uses in 1990 (50~o for blends, 50~/ofor neat fuel) is based on approximately 1 million methanol cars circulating on U.S. roadways by that date. Since this incipient fleet is projected to grow to 25 million Table 3. Forecasts of future methanol market demands (units: billions of gallons per year) End Use Transportation fuel Stationary fuel Chemical feed stock Total market demand
1985 0.015 0.035 1.6
1990 1.0 1.0 2.0
2000 10.0 10.0 5.0
1.65
4.0
25.0
Source: adaptations by author of forecasts appearing in Ref. [9].
GOODRICH: A SYNFUELS ERA FOR THE UNITED STATES'? cars only 10 years later, the penetration of the methanol car into the automobile market (defined as the percentage of new car sales each year) is scheduled to increase very rapidly after 1990: form only l car out of every 40 sold (2.5%) in 1990 to 1 out of every 6 sold (18~o) in the year 2000. Even so, this fleet will reach only about 1/2 the projected size of the diesel car fleet (Table 2), and these two fleets together should approximately equal the size of the gasoline fleet. Since gas (methane, hydrogen, etc.) and electric automobiles are also candidates for introduction in limited quantities by this period, we see that the automobile/fuel mix of the future will likely be much more varied than it is today, SYNFUEL PRICES
The methanol market demand forecasts (Table 2) are dependent on the future price of methanol relative to other liquid fuels. The literature abounds with widely varying cost estimates for the production of synthetic and biomass fuels. Table 4, below, presents estimates of the range in wholesale price of refined motor fuels from various synthetic and biomass sources. These pricing estimates must be considered speculative because the processing technologies have yet to be demonstrated on a commercial scale. This table illustrates what many energy experts agree will be the case: that methanol from coal could prove to be the least expensive motor fuel in the future. Methanol from biomass, although estimated to be twice as expensive as that from coal, will likely be $0.30 to $0.40 cheaper per gallon than ethanol. The estimated price of gasoline derived from oil shale is subject to considerable controversy. Some studies [1, 8] estimate syncrude from oil shale will be available for $35/barrel (1981 dollars) in the future, which translates to approximately $1.37/gallon of gasoline (as per footnote (b) of Table 4). However, when raw syncrude upgrading costs and heavy environmental impact costs are factored in, other studies [7] estimate the true refinery gate price of this gasoline to be in the range shown. Likewise, there is considerable debate over the price of gasoline derived from coal via the Mobil Process (Fig. 2). This price, of course, must always be higher than the methanol feedstock cost from which it derives. Given all the uncertainties in forecasting production costs and pricing trends of fuels, the following conclusion is tentatively drawn: it appears that methanol from coal (or natural gas) could be priced to sell for about 2/3-3/4 the price of unleaded gasoline from crude oil during the 1990s, and methanol from biomass at roughly the same price as gasoline; synthetic gasolines and ethanol are likely to be more expensive than the prevailing price of gasoline from crude oil. SUMMARY
Liquid fuels represent the critical domestic energy resource of the future. This article surveyed the liquid
fuels picture for the year 2000 and concluded that the United States must develop a synthetic/biomass fuels industry if it is to meet its transportation fuel needs while seeking to reduce its dependence on foreign crude oil. Synthetic fuels from coal and oil shale (methanol, gasoline, and diesel fuel) and methanol from agricultural residues and nonfood crops are depicted as the emerging options of the future. Within these options, methanol-from-coal is highlighted as probably proving to be the most technically versatile, economically viable, and environmentally sound choice. Alcohols from biomass are seen to play a critical bridging role between the declining domestic petroleum production of the 1980s and the advent of a commercial synfuels industry in the early 1990s. Focusing on methanol, the article presented a market demand forecast showing consumption rising rapidly from 4 billion gal/y in 1990 to 25 billion gal/y in the year 2000. This forecast is felt to be properly conservative for the near term and realistically optimistic for the longer term. Methanol's highest valued use in the future will be as a motor fuel, not as a stationary fuel for the industrial and utility sectors or as a chemical feedstock. However, because of the inevitable chicken-and-egg situation, the methanol motor fuel market will develop very cautiously during the late 1980s and early 1990s. The forecasting scenario presented recognizes this and relies on a shifting market structure--from the chemical market to the stationary fuel market to, finally, the motor fuel market--to assure development of the methanol production system to the point where it will adequately serve the transportation sector in the longer term. Methanol production projects aimed at the eventual motor fuel market must be in position in the mid-to-late 1980s selling to the lower margin stationary fuel and chemical markets. Then, by rapidly expanding production capacity, these producers will be able to capture good motor fuel market position by the mid- 1990s. Meeting this scenario schedule with the coal-tomethanol process requires that sizable demonstration projects get underway very soon because of the long Table 4. Estimated costs of synthetic liquid fuels in 1990 ( 1981 dollars) Fuel/source Gasoline/imported crude Gasoline/oil shale Gasoline/coal Methanol/coal Methanol/biomass Ethanol/biomass
Refined motor fuel(") S/gallon 1.27(b) 2.00-2.60 1.75-2.85 0.45-0.80 0.80-1.65 1.15-1.90
ta~Estimated wholesale price at the refinery gate. ~b~Based on imported crude oil price of $32.50/bbl (1980); refinery gate price assumed equal to 1.64 times crude oil acquisition cost; retail markup, delivery, and taxes will add another $0.30 to $0.40/gal. Source: adapted by author from cost estimates appearing in Refs [7] and [9].
GOODRICH:
A SYNFUELS ERA FOR THE UNITED STATES?
lead time needed (6--8 years) to verify the advanced technological concepts and prove their commercial viability. It also requires that the nation's automakers step up their R & D efforts on perfecting the methanol car and enter into extensive fleet testing agreements with governmental agencies and private entities. The nations's oil companies and fuel suppliers must begin planning a fuel delivery system that provides for the smooth, low-risk introduction of increasing quantities of methanol into the vehicle fleet. Also, the federal government must continue to evaluate fuel economy and exhaust emission standards and set reasonable future standards for the use of this motor fuel. The EPA, particularly, must begin to assess thoroughly a priori the safety, toxicity, and ecological impact aspects of widespread methanol usage. Especially important here is the need to demonstrate any health hazards arising from the exhaust emission products of detuned methanol cars characterizing an actual operating fleet of vehicles.
9
REFERENCES
1. U.S. Energy Strategies: Some Options .[or Eliminating Oil Imports by the Year 2000, Study Report
MTP 81W0002, "'Reasonable Choices Scenario." The MITRE Corporation, McLean, VA (1981). 2. IBM., "Baseline Scenario." 3. Notes compiled from various presentations at Fueling America's Transportation Future, Special Panel Session of AIChE Summer National Meeting, Detroit, MI (1981). 4. Technology Assessment of Changes in the Future Use and Characteristics ~[' the Automobile Transportation System, Vol. II: Technical Report, Office of Technology
Assessment, U.S. Congress, Washington, DC (1979). 5. G. Kulp et al., Transportation Energy Conservation Data Book, 5 edn, ORNL-5765, Oak Ridge National Laboratory, Oak Ridge, TN (1981). 6. R. S. Goodrich, Chem. Engng Prog. 78, 29 (1982). 7. Energy' from Biological Processes, Vol. I, Office of Technology Assessment, U,S. Congress, Washington, DC (1980). 8. E. M. Dickson et al., Synthetic Liquid Fuels Det'elopment, Vol. II: Analysis, SR[ International, Menlo Park, Ca (1976). 9. The Emerging U.S. Methanol Industry': Structure, Financing and Market Strategies, Hagler Bailly, Washing-
ton, DC (1982).
tlt,,mt Vol. 23. No. l, pp. 1 9, 1982
0196-8904,83 010001-09S03,00 (~
Printed in Great Btitain. All rights reserved
(opyright i
1983 Pergamon Pre~ LAd
A S Y N F U E L S ERA FOR THE U N I T E D STATES? R O B E R T S. G O O D R I C H Department of Organization/Operations Research, CTA-ITA-IEMB, 12,200 S~o Jos6 dos Campos, S.P. Brazil
(Received 17 September 1982) Abstract--This article surveys the liquid fuels picture for the year 2000 and concludes that transportation fuels will represent the critical domestic energy resource for the future. The United States must develop a synthetic fuels industry if it is to meet its transportation fuel needs while seeking to reduce its dependence on foreign crude oil. Synthetic fuels from coal and oil shale (methanol, gasoline, and diesel fuel) and methanol from biomass are depicted as the emerging options of the future. Within these options, methanol-from-coal is highlighted as providing the most technically versatile, economically viable, and environmentally sound choice. Based largely on transportation needs, the article presents a methanol market demand forecast calling for the consumption of 25 billion gal/y by the year 2000--enough to supply a fleet of 25 million methanol cars and provide for considerable methanol usage in the industrial, utility, and chemical sectors. Thus, about one out of every six cars in the automobile fleet would be operating on methanol if this forecast holds true. A survey of the cost estimates for producing alternative transportation fuels in the future shows that methanol-from-coat could prove to be the least expensive motor fuel: roughly two-thirds of the price of gasoline from crude oil and one-half the price of methanol from biomass. The article also poses some of the challenges facing the synfuels industry if it is going to overcome the entry barriers facing the establishment of a new fuel in the liquid fuels market place. Liquid fuels supply ctemand scenarios fleet forecast Methanol car forecast
Synthetic fuels l'rom coal, oil shale, biomass
INTRODUCTION
Automobile
• Even though the total U.S. demand for petroleum may well decline in the future, there is near unanimous agreement amongst energy forecasters that the demand for liquid transportation fuels will increase significantly from its current low point. • Even the more optimistic energy supply/demand scenarios (meaning high supply and low demand) indicate that transportation fuel demand alone could more than account for the domestic U.S. petroleum production expected in future.
Soaring energy costs and fear of gasoline shortages are far removed from the public's mind these days. Gasoline prices dropped dramatically early this year and, although now headed up again, have given us a year's grace from their steady upward creep. World crude oil prices have stabilized, and most economists see only inflationary increases in crude oil acquisition costs for the next several years. In fact, the United States is now importing fully one-third less foreign oil than it was just a few years ago. Energy companies are predicting that U.S. oil demand will continue to slowly decline for the next five to ten years as Americans trim their energy consumption, and industry switches from petroleum to coal and natural gas fuels. As a result, the federal government and energy companies are currently withdrawing support for the fledgling synthetic fuels industry established only a few years ago. Why then, when all appears well on the energy front, should there be concern about the need for alternative fuels in the future? Basically, for the following reasons:
Thus, if U.S. industry is going to continue to use petroleum liquids as chemical feedstocks and nontransportation fuels, the United States will likely be faced with importing ever-increasing quantities of foreign crude oil or developing an alternative liquid fuels supply based on coal, biomass, and other nonpetroleum sources. This article will examine the need for liquid fuels in the future and propose that, for the United States, the emerging alternative liquid fuels option appears to be a synthetic fuels (synfuels) industry based on coal and oil shale. More specifically, methanol from coal is forecasted to support a sizable alcoholpowered car fleet by the turn of the century, as well as supplying fuel for industrial/utility market and feedstock for the chemical market.
• The United States is in a recession with its industrial economy operating at about 70~o of capacity. Much of our apparent energy conservation is due to this fact alone. Climbing out of this recession will substantially increase our energy consumption and put new pressure on energy prices.
THE LIQUID FUELS PICTURE Liquid fuels used by the transportation, industrial commercial, and residential sectors constitute a large 1
2
GOODRICH:
A SYNFUELS ERA FOR THE UNITED STATES?
Table 1. The liquid fuels picture: past consumption and future projections (units: mmboe/d = millions of barrels of oil equivalent per day)
A.
Liquidfuels demand Transportation sector Industrial, commercial, etc. Total demand
B.
Liquid fuels supply Domestic petroleum~a) production Synthetic/biomass fuels • Coal liquids • Shale liquids • Biomass liquids Total syn./bio, supply
C.
Year 2000 scenarios Med. I [2] Med. II [3] High [4]
1976
1980
Low [1]
9.2 8.3
8.5 8.2
8.2 4.5
9.0 5.5
9.4 7.1
12.0 9.8
17.5
16.7
12.7
14.5
16.5
21.8
9.7
10.2
9.8
8.7
7.1
7.0
0 0 0
0 0 0
1.2 1.2 0.5
1.1 0.4 0.5
0.9 2.0 0.5
0.7 2.0 0.3
0
0
2.9
2.0
3.4
3.0
Total domestic supply
9.7
10.2
12.7
10.7
10.5
10.0
Petroleumimports necessary
7.8
6.5
0.0
3.8
6.0
11.8
taqncludes natural gas liquids. Sources: Historical data from Refs [4] and [5]; year 2000 scenarios adapted by author from projections appearing in Refs [1], [2], [3] and [4] as indicated by superscript.
fraction of the total U.S. energy consumption. In 1980, for instance, 45~ of all energy consumed was in the form of liquid fuels; over one-half of this demand went to fuel the transportation sector. Thus, this end-use sector alone accounts for approximately 25~o of the nation's total energy consumption. Because transportation--so vital to a nation's wellbeing and economy--is almost entirely dependent on liquid fuels, most energy experts agree that liquid fuels represent the critical domestic U.S. energy resource of the future. To put this issue in perspective, Table 1 has been prepared to illustrate the past trends and future projections of liquid fuels supply and demand in the United States. Concentrating first on liquid fuels demand, we see that transportation fuel consumption declined 7.5~ between 1976 and 1980 and accounted for nearly all of the decrease in total demand experienced during this period. A doubling of imported oil prices and a drastic downturn in the nation's (and world's) economy during this period considerably slacked the nation's appetite for liquid fuels. In addition, planned conservation measures have taken much of the energy wastage out of the industrial and transportation sectors. As to the future, the Year 2000 Scenarios for liquid fuels demand appearing in Table 1 represent the range of forecasts generally found in the recent literature [1-4]. The Low Scenario of this set repre-
tComparing liquid fuels from diverse sources is like comparing apples and oranges: they must be converted to a common basis. All supply/demand figures in Table 1 have been converted to equivalent barrels of crude oil through the ratio of the gross heating values (energy content) of the various liquid fuels compared to that of crude oil.
sents a concerted national effort to achieve zero petroleum importation by the year 2000, and accomplishes this by assuming major efficiency gains in the transportation sector and massive conversion of residential, commercial, and industrial heating from oil to coal, natural gas, and electricity. The High Scenario assumes an unconstrained liquid fuels demand based, largely, on pre-1978 growth rates in these sectors. The most likely candidates for the future are the two mid-range scenarios, Medium I and Medium II, which project total liquid fuel demands on the order of 14.5 to 16.5 million barrels of oil equivalent per day (mmboe/d).t At best, then, the energy experts are forecasting a flat, no-growth situation for total liquid fuels consumption for the 20-year period between 1980 and the year 2000. However, within this nogrowth situation, the liquid fuels demand ascribed to the transportation sector is projected to increase back to its 1976 level of 9.2 mmboe/d. This turnaround in demand will occur because of an expanding population base and (hopefully) an improving economic siatuation, both of which require an increase in transportation activity. Increases in automobile fuel economy and other transportation system efficiencies--already factored into these mid-range scenarios--will only serve to keep the fuel demand from rising to something nearer the 12.0 mmboe/d level predicted by the High Scenario. Table 1 also presents liquid fuels supply scenarios in terms of domestic fuels and petroleum imports necessary to match the demand scenarios just discussed. The historical data for 1976 and 1980 show a declining reliance on imported crude oil even though the domestic production of crude oil increased only very slightly during this period. There is
GOODRICH:
A SYNFUELS ERA FOR THE UNITED STATES?
nearly unanimous accord among energy experts that domestic petroleum supplies will decrease in the future, even with increased exploration and drilling activity and advances in enhanced oil recovery techniques. The Medium I Scenario, for instance, forecasts domestic petroleum production of 8.7 mmboe/d, made up of 5.8 mmboe/d from conventional production, 1.4mmboe/d from enhanced oil recovery, and 1.5mmboe/d from natural gas liquids. As conventional petroleum production continues to decline in the United States, more and more emphasis will have to be put on enhanced oil recovery and the production of natural gas liquids. The synthetic/biomass fuels portion of the domestic liquid fuels supply represents the range of alternative source supply thought economically necessary and technically justifiable to decrease our dependence on imported crude oil. As we see, these scenarios call for 20 to 30~i; of our total domestic supply to come from coal, shale oil, and biomass. While other forecasts of alternative liquid fuel supplies may range as o / of our total domestic production, high as 50 to 7 5/o there are many technical, economic, and environmental reasons why such levels will not be attainable or even desirable. To complete the liquid fuels picture, we see in Table 1 that the petroleum imports necessary to balance supply and demand could range from zero to nearly 12 mmboe/d. Though possible, it is both technically and economically improbable that we will become independent of foreign oil by the year 2000. The mid-range scenarios represent the most probable range of foreign oil dependence (3.8-6.0 mmboe/d), with the Medium I Scenario posing a nicely balanced challenge between liquid fuels demand conservation and synthetic/biomass fuels development which admits to a reasonable necessity of crude oil importation. All further discussion of liquid fuels supply and demand in this article will be based on this scenario, unless otherwise noted. AUTOMOBILE FLEET GROWTH AND FUEL DEMANDS With this view of the overall liquid fuels picture in
3
mind, let us now concentrate on the single largest consumer of transportation fuels--the automobile. Since nearly 2 out of every 3 gallons of transportation fuel consumed is gasoline, we see from this fact alone that the automobile plays a dominant role in assessing the liquid fuels demand in the future. Also, if synthetic/biomass fuels are to penetrate the transportation fuels market, they almost certainly will do so through the fleet of otto-cycle vehicles made up of automobiles and light trucks. This section of the article will present a brief scenario of the growth of the automobile fleet and the expected demand for motor fuel to supply this fleet. Table 2 contains baseline data (1980) and forecasted estimates of the operating automobile fleet size, vehicle miles traveled, average fuel economy, and annual fleet fuel consumption. We see, for instance, that the size of the fleet is estimated to increase from its 1980 level of 105 million vehicles to approximately 140 million by the year 2000. Based on the automobile sales records of the last 2 years, the assumed growth rate of the fleet (1.4% per year) may seem too high. However, the United States is still a growing country and the population of licensable youth is expected to burgeon again before the turn of the century [4]. Also, it is assumed that the U.S. economy will continue to improve and reverse the recent downward trend in new car sales before the fleet population has had a chance to decline. Throughout the period in question, it is assumed that the typical automobile utilization rate will remain at the current level of 11,000 miles/y/vehicle. This, too, could change if motor fuel prices were to escalate rapidly in reference to an inflation index, or if collective transportation were to make unexpected inroads. However, the continued down-sizing of the U.S. fleet and resultant gains in vehicle fuel economy (mpg) should allow American drivers to maintain their motoring habits in the future. If this assumption is correct, total vehicle miles traveled by the automobile fleet should reach the 1.5 trillion mile level in the year 2000. The fleet average fuel economy (mpg) for automobiles is projected to nearly double from its 1980
Table 2. Automobile fleet growth and fuel demand forecasts 1980 Fleet size (millions) 105.0 Vehicle miles (trillions) 1.13 Diesel penetration 4°, (of new car market) Fleet average fuel economy (mpg) 15 Annual fleet fuel consumption 75.3 (billions of gallons) --gasoline~"~ 74.7 ~ i e s e l fuel~a~ 0.6 Fleet fuel consumption in millions of barrels/day 4.9
1985
1990
2000
113.6 1.25 I0°,i
121.8 1.34 15"~;
140.0 1.54 33~,
19 65.8
22.5 59.6
28 55.0
62.9 2.9
54.6 5.0
40.8 14.2
4.3
3.9
3.6
t~%ssuming little or no penetration of synthetic/biomass alcohols into fuel market. Sources: 1980 data from Ref. [5]; projections by author.
4
GOODRICH:
A SYNFUELS ERA FOR THE UNITED STATES?
35
I I I t I
30
25
|
•
l ]
ON-ROAD FLEET FUEL ECONOMY PERFORMANCE
, ~
/27.5 • •
I/
s
20
/19 /
2o S 15
,.,E., r I
/i --
T
~
10 1965
1970
" ~.~r,15
1975
!
I I I
I
I
1980
1985
1990
YEAR
1995
2000 615-59
Fig. 1. Automobile fleet fuel economy forecasts. Sources: adapted by author from Ref. [4], p. 42, and Ref. [51, pp. 2-13.
level of 15mpg, as shown in Fig. 1. Claims of 60-75 mpg cars on the market by 1990 notwithstanding, it must be remembered that the average vehicle in the operating fleet is roughly 6½-years old and that it takes considerable time for the newer, more fuelefficient models to work their way through the entire age distribution of the fleet. This is illustrated in Fig. 1, where the new car fuel economy projection (based on minimum values set by EPA regulations) leads the operating fleet average by some 10 to 15 years. Though fairly conservative in nature, these fuel economy projections are thought to portray realistically the rate at which the American driving public will reluctantly convert to the small, highly fuel-efficient automobile of the future. Returning to Table 2, we see that the fuel consumption of the automobile fleet is projected to steadily decrease from over 75 billion gal/y in 1980 to only 55 billion gal/y in the year 2000--even though 35 million extra cars are expected to be in circulation Synthesis Gas (CO/H 2)
by then. Based on the assumed percentage penetration of diesel-powered vehicles into the new car market, the consumption of diesel fuel by the automobile fleet will increase drastically in the future: from less than 1 billion gal/y today to over 14 billion gal/y by the year 2000! In addition to this changing pattern of gasoline and diesel fuel demand, our guiding liquid fuels scenario (Medium I) calls for the utilization of some 2.0mmboe/d of synthetic and biomass fuels. These should enter the transportation fuels supply stream as methanol, synthetic gasoline and diesel fuel, and perhaps minor amounts of ethanol. Thus, we can expect to see quite a change in the transportation fuel mix of the future. SYNFUELS: THE EMERGING OPTION Alcohols from biomass are often touted as the alternative transportation fuels of the future. In some
Methanol ~ ' Production
Fuel Methanol
COAL TRANSPORTATION SECTOR END USE
Liquids (Sy. . . . de) ~
Shale OIL SHALE
f
Liquids " (Syncrude)
Oil
/
Gasoline
Refining ~ , ~ Distillates
Fig. 2. Elements of synthetic fuels systems for supplying transportation sector.
GOODRICH:
A SYNFUELS ERA FOR THE UNITED STATES?
countries such as Brazil, alcohols have already penetrated well into the motor fuel market [6]. However, the situation in the United States--the leading exporter of agricultural products to the rest of the world--is such that our demand for liquid fuels far exceeds our agricultural capacity to supply a significant portion via the biomass route. Biomass fuel studies [7] have shown that production of ethanol from grain and sugar crops in amounts greater than 2 to 5 billion gal/y would begin to affect significantly food prices. Such amounts of ethanol could scarcely provide a 5% gasohol blend on a nationwide basis in the future and would do little to improve the overall liquid fuels picture. Production of methanol from all forms of biomass residues offers an enlarged resource base that avoids much of the food vs fuel controversy. However, as we shall see later, the cost of methanol produced in this manner will likely be twice that produced from coal. For the United States, then, the emerging alternative liquid fuels option seems to be a synthetic fuels (synfuels) industry based on coal liquids and shale oil. Alcohols from biomass, especially methanol from agricultural residues and nonfood crops, are seen to provide a critical bridging between the declining domestic petroleum production in the 1980s and the advent of a commercial synfuels industry in the early 1990s. The basic elements of a synfuels system for supplying liquid transportation fuels are illustrated schematically in Fig. 2. There are two routes for converting coal and oil shale into liquid fuels: direct and indirect liquification. The direct liquification route consists of producing synthetic crude oil (syncrude) and introducing this into the refinery stream for processing along with the natural crude oils, as shown in the lower half of the diagram. The other route consists of the indirect liquification of coal to methanol by first converting it to synthesis gas, as illustrated at the top of the diagram. Synthesis gas consists mainly of carbon monoxide (CO) and hydrogen (H2) and can be converted to methanol (CH3OH) in the presence of a catalyst at high pressure and temperature. The fuel-grade methanol produced may be either blended with gasoline or used straight as a (neat) transportation fuel. It is also possible to produce high octane gasoline from methanol by what is commonly known as the Mobil Proces, although this route requires approximately 2.4 gallons of methanol for each gallon of gasoline produced. While discussing Fig. 2, it is interesting to point out that coal yields about three times more syncrude per ton mined than does oil shale. Also, coal liquids have an aromatic base more suited for producing high octane fuels (gasoline), whereas shale oil with its paraffinic base is more suited to the production of tPlant sizes on the order of 1/4 to 1/2 this size will be typical until the methanol market is very well established, probably about the turn of the century.
5
high cetane distillates (diesel fuel). On the negative side, both of these syncrudes have a higher sulfur content than most natural crude oils and will thus require extra processing (upgrading) and sulfur dioxide emission control procedures in order to produce transportation fuels. On the whole, coal is a more versatile resource than oil shale since it may be converted to synthesis gas (and hence to synthetic pipeline gas and chemicals) as well as syncrude and methanol. METHANOL FROM COAL The technologies for converting coal and oil shale into liquid fuels are still described as emerging technologies even though the basic processes for these conversions are well understood and have been amply demonstrated. The Germans, for instance, produced large quantities of gasoline from coal during World War II using the Lurgi coal gasification process and the Fischer-Tropsch synthesis process. The South Africans are currently using these two processes for producing most of their gasoline, diesel fuel, and alcohols even though these technologies are now considered inefficient and obsolete. In the United States, a number of advanced coal gasification technologies are being developed specifically for the characteristics of American coals. These gasifier developments, combined with a new generation of the Fischer Tropsch synthesis process, will likely form the backbone of the U.S. synfuels industry in the 1990s. A major component of the U.S. synfuels industry of the future will be the coal-to-methanol process shown in Fig. 3. This block flow diagram illustrates the processing steps and material flow rates for a very large plantt which daily converts 39,000 tons of coal into 100,000 barrels of methanol [8]. The process is designed such that all of the energy consumed in the plant is derived from coal--about one-third of the total coal input. The coal is gasified to synthesis gas (mainly CO and H2) which also contains carbon dioxide (CO2), water vapor (H20), methane (CH4), and contaminants such as hydrogen sulfide (H2S). The hot gas is quenched to remove tars and oils formed during gasification and then purified to remove the H2S. The principal chemical reactions involved in the Fischer-Tropsch methanol (CH3OH) synthesis operation in the lower right-hand corner of the diagram are: CO + 2H2--*CH3OH CO2 + 3H2-~CH3OH + H20. These reactions take place at 500°F and 1500 p.s.i, in the presence of a copper-zinc catalyst, and require the CO shift conversion and methane reforming (to CO + H2) operations shown in order to achieve reasonable CH3OH yields. Even so, the overall thermal
6
GOODRICH: Waste heat
A SYNFUELS ERA FOR THE UNITED STATES? SO2 (15 t/d)
(290x109 Rtu/d)
NOx (25 t/d)
Particulates
Hydrocarbons
(2 t/d)
(0.4 t/d)
[-----
1
1
I
Coal Gasification
Purification, I CO Shift Conversion[
E
Steam and
Power Generation
39,000 t/d Y
I
Methane Reforming
l
I
--
Fuel Gas Production
[
Methanol Synthesis
I
[
Higheralcohols
I I
~ : 1
( 15,200 b/d )
Phenols (840b/d) (405 b/d )
Synthesis Gas Compression
(33%)
I BYPRODUCTS i =- Tar, oil 8~naphtha
t I
A m m o n i a 8~ Sulfur 1620 1 / d )
(PRODUCr Methanol I00,000 b/d )
I
Water requirements
Solid waste: coal ash
(13xi06 g/d)
(3,500 t/d)
Fig. 3. Simplified flow diagram of coal-to-methanol process (material flow rates given m tons, barrels, or gallons per day). Source: adapted by author from Ref. [8], p. 140.
efficiency of this dated process (simply defined as the heating value of the methanol divided by the heating value of the coal needed to produce it) is only about 4 0 ~ - - r a t h e r low. However, the new generations of coal gasifier and methanol synthesis technologies under development are specifically designed to eliminate the methane reforming and oil/tar separation steps, and to produce better yields of synthesis gas and methanol. When ready for commercial introduction about 1990, these new designs should prove to have significantly higher energy efficiency values. Typical emission levels of air pollutants expected from a plant using "best available" emission control technology are shown at the top of Fig. 3. The particulate emission level of two tons/day of (mainly) fly ash resulting from the combustion of coal, for instance, assumes a control level of 99.5~o using electrostatic precipitators. The emission levels of this plant would be roughly 1/5 those from an equivalent oil shale-to-syncrude plant. In addition, water requirements would be only 1/2 and the amount of solid waste generated only 1/40 of that from the above-ground oil shale retorting process. Unless an underground in situ shale conversion process can be commercially demonstrated, there is general agreement that the environmental impact of a synfuels industry based on coal will be considerably less than one based on oil shale. METHANOL MARKET FORECAST
There are many barriers to overcome in trying to establish a new fuel in the liquid fuels marketplace.
Major among these is the inevitable chicken-and-egg problem: who is going to gamble $1.5 billion (the approximate cost of a 50,000 barrel/day coal-tomethanol processing plant) to find out whether the methanol market is 100 million or 1 billion gal/y? Likewise, what automaker is going to produce methanol cars when there is no guarantee that adequate fuel methanol will be there when and where the customer wants it? Also, what auto buyer in his right mind would consider a methanol car if neither fuel supply nor continued production of these cars was reasonably guaranteed? Obviously, it will take the parallel commitments of both the methanol supplier and methanol user (the auto manufacturer and the car-buying public) to overcome this entry problem. Efforts along this line are already underway: • The Ford Motor Co. recently approached major oil companies about coordinating and sharing R & D efforts on the development and introduction of methanol motor fuel and methanol cars on a regional basis during the mid-to-late 1980s. • The California Energy Commission is conducting a 5 y, 5000-vehicle fleet testing program designed to establish customer acceptance of methanol-fueled automobiles. Whether these and similar efforts will be sufficient to convince private sector capital to invest in a new market remains to be seen. At this time, it appears the market for methanol motor fuel will not develop for another 8-10 years. However, as the following scenario [9] indicates, there are several other methanol
GOODRICH:
A SYNFUELS ERA FOR THE UNITED STATES?
markets which could be developed in the interim and used to leverage methanol-from-coal into a full-scale synfuels industry by the turn of the century. The future market for methanol will consist of three major segments: transportation fuel (both as a blending agent and neat fuel); stationary fuel (to fire industrial/utility turbines and boilers); and feedstock for the chemical industry. Table 3 presents a forecast of the potential demands of each of these market segments for the years 1985, 1990 and 2000. We see that the total methanol demand (currently less than 1 billion gal/y) is projected to rise slowly through 1990. Thereafter, it should begin to increase sharply to reach the 25 billion gal/y level by the year 2000 as the fuel market (transportation and stationary) rapidly develops and outstrips the chemical market. The stationary fuel market will emerge in the late 1980s as methanol is used to replace natural gas in industrial gas turbines and combined cycle systems. The utility segment of this market will then emerge as utility companies begin to use methanol to replace petroleum fuels and natural gas because of their escalating prices. During this entire period, the chemical market for methanol should grow steadily but modestly, reaching 5 billion gal/y by the year 2000. Use of methanol in the transportation sector should begin slowly in the mid-1980s as an accepted blending agent in gasoline and as a neat motor fuel for small captive fleets of vehicles. Once these fleets have been fully proof tested, the methanol car should begin to go public as fuel distribution is guaranteed by methanol suppliers on at least a regional basis. By 1990, blend sales will account for only 50~o of the total methanol motor fuel market as methanol car production and showroom sales are firmly launched. During the last decade of the century, public acceptance of methanol-fueled cars should continue to increase significantly. By the year 2000, the methanol motor fuel market should reach a sales volume of 10 billion gal/y, almost entirely in the form of neat methanol for the growing methanol car fleet. When compared to the total automobile consumption forecasted for that year (Table 2), this would mean that approximately one gallon out of every five sold at the pump would be methanol. Not all of this forecasted methanol market will be supplied by coal. Natural gas should remain the predominant feedstock through the mid-1980s. Then, as natural gas prices continue to escalate and the older processing facilities are phased out, methanol from biomass and coal will begin to enter the fuel stream. By the late 1990s, as much as 90~o of the total methanol market will be met by coal processing plants. However, this forecast is contingent to some degree on the eventual outcome of the Alaskan natural gas pipeline project. There are serious doubts that this troubled $43-billion pipeline venture will ever be completed, though currently set for 1989. Rather than transport or flare the gas, the decision may be made to process it to methanol and then
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move the methanol in batches through the existing crude-oil pipeline to the lower 48 states. Estimates indicate that at least 6 billion gal/y of methanol could be supplied from this source alone by the mid-1990s, and that it could be priced to sell between 2/3 and 3/4 of the price of unleaded gasoline. Even so, natural gas may well become too valuable a fuel/feedstock to allow 40~o of its energy content to be lost through conversion to methanol.
DEVELOPMENT OF THE METHANOL CAR FLEET
Both Ford Motor Co. and U.S. Environmental Protection Agency officials have gone on record saying that methanol cars and motor fuel are the clear choice for alternative transportation forms of the future. Methanol-powered cars will have superior performance characteristics and a much easier time complying with EPA exhaust emission standards than their gasoline counterparts. Cold starting and engine wear problems should be overcome with increased R & D efforts and fleet testing during the mid-1980s, and new generations of the methanol engine will eventually achieve the fuel economy (mpg) level of the gasoline version. According to Ford officials, the use of neat methanol will allow cost reductions on the emission control systems needed to meet the clean air regulations and result in simpler and cheaper cars in the future. The methanol motor fuel demand forecast outlined in the previous section is based on the slow but steady realization of these opportunities and, of course, the parallel development of a nationwide fuel supply at competitive prices. This being the case, methanol supply of 10 billion gal/y in the year 2000 should support a methanol car fleet of approximately 25 million vehicles based on an average (per vehicle) methanol consumption rate of 400gal/y. This fleet size estimate assumes all the fuel methanol will be used as a neat motor fuel (not blended) and the methanol fleet will attain the same average utilization rate (miles/y/vehicle) and fuel economy (mpg) as the fleet average given in Table 2 and Fig. 1. The methanol market demand forecast for transportation uses in 1990 (50~o for blends, 50~/ofor neat fuel) is based on approximately 1 million methanol cars circulating on U.S. roadways by that date. Since this incipient fleet is projected to grow to 25 million Table 3. Forecasts of future methanol market demands (units: billions of gallons per year) End Use Transportation fuel Stationary fuel Chemical feed stock Total market demand
1985 0.015 0.035 1.6
1990 1.0 1.0 2.0
2000 10.0 10.0 5.0
1.65
4.0
25.0
Source: adaptations by author of forecasts appearing in Ref. [9].
GOODRICH: A SYNFUELS ERA FOR THE UNITED STATES'? cars only 10 years later, the penetration of the methanol car into the automobile market (defined as the percentage of new car sales each year) is scheduled to increase very rapidly after 1990: form only l car out of every 40 sold (2.5%) in 1990 to 1 out of every 6 sold (18~o) in the year 2000. Even so, this fleet will reach only about 1/2 the projected size of the diesel car fleet (Table 2), and these two fleets together should approximately equal the size of the gasoline fleet. Since gas (methane, hydrogen, etc.) and electric automobiles are also candidates for introduction in limited quantities by this period, we see that the automobile/fuel mix of the future will likely be much more varied than it is today, SYNFUEL PRICES
The methanol market demand forecasts (Table 2) are dependent on the future price of methanol relative to other liquid fuels. The literature abounds with widely varying cost estimates for the production of synthetic and biomass fuels. Table 4, below, presents estimates of the range in wholesale price of refined motor fuels from various synthetic and biomass sources. These pricing estimates must be considered speculative because the processing technologies have yet to be demonstrated on a commercial scale. This table illustrates what many energy experts agree will be the case: that methanol from coal could prove to be the least expensive motor fuel in the future. Methanol from biomass, although estimated to be twice as expensive as that from coal, will likely be $0.30 to $0.40 cheaper per gallon than ethanol. The estimated price of gasoline derived from oil shale is subject to considerable controversy. Some studies [1, 8] estimate syncrude from oil shale will be available for $35/barrel (1981 dollars) in the future, which translates to approximately $1.37/gallon of gasoline (as per footnote (b) of Table 4). However, when raw syncrude upgrading costs and heavy environmental impact costs are factored in, other studies [7] estimate the true refinery gate price of this gasoline to be in the range shown. Likewise, there is considerable debate over the price of gasoline derived from coal via the Mobil Process (Fig. 2). This price, of course, must always be higher than the methanol feedstock cost from which it derives. Given all the uncertainties in forecasting production costs and pricing trends of fuels, the following conclusion is tentatively drawn: it appears that methanol from coal (or natural gas) could be priced to sell for about 2/3-3/4 the price of unleaded gasoline from crude oil during the 1990s, and methanol from biomass at roughly the same price as gasoline; synthetic gasolines and ethanol are likely to be more expensive than the prevailing price of gasoline from crude oil. SUMMARY
Liquid fuels represent the critical domestic energy resource of the future. This article surveyed the liquid
fuels picture for the year 2000 and concluded that the United States must develop a synthetic/biomass fuels industry if it is to meet its transportation fuel needs while seeking to reduce its dependence on foreign crude oil. Synthetic fuels from coal and oil shale (methanol, gasoline, and diesel fuel) and methanol from agricultural residues and nonfood crops are depicted as the emerging options of the future. Within these options, methanol-from-coal is highlighted as probably proving to be the most technically versatile, economically viable, and environmentally sound choice. Alcohols from biomass are seen to play a critical bridging role between the declining domestic petroleum production of the 1980s and the advent of a commercial synfuels industry in the early 1990s. Focusing on methanol, the article presented a market demand forecast showing consumption rising rapidly from 4 billion gal/y in 1990 to 25 billion gal/y in the year 2000. This forecast is felt to be properly conservative for the near term and realistically optimistic for the longer term. Methanol's highest valued use in the future will be as a motor fuel, not as a stationary fuel for the industrial and utility sectors or as a chemical feedstock. However, because of the inevitable chicken-and-egg situation, the methanol motor fuel market will develop very cautiously during the late 1980s and early 1990s. The forecasting scenario presented recognizes this and relies on a shifting market structure--from the chemical market to the stationary fuel market to, finally, the motor fuel market--to assure development of the methanol production system to the point where it will adequately serve the transportation sector in the longer term. Methanol production projects aimed at the eventual motor fuel market must be in position in the mid-to-late 1980s selling to the lower margin stationary fuel and chemical markets. Then, by rapidly expanding production capacity, these producers will be able to capture good motor fuel market position by the mid- 1990s. Meeting this scenario schedule with the coal-tomethanol process requires that sizable demonstration projects get underway very soon because of the long Table 4. Estimated costs of synthetic liquid fuels in 1990 ( 1981 dollars) Fuel/source Gasoline/imported crude Gasoline/oil shale Gasoline/coal Methanol/coal Methanol/biomass Ethanol/biomass
Refined motor fuel(") S/gallon 1.27(b) 2.00-2.60 1.75-2.85 0.45-0.80 0.80-1.65 1.15-1.90
ta~Estimated wholesale price at the refinery gate. ~b~Based on imported crude oil price of $32.50/bbl (1980); refinery gate price assumed equal to 1.64 times crude oil acquisition cost; retail markup, delivery, and taxes will add another $0.30 to $0.40/gal. Source: adapted by author from cost estimates appearing in Refs [7] and [9].
GOODRICH:
A SYNFUELS ERA FOR THE UNITED STATES?
lead time needed (6--8 years) to verify the advanced technological concepts and prove their commercial viability. It also requires that the nation's automakers step up their R & D efforts on perfecting the methanol car and enter into extensive fleet testing agreements with governmental agencies and private entities. The nations's oil companies and fuel suppliers must begin planning a fuel delivery system that provides for the smooth, low-risk introduction of increasing quantities of methanol into the vehicle fleet. Also, the federal government must continue to evaluate fuel economy and exhaust emission standards and set reasonable future standards for the use of this motor fuel. The EPA, particularly, must begin to assess thoroughly a priori the safety, toxicity, and ecological impact aspects of widespread methanol usage. Especially important here is the need to demonstrate any health hazards arising from the exhaust emission products of detuned methanol cars characterizing an actual operating fleet of vehicles.
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REFERENCES
1. U.S. Energy Strategies: Some Options .[or Eliminating Oil Imports by the Year 2000, Study Report
MTP 81W0002, "'Reasonable Choices Scenario." The MITRE Corporation, McLean, VA (1981). 2. IBM., "Baseline Scenario." 3. Notes compiled from various presentations at Fueling America's Transportation Future, Special Panel Session of AIChE Summer National Meeting, Detroit, MI (1981). 4. Technology Assessment of Changes in the Future Use and Characteristics ~[' the Automobile Transportation System, Vol. II: Technical Report, Office of Technology
Assessment, U.S. Congress, Washington, DC (1979). 5. G. Kulp et al., Transportation Energy Conservation Data Book, 5 edn, ORNL-5765, Oak Ridge National Laboratory, Oak Ridge, TN (1981). 6. R. S. Goodrich, Chem. Engng Prog. 78, 29 (1982). 7. Energy' from Biological Processes, Vol. I, Office of Technology Assessment, U,S. Congress, Washington, DC (1980). 8. E. M. Dickson et al., Synthetic Liquid Fuels Det'elopment, Vol. II: Analysis, SR[ International, Menlo Park, Ca (1976). 9. The Emerging U.S. Methanol Industry': Structure, Financing and Market Strategies, Hagler Bailly, Washing-
ton, DC (1982).