Australia’s Fuel Supply In The Long Term. By David Archibald.

To recap, back in the 1950s it was realised that our fossil fuel endowment would be exhausted one day and nuclear power would have to be commercialised to maintain civilisation at the level to which we have become accustomed. Shell Oil geologist King Hubbert worried about civilisation’s ‘margin of safety’ in getting the right nuclear technology sorted before fossil fuels ran out. There has no real progress in nuclear technology since Congress killed the breeder reactor project in 1983.

 

 

Peak oil was expected to happen in 2005. LNG receiving terminals were being built on the US Gulf Coast to import the natural gas that would be needed. Instead, the US shale oil boom started, the LNG receiving terminals were converted into export terminals and the civilisational party went on for another 20 years. The shale bounty was squandered. The oil price is rising again with the peak in US oil production, overprinted by localised shortages due to reliance on supply from the Middle East.

The short-term solution is to build coal liquefaction plants. But we know that our coal endowment will run out, and natural gas before that. Lack of alternatives will force us to the right solution in the end; our only choice is how much pain we endure in the interim. …

Liquid hydrocarbons are irreplaceable in terms of energy density and convenience of handling. We have lot s of coal. So, coal-to-liquids is the obvious future:

There are two choices in coal liquefaction processes: Bergius and Fischer-Tropsch, both invented in Germany in the 1910s.

In the Bergius process, hydrogen is forced into coal molecules at a temperature of 450˚C and a pressure of 170 kg/cm2 (165 atmospheres or 2,420 psi).

The Fischer-Tropsch process burns coal in pure oxygen to produce a synthesis gas that is catalysed to long chain hydrocarbons in an oil bath. Bergius is the better process. In WW2, German synthetic fuel production was dominantly via the Bergius process:

 

 

Cost per liter of a Bergius plant? About A$1.21 per liter (~US$135 per barrel).

The wholesale price is affordable. What about the capital cost per consumer? The drive-away price of a Toyota Corolla Hybrid is $37,000. Its fuel consumption rate is 25 kilometres per litre. If the vehicle does the normal 20,000 km per year, that is 800 litres to get there. The capital cost of a litre of annual production is $2.63. If we multiply that by the 800 litres of fuel consumption per annum, the Corolla’s share of the cost of the Bergius plant to supply it is $2,100. This is 5.7% of the drive-away price, less than the cost of a refrigerator or some TVs, and a fraction of the $8,000 you can pay for extra trim for the Corolla. Car buyers should be given the option of buying a perpetual fuel supply for their vehicles.

It is the same story with wheat-growing. Medium-rainfall country in the WA wheatbelt is currently selling for $7,500 per hectare. Each hectare is expected to produce 2.5 tonnes of wheat per hectare, using 15 litres of diesel per tonne in no-till cropping, equating to 38 litres per hectare.

At the moment, that diesel supply is on a hand-to-mouth basis. The farmer might get his crop in, but will there be diesel for sale come harvest? To reduce risk he could buy in the diesel for harvest at the time of planting and keep it in tanks on the farm. Better yet, he could guarantee supply in perpetuity by paying $2.63 per annual litre of production from a Bergius plant for an outlay of $100 per hectare, increasing his capital outlay by 1.3%. The cost of disruption is far, far greater than the outlay for fuel supply to the farm. The same is true for mining, trucking and all the other activities of productive people. And it applies to aircraft:

 

 

China has supplied 30% of Australia’s jet fuel consumption. It was stupid to get ourselves into that situation. We could be making all the jet fuel we need ourselves. … Everyone else on the planet is now aware of just how stupid Australia has been on this subject. This is a recent headline:

 

 

… Bergius plants are the near-term solution. Longer term it will always be nuclear, specifically lead-cooled or molten-salt cooled breeder reactors (sodium is too messy).