Nuclear – Liquid Fuel Synergy
by David Archibald
18 November 2024
The story so far: world peak oil production was in November 2018. Since then, US tight oil production has risen by three million barrels per day, partially offsetting the decline of conventional oilfields around the world:
But all of that production growth for the last 10 years has been in the Permian Basin. There are signs that the inner core of that basin has tipped over into steep decline. For example, here is the chart of oil production versus the gas-to-oil Ratio (GOR) in Howard County, Texas. Howard County, a little place of 2,341 square kilometres, has had an oil production rate higher than Australia.
Howard County’s oil production has halved in the last 12 months, while the gas-to-oil ratio has nearly doubled. Once all of the counties in the Permian Basin tip over into decline, the decline in world oil production will become much steeper. Energy sources that can substitute for oil will approach the oil price in energy content terms, less the cost of conversion. The international LNG price is already there, because compressed natural gas can substitute for liquid hydrocarbon fuels.
At about US$110 per barrel for oil, coal can substitute for oil via the Bergius process. This will have profound economic effects, because, at that price, burning coal for power generation cost the same as using oil for that purpose. Australia is already going down that path in a futile attempt to keep our power grid stable under the increasing load of wind and solar inputs. Natural gas, supplied from new LNG terminals, is burned in in gas turbines to glue the grid together.
There is a solution that solves all our energy problems. Power from breeder reactors can provide the hydrogen for Bergius process plants, which will turn our coal reserves into diesel, petrol and jet fuel. This becomes economic at around US$110 per barrel, or perhaps at an even lower price. US$110 per barrel is A$1.08 per litre. Add distribution costs and you are likely to have a retail price of A$1.30 per litre before taxes.
The current technology that Bergius plants use to generate hydrogen is via steam reforming part of the process stream. Using an external power supply to generate hydrogen by electrolysis increases the fuel yield from coal by 20%, as well as making the process easier to manage. If nuclear is used to provide that power, the nuclear power plant becomes the largest component of the capital cost, so that determines the size of the plant. An ARC-100 reactor with a rated capacity of 150 MW and a capital cost of $938 million can produce the 139 MW needed to produce the hydrogen for a 8,000 barrel per day plant. The cost of the electrolyser capacity for a plant that size would be about $120 million. Then comes the Bergius plant which, without need of steam reforming, would be a simple tube about a metre in diameter with a wall thickness of perhaps 10 mm. The whole setup might cost around $1,650 million.
Process conditions for a Bergius plant are 300°C and 250 atmospheres. Both parameters are easily achievable, even around the house. Domestic ovens can get to 290°C and scuba tanks can be filled to 300 atmospheres. One constraint is that hydrogen causes embrittlement of carbon steel beyond 200°C, so process pipework will have to be made of stainless steel. This is not a problem either though. For example, SpaceX’s Starship used type 304 stainless steel before switching to its proprietary formulation.
One of the more fuel-efficient vehicles available at the moment is the Toyota Camry hybrid, which gets 20 km per litre. At that rate, and assuming vehicles average 20,000 km per annum, an 8,000 barrel per day plant will provide the fuel to keep nearly half a million cars on the road.
At the moment Australia is consuming one million barrels per day of fuel and producing oil at about one third that rate. Our fuel supply situation is precarious and the nation is at serious risk. This graph illustrates the best possible outcome to recover our situation from here:
We start building reactors and synthetic fuel plants from 2028 and then just keep on building. By 2037 we have fully substituted fuel imports and are able to start exporting product. The turnaround in our terms of trade will be significant. If we continue our current import trajectory, by 2030 we might be paying US$200 per barrel for 800,000 barrels per day. This would amount to $250 million per day and $91 billion per annum and make us much poorer. We could instead make our own diesel and petrol, so we should start doing so now.
There would be a further benefit by tying our synthetic fuel industry to come with a national power grid based on nuclear reactors. Our current situation is that average national demand is 30,000 MW, which spikes to 66,000 MW to meet peak air conditioning demand at the height of summer. It is possible to ramp nuclear reactors up and down to meet intraday changes in demand, but they prefer not to be treated this way.
Producing the hydrogen to make one million barrels per day of synthetic liquid fuel will require 19,000 MW. The electrolysers making that hydrogen can be turned down to 25% of rated capacity without affecting efficiency. It will be much cheaper to oversize the electrolysers and store the extra hydrogen in gasometers with floating roofs than to build the generating plant in the power grid to meet peak demand.
Australia produces about 500 million tonnes of coal per annum. At a yield of 5 barrels per tonne that would make close to 7 million barrels per day. Australia’s coal reserves of 140 billion tonnes could and should be converted to 700 billion barrels of liquid fuels, which is about three times the current Saudi Arabia’s oil reserves. If we produced at 10 million barrels per day, our coal reserves would last 200 years.
Now let’s look at it from a motorist’s perspective. The capital cost of making 1,000 litres of fuel annually for the hybrid Camry mentioned earlier would be about $3,500, which in turn is about 10% of the retail price of the vehicle. Most car owners would happily pay another 10% for their vehicle if that would guarantee its fuel supply. They just have to be given the opportunity.
What all this leads up to is this chart:
That chart, produced by the Australian Energy Regulator, show demand in the National Energy Market (NEM) as the orange line and installed capacity as the blue bars from 1998 to 2024. In the old days when we had the most cost-efficient power supply possible, the blue bars were just a bit higher than the orange line. Now we are on a trajectory to have three times as much installed capacity as power demand (with tens of thousands of tonnes of used solar panels and wind turbine blades going to landfill each year). This evens out the intermittency of wind and solar generation in the crudest way possible — overbuild it at great expense.
A better solution is to combine our power supply and our liquid fuel supply in the most cost-effective way possible, as illustrated by this graph:
This chart illustrates how it would work. Power demand goes up and down with the needs of the working day. Power supply has to be higher than peak demand, to have a margin of safety. As the price of fossil fuels goes up with exhaustion, the countries with the cheapest power and thus the greatest competitive advantage and in turn the highest standard of living will be those countries using nuclear power for their electric grids. Nuclear reactors can be designed to be load-following, but it is better to have them operate at a steady state.
To achieve that, and have a use for the power not needed by the grid at night, oversize the electrolysers for the Bergius plants we will using to make liquid fuels and temporarily store hydrogen produced overnight in gasometers. By combining our power system with what we will need for fuel production, we will have a larger, more resilient and lowest-cost energy system.
This is our lowest-cost solution and our best-possible solution. We should head down this path as quickly as possible.
David Archibald is the author of The Anticancer Garden in Australia.