[jtmorgan61]

Coal to oil and thermal depolymerization will have to replace 10% of the world's oil production within 5 years of 3% yearly depletion. 8-9 million barrels per day will need to be replaced. Tell us how many coal to oil plants will be needed to fill that order. Tell us how much coal will be needed to fill that order. Not only will we have to build the infrastructure for coal to oil, but also to mine much more coal. We can't just take coal from other parts of the economy, we will have to actually mine more coal. How can this be done? The answer is it won't. It's time to wake up.

Just explain to me what it would take to replace 8-9 million barrels of oil per day. Until you do, I don't see how you can continue the discussion. If you want to get even more realistic, make it 15 million barrels per day, to take into account economic growth requirements on oil. Just tell me what it would require and where it is going to come from.

Take a look at my conversation with JohnDenver on the thread "Why oil alternative fuels will fail." The last 4 or 5 pages are basically this question in (excruciating) depth, although we're looking mostly at the more extreme scenario of 40mbd over 10 years.

The executive summary:
Let's say 9 mbd from coal to oil.

Money: China's plant is $6 billion, will produce 150000 bd (or 15000 barrels/day/line). That means we need 60 of these plants. That's $360 billion or about $72 billion a year.

Coal: Right now the US produces 1 billion tons of coal a year. (I believe the world produces perhaps 4 billion tons a year). Coal to oil conversion produces perhaps 3 barrels of oil per ton. Let's say we have to do about 2.5 mbd of the 9 mbd in the US (i.e. exactly in line with our 250 Gton reserves vs. 900 Gton world reserves and close to our percentage of the world economy). That's about 1 Gby. we need to do about have to expand coal production by ~350000 tons (35%) over 5 years, eventually up to about 700000 tons (70%) over 10 years. That's a big scale, but don't forget (1) we have some spare capacity as a number of coal mines have closed due to price competition (2) we increased production by 47% over 25 years without a blip.

We won't run out of coal too soon with increased production either, the US currently uses 1/250 billion tons a year (vs. 30/1000 Gb oil/yr) and doubling usage still puts us way, way below the use rate of oil.

Steel: Steel insiders are only worried about demand for steel peaking when China's growth slows down. Steel demand is at peak when economies are growing at their fastest (i.e. when the most new industrial construction is going up). US and Japanese demand already peaked quite a while ago. Steel should not be a problem.

What about TD taking up half, say 5 mbd, of the slack?

Money:
The other thread establishes profitability at around $80/barrel.

It's about $30 million for that 500 bd plant in missouri. Since it's a pilot plant and refineries get good economy of scale, I guess a 2000 bd plant will cost $100 million. So we would need 2500 plants to take up half of the slack. That's $250 billion, or $50 billion/year.

Trash:
4 billion tons of agricultural waste, 8 billion tons of industrial waste, in the US alone per year. 1 ton of waste = >1 barrel of oil. 5 mbd = ~2Gby. So we cover world production with about 1/6 of US waste alone.

Where is the money going to come from? Add up TD and coal and you're looking at $125 billion/year to produce 14 mbd, add liberally another $75 billion to scale up coal mining. The US government alone could cover this if they had to. However, private industry is going to do this, because they can make money (although of course they will also take as many subsidies as they can). The global energy market was $3 trillion in 2004. ExxonMobil alone spent $275 billion last year, and 3 other majors are not far behind in size.

So yeah, I think we can fund it.

These numbers should make it clear that without advance planning, we are likely looking at a long recession with high prices while production capacity is built. But they also suggest that coal to oil (and to a lesser extent, TD) can be done on a scale to cover the gap.

[jtmorgan61]

I agree with JTMorgan that peak oil will not result in a die off or full scale collapse but I do hope the economic havoc that it will initiate may serve as a Wake Up call to our society and culture to move us toward a sustainable future. I dont see far reaching changes happening to our government corporations or our economic system without a severe crisis caused by peak oil to initiate this transformation.

You understand me completely!

[jtmorgan61]

Tire manufacturers are running at capacity and don't particularly want to expand, because they fear a future collapse in demand that will leave them with excess capacity.
Scale that up.

I agree that it's a problem. I think my summary above is suggestive that scaling fully and quickly enough to prevent any economic disruption will be problematic, and that we are likely looking at a substantial recession. I think it also suggests, however, that a good deal of infrastructure is going to be built, enough to mitigate the worst impacts of the oil peak.

Here is my "extremely optimistic but possible" scenario for the future:

Iraq finishes off the neocons' desire for resource war. According to the Economist, only a few years ago they were openly joking in the white house about whether to turn left for Syria or right for Iran. Now they are looking to pull out and have accepted that a republican won't be elected in 2008 without a stable, american-free Iraq. The war weakens America's position relative to the rest of the world, and finishes off American willingness to launch pre-emptive attacks. Moderately higher oil prices spur a big move towards hybrids and continue to grow solar and wind companies until they are capable of making significant contributions to generation capacity.

Oil peaks in a couple of years. Oil majors, etc. are caught somewhat off guard and unable to scale completely and quickly enough (it takes 3-5 years to build a coal to oil plant). But they are able to catch up somewhat, and aggressive exploration and tertiary recovery keeps the global decline rate below 5%. This produces $80-120/barrel oil, which I believe will produce a hard recession but not a depression.

It's a strong enough signal to throw resource depletion in the face of the average joe. Everyone demands hybrids and plug-in hybrids, and with demand high, research into battery technology explodes. The new vehicles dramatically improve fuel efficiency. As more fuel efficient methods are switched in, the economy can begin growing again even with pricey oil. Ideally the environmental movement is able to connect the idea of limits to the entire ecosystem, and put pressure on government to move away from coal and gas generation towards ever cheaper, non-depleting renewables and/or nuclear.

[pilferage]

The grid's already in place. Assuming we replace private transport with vehicles analogous to the air car, then each vehicle should cost ~10k new, and we'll need ~80-100 more nuclear reactors to provide the baseload needed to charge them. A organizational restructuring of the grid is needed too (iirc we waste quite a bit because of company profit)...
An electric car would cost more initially, but would be more efficient and result in fewer power plants needed. Of course this isn't taking into account renewables, which could pick up some of the needed capacity.
Either way it's doable. What would be really interesting is if viable fusion, suddenly popped up a few years after peak....

[Falconoffury]

Jtmorgan, thank you for your reply. It was well written and informative.

One thing you haven't factored in yet is electrical requirements of coal to oil infrastructure. It is likely that we will have to expand our ability to produce electricity if we expect to have thousands of coal to oil and thermal depolymerization plants running.

You said we increased our coal production by 47% in 25 years. Since coal is becoming less economically viable than it was 25 years ago, and we only are talking about 5 years time to make up for depletion of oil, I think it's more realistic to cut the 35% in half to about 17% in 5 years.

It looks to me like, after 5 years of depletion, coal to oil and thermal depolymerization will be able to only keep oil production flat in the best of cases. If oil depletion remains at about 3% after the first 5 years, then it doesn't look as if these technologies will be able to do any more than keep oil production flat for a number of years. Finally, even these technologies will eventually find their limits and fail to offset depletion.

It looks like your ideas will probably stretch out the recession and delay a fullblown great depression, but that isn't going to stop a dieoff. It's just going to take longer to hit the dieoff. We can expect depletion to start taking hold in 2007-08 for oil. By 2012 expect a strong recession. In some parts of the world, starvation can be expected to hit hard around 2012. If the United States decided to stop sending all aid to Africa, that would cause millions of deaths alone. Some countries will take longer to come into famines than others, but you can expect world population growth to halt sometime around 5-8 years from now. We are coming into a long-lasting recession very soon, and the longer a recession lasts, the worse things get for quality of life. You could say it's a "Long Emergency" to quote the title of a book.

[MattSavinar]

I guess you're free to bury your gold in the desert or whatever if you mistrust the system that much.

[/QUOTE]

As a matter of fact, that is exactly what I do. And I bet it's what a lot of the employees and investors in Enron, Worldcom, GM, Ford, Delta, United, Arthur Anderson, numerous tech/dot com companies wish they had done with their money back in 2000-2001 when gold was $250 or so. (Its $440, roughly. I don't keep track on a day-to-day).

Matt

[jtmorgan61]

One thing you haven't factored in yet is electrical requirements of coal to oil infrastructure. It is likely that we will have to expand our ability to produce electricity if we expect to have thousands of coal to oil and thermal depolymerization plants running.

Since we're looking at adding about 10% to the annual energy supply expenditure, itself less than 10% of GDP, I don't expect it to be a major disruption, although I'm sure it could bump construction prices another 10-20%. I'm sure if I ran the numbers for a 5% expansion in electricity output with nuclear, it would certainly be a reasonable cost, although again the infrastructure wouldn't run in time to prevent short-term problems.

It looks like your ideas will probably stretch out the recession and delay a fullblown great depression, but that isn't going to stop a dieoff. It's just going to take longer to hit the dieoff. We can expect depletion to start taking hold in 2007-08 for oil. By 2012 expect a strong recession. In some parts of the world, starvation can be expected to hit hard around 2012. If the United States decided to stop sending all aid to Africa, that would cause millions of deaths alone. Some countries will take longer to come into famines than others, but you can expect world population growth to halt sometime around 5-8 years from now. We are coming into a long-lasting recession very soon, and the longer a recession lasts, the worse things get for quality of life. You could say it's a "Long Emergency" to quote the title of a book.

In the first world, the longer the stretch in time, the more likely that hybrid and plug-in hybrid technology will prevent demand from growing (remember 70% of oil goes to personal transport). Plug-in hybrids in particular have the potential to raise gas mileage to 100 mpg or more, since most consumers would use *no* gas on a given day. Ideally non-fossil fuel technologies, like full-on electric cars, and more eco-friendly city reorganization will come along if enough time is bought with a strong price signal.

The third world, now that's another story entirely. I wouldn't expect a major recession to stop supply of aid, and I haven't done a country by country analysis of to what extent green revolutions have been carried out in these countries and to what extent they would be disrupted by higher oil prices. Perhaps someone could point me towards a thread or detailed analysis?

I remain convinced that:
1. Alternative production technologies and enhanced recovery will mean a more gradual transition away from fossil fuel than most doomers appreciate.
2. That if the transition is gradual there are currently technologies in development that will replace most non-plastics fossil fuel usage (and in the long, long run TD could recycle all of our plastics).
3. That after these technologies are introduced, continued economic growth is possible.
4. That although millions of people in the most marginal conditions may die, and it is a horrible thing, we are unlikely to see the billions of deaths, not to mention permanent reversion to a feudal society, that most around here seem to predict.

[jtmorgan61]

What would be really interesting is if viable fusion, suddenly popped up a few years after peak....

It would be sweet, but ITER, which I think might be completed in 2010 or so, is a prototype for a demo for an actual commercial reactor. Right now they have no proven designs that efficiently capture the produced energy. In addition, the enormous reactor size needed to produce net energy has led some to calculate that fusion power is unlikely to ever be much cheaper than nuclear. (Obviously, it's cleaner though not totally clean).

If everything goes absolutely perfectly we could see commercial fusion as early as 2025, but I certainly wouldn't bet on it.

[EnergySpin]

That after these technologies are introduced, continued economic growth is possible.

No you need energy for that ... unless you find an infinite energy source, continued growth is not possible. This defies all laws of physics. If you make the argument that the economy demateriliazes and that "knowledge" is key ... then how are you going to interface this economy to the material world (after all "knowledge producers" have to eat, clothe, house themselves)? You will run again to material/energy limits

not to mention permanent reversion to a feudal society, that most around here seem to predict.

What's the difference between a bank leasing you the land you need to grow stuff or your house and feudalism? That was a leasing kind of deal as well. Feudalism is inevitable unless we kill the free market.
Most of the people in this forum will end up working for a master ... unless they decide to something about it.

[EnergySpin]

What would be really interesting is if viable fusion, suddenly popped up a few years after peak....

It would be sweet, but ITER, which I think might be completed in 2010 or so, is a prototype for a demo for an actual commercial reactor. Right now they have no proven designs that efficiently capture the produced energy. In addition, the enormous reactor size needed to produce net energy has led some to calculate that fusion power is unlikely to ever be much cheaper than nuclear. (Obviously, it's cleaner though not totally clean).

If everything goes absolutely perfectly we could see commercial fusion as early as 2025, but I certainly wouldn't bet on it.

Energy is not a commodity. Energy is life ... life is priceless. JT for someone who can at least maintain a conversation you are so naive. I would suggest a thermodynamics and basic biology textbook to see why these arguments are misguided. As long as you can produce more energy out of an energy investment than you put in, then this investment is worthwhile. If fusion is physically feasible on this planet, then fusion should be pursued. The EROEI for a fusion reactor (if it is possible) will be a ridiculous figute ... probably in the 100000 range

[SchroedingersCat]

One of things I don't see mentioned when profitability of building alternatives is brought up is the cost of money. People with money to invest will put it where it makes the biggest return. People who borrow money need it to start working immediately to cover their interest. And the return needs to be greater than the money cost.

Oil is expensive to buy right now, but cheap to produce. The market price is completely decoupled from the production costs. If CTO should be considered competitive at $35/bbl because oil is selling at $60, the point is missed that the barrel of oil was produced for $1-$2.5/bbl. Including initial capital. The EIA did a study back in the mid-90's about the cost associated with increasing production in the middle east. Try here

If CTO or TD were anywhere near as profitable as oil the investors would be all over it. By the time it is, we won't have the resources left to make it happen.

[oiless]

Here you go guys, fly at it.

http://www.equipmatching.com/used_equip ... /31589.php

I've been trying to educate myself on coal liquefaction today. Does anyone have an answer to how much liquid fuel (barrels) can be produced from a ton of coal? Someone mentioned an efficiency of 70% and 7 barrels per ton.
I'm having a hard time finding consistant data, I find claimed thermal efficiency numbers of 40-65%, and claims of up to 5 barrels per ton with high quality coal.
However, when I try crunching numbers on existing and "in the building stage plants" I get numbers from 2 to 3.9 barrels/ton. Unfortunatly the throughput numbers vary from source to source, and I end up converting tons/liquid to barrels, making the whole thing guesswork.
Does anyone have reliable throughput numbers for existing plants, or reliable predicted numbers for the plants going up in China?

[MattSavinar]

Here is my "extremely optimistic but possible" scenario for the future:

Moderately higher oil prices spur a big move towards hybrids and continue to grow solar and wind companies until they are capable of making significant contributions to generation capacity.

Wind/solar combined account for 1/6 of one percent of our energy usage. So even if they grow by 600% relative to their current proportion, we're still talking 1%

And they are not transportation fuels.

Hybrids: even if every car in America was magically "hybridized" overnight, we'd be back using the same amount of gas in 7 years as we are now.

_____________________________________________________________

Oil peaks in a couple of years. Oil majors, etc. are caught somewhat off guard and unable to scale completely and quickly enough (it takes 3-5 years to build a coal to oil plant). But they are able to catch up somewhat, and aggressive exploration and tertiary recovery keeps the global decline rate below 5%. This produces $80-120/barrel oil,

A few big assumptions, don't you think? When oil supply dropped 5% per year back in the 70's, we got more like 400% price spikes by the time we got to around 15% reduction in supply. (those aren't exact numbers).

And what happens when there is some type of artificial disruption on top of the geologic 5% decline? Oil spikes from your (optimistic) $100 midpoint to $200, $300, $400. . . . ? See the "Oil Shockwave" war game played out in Washington recently for an example of what I'm talking about.

_____________________________________________________________

It's a strong enough signal to throw resource depletion in the face of the average joe. Everyone demands hybrids and plug-in hybrids, and with demand high, research into battery technology explodes. The new vehicles dramatically improve fuel efficiency. As more fuel efficient methods are switched in, the economy can begin growing again even with pricey oil. Ideally the environmental movement is able to connect the idea of limits to the entire ecosystem, and put pressure on government to move away from coal and gas generation towards ever cheaper, non-depleting renewables and/or nuclear.

[/QUOTE]

Or maybe we'll just invade Iraq.

[MattSavinar]

not to mention permanent reversion to a feudal society, that most around here seem to predict.

[/QUOTE]

Been to Texas lately?

[jtmorgan61]

No you need energy for that ... unless you find an infinite energy source, continued growth is not possible. This defies all laws of physics. If you make the argument that the economy demateriliazes and that "knowledge" is key ... then how are you going to interface this economy to the material world (after all "knowledge producers" have to eat, clothe, house themselves)? You will run again to material/energy limits

Yes, but you effectively shift your demand to the electric grid. There you can scale up renewables (somewhat) and nuclear, plus keep using coal. Hopefully good renewables and fusion eventually make up most of the electricity portfolio. Then you are in quite good shape for quite a while.

What's the difference between a bank leasing you the land you need to grow stuff or your house and feudalism? That was a leasing kind of deal as well. Feudalism is inevitable unless we kill the free market.
Most of the people in this forum will end up working for a master ... unless they decide to something about it.

Geographical mobility. Choice. Standard of living. Chance of getting ahead economically.

I think the reference here came out of reading Stanton's comments in the previous edition of ASPO - it was fresh on my mind as I had just been reading a thread about it.

[MattSavinar]

What about TD taking up half, say 5 mbd, of the slack?

Money:
The other thread establishes profitability at around $80/barrel.

It takes $1 to pull a barrel out of the ground in Iraq. At $100/barrel on the market, that's a 100/1 return on investment.

It takes $80 to produce a barrel of oil from thermal depoloymerization. At $100/barrel on the market, that's a 1.25/1 return on invesment.

If you were a major investor, energy company, where are you going to put your money, especially when the external costs of the oil from Iraq are paid for by the taxpayers?

You think the big players don't know about TDP and Peak Oil? Of course they do. Yet the company, according to the Januray issue of Fortune, needed a $10 million dollar grant from the DOE to keep it's head above water.

If TDP is going to play the role you think it is, and if the major players know about it and Peak Oil (as they most certainly do), then why did the company need a government handout to keep going?

And let me remind you that despite two years of constant hoopla amidst the doubling of oil prices, the company still has only one plant producing about 200 barels a day of heating oil with no plans for future plants in the states either.

That doesn't sound like something that is going to play a major role in softening the decline.

Matt

[jtmorgan61]

Energy is not a commodity. Energy is life ... life is priceless. JT for someone who can at least maintain a conversation you are so naive. I would suggest a thermodynamics and basic biology textbook to see why these arguments are misguided. As long as you can produce more energy out of an energy investment than you put in, then this investment is worthwhile. If fusion is physically feasible on this planet, then fusion should be pursued. The EROEI for a fusion reactor (if it is possible) will be a ridiculous figute ... probably in the 100000 range

You need to look at this with a level head and assume market economics will continue to dominate.

Investment in an energy option is only going to happen on a wide scale if it is the cheapest way to produce electricity. (Obviously there could be security and diversification issues driving gov't investment as well, and we should be factoring environmental impact into the costs.)

An extensive read of fusion boards has convinced me that right now we don't have a great way to capture fast neutrons as energy. Producing 10000x is useless if we can't capture any of it. It's also useless if it costs so many billions to build a plant that we could have made it cheaper using, say, solar power satellite technology.

As I've said before I'm hopeful for fusion long-term, but if it can be done my over/under for it coming to market is 2030.

[jtmorgan61]

If CTO or TD were anywhere near as profitable as oil the investors would be all over it.

They would be all over it right now if the prevailing wisdom in the oil industry wasn't that oil will go back below $40/barrel when new projects come online in 2007.

China's first plant is still aimed at $30-35/barrel oil.

By the time it is, we won't have the resources left to make it happen.

I think the above summary makes it clear that this is a relatively small fraction of our current GDP. I believe that there will be bottleneck issues, but unless global decline is something on the order of 10%+ I don't see how the situation gets away from us. Especially since we will probably see everyone accept incipient peak oil within 2 years (when the impact of the large number of megaprojects, perhaps 10 mbd, can be assessed).

[MattSavinar]

It looks like your ideas will probably stretch out the recession and delay a fullblown great depression, but that isn't going to stop a dieoff. It's just going to take longer to hit the dieoff. We can expect depletion to start taking hold in 2007-08 for oil. By 2012 expect a strong recession. In some parts of the world, starvation can be expected to hit hard around 2012. If the United States decided to stop sending all aid to Africa, that would cause millions of deaths alone. Some countries will take longer to come into famines than others, but you can expect world population growth to halt sometime around 5-8 years from now. We are coming into a long-lasting recession very soon, and the longer a recession lasts, the worse things get for quality of life. You could say it's a "Long Emergency" to quote the title of a book.

In the first world, the longer the stretch in time, the more likely Ideally non-fossil fuel technologies, like full-on electric cars, and more eco-friendly city reorganization will come along if enough time is bought with a strong price signal.

Go to the city council of your nearest big city. Propose they put bike lanes in the major streets. Come back and make the same assumptions about "eco-friendly city reorganization" happnening. Maybe some small towns like Willits and Sebastopol out here in the 707 area code will make some attempts, but that's about as far as your going to get.

New York, Miami, Los Angeles? Their idea of "eco-friendly city reorganization" is to reorganize people's faces when they start protesting gas prices.

Look what is happening to Amtrak. BART in the Bay Area is in debt up to its eyeballs. . . The exact opposite of what you anticipate is what is really happening despite the fact that oil prices have tripled since 9/11 and we are in what should be an obvious "war for oil"!

And since when is a full-on electric car a "non-fossil fuel technology."? If your municipality uses coal, for instance, your plug in car is a coal-powered car/

[MattSavinar]

I'll bet quite openly that less than 1% of US presidents have been impeached for lying.

That doesn't mean most haven't lied.

Right, and there's certainly some corruption at many corporations. But most of them aren't dirty enough to collapse like those companies. The poster I was responding to picked extreme examples to argue that every corporation is basically in existence to hurt people. I instead argue that every corporation is in business to make as much money as possible, and most of them blithely disregard whether they are hurting people or not. A rare few have someone rise to the position of CEO who tries to take as much money as possible, but rare is the CEO who gets away with it for long.

If you opened a barrel of apples, and the top apples happened to be totally rotten, do you think the rest are going to be edible?

This is a poor analogy.

You're right. I forgot to mention that it has been confirmed that the security staff of the Supermarket are laundering massive amounts of drug money and that the manager's staff is best friends with the apple companies that supplied the worst, most rottenest apples.

And the supermarket is on it's way to bankruptcy by 2011, is under attack by gang members,has a staff/work force on the verge of attacking each other, etc.

I also forgot to mention that the manager is a dry-drunk who ran several previous enterprises into the ground but was saved with the help of money from the family of one of one of the top gang leaders.

Matt