ENERGIZING OUR FUTURE

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ENERGIZING OUR FUTURE

• A RATIONAL LOOK AT OUR ENERGY CHOICES FOR THE
  21ST CENTURY
  
• PRESENTED AT THE TECHNOLOGY FORESIGHT MEETING,
  NCMS, ANN ARBOR, 17 JUNE, 2004
  

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A FEW FACTS

• CURRENT WORLD ENERGY USE 400 QUADS
• PROJECTED 2020 CONSUMPTION 610 QUADS
• MAY BE MORE IF CHINA MAINTAINS PRESENT PACE
• 1.9 MILLION BBL/YR IN 2002 ? 3.65 BILLION BBL/YR
  IN 2025 AN INCREASE OF ALMOST X2000
  
• WHERE WILL THE INCREASE OF 210 QUADS BY 2020
  COME FROM?
  
• IT HAS TO BE OIL, NATURAL GAS, COALVIA
  DERIVATIVES LIKE ELECTRICITY, HYDROGEN
  
• RENEWABLES WILL NOT CONTRIBUTE MUCH
• IN THE U.S., ONLY 12 NOW AND MOST OF THAT IS
  HYDROELECTRIC. ONLY WIND ENERGY IS GROWING
  
• SOLAR PV OR SOLAR THERMAL IS TOO COSTLY FOR OTHER
  THAN POOL HEATING OR DRIVEWAY LIGHTS.

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THE USUAL MYTHS (1)

• WE ARE RUNNING OUT OF OIL
• DEPENDS WHAT OIL IS BEING DISCUSSED
• CONVENTIONAL, LOW-COST OIL? YES, IN THE U.S.,
  SINCE THE 1970s IN 20-40 MORE YEARS GLOBALLY
  
• UNCONVENTIONAL, HIGHER-COST OIL? NO, NOT FOR A
  LONG TIME BUT IT WILL COST A LOT MORE BY 2020
  
• ESPECIALLY IN THE U.S. CANADA E.G., DEEP
  OFFSHORE GULF, ARCTIC, OIL SANDS, EVEN SHALE OIL
  
• THERE IS ALMOST CERTAINLY A LOT OF UNPROVEN,
  UNEXPLORED OIL IN IRAQ, LIBYA, SAUDI ARABIA
  
• SOME OF THIS IS REALLY CHEAP OIL
• BUT RAPID GROWTH IN WORLD DEMAND WILL ENSURE THAT
  PRICES, AS OPPOSED TO COSTS, REMAIN HIGH
  
• WORLD-WIDE, SUPPLIES ARE GOOD FOR 50 YEARS, MAYBE
  75 BUT THE PRICE WILL HURT BY 2020 OR SO.

4
THE USUAL MYTHS (2)

• WE HAVE UNLIMITED NATURAL GAS RESOURCES
• NO IN NORTH AMERICA! YES GLOBALLY
• U.S. HAS 8-10 YEARS OF PROVEN ( ECONOMICALLY
  VIABLE) RESERVES FAR SHORT OF PROJECTED NEEDS
  
• WE ARE ALREADY IMPORTING INCREASING AMOUNTS OF
  LNG AT 4.50, THUS FURTHER INCREASING OUR ENERGY
  DEPENDENCE
  
• THERE IS A LOT MORE GAS IN HIGH-COST UNPROVEN
  AREAS
  
• DEEP OFFSHORE, ARCTIC OFFSHORE, MARINE AND
  PERMAFROST METHANE HYDRATES, COAL BED METHANE,
  TIGHT GAS.
  
• WILL TAKE MANY YEARS, HUGE INVESTMENTS, TO
  DEVELOP
  
• NONE WILL BE DEVELOPED BY INDUSTRY UNLESS GAS
  PRICES HOLD AT OR ABOVE PRESENT LEVELS NEED
  10/MMBTU!
  
• PLENTY OF GAS IN GEOPOLITICALLY DIFFICULT AREAS
  E.G., RUSSIA, KAZAKHSTAN, IRAN, QATARBUT NOT
  U.S. AND CANADA
  
• LONG-DISTANCE TRANSPORTATION OF LNG HAS ITS
  RISKS
  
• CONVERT GAS TO LIQUIDS, TRANSPORT THOSE
  INCOGNITO
  
• AS IN QATAR NOW

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THE USUAL MYTHS (3)

• THE HYDROGEN ECONOMY WILL SAVE US!
• IT WILL NOT
• HYDROGEN IS AN ENERGY CARRIER, NOT A SOURCE
• IT MUST BE MADE FROM GAS, OIL, MAYBE COAL
• IT DOES NOTHING FOR OUR ENERGY INDEPENDENCE
  UNLESS WE FIND A WAY TO MAKE IT AT A COMPETITIVE
  COST FROM RENEWABLE RESOURCES WE HAVENT!
  
• SOME COMPARATIVE COSTS ON THE NEXT SLIDE
• CONVERSION OF NATURAL GAS, OIL, COAL TO HYDROGEN
  ARE ALL TECHNICALLY POSSIBLE, AT A PRICE.
  
• ALMOST ALL GENERATE SOME OF THEIR HYDROGEN FROM
  STEAM E.G., METHANE REFORMING CH4 H2O ? 3H2
  CO
  
• THE ONLY ECONOMICALLY VIABLE OPTIONS ARE NATURAL
  GAS (WE DONT HAVE ANY TO SPARE, COAL (USES A
  LOT OF WATER), MAYBE NUCLEAR/REFORMING (NOBODY
  WANTS IT!)

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HYDROGEN MANUFACTURING COSTSFEBRUARY 2004 NRC
STUDY
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A LOOK AT THE FUTURE

• WE HAVE A LOT OF COAL (257x109 MT) IN U.S.,
  CANADA
  
• AS DOES THE REST OF THE WORLD (727x109 MT)
• GOOD FOR SEVERAL HUNDRED YEARS AT PROJECTED USE
  RATES
  
• BUT WE NEED TO FINISH DEVELOPING CLEAN COAL
  TECHNOLOGY PREFERABLY WITH CO2 SEQUESTN
  
• THERE IS A LOT OF WELL-ESTABLISHED OLD (1978)
  TECHNOLOGY FOR CONVERSION TO WIDE RANGE OF FUEL
  LIQUIDS, GASES
  
• NEED TO STOP TALKING, START DOING ON CLEAN COAL
  AND TO STOP SPENDING THE ON HYDROGEN
  
• HYDROGEN IS GREAT AS A CHEMICAL FEEDSTOCK FOR
  HYDROGENATION, BUT NOT AS A FUEL
  
• SOME WOULD PREFER TO SEE NUCLEAR RATHER THAN
  COAL, BUT PUBLIC RESISTANCE IS LIKELY TO PREVENT
  THIS

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A LOOK AT THE FUTURE

• IN GENERAL
• ENERGY PRICES WILL CONTINUE TO RATCHET UPWARD
  SLOWLY WITH NO LONG-TERM RELIEF
  
• TRADERS IN ENERGY COMMODITIES (WHO REALLY CONTROL
  PRICES) WILL CONTINUE THEIR PARANOIA AND
  OVER-REACT TO OPEC ANNOUNCEMENTS, MID-EAST
  DISTURBANCES, REFINERY FIRES..AND THUS
  CONTRIBUTE TO RISING PRICES
• WE WILL CONTINUE TO USE HYDROCARBON FUELS FOR AT
  LEAST 50 MORE YEARS, BUT WITH INCREASING EMPHASIS
  ON CO2 SEQUESTRATION (OR SOME NEW EQUIVALENT),
  LOW-CARBON FUELS AND BIOFUELS (WITH ZERO NET
  CARBON EMISSIONS)
• THE INFRASTRUCTURE IS IN PLACE FOR LIQUID FUELS,
  HYDROCARBON GASES, BUT NOT FOR HYDROGEN.
  
• ELIMINATION OF CO2 ALONE WILL NOT ELIMINATE
  GLOBAL WARMING. IT IS ONLY ABOUT ONE-THIRD OF
  THE PROBLEM!
  
• GET USED TO IT!

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A LOOK AT THE FUTURE

• TRANSPORTATION (PERSONAL, COMMERCIAL)
• LIQUID FUELS WILL PREVAIL, INCLUDING
• BIOFUELS WITH CLOSED-LOOP CARBON CYCLES
  (BIODIESEL, BIOMASS-BASED GTL (FT) FUELS
  
• OXYFUELS (SUCH AS DIPROPYL ETHER OR DIPENTYL
  ETHER) AS GASOLINE AND DIESEL ADDITIVES OR EVEN
  SUBSTITUTES THEY ARE INEXPENSIVE AND RELATIVELY
  CLEAN
• HYBRID POWER TRAINS ESPECIALLY DIESEL/ELECTRIC
  WILL PLAY A MAJOR ROLE UNTIL WE CAN COME UP
  WITH A MUCH BETTER LOW-C POWER SOURCE THAN
  HYDROGEN
• FOR SOME YEARS, EVs AND SOLAR POWERED VEHICLES
  WILL PLAY A MINOR ROLE BECAUSE OF HIGH FIRST
  COSTS AND BATTERY REPLACEMENT COSTS THEY HAVE A
  BETTER LONG-TERM FUTURE
• LI-ION BATTERIES CAN ACHIEVE THE RANGE, BUT COST
  IS HIGH
  
• HYDROGEN VEHICLES WILL FIND A NICHE A SMALL ONE
  STARTING IN ABOUT 2025 BUT WILL NOT BE A
  SIGNIFICANT FACTOR FOR 45-50 YEARS, IF EVER.

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A LOOK AT THE FUTURE

• MANUFACTURING
• ELECTRICAL WILL BECOME MUCH MORE COSTLY
• NATURAL GAS SHORTAGES LIKELY BY 2010-2015. GAS
  WILL ALSO BECOME MUCH MORE COSTLY. SHORTAGES
  WILL END BY 2020-2025, BUT PRICES WILL REMAIN
  HIGH
• LIQUID FUELS WILL ALSO BECOME MORE COSTLY BUT
  ABSENT INTERNATIONAL CONFLICT, NOT BY AS MUCH AS
  GAS A BREAK FROM TRADITION
  
• THERE WILL GROWING USE OF LIQUID FUELS FOR
  DIESELS OR GAS TURBINES THAT ARE CARBON-NEUTRAL
  OR OFFER LOW-CARBON EMISSIONS (BIODIESEL,
  BIOMASS TO LIQUID (BTL) FUELS)
• HYDROGEN WILL BE USED FOR STATIONARY FUEL CELLS
  ONLY, BUT BEWARE REAL-WORLD HYDROGEN COSTS THEY
  WILL ALSO INCREASE AS FUEL COSTS INCREASE ABSENT
  ANY REAL PROGRESS IN LARGE-SCALE RENEWABLE ENERGY
  DEVELOPMENT
• TRUST BUT VERIFY - PERFORM A SOURCE-TO-USE ENERGY
  AND COST ANALYSIS!

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A LOOK AT THE FUTURE

• CONCLUSIONS
• GRADUAL TRANSITIONS OVER 50 YEARS, NO SUDDEN
  STEP FUNCTIONS
  
• HYBRID POWER TRAIN TECHNOLOGY WILL PREVAIL FOR
  MOST FORMS OF TRANSPORTATION BY 2020-2030
  
• GRADUALLY INCREASING PRICES FOR OIL, GAS WILL
  PROVIDE INCENTIVE FOR DEVELOPMENT NEW HIGH-COST
  ENERGY SOURCES STARTING RIGHT NOW!
  
• CONCERN OVER CO2 WILL DRIVE INTRODUCTION OF
  TECHNOLOGY SUCH AS CARBON SEQUESTRATION BY 2015
  
• RENEWABLES WILL FOCUS ON WIND POWER, BIOMASS
  CONVERSION TO LIQUIDS HAPPENING NOW
  
• HYDROGEN WILL FIND A NICHE IN AUXILIARY/BACK-UP
  POWER GENERATION, BUT NOT IN TRANSPORTATION

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THE UNAVOIDABLE COMMERCIAL

• For more information, please contact
• John Wilson, President
• TMG/ENERGY(A Unit of TMG/The Management Group)
• P.O. Box 36250
• Grosse Pointe, MI, USA 48236
• (also 4653 Bradbury Ct., Windsor, Ontario, Canada
  N9G 2M2)
  
• Tel [phone] or 519-966-0545
• Fax [phone]
• Email tmg_at_tmgtech.com OR tmgenergy_at_aol.com
• Web site www.tmgtech.com