Unconventional Fuels Creating Second Industrial Revolution

A renewed interest in unconventional fuels such as coal-to-liquids (CTL) is creating a second industrial revolution. The drivers are sustained, high-energy prices and expanding populations demanding a higher standard of living with access to electricity and fuel.

Peak oil, energy security and environmental concerns also drive the world to gasify lower-rank coals, petroleum coke, natural gas, biomass, wastes, oil shale, tar sands and heavy oil. The US has always relied on its abundant coal reserves for power generation and now must turn to coal and other strategic feedstocks for transportation fuels.

US Air Force demand for CTL-based aviation fuels and the country's needs for baseload generation and transportation fuels is driving the US to depend on coal for its energy needs and are strengthening coal's political strength in the US Congress.

The US Air Force is the major reason why coal-conversion technology leaders believe that the US will soon have a CTL industry. The USAF continues to lobby Congress about CTL's importance to national security, and as often stated in energy-legislative debates, the only thing that can really bring down US military aircraft is lack of fuel.

US CTL production could be supplying half the military fuel by 2015 and 70% by 2045, making the country a must safer place. The civilian airlines industry is using 1.4 million b/d of refined product and its fuel requirements are increasing rapidly, and by 2030 will account for half of total US domestic-oil production.
Civilian air is as much of a national security concern as the USAF requirement for aviation fuels derived coal and other unconventional feedstocks. Airlines such as Jet Blue, Southwest and FedEx want CTL fuels because it its perfect fit for aviation. The cost of carbon sequestration can also be covered with today's economics for jet fuel and CTL.

More than 85% of US fossil fuels and over 50% of US electricity generation depends on coal because the US can no longer depend on LNG to fuel electricity generation. Conversion of coal to liquids, power and substitute natural gas is a much-needed backstop technology.

Coal-based CTL transportation fuels with the right framework from US government can compete with any unconventional hydrocarbons such as tar sands and oil shale and the US could meet global demand for liquid fuels and natural gas with coal and other feedstocks.

It is clear that China will use coal for power, fuels and petrochemical feedstocks and the US is at risk of falling behind China that will spend more than $25 billion on proposed CTL production plants. China, India and South Africa are building 80,000-b/d CTL plants, while US CTL plants will likely produce 40,000 b/d using 8.5 million tpy of coal.

The US is already behind the curve when it comes to tapping the vast liquid fuel potential that coal and other unconventional feedstocks offer. The US Congress should take the necessary steps to help cover the risk of new technologies and enable Wall Street to finance the building of CTL plants as soon as possible.
Significant energy security gains can be immediately gained through the production of US coal-derived fuels. Domestic CTL production could turn the tide against the $7 trillion that the US has sent to producing countries to buy crude oil over the past 30 years.

CTL fuels could greatly limit the impact of natural disasters and potential terrorist attacks and is driving the US Dept. of Defense to use CTL fuels. CTL fuels are also greatly needed because biofuels such as ethanol offer small CO2-emissions cuts, have enormous production costs and present serious transmission-and-infrastructure problems.

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