JUICE: Alternate Fuels World
Juice, the World of Alternative Fuels is intended to be the journal of record for the alternative fuels industries, the central clearing house for market intelligence, financial reporting, best business practices, and technology assessment in respect to alternative fuels and the means for producing and distributing them.
At least initially, Juice will be distributed electronically with the possibility of print offerings if conditions warrant them. The form will be that of a Website with changing content rather than an electronic newsletter.
The underlying concept is that of a multi-dimensional information resource. Juice will be at once a reporting service, a portal, and a repository for more enduring premium content. The latter will include expert analysis and commentary on industry trends and developments, market metrics and projections, examinations of new technologies, investigations of winning corporate strategies, panel discussions involving industry leaders and observers, profiles of seminal decision makers and thought leaders, and much else.
Juice will cover the whole gamut of alternative fuels and the full range of uses and applications involving them. Unconventional fossil fuels such as heavy oil, oil shale, tight gas, shale gas, and methane hydrates will be subject to regular reportage as will synthetic liquid fuels and gases derived from fossil fuel resources. We’ll also cover fuels derived from biomass including ethanol and biodiesel, as well as lesser known products such as heavy alcohols, pyrolysis oil, and bio-based synfuels.
Juice is concerned with both the minutiae of individual news events and the larger implications of the growth of the alternative fuels business—and these implications are very large indeed. We believe that alternative fuels will expand to become one of the key industries of this new century as sources of conventional fossil liquid fuels and gases become ever more constrained. Inevitably, the role of alternative fuels in the world economy, in future technological transformations, and in the realm of international relations will grow ever more important. Consequently, our coverage will include political reporting, economic analysis, and even the occasional foray into socio-cultural concerns, for energy impacts all of these areas, and the transition to a new energy regime must necessarily bring about far reaching changes throughout society.
The Range of Information Services
Juice aims at richness and diversity rather than a narrow focus. For anyone seeking crucial market intelligence within this crucial area of the New Economy, Juice is the logical destination on the Web.
Juice will provide news feeds, pricing and trading data, reports of major project wins, and announcements of new products and production processes. We’ll also include a library of white papers and primers as well as interviews and panel discussions involving persons having special insights into the workings of the industry and its likely future. Eventually, though not immediately, we’ll have a comprehensive, annotated industry directory of equipment and services. We’ll also publish advertorial on a selective basis. We believe that high quality advertorial can serve an important educational role so long as it does not become a substitute for independent feature articles and is balanced by independent analysis. We further believe that by offering a forum where lengthy promotional pieces are likely to be read and discussed we are providing an important service for our sponsors.
Nobody is doing all or even much of this in the alternative fuels space today, although other online publications serving other industries do take this general form. Where we aim to be unique in online trade publishing is in the formulation and presentation of premium content.
Premium content is another word for paid content, or, more correctly, content worth paying for. In a developing industry that is largely without landmarks, certain types of information are indeed very valuable to stakeholders and to those contemplating market entry and investment.
A succession of news items about this or that plant opening, which, unfortunately characterizes most of the extant trade periodicals relating to alternative fuels, does not constitute premium content. What is needed instead is competitive intelligence which extends across the whole of the industry, informed assessments and cogent discussion of new alternative fuel production processes and distribution methods, and, above all, a keen understanding of how industries based upon chemical processing grow and develop, and how new energy sources are likely to penetrate the marketplace, shape the economy, and condition technological changes in transportation, electrical generation, and architecture.
Our approach to presenting premium content is to summarize the most relevant aspects of an issue or event in no more than two hundred words, offering, as it were, a high level perspective—a 50 thousand foot view. More detailed information on the various aspects summarized will be presented in separate blocks of text, affording a 1,000 foot view. Further details are provided in linked sections which provide highly detailed observations from ground level, so to speak.
We strongly believe that most decision makers wish to receive summary information initially, provided that it emanates from a trusted source, and to review supporting documentation at their leisure or perhaps not at all. Not just bullet points, but a digest of all salient information and a cursory assessment of its importance. We believe that those having key responsibilities also have limited time for perusing periodicals. Thus what is essential must be immediately retrievable, while what is secondary is made available on succeeding pages.
When appropriate, we will also be presenting longer investigative pieces that explore issues of ongoing importance. These will appear less frequently at a rate of approximately two or three per month.
JANUARY, 2007
January is the kickoff issue, and so much of it will be devoted to introducing ourselves. Rather than issuing one major article per week as will be the practice in the months to come, in this inaugural issue all of the month’s articles will be presented in the first week. In order to allow the publication to serve as an advertisement for itself, no paid premium content will be posted for the first month, and all information on the Website will be available gratis.
1. Editorial: who we are and what we bring to the discussion of alternative fuels. Daniel Sweeney is a highly experienced, award winning business journalist and science and technology writer who has been covering new energy technologies for the past five years. Yvonne Beltzer is an award winning television writer and producer with one Emmy and five Golden Mikes to her credit.
2. The state of the industry, alternative fuels on the cusp: as recently as three years ago, alternative fuels were more a hypothesis than a real industry, something to think about at some unspecified time in the future when either endemic shortages of conventional fuels or environmental concerns assumed some urgency. Now, for a variety reasons, at least two alternative fuels, namely ethanol and biodiesel, are building a real presence in the marketplace, and, equally significant, are attracting major investment. Nevertheless, the industry faces real challenges to further growth, not the least of which is uncertainty as to the price and extent of conventional petroleum and natural gas resources.
3. The universe of alternative fuels, part 1: alternative fuels are more than just ethanol, biodiesel, and heavy oil from Canada, the candidates most frequently covered in the mainstream press, and also include synfuel from coal, natural gas, and biomass; di-methyl ether; biocrude, also known as pyrolysis oil; and synthesis gas among others. We provide our informed estimate of the relative importance of each now and in the future, and we predict that the midterm future is apt to bring a far different ranking than that which obtains today.
4. The universe of alternative fuels, part 2: who are the players and who are the stakeholders? Who makes the stuff, who buys it, and who supplies the infrastructure for making it and moving it? Currently, alternative fuels is a business that is top heavy with production equipment manufacturers, replete with producers, but short on dedicated customers and distributors. Most of the entrepreneurial activity is in the middle, with both exploration companies and production plants springing up in wild profusion and absorbing a great deal of investment capital. We are also seeing major plant engineering and equipment manufacturers with a prior stake in oil refining branching out into alternative fuels with modified or, in at least some cases, fundamentally new product offerings.
FEBRUARY, 2007
February is our first premium content issue and the beginning of business as usual. The subject is ethanol, with some significant discussion of both methanol and the heavier alcohols. Ethanol is where the entrepreneurial activity is currently most pronounced, and for good reason. Ethanol’s future as a fuel additive is virtually assured in the U.S., and, most likely, throughout much of the rest of the world as well. Its future as a primary fuel is another matter altogether, however.
1. Lead article – the new production technologies and the risks they represent: because of the sensitive nature of the information presented, and the difficulty we experienced in obtaining it, this article will be strictly premium content—invaluable information for the bold but prudent investor. So where’s the value? Almost every commentator on the topic of ethanol fuel concedes that current North American production techniques, which are built around a corn feedstock, cannot scale up to the point where ethanol poses a real challenge to fossil fuels in the marketplace. And yet practically all of the nearly fifty new plants under construction use conventional fermentation and the traditional corn feedstock. At the same time, articles discussing newer technologies for producing ethanol from cellulose comprise most of the coverage in popular science journals, and within such journals cellulosic ethanol is frequently promoted as the answer to the nation’s energy problems. And that’s where it really gets interesting. In fact, cellulosic ethanol production techniques date back to the nineteen twenties, and have never proven out economically to date, and, furthermore, now face competition from a number of even newer technologies. So which techniques offer the real potential for competing with fossil fuels? You won’t find the answer anywhere else.
2. The other alcohols: ethanol isn’t an optimal choice as a motor fuel. It is ill suited for use in water craft or in general aviation, and it is too expensive for use in heating. Moreover, it has no application except as an additive in compression ignition engines, which rules out its use in railway locomotives, heavy trucks, heavy construction equipment, and ships. Even in gasoline engines it compares poorly with gasoline across almost the entire range of performance attributes. In fact, both butanol and various combinations of heavy alcohols are more nearly ideal motor fuels than ethanol, and various companies including Dow and British Petroleum are working feverishly to commercialize cost effective techniques for producing them. So where’s the smart money riding in the war of the alcohols? The information is for sale on our Website.
3. Editorial – drunk on ethanol: ethanol is obviously going through a major hype cycle, and we believe the level of enthusiasm is probably way out of proportion to ethanol’s real potential as a replacement for petroleum products. Indeed, we see ethanol facing plenty of competition as a primary replacement fuel, and we caution that a very particular set of circumstances must be met before one can even contemplate an ethanol transition.
4. Molasses and rum: remember that great song from the musical 1776? You’ve got to love a librettist who understands the singular importance of the so-called “triangular trade” to the developing industrial revolution in Europe and the emergence of the U.S. as the pre-eminent mercantile nation of the new century. It turns out molasses and rum are crucial to the fuel ethanol industry as well, and a lot of people are trying to launch a new triangular trade encompassing the emerging nations in the tropics, the industrialized nations of Western Europe and North America, and the chronically energy short Asian Tigers. Unfortunately, much misunderstanding surrounds the current ethanol success story in Brazil based on sugar and molasses, and many false lessons are being applied elsewhere with predictably dire consequences. Find out why.
5. The bio-refinery concept: a lot of investors don’t know it, but the ethanol business currently depends on co-products, that is, products produced from the feedstock in addition to ethanol. Eventually, bio-fuels producers hope to replicate the success of the petroleum industry with petrochemicals by producing a whole range of industrial chemicals from biomass. How close are they to achieving this goal? The answers are here.
MARCH, 2007
The focus for March is on heavy oil including bitumen, also known as tar. A heavy oil rush has begun in earnest in the tar sand region of Alberta, Canada, and the investment dollars are pouring in despite the very modest production levels to date.
1. Our first article will not be premium content. Sometimes one has to provide a service to the public, and the public is being grievously misinformed in respect to both the investment opportunities in heavy oils and the likelihood that heavy oil production will ramp up sufficiently to counteract the anticipated decline in conventional crude. Make no mistake, the heavy oil hydrocarbon resource is enormous, but a good proportion of it is not economically recoverable with today’s proven technologies, and, furthermore, the cost of recovery is high and likely to grow higher as the easy pickings are exhausted and deep deposits are attacked with unproven in situ extraction techniques. There’s also a big problem in obtaining sufficient quantities of hydrogen and natural gas to bring the fields into full production.
2. Technologies to bet on: no one turns his nose up at two trillion potential barrels of oils these days, and a lot of people are betting on various bleeding edge technologies to bring more heavy oil online. In this our second article, which is premium content, we look at a number of companies offering new extraction technologies who are seeking backers and customers, as well as examining some pre-commercial research efforts of promise. We also look at several small companies claiming to offer the means for producing low cost hydrogen and syngas, which in turn provides process heat for excavation and refining, and also for electrical generation as well as for upgrading the oils themselves.
3. Can the petroleum industry manage a heavy oil boom? That remains to be seen. This article is another freebie and should prove useful to both investors and citizens at large with an interest in energy policy. Whether or not the exploitation of tar sands on a massive scale ever proves technically feasible, the lack of excess excavation and refining capacity in the oil industry will probably prevent it from happening any time soon. Yet another problem is the graying of the professional and technical communities in the industry, and the fact that the field of petroleum engineering is not attracting a sufficient number of applicants to replace those who are retiring. Furthermore, heavy oil excavation vies with other areas in heavy construction for engineers and skilled trades people, and the harsh climate and lack of living facilities in Alberta mean that steep premiums must be paid to get anyone to work in the fields. A general lack of support infrastructure exacerbates the problem. How is the industry responding? Juice provides the answers.
4. Heavy oil outside of Canada and Venezuela: Canada and Venezuela have approximately 70% of all of the heavy oil in the world, but that still leaves a potential of hundreds of billions of barrels to be gotten elsewhere. Here we look at the prospects in the smaller markets.
APRIL, 2007
Synfuel is our obsession for the month of April, and we’ll look at synfuels made from natural gas, coal, industrial waste, and biomass. Synfuel developed a very bad name for itself back in the late seventies and early eighties when the Synfuel Corporation of America, a quasi-public agency, burned through a ton of tax payer dollars and never succeeded in selling a drop of oil, but synfuel is back today and attracting a lot of interest. We’re actually pretty bullish on synfuel, and we think it’s being overlooked in favor of a number of competitors that are less well positioned to play in the petroleum replacement market. At the same time we see synfuel, at least as the industry is constituted today, facing a lot of problems in its drive to become mainstream. Synfuel has been manufactured off and on for about a hundred years, but seldom profitably and never without subsidies, so there isn’t a lot of commercial experience. Furthermore, many of the production technologies remain experimental and thus extremely risky for anyone wanting to invest in plants employing them. But the biggest obstacle is the sheer magnitude of investment required to get the industry going. Though some would argue otherwise, synfuel doesn’t seem to scale down very readily, and a billion dollars per plant represents a realistic floor for investment. That’s a big bet for anyone, and it’s a bet that can be lost if any sustained drop in conventional crude oil prices occurs or if unconventional oil or shale oil significantly undersells synfuel.
1. Gas-to-liquids: liquid petroleum analogs produced from conventional natural gas constitute the only truly cost competitive synthetic fuels today, and are being produced commercially in South Africa, Qatar, and Malaysia. Unfortunately, the rapidly rising cost of accessible conventional natural gas may soon render liquid fuels made from this source uncompetitive. Where does this leave gas-to-liquids? Gas to liquid producers are left with essentially two choices—utilize stranded conventional resources, i.e. those that exist apart from pipelines, or resort to unconventional sources such as tight gas, coal bed methane, and shale gas. Which course is most likely to succeed? This is information worth paying for, and Juice provides it.
2. Coal to liquids, a review of the processing options: coal-to-liquids has come to be almost synonymous with the Fischer-Tropsch process which itself involves an initial stage of gasification and the subsequent catalytic treatment of a coal-based syngas. But at least two other methods exist for processing coal to produce liquid fuels. Direct liquefaction, the oldest and lowest cost coal-to-liquids process, is currently being investigated by the Chinese, and U.S. based Headwaters Technology is the chief exponent of the technique. In addition, Mobil has developed a process for producing gasoline from methanol at an 85% conversion rate; methanol in turn can easily be produced from coal. We believe that the hydrothermal upgrading (HTU) techniques developed by Shell and Biofuel BV could also be used for this purpose. We might add that Fischer-Tropsch itself has evolved into many variants and scarcely constitutes a single approach any longer. Here we provide the first in-depth comparison of the various technologies in the literature and summarize the investment and deployment activities involving each. We also look at some dark horse technologies that fall into none of the previous categories.
3. Bio-based synfuels: it is entirely possible to produce liquid fuels including petroleum analogs from biomass, utilizing many of the same techniques applied to coal, i.e. gasification followed by Fischer-Tropsch, HTU, direct liquefaction, and the Mobil process, and much experimental activity has been devoted to perfecting such processes. The promise of bio-based synfuel is a carbon neutral fuel with superior combustion properties to biodiesel or ethanol. The problem involves lower energy content of biomass in general, the high carbon content, and the copious production of ash, tar, and other undesirable residues which foul the reactors and present major disposal problems. Again we’re providing of comprehensive survey of the current art and our appraisal of the most fruitful directions in research and development. Our surprise finding is that the lowly anaerobic digester, definitely a dark horse technology in the minds of most investors, may well hold the key to cost breakthroughs.
4. Gasifiers: gasifiers are primary production processors in most synfuel plants, actual or proposed. They’re also used in some manufacturing methods for producing ethanol or heavy alcohols. Although gasifiers of one sort or another have been in use for producing syngas from coal since the beginning of the nineteenth century, gasifier technology is still evolving, and a plethora of new designs, mostly from startups are vying for acceptance in the marketplace. Here we are looking particularly at the gasification of biomass since coal gasification is fairly well proven, particularly for the production of hydrogen rich chemicals such as methane and methanol. We’ll examine the established products from industry leaders such as G.E. and Lurgi as well as intriguing new designs from firms like Solena, Pearson Technologies, CHOREM, and GTL Microsystems. We’ll also see how gasifiers stack up against the new generation of ultra-efficient anaerobic digesters and the hydro-thermal upgrading processors.
5. Cost estimates for coal-to-liquids. There is surprisingly little literature on the likely cost of producing liquid fuels from coal. In this premium content article we’ll reveal what we’ve found in background interviews with producers as well as outside analysts with insider knowledge. We’ll also extrapolate from the much more abundant literature pertaining to the Fischer-Tropsch processing of bio-based syngas. As is so often the case in the alternative fuels universe, the reality departs considerably from the conventional wisdom.
MAY, 2007
This is our biodiesel issue. We like bio-diesel, and not just because Willie Nelson makes it nor because Daryl Hannah drinks it, or does she? Biodiesel has the look of a true insurgent, and insurgents are ultimately what set industries on new courses. Biodiesel is not simply trying to append itself onto the petroleum industry as is ethanol. Instead most of the producers are attempting to set up their own distribution networks and their own brands. Still, biodiesel has a very long way to go, particularly in the United States, before it can be truly said to be a major player.
1. Commentary—biodiesel faces its demons: biodiesel needs to develop a real market focus. In the U.S. biodiesel is close to being a cult, the green fuel for the environmentally conscious, but scarcely a fuel for everyman or for every businessman. In Europe, where biodiesel is already produced in considerable quantities, the situation is much better, but still biodiesel is seen mainly as a hedge against disruptions in the supply of petroleum. As we see it, several things have to happen to propel biodiesel out of the niche markets it currently inhabits. The cost of production has to decline greatly, which will involve new feedstocks, of which there are many, and probably new processes, of which there are several. Second, producers need to target specific markets and dominate them, be they maritime, heavy equipment, diesel automobiles, or whatever. And, particularly in the U.S., biodiesel needs to clean up its act and take steps as an industry to marginalize those producing substandard products—and, unfortunately, they are all too numerous. Standards already exist but they have to be made conspicuous, and the industry needs to commence industry advertising that stresses standards. Finally, the biodiesel industry needs to figure out where it will fit in the larger scheme of things in the years to come.
2. Feedstocks: biodiesel today is made primarily from high value food crops particularly oil seeds such as rape seed, pumpkin seed, cotton seed, etc. The major exception is palm oil which is produced primarily as a byproduct. Because of the high cost of oil seeds, many in the industry are looking at certain oil producing plants that do not yield edible oils and require less cultivation than the oil producing food crops. These include jatropha, the Chinese tallow tree, jojoba, hemp, and a number of others. Here we poll the agronomists on the real promise of the more prominent of these dark horses.
3. Biodiesel equipment manufacturers and plant engineers: here’s an area that is definitely in need of coverage. A lot of the biodiesel production taking place today involves jury rigged manufacturing equipment, but larger plant engineering companies like Lurgi are starting to get into the business as well as some interesting startups like Gaian Technologies that claim to have developed significantly less expensive manufacturing processes—a sine qua non for the long term success of this industry in our opinion.
4. Biodiesel entrepreneurs: biodiesel is, to our way of thinking, among the most interesting of the alternative fuels because it holds the promise of true independence. Unlike ethanol, biodiesel does not appear condemned to remain an appendage of the petroleum industry, and the fact that, almost alone among alternative fuels, it can be manufactured cost effectively in relatively small batches, has led to a proliferation of small suppliers. Will the industry remain friendly to entrepreneurs, or will production tend to become concentrated, and to fall into the hands of a few very large companies as has been the norm with other energy sources in the past? We aim to provide some answers.
5. When biodiesel is not biodiesel: a number of companies, most notably Volkswagen, are manufacturing fuel from biomass which is essentially synthetic petroleum diesel rather than an alcohol ester as is almost all of the motor fuel currently labeled biodiesel today. This new product potentially poses a formidable challenge to traditional biodiesel in the marketplace, and here we’ll offer our impartial competitive assessment of the rival fluids. Biodiesel vendors, this is about your survival, and it’s well worth paying for. As they say, pay now, or pay later.
6. Methyl ester or ethyl ester? Biodiesel can be manufactured with any alcohol, and methanol is favored now primarily because it is priced considerably lower than is ethanol or heavy alcohols. But what if research on new ethanol production techniques pays off and the price of ethanol plummets? Will this change the nature of the biodiesel industry? The question is made more urgent by the fact that at least two process developers, Neste Oil and Renessan, have developed techniques for producing ethanol and biodiesel simultaneously within the same production facility. Is this a natural marriage, and if so, what does it portend for both industries?
JUNE, 2007
June is our transportation issue. Transportation drives the alternative fuels industry, and developments in transportation have the gravest import for the future of alternative fuels.
So what’s on the horizon or over the horizon?
1. The personal transport population time bomb: premium content, available at a price for those who need to know. The automobile industry, nearing its hundred and twentieth birthday (Peugeot launched commercial production in 1889), is poised for explosive growth in the years to come. But if conventional petroleum supplies are constrained, how can such growth take place? Will alternative fuel production be sufficient even to support current automotive production levels let alone support five per cent per annum increases in unit sales in East Asia?
2. The personal transport population time bomb continued: if the supply of liquid fuels is unlikely to keep pace with the demand for personal transportation, a distinct possibility in our view, where does that leave the automobile industry and the other transportation segments that depend on liquid fuels? We examine the prospects for plug-in hybrids and pure electric vehicles, and we also consider the possibility of the personal transportation industry shifting to highly efficient compression ignition engines, which, when combined with hybrid technologies could permit reductions in petroleum usage exceeding 50%. We also look at the possibility of coal based di-methyl ether (DME), a low emission liquid gas that can be inexpensively produced from coal or biomass, displacing both conventional diesel and biodiesel in the compression ignition space.
3. The other transportation segments: heavy trucks, trains, airplanes, ships, boats, motorcycles, and heavy equipment—all of these require liquid fuels, and none have been targeted in any major ways by alternative fuels manufacturers to date. We take a look at the future needs for fuels within each of these segments and suggest how the various alternative fuels contingents might address these huge markets.
4. Potential disruptions: rather incredibly, in our opinion, most analyses of the future of the transportation industry assume that transportation will be much the same in 2050 as it is today despite the fact that technological change in general has accelerated, and the fact that transportation fifty years ago was considerably different than it is today. We examine a number of technological trends to watch including PRT (personal rapid transit), automated personal aviation, wing-in-ground effect aircraft, evacuated tube maglev, the return of supersonic civilian transport, and the dawn of hypersonic transport.
JULY, 2007
In July we scrutinize oil shale, and not a moment too soon. Already various investment services are trumpeting the coming oil shale bonanza while at the same time environmental groups are digging in their heels and warning of dire consequences if extraction commences. So what’s underneath it all? Perhaps as much as two trillion barrels of oil or an amount that is roughly equal to all of the conventional oil remaining.
1. Booms, busts, and boondoggles: in the past oil shale has been the fool’s gold of the energy industry, hyped beyond all measure, and subject to periodic waves of investment followed by investors abruptly deserting their claims and cutting their losses. Here we examine the shady history of this non-industry, the federal government’s complex and ambiguous relationship with investors and developers, and finally why present circumstances may be entirely different and may in fact signal the beginning of real development.
2. Why oil shale is so important: Most of the oil shale in the world is located in the U.S. in a series of nearly contiguous deposits located in the northern Rockies. The resource is enormously concentrated, extending hundreds of feet down into the earth and covering hundreds of square miles—a nearly solid chunk of fossil hydrocarbons packing more energy than all of the oil in the entire world. There’s no drilling of dry holes when it comes to oil shale. We know exactly where it is, and we know it’s huge. So why all the boondoggles and false starts? Why hasn’t it been tapped? It’s all a matter of money, as it usually is, and it’s a matter of technology too.
3. Oil shale economics, claims and counterclaims: Lots of pilot oil shale projects have been launched over the years going all the way back to the nineteen thirties, and while it is indeed perfectly possible to make refined petroleum products out of the rock, it is arguably not particularly cost effective with established techniques such as they are. The real question is how cost effective the newer techniques might be. While we can’t provide definitive answers simply because no commercial scale production is taking place today, we can provide some very acute assessments of the likely potential of the present art including a number of radically new technologies proprietary to several plucky startups.
4. A review of the new technologies: For an industry that has never produced much revenue, oil shale has engendered a great deal of technological diversity and at least a dozen production and excavation techniques (the two are often indistinguishable for reasons explained in the article). Here we explain in detail just what is involved in getting at the deposits as well as the various problems associated with a number of the techniques.
5. Profiles of the players: Oil shale has always attracted entrepreneurs and colorful characters and it still does. Among the twelve successful applicants for excavation permits from the Federal Government, which happens to own most of the land in which deposits are situated, are a number of large oil companies and an equal number of startups. There is also something of an oil shale frenzy taking place in Israel which can claim sizable deposits, the only fossil fuel to be found in the Holy Land. A number of interesting startups are active there as well.
6. Untapped wealth. While most oil shale lies in a small area in the Rockies, there’s a lot elsewhere, and most of it is just sitting there. Here’s our guide to known resources and how the right to exploit them might be secured.
AUGUST, 2007
In August we present our take on the hydrogen phenomenon, which, careful observers will note, we have studiously avoided thus far. Hydrogen is, among other things, an alternative fuel that was the subject of an investment land rush in the late nineties and the first couple of years of this decade. Literally thousands of companies either bet the farm on the hydrogen economy or diversified into hydrogen production or hydrogen fuel cells or both. We performed a year long study on hydrogen, so we know the area.
1. Hydrogen reality: this is free content offered as a service to both citizens and investors. Free but not valueless, because it is abundantly evident to most astute observers by now that the impetus is departing from hydrogen advocacy. Many of the major auto makers continue to insist that hydrogen fuel cell vehicles are just around the corner, but industry insiders know better. A growing number of studies have demonstrated the fatuity of the hydrogen economy, but ideologically motivated support for the idea continues, and much of the public continues to believe that it is imminent. Here we show that hydrogen will indeed play a major role in the energy revolution to come, but not the role that many assume.
2. Why hydrogen is important: this is premium content representing important information for investors and stakeholders in various alternative fuel concerns. Hydrogen, it turns out, is required in growing amounts for conventional oil production, and is needed in far larger quantities for processing heavy oil, oil shale, and synfuel produced from biogas. Direct liquefaction of coal is also a very hydrogen intensive process. So where’s it going to come from? That’s the subject of the next article.
3. The high cost of hydrogen and what to do about it: hydrogen is expensive to produce, store, and transport. Transport and storage are almost certain to remain expensive for the foreseeable future but there may be a few cost breakthroughs involving production that are essentially good to go. One of them, somewhat surprisingly, utilizes nuclear energy.
4. Whither fuel cells: several thousand companies got into the fuel cell business a few years ago. With all those manufacturers cranking out product, there must be millions of fuels cells out on the street, right? Well, not counting experimental models on lab benches, no more than 3,500 fuel cells were in operation in 2006, and that’s a global figure. Fuel cell vehicles were supposed to anchor the hydrogen economy just as hydrogen was supposed to enable a transition away from internal combustion engines and toward fuel cells, but hydrogen fuel cell cars never happened. In fact, the future of fuel cells probably lies with units that can run off fossil fuels, whether used directly or reformed. Here we look at the near and mid term future of fuel cells and examine what impact they will have on the alternative fuels business.
SEPTEMBER, 2007
In September we look at the financial industry’s relationship with the alternative fuels vendors. Today the majority of larger venture capital firms in the U.S. have some involvement in alternative energy, and a number have specialized in the area. What are they looking for in an investment, and will their infatuation with alternative fuels last?
1. Profiles of the financial institutions most active in alternative fuels: who are the leaders in funding innovation in our space and what are their criteria for candidates?
2. Courting investors: you’ve got a breakthrough technology for solving the world’s fuel problems and all you need is a little loose change to start producing your magic elixir. How do you approach funding institutions with some prospect of success? We’ll enumerate the attributes that make entrepreneurs attractive to the moneybags while also sounding a few cautionary notes.
3. Selling out: just like armies, entrepreneurs are increasingly preoccupied with exit strategies today. One way out of the business is to sell one’s intellectual property to someone else. Here we examine the logistics for doing so.
4. Where the money is going: who got what funding in what segment?
OCTOBER, 2007
October is our coal gasification and syngas issue. Coal gasification, i.e. the production of synthesis gas (carbon monoxide plus hydrogen) from partially combusted coal, is the key to making coal fired generator plants as clean as natural gas plants. The problem is that gasification entails not only an entirely new and very expensive industrial plant on the premises, it also requires a fundamentally different kind of turbine. Coal gasification, absent subsidies of some sort or another, whether outright government transfers of money, carbon credits, or tax waivers, or whatever, does not make economic sense even for new builds let alone for retrofits, and yet if the industrialized nations aim to get serious about reducing greenhouse gases, they have to go in this direction.
1. Where gasification is at: coal gasification for the purpose of producing fuels is mostly a business of pilots at present, but in China and India thousands of gasifiers are already in operation, mostly for producing industrial chemicals such as methanol and ammonia. How readily can the gasification industry, such as it is, adapt itself to producing liquid fuels?
2. A review of the technologies: coal gasification entails specialized gasifiers and syngas turbines, the latter of which are available from only one or two manufacturers. Neither technology can be said to be entirely proven. Here we assess available products and summarize significant research in this area.
3. A syngas future: up until the middle of the twentieth century syngas from coal was a major resource for cooking, heating, and illumination in the U.S. and in Europe, and it also served as a precursor for the production of numerous industrial chemicals. With the advent of low cost natural gas, syngas from coal almost disappeared, however. Now, with the very rapid rise in the price of natural gas over the course of the past decade, syngas is poised to make a comeback. Here we examine the range of applications that may be served by syngas and the prospects for a return to pervasiveness.
4. Methane from coal, an alternative future: a number of companies claim to have developed low cost methods for producing methane rather than syngas from coal. Methane, of course, is the chief constituent of natural gas, which we already know and love, and would prefer to keep using so long as the prices stabilize. So is methane from coal the answer? Buy this premium content and find out.
NOVEMBER, 2007
In November, as the year draws to a close, we’ll take a look at some longer shots, some largely overlooked areas in the alternative fuels space. In our view the alternative fuels business is young enough that it still could evolve in ways unforeseen to most observers today.
1. Liquid petroleum gas (LPG): this term refers to a combination of ethane and butane, heavier hydrocarbon gases often found in the vicinity of oil fields and easily liquefied under moderate pressure. LPG is already used fairly extensively in commercial fleets and in some watercraft, and it can be used in spark ignition engines with relatively slight modifications. But what really makes it intriguing is the extent of the resource. The energy stored in butane and propane deposits in North America alone may exceed that in all of the world’s remaining oil reserves. So why isn’t LPG more visible? We’ll explain why, and also explore the prospects of this clean and abundant fuel source for playing a larger role in meeting our energy needs.
2. Methane again: in Europe many energy prognosticators believe that methane derived from biomass will play an increasingly significant role in both transportation and electrical generation in the years to come. Is this position at all credible, and what are the obstacles to implementation?
3. Pyrolysis oil, also known as biocrude: we view pyrolysis as a very dark horse currently, but one never knows. Biocrude is used primarily for producing energy in industrial facilities where the wastes may be used as feedstocks for manufacturing it. Because it is volatile and corrosive, it has not been sold to any extent as a fuel. Certain experimental techniques for refining the substance offer the promise of ameliorating some of its shortcomings, however, so we can’t rule out a role for biocrude in the future.
4. DME: DME has been mentioned in previous articles; here it is the primary focus. DME is a gas which, like propane or butane, may be liquefied under moderate pressure. Unlike liquid petroleum gas, DME is a very high cetane fuel that works extremely well in compression ignition engines. Used by itself, DME produces very low emissions, and, when combined with ethanol, offers the most favorable emissions profile of any hydrocarbon fuel. Since DME is relatively safe to store and transport, and can be inexpensively manufactured from coal, unconventional natural gas, and biomass, it has a lot going for it. What it lacks is a real constituency or lobby. DME could play a major role in the future energy business or it could be an also ran. We survey activities to date and venture some tentative predictions of our own.
5. Golden garbage: here the focus is on a feedstock rather than on the final product. Municipal and industrial hydrocarbon wastes can make excellent feedstocks for the production of both alcohols and synfuels. Since such wastes represent disposal problems both for those who produce them and for municipal landfills receiving them, both entities are frequently willing to pay someone to take the wastes off their hands. Thus the alternative fuels producer who chooses to process such wastes into fuel pays essentially nothing for the feedstock and need only consider the cost of processing. Many alternative fuels startups have built their business plans around such “golden garbage”, and are claiming that they can already undercut petroleum refiners. Can it be true? If you’re thinking of using municipal waste as a feedstock or investing in someone else who is, you need to read this article which rigorously examines the basis of such claims. Available as premium content for considerably less than a trillion dollars.
6. Waste coal: in the two hundred years since coal excavation has taken place in the U.S. millions of tons of slag or waste coal have been produced, and most of it has been treated as refuse and simply heaped in unsightly and often unsafe mounds throughout coal producing regions. Recently technologies have been developed for turning the waste into useful fuels. We see this as distinctly promising, and we’ll explain why.
DECEMBER, 2007
Goodbye, 2007. What’s last is not least, but indeed a most important and sorely neglected aspect of the business of alternative fuels, namely distribution and retail sales, with some words on branding and market positioning as well. Except in the small though vigorous biodiesel segment, alternative energy suffers from a kind of identity crisis and a lack of a well established presence in the marketplace. Most biofuels depend upon irregular retail distribution among independent fueling stations, and utterly lack pipeline networks or large fleets of tanker ships to deliver the product to remote markets. Consequently, most are difficult to obtain in most markets, and, moreover, their advantages are poorly communicated to potential customers. Progress is being made, but alternatives as a whole have barely begun to initiate marketing campaigns that are remotely comparable to those maintained by conventional energy incumbents.
1. We’ve been there before: ethanol producers vigorously campaigned to introduce ethanol blends in the nineteen twenties, thirties, seventies and eighties—failing in each instance, in part due to adamant petroleum industry opposition, but also due to a failure to seize market opportunities. Here we’ll examine what went wrong in the past and how to avoid a recurrence.
2. Coming on strong, the fast times and wild ride of an earlier alternative energy industry: not many people in the biofuels space like nuclear, and we’re not out to sing its praises here. But when nuclear power appeared on the scene in the early sixties, it was definitely an alternative form of energy, an entirely new technology challenging an enormous fossil fuel establishment. Nuclear always faced a huge capital cost disadvantage, and always made large numbers of citizens extremely nervous, and yet in the decade from 1970 to 1980 when most of the plants were built, nuclear went from utility electrical power generation percentage of under 1% to roughly 10%. Wind isn’t even close to equaling that, though natural gas which came later, has done much better. How could such an expensive form of energy as nuclear and one that has aroused such strong opposition to boot have done so well—at least in the short run? Successful promotion played a big role, as did a canny exploitation of the regulatory regime governing public utilities. Here we’ll explain how it all went down, and what lessons can be learned by other energy insurgents.
3. Retail sale of alternative fuels: Here we look at the independent fueling stations and their complex relationship with alternative fuel manufacturers. We’ll also look at how the manufacturers can market their products effectively to independents.
4. Selling alternative fuels to the public: that’s really what it’s all about, isn’t it? Biodiesel has succeeded in building a following, but probably more from the proselytizing of do-it-yourselfers than a concerted industry-wide marketing campaign. Light liquid fuels, on the other hand, such as M-Fuel, Escalene, and Envirolene have had very little impact on the marketplace. Why has the one succeeded and the others languished? Here we will attempt some answers.
5. Fleet sales: sales to commercial and governmental fleets remain the mainstay of alternative fuels providers. Such sales have enabled individual companies to survive, but have typically doomed the industry as a whole. To whit, attempts to introduce such fuels as LPG, methanol, and hydrogen through fleet sales have resulted in high degree of stagnation in those industries after initial successes. Why has this been the case, and how should alternative fuel manufacturers approach fleet sales in the future?
