Crude Oil: A Wake-up Call
George Unzelman, who has more than 50 years of refining experience and is featured in an interview later in the magazine, has been in the industry during some of its most dramatic changes – some predicted, some results of opposition. In an opinion editorial, Unzelman shares his observations and predictions moving forward.
 |
Crude oil economics is the driving force for the development of alternatives. which include renewable and non-renewable sources.
In the late 1970s, with lines at U.S. service stations, experts predicted we would be against the ceiling on world crude oil production by the year 2000. It didn’t happen!
In the meantime, alternatives of all types were studied, and it
was the beginning of subsidized ethanol in gasoline. Because of the shortage and high price of gasoline, conservation took over. The U.S. government even mandated a 55-mph speed limit as a conservation measure. Crude-oil price was an incentive to search for more oil and exploit old fields. As a result, the world found itself awash with crude and the price plummeted.
A positive aspect of the price pressure on fuels turned out to be new technology in the search for oil, a better understanding of what could be added to gasoline as extenders, and an alarm signal that, someday, there would be a limit to non-renewable energy resources.
Today, crude-oil economics is once again the driving force behind the development of renewable alternatives, as well as renewed interest in coal and shale. For example, financing for ethanol plants and/or studies of liquids from coal come and go with the price and availability of crude oil. This pinpoints a growing weakness for the United States and the entire world to replace the energy needs in the face of the inevitable decline in world crude oil production. Assuming there is no precipitous loss of major oil producing fields, the decline may be gradual enough for some effective political and industry response. Current world oil production is in the order of 85 million b/d. A limit set by some experts is estimated to be about 100 million b/d. The timing for the limit could be as early as 2030; others project 2050.
Does this mean we are going to run out of oil in this century? Certainly not! A declining oil reserve will exist long past this century. Crude oil will simply become too valuable to waste as transportation fuel and heating oil. The long-term value may be for petrochemical manufacture, fertilizers, plastics etc.
In my opinion, the alternatives we now have on the table will not solve the problem. Long range, it is difficult to place much faith in biofuels. They will fill a niche, but are unlikely to replace transportation fuels from crude oil. Current gasoline use in the United States is slightly more than 9 million b/d. Diesel is about 4 million b/d. Biofuels use in 2006 totaled almost 7 billion gal (26.5 billion L) per year.
That translates to about 500,000 b/d, or about 3.8% of U.S. transportation fuel demand. It should be pointed out that we have been “introducing” subsidized biofuels into the fuel system for more than 25 years. This is not much progress for a quarter of a century.
Ambitious growth is projected for ethanol and biodiesel, but major roadblocks exist – water shortage, land limits and competition with food. Some point to switchgrass
as an ethanol feedstock. Cellulose may eventually serve as a source of ethanol, but it is most likely to come from wood waste. Researchers have been searching for competitive ethanol from cellulose for years.
What are the real alternatives to crude oil? The United States will eventually turn to coal and nuclear for much more electrical energy. The United States has one of the largest deposits of coal in the world. Whether we like the concept or not, electricity can power vehicles and trains. The remaining crude can be conserved for aircraft fuel and petrochemicals.
Coal power plants can be cleaned up much more effectively than they are today. What to do about the carbon dioxide awaits some future method of control or disposal. The ultimate step with coal may be to simply use Sasol-South Africa technology – liquids from coal. In other words, use of a derivation of a syn-crude from coal.
How about the fuel-cell vehicle powered by hydrogen? Most of
the hydrogen in the world is derived from crude oil or natural gas. Any hydrogen source from water requires electrical energy, probably from a power plant using natural gas, coal or residual from crude oil as feed.
Fifty years ago, the Canadian tar sands, a significant source of crude oil, was considered unlikely. Now it is an important reserve. The same applies to oil from shale today. Deposits in Colorado, Utah and Wyoming are estimated to contain a trillion bbl.
I visited the small Parachute Creek plant in Colorado in the 1970s. Shale containing 37 gal (140 L) of oil per ton was crushed to small pieces and heated to release the oil. This pilot plant was shut down when the price of oil declined. Today’s hope is to eliminate mining and somehow release the oil from shale in place so it can be pumped to the surface.
The United States is just now beginning to feel the impact of China, India and the developing countries competing for oil. The pace is at some exponential rate compared with a few years ago. Eventually, conservation of the remaining world crude pool, as well as alternative sources, will become the only practical solution. The growing world population and the constant quest for a better standard of living are incongruous with an oil ceiling.
I would like to paraphrase some-thing Will Rogers said back in the 1930s: America is a land of plenty. When we want water, we build a dam. When we want oil, we punch a hole in the ground. But when it is all gone, that is when we will find out how good we are.
