Energy & Fuels 1993, 7, 23-26
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Diversification of Raw Materials for Domestically Produced Transportation Fuels J. P. Longwell Department of Chemical Engineering, Massachusetts Institute of Technology, Cambridge, Massachusetts 02139 Received June 1, 1992. Revised Manuscript Received October 5, 1992
This paper focuses on the future supply of domestically produced transportation fuels and is based on the assumption that consumption of transportation fuels will remain constant and that 50% will be produced from domestic resources. I t is based on the National Research Council study “Production Technologies for Liquid Transportation Fuels”. Estimates of economically producible petroleum and tar in the U S . range between 75 billion bbl for a price of $25/bbl and current technology to 140 billion bbl for a price of $40/bbl and advanced technology. Since current total U S . consumption of transportation fuel is 3.6 billion bbl/year, time is available to undertake the massive task of converting to use of the more plentiful solid fuel resources. In the early stages of this transition, natural gas can make a contribution as a source of hydrogen and synthesis gas but, in an era where coal and biomass conversion are competitive with crude, manufacture of hydrogen from these solid resources is expected to be cheaper and also needed to conserve domestic natural gas for other uses. The solid fuel resources, coal, oil shale, and biomass, can compete when the price of conventional crude exceeds $30-40/bbl. The lower number assumes continued technological advances in these processes. Manufacture of methanol from coal biomass is competitive in the same price range. Methanol from low cost natural gas is less expensive and imported methanol from $1.00/Mcf gas can compete with $24/bbl crude. I t is not expected, however, that such low gas prices will persist in the United States (so competition from imported methanol is expected). Hydrogen, or synthesis gas for hydrocarbon or methanol manufacture, can be produced interchangeably from all resources in a partial oxidation gasifier. This presents the opportunity to optimize the use of tar, coal, and biomass depending on the evolution of availability and price. Combining biomass with these other resources offers a way to economically use biomass in large-scale facilities.
In the past, the transportation fuels, gasoline, jet and diesel fuel, and residual fuels have been almost entirely manufactured from petroleum and natural gas liquids, with growing dependence on foreign sources-currently about 50 % . More recently, important changes, largely driven by environmental and health concerns are occurring. An example is the phasing out of tetraethyllead which has made limited use of high octane number oxygenated additives cost effective. Urban environmental concerns have resulted in legislation requiring further increases in gasoline oxygen content. The 1990 Clean Air Act revision requires, for example, 2.7 % oxygen content in gasoline by 1992 in some cities during the part of the year when they are prone to high CO levels. This requirement is also being applied throughout several states. Methyl tert-butyl ether is the major oxygenated additive, manufactured from methanol from natural gas and isobutylene obtained by cracking hydrocarbons. Ethanol from agricultural sources provides an additional, limited, source of oxygenates. Use of compressed natural gas and methanol fuel, which require vehicle modification, is also being introduced for fleet use, largely in urban areas. It is expected that diversification will grow. Jet fuel and diesel fuel are not expected to undergo major changes; however, reduction in sulfur and aromatics content of diesel fuel will probably be required for environmental reasons. This paper focuses on the future supply of domestically produced transportation fuels, their cost, and the consequent timing for development of fuels from domestic 0887-0624/93/2507-0023$04.00/0
resources. It makes extensive use of information acquired for the National Research Council study “Production Technologies for Liquid Transportation Fuels”.l In order to focus the discussion, it is assumed that consumption of transportation fuels will remain constant and that we will work toward the goal of maintaining domestic production at 50% of the total. In this discussion, costs are presented in constant 1988 dollars. As shown in Table I, in the United States, liquid fuel use is dominated by the transportation sector. It is expected that the transportation sector’s share of liquid fuels use will grow as petroleum cost increases and supplies diminish since the other sectors can switch relatively easily to natural gas, solid fuels, or electricity. Within the transportation sector the major fuel is motor gasoline. It is not expected that the distribution will change drastically for the next few decades although jet fuel may well continue to grow in importance. Domestic petroleum production in 1989 was approximately 3 billion bbl/year and the total resources have been estimated to be 500 billion bbl.3 The fraction of this resource that can be economically produced was estimated for two price levels,$24/bbl and$40/bbl for current practice and for advanced technology. These estimates, summarized in Table 111,were prepared for the National Research (1) Fuels to D i c e Our Future; National Academy of Science Press: Washington, DC, 1990. (2) Energy Information Administration Annual Energy Outlook, 1989. (3) Kuuskraa, et al. US.Petroleum and Natural Gas Resources, Reseroes and Extraction Costs; ICF Industries Inc.; Fairfax, VA, 1990.
0 1993 American Chemical Society
Longwell
24 Energy & Fuels, Vol. 7, No. 1, 1993 Table I. Yearly U.S. Liquid Fuel Use by Sector ( 1988)2 quads (1015BTU)
% of total
resource
transportation residential commercial industrial electric utilities total
21.0 1.2 1.0 4.8 1.3 29.3
72 4 3 16 5 100
coal Western Shale Eastern Shale tar sands biomass (methanol)6
Table 11. Yearly Transportation Fuel Use ( 1 9 W 3 fuel tvDe ~~~~
Table V. Alternative US. Resources1
sector
auads (billion bbl/vr)
% of total
13.8 (2.4) 3.5 (0.6) 3.0 (0.5) 0.7 (0.1) 21.0 (3.6)
66 17 14 3 100
~
motor gasoline diesel fuel jet fuel residual fuel total
Table 111. Estimated Remaining Economically Producible U.S. Crude Oil Resources (1989)‘ current practice
billion bbl oil quads resource base to current annual production ratio
advanced technology
mod cost high cost mod cost high cost ($24/bbl) ($40/bbl) ($24/bbl) ($40/bbl) 115 140 75 95 667 810 435 551 35 47 25 32
Table IV. Estimated Remaining Economically Producible Natural Gas Resources3 current technology
advanced technology
wellhead gas price, 3 5 3 5 $/Mcf Tcf gas (bbl oil equiv) 595 (107) 770 (140) 880 (160) 1420 (256) ratio of resource 33 43 50 80 base to current production
Council by ICF Industries. The recent increases in resource estimates based on advances in identification of isolated pockets of oil were taken into account. Tar (>lo4 cP) is included in these estimates. For current practice, which includes secondary recovery, and a cost of $25/bbl, 75 billion bbl can be recovered. The ratio of this resource to the 1989 production of 3 billion bbl of oil/year provides a time scale for this resource. It is, however, not a prediction of suddenly running out of oil in 25 years. It is expected that, in the near term, production will continue to decrease but that a vigorous drilling and development program can bring it back to the present rate. In time, production for a given price will decrease as the lower cost resources are consumed. This ratio is, however, useful for planning purposes. Increasing oil price to $40/bbl with no change in technology is estimated to increase the economically producible resource to 95 billion bbl(26%). At this price, however, extended oil recovery techniques become economically feasible and 140 billion bbl can be economically produced with a resource to current annual production ratio of 47. These times will be decreased if, for environmental reasons, some of the resources cannot be tapped. They, however, are the same general magnitude as the time required to build up an industry and facilities for major production of liquid fuels manufactured from alternative resources such as biomass, coal, and oil shale. In Table IV estimates for production of domestic natural gas are presented. The wellhead gas price of $3/Mcf corresponds to an oil price of about $18/bbl. Domestic
recoverable amount (quads) 6000-11000 3000-4000 400 400 (- 1 billion bbl/yr of oil equivalent)
gas production, on a heating value basis, is currently approximately the same as oil production and the base case resource baselcurrent production ratio is 33 years32% higher than shown in Table I11 for the petroleum base case. It is expected, however, that the use of natural gas for heating and power generation will grow relative to petroleum2 so the time scales may not be greatly different from petroleum. While natural gas can be converted to, or used for, transportation fuel, the domestic resource cannot be expected to substitute for petroleum in transportation fuels to a major extent without disruption of its major uses for heating and power generations. It is expected, however,that natural gas will, in the early stages of switching to tar and solid resources, be a major source of hydrogen needed for processing to high-quality transportation fuels. In the United States solid carbonacous resources, which can be converted to transportation fuels, are available to supplement the supply of petroleum. Estimates of the magnitude of these resources are presented in Table V. If we remember that the estimated economically producible US. petroleum was 800quads (140 billion bbl) for the high cost, advanced technology scenario, coal and Western oil shale represent resources large enough to replace domestic petroleum for many years. Estimates of the potential for environmentally and economically acceptable biomass production vary widely (about a factor of 2 on either side of the estimate shown here).5 This potential can be compared to the 2.4 billion bbl/yr gasoline shown in Table 11. On this basis, the biomass resource is large enough to be an important but not dominant source of domestic transportation fuel. The cost of producing transportation fuels from nonpetroleum resources has been estimated using a common basis for process and raw material costs. These estimates are based on a study prepared for the National Research . ~ costs are expressed Council by SFA Pacific I ~ c These in terms of an “equivalent crude cost”,defined as the crude oil price at which the alternative resource becomes a cost competitive feedstock for fuel production. For example, a fuel manufacturer and marketer who is deciding whether to invest in a plant for use of imported petroleum or for use of domestic coal would presumably favor the coal if the equivalent crude cost was expected to be less than the cost of purchased crude. These costs include refining, distribution, marketing, and vehicle modifications costs. This equivalent crude cost is useful for placing a variety of alternatives on a common basis and allows direct comparison with posted international crude price. The estimates presented here are on the basis of 1988 dollars and a 10% discounted cash flow return on investment. ~
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(4) Shulman, B. L.; Biasca, F . E. Liqurd Transportation Fuels from
Natural Gas, Heavy Oil, Oil Shale and Tar Sands: Economics and Technology; SFA Pacific Inc.; Mountain View, CA, 1989. (5) Sperling, D. New Transportation Fuels-A Strategic Approach to Technological Change; University of California Press: Berkeley, CA, 1988. (6) Sperling,D.;DeLuchi, M. A. TransportationEnergy Futures. Annu. Reu. Energy 1991, 14, 375-424.
Energy & Fuels, Vol. 7, No. 1, 1993 26
Transportation Fuels
Table VI. Equivalent Crude Cost of Alternative Fuels.
process heavy oil conversion tar sands extraction coal liquefaction Western Shale oil compressed natural gas methanol via coal gasification methanol via natural gas at $4.89/Mcf $B.OO/Mcf $1.OO/ Mcf a
cost estimates for current published technology 25 28 38 43 34 35-40
cost targets for improved technology
Gasification
Cleanup
Conversion
Cn Yn
30 30
45 37 24
In 1988 dollars/bbl, at 10% discounted cash flow (ref 1).
Historically, natural gas cost for power generation and industrial use has been related to the cost of crude oi1,lV2 according to the formula $/MCF = 3.91
Coal Biomass Char Coke Gas
+ 0.05857(P0i1- 28)
where Poi1 is the price of crude oil in $/bbl. This predicted gas price is approximately twice the current gas price. This depressed price is brought on by a current surplus gas production capacity plus both time and regulatory constraints on switching from oil to gas. At high gas prices competition can also be expected from imported liquefied natural gas and from pipeline gas from Canada and Mexico. Natural gas is expected to be the major source of hydrogen for processes such as heavy oil and tar conversion and will probably be the major source in at least the early stages of shale oil refining and coal liquefaction; however, when the cost of natural gas exceeds $5 per thousand cubic feet, coal gasification is expected to become more economical for hydrogen and synthesis gas production. Estimated costs for several processes for production of alternative automotive fuels are shown in Table VI. Heavy oil and tar sands, which were counted as petroleum in Table 111, can be converted to transportation fuels by hydroprocessing, using natural gas as a source of hydrogen, at $25/bbl and $28/bbl equivalent crude cost. There are large foreign resources of tar in Canada and Venezuela, and competition by imports can be expected when prices rise to the level where it is economical to expand our domestic tar and heavy crude hydrogenation capacity. The use of compressed natural gas for automotive fuel, which includes distribution and vehicle modification costs, was estimated to be $34/bbl equivalent crude cost. The gas cost, using the formula given earlier, was $4.20/Mcf and accounted for 64 % of the total cost. Gas at the current low price would substantially reduce the cost. It was also estimated that a compressed natural gas vehicle would cost $lo00 more than a conventional vehicle. If smaller compressed gas tanks allowed a reduction to $500, the equivalent crude cost would be reduced to about $16/bbl at $2.OO/Mcf wellhead price for gas. This is an attractive current option where reduced operating range is acceptable and where a suitable natural gas distribution system exists. Equivalent crude costs for direct coal liquefaction and Western Shale oil were estimated to be $38/bbl and $431 bbl, respectively. Over the last decade, significant progress has been made in coal liquefaction; however, the shale oil process has suffered from lack of published activity. Leads for further cost reduction, in both processes, offer the
Oil Shale Coal Biomass
Liquefaction
Char/Coke
Figure 1. Feeds for direct and indirect solid to liquid fuels conversion.
potential of achieving, with continued R&D,a cost of $301 bbl within the next decade. Methanol by coal gasification is $35-40/bbl. In this case, the projected price of domestic gas makes coal gasification the most economic route. Estimated costs for methanol from overseas natural gas are also shown for US.investment costs with the cost of transportation to the U.S.added. A 15% energy efficiency advantage and a $100 automobile cost differential for methanol was also assumed. On this basis, imported methanol based on low cost gas can be lower cost than domestic production from solid fuel resources. The use of wood for methanol production is one of the more attractive methodsfor using biomass. In this study,' wood and coal feed costs were taken to be approximately the same and, for the same size of plant, gasification and process costs would be about the same. The costs shown for coal to methanol, however, are based on a large plant (oil equivalent 50000 bbllday of oil). Biomass based operations on a smaller scale would have increased costs. From the above studies, it appears that, in the $3040lbbl range of equivalent crude cost, use of all the solid resources becomes of economic interest with heavy oil processing becoming economic at $25/bbl. The time at which prices in this range will become sufficiently stable to attract unsubsidized private capital is unpredictable. If a decision is made to maintain domestic production at a stable level (say 50% of the total), construction of and operation of facilities before the time of stable international oil prices in the $30-40/bbl range will be necessary. Facilities for hydroprocessing of heavy oil and tar are expected to be the first step followed by introduction of use of solid resources. It has been shown that heavy oil hydroprocessing operates successfully with a mixture of coal and oil and that hydrogen, which is used in large quantities, can be manufactured from a wide variety of feeds. The possibility exists, therefore, for substantial flexibility in the type of feed used in a given plant with the potential for changing the mix as economics and supply change with time. These process possibilities are illustrated in Figure 1. Gasification by partial oxidation is capable of converting any carbonaceous feed to a gaseous mixture from which the hydrogen and CO can be separated. From this hydrogenlcarbon monoxide mixture, hydrogen for direct liquefaction can be produced. Methanol or paraffinic liquid fuels, both excellent transportation fuels, can also be manufactured from the hydrogen-carbon monoxide mixture by catalytic conversion.
Longwell
26 Energy & Fuels, Vol. 7, No. 1, 1993 Table VII. Approximate Greenhouse Gas Emission per Mile Relative to Petroleum-Powered Internal Combustion Enuinesb ~
~~
fuel and feedstock current technology gasoline and diesel from crude oil CNG, gasoline, diesel, or methanol from biomass methanol from coal gasoline from oil shale CNG from natural gas methanol from natural gas potential advanced technology gasoline from coal or shale using nonfossil sources for process heat and hydrogen
percent change 0
-100 +98 +27 to +80
-19 -3
Oil shale is intermediate with the amount of COZ produced depending on the degree of carbonate decomposition during the retorting process. Natural gas based fuels are slightly better than petroleum. If process heat and hydrogen from nonfossil resources (biomass,solar, nuclear) becomes available, the greenhouse gas production from gasoline or methanol from all sources is comparable to or better than gasoline from petroleum. Development of nonfossil heat and hydrogen could, therefore, be an important factor in use of our fossil fuel resources.
0
“Direct” liquefaction hydrocarbon fuels are produced by reaction of tars or solid fuels with hydrogen produced by gasification. These processes produce fuels that normally contain aromatic hydrocarbons; however, these hydrocarbons can be converted to cleaner burning naphthenes by further hydrogenation. The production of the greenhouse gas, COP,could well have a major effect on the choice of raw materials for transportation fuel. Table VI1 presents information on the formation of greenhouse gases, relative to petroleum based gasoline, for production and use of automotive fuels from several starting materials. Biomass-based fuels are considered to be greenhouse gas neutral. This assumes no consumption of fossil fuels in the complete fuel cycle. Methanol from coal, however, produces approximately twice the CO2 produced from use of petroleum-based fuels.
Conclusions 1. If production of transportation fuels from domestic resources is to be maintained at approximately the current level, it is time to begin the transition from petroleum to alternative raw materials. 2. Compressed natural gas and hydroconverted tars are promising near-term candidates. 3. The 1988 equivalent crude cost, starting with solid resources, is in the $30-40/bbl range. 4. With continued R&D, equivalent crude costs around $30/bbl should be achievable within the next decade. 5. Both supply and environmental considerations lead to a diverse set of raw materials. 6. Coprocessing of raw materials offers an opportunity for optimizing the transition to use of solid resources. 7. The production of COZfrom fossil resources can be substantially reduced by developing nonfossil fuel based sources of heat and hydrogen.
