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ENERGIZING OUR FUTURE

ENERGIZING OUR FUTURE. A RATIONAL LOOK AT OUR ENERGY CHOICES FOR THE 21 ST CENTURY PRESENTED AT THE TECHNOLOGY FORESIGHT MEETING, NCMS, ANN ARBOR, 17 JUNE, 2004. A FEW FACTS. CURRENT WORLD ENERGY USE : ~400 QUADS PROJECTED 2020 CONSUMPTION : ~610 QUADS

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ENERGIZING OUR FUTURE

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  1. 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 JOHN R. WILSON, TMG/ENERGY

  2. A FEWFACTS • 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, COAL…VIA 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. JOHN R. WILSON, TMG/ENERGY

  3. THE USUALMYTHS (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. JOHN R. WILSON, TMG/ENERGY

  4. THE USUALMYTHS (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, QATAR…BUT NOT U.S. AND CANADA • LONG-DISTANCE TRANSPORTATION OF LNG HAS ITS RISKS • CONVERT GAS TO LIQUIDS, TRANSPORT THOSE “INCOGNITO” • AS IN QATAR NOW JOHN R. WILSON, TMG/ENERGY

  5. THE USUALMYTHS (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 HAVEN’T! • 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 DON’T HAVE ANY TO SPARE], COAL (USES A LOT OF WATER), MAYBE NUCLEAR/REFORMING (NOBODY WANTS IT!) JOHN R. WILSON, TMG/ENERGY

  6. HYDROGEN MANUFACTURING COSTS[FEBRUARY 2004 NRC STUDY] JOHN R. WILSON, TMG/ENERGY

  7. 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 SEQUEST’N • 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 JOHN R. WILSON, TMG/ENERGY

  8. 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! JOHN R. WILSON, TMG/ENERGY

  9. 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. JOHN R. WILSON, TMG/ENERGY

  10. 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! JOHN R. WILSON, TMG/ENERGY

  11. 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 JOHN R. WILSON, TMG/ENERGY

  12. 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: 313-434-5110 or 519-966-0545 • Fax: 519-966-7246 • Email: tmg@tmgtech.com; ORtmgenergy@aol.com • Web site: www.tmgtech.com JOHN R. WILSON, TMG/ENERGY

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