Future of Road Fuel

Particularly for those concerned that peak oil constitutes a major near-term concern, let me recommend a couple of items to consider.

Diesel engines have a great future in the automotive sector.  See for example this column by David Booth.  (If anyone can point to anything Booth has said in the last 10 or 15 years on alternatively fueled vehicles that turns out in hindsight to have been wrong, please pass on the reference. Maybe he is helped by the fact that he is not an energy journalist, where too often fads rule, but the Booth’s record on energy subjects makes him worthy of special attention.)

As for the future of diesel supply, plunk the phrase “gas to liquids” into Google News any day and watch the energy world evolve in real time. One of the main products of gas to liquids is likely to be ultra low sulfur diesel. The economics of converting methane into synthetic diesel appear to be improving very rapidly.

The world supply of low cost and negative cost methane is very substantial. Here are a couple of ways to put the available gas supply in perspective.

The current wholesale cost of natural gas in North America is about 26% of the cost of oil on an energy equivalent basis. This ratio is very low by historical standards but futures markets suggest that this ratio is likely to continue in this range for the foreseeable future. The low value of gas relative to oil is motivating many firms to find ways to use gas to displace needs now met by oil.

The World Bank estimates that on average, some 150 billion cubic meters of natural gas are being flared or vented annually. If this amount of gas was fed into facilities equivalent to Shell’s Pearl facility in Qatar (45 million of cubic meters of gas in for 260,000 barrels per day of petroleum liquids much of which is synthetic clean diesel, natural gas liquids and ethane) the total output would be in the order of 3% of the current world demand for oil. Converting gas now flared or vented to usable fuels would reduce emissions at a rate equivalent to the rate of emissions associated with all the displaced conventional fuels.

 

 

 

 

4 Comments

  1. Diesel: My Jetta TDI has 370,000 km on it and still gets 20+ km/litre (57 MIPG). VW execs must laugh at how the only other diesels available in NA are for luxury vehicles. I waiting on Mazda’s.

    Natural gas: Too bad Shell just or will close some of the remaining public pumps in the GTA.

  2. Diesel: My Jetta TDI has 370,000 km on it and still gets 20+ km/litre (57 MIPG). VW execs must laugh at how the only other diesels available in NA are for luxury vehicles. I’m waiting on Mazda’s.

    Natural gas: Too bad Shell just or will close some of the remaining public pumps in the GTA.

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  4. Pingback: Planes, Trains and Automobiles: Frack Gas Hits the Open Road | Tom Adams Energy - ideas for a smarter grid

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