Fortunately, a number of options exist that can be applied to lessen oil dependence and reduce economic vulnerability to oil price increases. They include reduction in energy demand, methods to increase oil production, and the introduction of alternative fuels that can substitute for oil in key market applications.
Practical mitigation of the problems associated with world oil peaking must include fuel efficiency technologies that could have an impact on a large scale over time. It is clear that automobiles and light trucks, together termed light-duty vehicles (LDVs), represent the largest targets for consumption reduction worldwide.
Government-mandated vehicle fuel efficiency requirements are certain to be an element in the mitigation of world oil peaking. In addition to major fuel efficiency improvements in conventional vehicles, one result would almost certainly be the more rapid deployment of hybrid electric vehicles. Market penetration of these technologies cannot happen rapidly because of the time and effort required for manufacturers to retool their factories for large-scale production and because of the slow turnover of existing stock. In addition, a shift from gasoline to diesel fuel would require a major refitting of refineries, which would take time.
It is difficult to project what the fuel economy benefits of hybrid electric or diesel powered LDVs might be on an international scale because consumer preferences will likely change once the public understands the potential impacts of the peaking of world oil production. The fuel efficiency benefits that hybrid electric drivetrains might provide for heavy-duty trucks and buses are likely smaller than for LDVs for a number of reasons, including the fact that there has long been a commercial demand for higher-efficiency technologies in order to minimize fuel costs in these professional fleets.
Hybrid electric technology can also impact the medium duty truck fleet, which is now heavily populated with diesel engines. For example, road testing of diesel hybrid electric drivetrains in FedEx trucks began recently, with fuel economy benefits claimed to be 33 percent (Eaton Corporation, 2004). On the other hand, there appear to be limits to the fuel economy benefits of hybrid drivetrains in large vehicles; for example, the fuel savings in hybrid buses might only be in the 10 percent range (National Renewable Energy Laboratory, 2002).
Improved oil recovery (IOR) is used to varying degrees in all oil fields. A particularly notable opportunity to increase production from existing oil fields is to use enhanced oil recovery technology (EOR), also known as tertiary recovery. EOR is usually initiated after primary and secondary recovery techniques have maximized their productivity. Primary production is the process by which oil naturally flows to the surface because oil is under pressure underground. Secondary recovery involves the injection of water into a reservoir to force additional oil to the surface.
EOR has been practiced since the 1950s in various conventional oil fields, primarily in the United States. The process that likely has the largest worldwide potential is miscible flooding wherein CO2 or light hydrocarbons are injected into oil reservoirs, where they act as solvents to move residual oil.
This category of unconventional oil includes a variety of viscous oils that are called heavy oil, bitumen, oil sands, and tar sands. These oils have the potential to play a much larger role in satisfying the world's needs for liquid fuels in the future.
The largest deposits of unconventional oils exist in Canada and Venezuela, with smaller resources in Russia, Europe, and the United States. While the sizes of the Canadian and Venezuela resources are enormous, 3 to 4 trillion barrels in total, the amount of oil estimated to be economically recoverable is of the order of 600 billion barrels. This relatively low fraction is in large part due to the extreme difficulty in extracting these oils (Williams, 2003). While recovery may increase with higher world oil prices, estimation of the increased reserves would be highly speculation.
Here are some of the reasons why the production of unconventional oils has not been more extensive:
• Production costs for unconventional oils are typically much higher than for conventional oil.
• Significant quantities of energy are required to recover and transport unconventional oils.
• Unconventional oils are of lower quality and, therefore, are more expensive to refine into clean transportation fuels than conventional oils.
• There can be significant environmental problems associated with the production of these unconventional oils.
Very large reservoirs of natural gas exist around the world, many in locations that are isolated from natural gas-consuming markets. Significant quantities of this "stranded gas" are being liquefied and transported to markets in refrigerated, pressurized ships in the form of liquefied natural gas (LNG). Another method of bringing stranded natural gas to world markets is to disassociate the methane molecules, add steam, and convert the resultant mixture to high-quality liquid fuels via the Fisher-Tropsch (F-T) process. F-T based GTL results in clean, finished fuels, ready for use in existing end-use equipment with only modest finishing and blending. GTL processes have undergone significant development over the past decade.
To derive liquid fuels from coal, the leading process involves gasification of the coal, removal of impurities from the resultant gas, and then synthesis of liquid fuels, using the F-T process. Gas cleanup technologies are well developed and deployed in refineries worldwide. F-T synthesis is also well developed and commercially practiced. A number of coal liquefaction plants were built and operated during World War II, and the Sasol Company in South Africa subsequently built several larger and more modern facilities (Kruger, 1983). Modern gasification technologies have been dramatically improved over the years, with the result that over 200 gasifiers are in commercial operation around the world, most using petroleum coke or coal as their feedstock. Coal liquids from gasification followed by F-T synthesis are of such high quality that they do not need to be refined. Coal liquefaction is believed capable of providing clean substitute fuels at between $35 and $45 per barrel (Gray et al., 2001; Gray, 2005).
Biomass can be grown, collected, and converted to substitute liquid fuels by a number of processes. Currently, biomass-to-ethanol is produced on a large scale to provide a gasoline additive in the United States and Brazil, among other places. The market for ethanol derived from biomass is influenced by government requirements and facilitated by generous tax subsidies. Research holds promise of more economical ethanol production from cellulosic, or woody, biomass, but related processes are far from economic. Reducing the cost of growing, harvesting, and converting biomass crops will be necessary (Smith et al., 2004).
Hydrogen has potential as an alternative to petroleum-based liquid fuels over the long term in some transportation applications. Like electricity, hydrogen is an energy carrier, not a primary fuel; hydrogen production requires an energy source for its production. Energy sources for hydrogen production include natural gas, coal, nuclear power, and renewable resources.
Recently, the U.S. National Research Council (NRC), the operating arm of the U.S. National Academies, completed a study that included an evaluation of the technical, economic, and societal challenges associated with the development of a hydrogen economy (National Research Council, 2004). The NRC concluded that fuel cells must improve by a factor of 10 to 20 in cost, a factor of 5 in lifetime, and roughly a factor of 2 in efficiency in order to become commercial. The NRC did not believe that such improvements could be achieved by technology development alone. It called for new concepts and technical breakthroughs. In other words, today's technologies do not appear practically viable, and the advent of commercial hydrogen vehicles cannot be predicted.
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