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Before the oil runs out: the search for alternatives

To replace oil, the US needs a fuel that can power aircraft, trains, and cars. Other fossil resources, rather than green energy, may have the inside track. Part 3 of three

By John DillinCorrespondent of The Christian Science Monitor / September 22, 2005


When Adolf Hitler sparked World War II, the German war machine faced a daunting challenge: It had almost no petroleum.

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Despite the shortage - which some considered fatal - a powerful Nazi blitzkrieg quickly rolled back the armies of Poland, France, the Low Countries, and Britain, and it thrust far into the Soviet Union. Hundreds of German bombers pounded Britain, and swarms of German fighter planes fought off Allied attackers.

How did Hitler do it? With coal.

Operating 25 synthetic fuel plants, Germans converted their country's brown coal into high-quality diesel fuel and gasoline. Coal provided over 92 percent of Germany's aviation fuel and half of all its petroleum needs.

What worked in wartime Germany could hold lessons for the United States. With only 2 percent of the world's proven oil reserves but teeming with coal, the US could turn its carbon bounty into synthetic fuels. If they're cheap enough, synfuels could power America's autos, trucks, trains, tractors, and aircraft far into the future and cut the nation's reliance on Middle East oil. The US already relies on coal, natural gas, hydropower, and even windmills to heat and provide electricity for homes, offices, and factories. But for transportation - a linchpin of modern economies and national security - synfuels from coal, tar sands, and other ancient fossil deposits represent one of the few alternatives to oil.

"Only fossil fuels provide energy on a large enough scale and with sufficient versatility to meet the world's growing demand for energy," concluded a recent study by ExxonMobil.

Oil and Gas Journal seems to concur. Even as conventional oil supplies begin to play out in the US, the North Sea, and some other major production areas like Venezuela, the Journal says that the most "realistic" replacements would be other "hydrocarbon resources [such as] oil shale, tar sand, extra heavy oil, and possibly coal liquids."

Only hydrocarbon sources like tar sands and coal liquids are in great enough supply to supplement regular oil, the Journal says.

Until now, energy companies have by and large bypassed hydrocarbon alternatives to conventional oil because of cost. Producing oil from something like Canada's vast tar-sand deposits was just too expensive at $30 or $40 a barrel when Saudi Arabia could pump and deliver conventional oil for about $4 a barrel.

Current tight markets and rising prices for oil have changed that equation. Today, there are already a few places with limited but growing production of synfuels. South Africa, for example, has two firms that together produce 200,000 barrels a day of synfuel, mostly from coal, but more recently from natural gas.

Even more ambitious projects are under way in Canada, where private firms such as Royal Dutch Shell are mining and refining tar sands into synfuel that competes directly with conventional oil. Shell plans to more than triple its output from Canadian tar sands to 500,000 barrels a day by 2015, Malcolm Brinded, the company's executive director for exploration and production, said this month.

This is only one of Shell's several efforts to expand oil output from unconventional sources. Mr. Brinded says the company also recently set up a joint venture with a Chinese partner "to explore the possibilities for developing oil-shale resources in Jilin Province."

Among the top candidates to replace conventional oil are:

Tar sands. The world's largest deposits of this bitumen are in Canada. After billions of dollars of investment by private oil companies, output from the Alberta tar sands has reached 1 million barrels of synthetic oil a day. That should rise to 2 million barrels a day by 2010, and 3 million by 2020. A recent report indicates that costs of producing the oil have declined to $18 a barrel - making tar-sands oil comfortably profitable in today's market.