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
17 June 2004
JOHN R. WILSON, TMG/ENERGY
1
A FEW FACTS
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CURRENT WORLD ENERGY USE: ~400 QUADS
PROJECTED 2020 CONSUMPTION: ~610 QUADS
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MAY BE MORE IF CHINA MAINTAINS PRESENT PACE
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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
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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.
17 June 2004
JOHN R. WILSON, TMG/ENERGY
2
THE USUAL MYTHS (1)
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“WE ARE RUNNING OUT OF OIL”
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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
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THERE IS ALMOST CERTAINLY A LOT OF “UNPROVEN”,
UNEXPLORED OIL IN IRAQ, LIBYA, SAUDI ARABIA
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ESPECIALLY IN THE U.S. CANADA – E.G., DEEP OFFSHORE
GULF, ARCTIC, OIL SANDS, EVEN SHALE OIL
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.
17 June 2004
JOHN R. WILSON, TMG/ENERGY
3
THE USUAL MYTHS (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
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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
17 June 2004
JOHN R. WILSON, TMG/ENERGY
4
THE USUAL MYTHS (3)
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“THE HYDROGEN ECONOMY WILL SAVE US!”
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IT WILL NOT
HYDROGEN IS AN ENERGY CARRIER, NOT A SOURCE
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17 June 2004
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
5
HYDROGEN MANUFACTURING COSTS
[FEBRUARY 2004 NRC STUDY]
Production Method`
CURRENT
FUTURE
(“Central Station = centralized manufacture of
hydrogen at national or regional facilities)
$/KG
$/GJ
$/KG
$/GJ
Natural Gas, Central Station + Distrib’n
2.07
14.38
1.73
12.01
Natural Gas, Distributed Manufacture
3.63
25.21
2.52
17.49
Coal, no sequestration, Central Station
2.04
14.20
1.61
11.21
Coal with sequestration, Central Station
2.18
15.14
1.67
11.63
Nuclear [steam reforming, not electrolysis]
N/A
N/A
2.33
16.15
Biomass [Midsize Plant]
7.11
49.38
3.63
25.21
Electrolysis, Grid Power
6.81
47.33
4.15
28.81
Electrolysis, Wind Power
6.81
47.33
2.89
20.06
Electrolysis, PV with Grid Backup
9.93
68.93
4.55
31.58
Gasoline w/Hybrid Efficiency, H2 Equivalent
2.12
N/A
??
??
“Euro” Diesel w/Hybrid Efficiency, H2 Equ.
1.68
N/A
??
??
17 June 2004
JOHN R. WILSON, TMG/ENERGY
6
A LOOK AT THE FUTURE
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WE HAVE A LOT OF COAL (257x109 MT) IN U.S., CANADA
AS DOES THE REST OF THE WORLD (727x109 MT)
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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
17 June 2004
JOHN R. WILSON, TMG/ENERGY
7
A LOOK AT THE FUTURE
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IN GENERAL:
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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!
17 June 2004
JOHN R. WILSON, TMG/ENERGY
8
A LOOK AT THE FUTURE
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TRANSPORTATION (PERSONAL, COMMERCIAL)
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LIQUID FUELS WILL PREVAIL, INCLUDING:
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17 June 2004
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
9
A LOOK AT THE FUTURE
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MANUFACTURING
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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”
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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!
17 June 2004
JOHN R. WILSON, TMG/ENERGY
10
A LOOK AT THE FUTURE
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CONCLUSIONS…
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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
17 June 2004
JOHN R. WILSON, TMG/ENERGY
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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
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

(also 4653 Bradbury Ct., Windsor, Ontario, Canada N9G 2M2)
Tel: 313-434-5110 or 519-966-0545

Fax: 519-966-7246
Email: [email protected]; OR [email protected]

Web site: www.tmgtech.com
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17 June 2004
JOHN R. WILSON, TMG/ENERGY
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