Linc Energy Blog

As recently reported on Forbes.com, “The International Energy Agency released its ever-popular annual World Energy Outlook.

Using a modest 1.6% annual energy demand assumption through 2030, the world will need 45% more energy.

Assuming some conservation, new energy alternatives and a mere $26 trillion in capital investments, daily oil production would need to rise 25%.

This is the equivalent of four Saudi Arabias going into production between now and 2030.” 

Ok.  Gas prices are down at the pump.  Crude oil has hit a four year low.  And they both may go lower.  But this doesn’t obviate the fact that the world is growing, that recessions (and depressions) end, and that a bigger population will require more energy.   The IEA is projecting a slight contraction in the “growth demand” in energy markets for 2009.  (meaning, even in a global recession demand for energy will continue to rise)

These are some bright folks.  And if we don’t pay attention to what they’re saying, we’re going to be, as some say, ‘up the Nile, without a paddle.’

 lWe’ve got to stop living in denial, or were going to be ‘up the Nile.’

The equivalent of 4 Saudi Ariabias to meet a conservative energy-demand growth?!   $26 TRILLION in capital and exploration investment to find more energy over the next 22 years?!

Steven Chu, Nobel Prize Laureate, and President Elect Barack Obama’s pick to lead the US Department of Energy will have his hands full over the next few years.   Fortunately, Chu has a track record of innovative thinking as the head of the Lawrence Livermore National Laboratory in Berkeley, California.

Under his guidance, LLNL has been actively involved in modeling a technology which will address the global demand for energy in a timely manner.  That technology is Underground Coal Gasification or UCG.

In conjunction with BP, LLNL, is validating the science behind UCG, and working to bring the technology to commercial viability as soon as possible. 

BP and Linc Energy, Ltd (www.lincenergy.us) have recently reaffirmed an MOU for BP to off-take up to 14,000 barrels a day of Linc’s ultra-clean, sulfur-free, diesel fuels.

In a world-first demonstration facility in Chinchilla, Queensland, Linc has proven the integration of UCG and Coal-to-Liquids, providing proof that previously ‘stranded’ coal assets can be commercially accessed in an environmentally responsible manner, and converted into that very product that the world covets- petroleum.

Unlocking the inaccessible coal assets available in the United States can provide us with the equivalent energy value of Saudi Arabia.  Converting that resource into environmentally friendly petroleum products (the Linc Energy fuel is dramatically less polluting than that derived from conventional oil, and yet, it actually provides more efficiency or “bang for your buck” per gallon) will actually fuel our economic growth for another couple of centuries.

Interestingly enough, the technology that Linc has brought to the market in Australia is actually less expensive than conventional Coal-to-Liquid facilities.   By a long shot.  The tremendous cost savings that underground coal gasification brings to the fore will allow the US to engage in Integrated Gasification Combined Cycle (IGCC) electricity production- and reduce CO2 emissions by nearly 40%.

Linc Energy recently announced that it will build a demonstration facility in Wyoming over the coming 12 months.  Proving, once again, that coal - which powered the world’s first great economic expansion, can be an environmentally, and economically, viable solution in the near term.

22 years isn’t that far off.  Solar energy is going to make big strides in that time.  So is wind energy (though T. Boone Pickens is worried about getting financing for his $10 Billion dollar wind farm), and geothermal, and fuel cell technology, and bio-fuels, etc.

We may have additional Nuclear power electrical production facilities on-line by then (though the last one constructed in the US took almost 22 years to get built.)

We have the coal now.  We have the technology to access it with robust environmental and societal stewardship- no strip-mining the tops off of mountains, no putting underground miners lives at risk, no particulate pollution, no mercury effluent, no acid rain – through the application of underground coal gasification.

Lawrence Livermore National Laboratory has been on the forefront of the science.  Linc Energy has been on the forefront of making clean-coal a reality in the real world.  

Steven Chu will have his hands full addressing energy supply, energy security, and climate change.  Fortunately he’s seen that UCG can work.  Hopefully he’ll advance this as a component of his overall policy agenda to ensure that we’re not up the Nile without a paddle in 22 years.

US Automakers should be ashamed of themselves.

Over the past few weeks it’s become evident that “Made in America,” at least in the auto industry, means lower quality, lower fuel economy, and higher prices.  The Big 3 Automakers in the US- Ford, Chrysler, GM- are on the brink of bankruptcy, and not for the first time.

They have been lolling in complacency for years (some would claim decades), building gas-guzzling cars and trucks and relying on the patriotism of the US buyers to purchase American made goods.  But the bloom has been off the rose for some time in the US market with the Big Three having taken losses domestically for several years in a row  Interestingly, these same companies had been making profit, hand over fist, selling more fuel efficient vehicles into the overseas markets.

And now that they’ve been mismanaged to the brink of death, the US taxpayer is expected to step in and bail them out.  In a story released by AP this morning (http://www.google.com/hostednews/ap/article/ALeqM5geKFqV9VosGZ-_99BTrTWsLbo6NgD94EJIVO0)  it’s clear that the impact of the short-sightedness of US management of the Big 3 is going to cost us billions of dollars.  The economic impact of these 3 incompetents failing is profound.  Not only will their overpaid employees be on the street, but the cascade of pain will continue through the entire supply-chain of the industry- literally effecting hundreds of thousands of jobs in our already fragile, if not broken, economy.

Of course, over the past 5 years, these very car makers could have been focusing on fuel efficiency, designs that sell, and affordability so that when the inevitable increase in Oil prices came, they were prepared.  Oil is now at an 18 month low, under $60 a barrel, but just when the price of gasoline is coming down, the ability of US consumers to buy has become more precarious than than any time in the past 70 years.

Oil is a precious commodity.  At best we have a 50 year supply (at current consumption rates)  However, we are consuming Oil at a rate 4 times that of our discovery of additional reserves.  We have a petroleum-based infrastructure in which we’ve invested trillions of dollars, and the combustion engine is here for decades to come.  We’ve reached Peak Oil.  (http://www.peakoil.com)

The Big Three MUST focus on fuel efficiency for the future.  The only hope we have to substantively expand our oil reserves is through coal conversion.  Coal is simply carbon.  Those carbon molecules can be polymerized into long-chain hydrocarbons through several well-known, commercially proven, technologies like Fisher-Tropsch.  Sasol (NYSE:SSL), (http://www.sasol.com) the largest commercial producer of petrochemicals and sulfur-free diesel fuel has been using coal conversion technology for over 30 years.

Several new companies have come on the scene over the past 5 years, the most notable of which is Linc Energy, Ltd (ASX:LNC, OTCQX:LNCGY), which is bringing environmental stewardship, management excellence, and progressive thinking to the party.  Linc (http://www.lincenergy.com.au)  has proven the integration of Underground Coal Gasification with Coal to Liquids technologies at their Chinchilla, Queensland facility.  The work that Linc Energy has done has shown that we can unlock, and unleash, the potential energy that is stored in the vast, world-wide, coal resources- a potential which dwarfs our existing, known, oil reserves.   Linc Energy will produce ultra-low-sulfur diesel at a cost per barrel roughly equivalent to current diesel production prices in the United States.  Interestingly, ULSD is one of the most efficient, and environmentally friendly, liquid fuels produced. 

The demand for diesel is growing world-wide, out pacing the demand growth for gasoline substantially.  (http://www.eia.doe.gov/oiaf/servicerpt/intro.html) 

European refineries are increasing their diesel production capacities, because European consumers are demanding more fuel-efficient, diesel powered, vehicles.  Oddly enough, many of these fuel-efficient vehicles are being produced by our Big Three automakers.

But not here in the USA.  Instead, the Big Three have been focusing on the least fuel-efficient models, relying for years on the lowest priced gasoline in the world, and not seeing the day, that we ALL knew would come when fuel-efficiency would actually mean something.  I suspect that the Big Three has spent more on lobbying our government to fight fuel-efficient vehicle production than they have on retooling, redesigning, and retraining their workforce to face today’s crisis.

It’s a shame.  The Big Three should be ashamed of themselves.  And do something now.  But don’t take my word for it.  Read this OpEd piece in the New York Times by Thomas L. Friedman :

http://topics.nytimes.com/top/opinion/editorialsandoped/oped/columnists/thomaslfriedman/index.html?inline=nyt-per 

Want a Nuke in your backyard?

There was a significant emphasis during the recent election campaign on the “energy crisis,” with John McCain, and President Elect Barack Obama, both claiming that Nuclear Energy would be a component of each of their comprehensive energy policies.

The Union of Concerned Scientists (UCS), a scientific watch-dog organization says this on their website (www.ucsusa.org)under the title Nuclear Energy 101;

“The United States has strong safety regulations on the books, but the federal agency that oversees the nuclear industry—the Nuclear Regulatory Commission (NRC)—does not enforce them consistently. In addition, current security standards are inadequate to defend nuclear plants against terrorist attacks. A major accident or successful attack could kill thousands of people and contaminate large regions for thousands of years.”

Nearly 20% of our electricity in the United States is currently produced by Nuclear Reactors.  It’s been 29 years since the Three Mile Island disaster.  The technology has gotten safer.  Or has it?

This is a core question to explore over the next few weeks. 

With the recent economic melt-down in the US and abroad, the increased demand for electricity is likely to slow. Again, demand is likely to slow.  Not stop.  And our ability to meet that demand is stagnating as well.   Assuming that recovery from the recession we’re currently facing takes 5 years (the Great Depression lasted about 8 years, but we have made economic policy advances since then,) then by the time our demand for more electricity begins increasing once again, we would not have the permitting process completed for the single Nuclear Power Plant.   Construction of the plant requires between 4-8 years (nobody really knows- the last US built plant took almost 25 years to come online.)

The permitting process is (and I guarantee, will be) frequently interrupted by lawsuits filed to stop construction- although the NRC (see above) has “simplified” the permitting and licensing process.

Nuclear Power, on a scale which can add any reduction to our increased demand (the average Nuclear Power Plant will support only 100,000 homes,) is highly unlikely to occur in our lifetimes.  Each one will cost about $3 Billion USD to construct.   An enormous price tag for a questionable solution.

Are there real alternatives to Nuclear Power?   T. Boone Pickens is campaigning actively for a 4000 Megawatt wind farm.  CNN recently reported the details of Pickens’ plans (http://www.cnn.com/2008/US/05/19/pickens.qa)

Pickens is claiming that 4000 Megawatts (being generated by wind turbines stretching from south Texas to the Canadian border) will power 1.4 million homes.   The Billionaire Oilman cites a 2007 Department of Energy study projecting that the United States could produce 20% of its electricity by Wind Power. http://www.energy.gov/energysources/wind.htm

According the interview by Charlie Rose on CBS 60 Minutes, Pickens’ Wind Farm project has a projected cost of about $10B USD. (www.cbsnews.com/video/watch/?id=4546585n)

There are, of course other alternative sources of energy.  Google.org recently announced a $10 Million USD investment in Geothermal technologies. (blog.google.org/2008/08/enough-geothermal-energy-to-power-globe.html)

Solar Power is another long-standing stalwart in the alternative energy debate.  While there have been tremendous advances in conversion technologies (photovoltaic cells,) there are still significant challenges facing storage technologies to date.

Clean-Coal technologies are making progress in reducing the CO2, and other greenhouse gasses they produce.  Coal is the most ubiquitous energy source in the United States, with coal deposits representing a 6-fold greater energy potential than all US Oil and Gas reserves combined.   Yet many consider the term Clean-Coal to be oxymoronic.  CO2 is produced in any combustion reaction- and coal must be combusted to produce electricity.  However one very promising technology seems to be making headway:  Underground Coal Gasification/Combined Cycle Gas Turbine (UCG/CCGT)

The first company to attempt to commercialize this environmentally friendlier technology is based in Australia.  Linc Energy, Ltd has recently commissioned its Underground Coal Gasifier with the intention of building a pilot UCG/IGCC electrical power generation facility on its Chinchilla site in Queensland. (http://www.lincenergy.com.au/power.php)

As an interesting adjunct to the Linc Energy story, the company has recently begun the demonstration of its Coal to Liquids technologies for the creation of Sulfur-free, low emission, ultra-clean diesel fuel.

Traditional IGCC (Integrated Gasification Combined Cycle) electrical generation shows a 40% reduction in greenhouse gas emissions.  A US based industrial consortium, FutureGen, (http://www.futuregenalliance.org) is attempting to build a near-zero emissions coal-fired power-plant utilizing IGCC and Carbon Sequestration technologies.  

There are clearly alternatives to Nuclear Power.  There will be an end to the recession.  There will be massive demand growth for energy worldwide.  We must explore those which make the most sense for both today and tomorrow.

Solar, Wind, Hydro, Geothermal, Clean-Coal; all make immediate investment sense.  Nuclear Power proliferation doesn’t seem to have the compelling economics, the safety record, or the political support of the people whom it is proposed to serve.  There are alternatives.  Let’s explore those.