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