The worst consequences of the global warming scare

Guest essay by David Archibald

During World War II, one Russian physicist realized that the United States was working on an atomic bomb when articles about high energy nuclear reactions disappeared from the physics journals he subscribed to. As an interested observer of coal-to-liquids (CTL) developments, I got the same feeling when reading the programme for the World CTL Conference 2013 held in Shanghai on 16^th April. There was almost nothing about China’s CTL projects.

We all know that China has building coal-fired power stations at the rate of one a week. They are also building a number of CTL projects. News on these projects now seems to come largely from Western equipment suppliers. For example, the MAN Group of Germany announced the sale of compressors for the Shenhua Ningxia CTL project. The compressors will be used to make 40,000 tonnes per day of oxygen which equates to CTL production of 120,000 barrels per day.

Shenhua is China’s largest coal company. The Shenhua website doesn’t mention the Shenhua Ningxia CTL project which would have a capital cost of the order of $10 billion. In fact the company’s news section on its website hasn’t been updated for a year. It seems that news on CTL projects in China has gone dark.

Why would that be? Let’s go on to look at the state of fill of the Chinese strategic petroleum reserves as outlined in this document. China has accelerated the rate of build and fill of its strategic petroleum reserves in the last few years. It could reach its formal target of almost 700 million barrels, equivalent to the US strategic reserve, by 2015. This graph shows the comparative size of the US, Japanese and Chinese strategic petroleum reserves:

I believe that the reason China has gone dark on its CTL projects is because it considers that they give the country a competitive advantage. Shenhua has stated that its first CTL plant, a direct liquefaction facility in the Ordos Basin, has an all-in cost of $60 per barrel and that it is very profitable. Now any company, and any country, in the world that has coal deposits could copy Shenhua’s successful example and start making money from their own CTL projects. That isn’t happening. Why might that be?

A big clue is in the quote following from an interview with an International Energy Agency analyst. The role of the International Energy Agency, based in Paris and largely funded by the United States, is to talk down the oil price as a counterpoint to OPEC. It is not to be confused with the Energy Information Administration, part of the US Government.

“During a recent briefing in Washington, D.C., IEA analyst Laszlo Varro was pessimistic about CTL. “Essentially, energy policy needs to replicate a war blockade,” he said. “The only country that has meaningful investments in coal to liquids is China.”

Varro added, “It’s a big carbon dioxide factory.”

With the EPA in the United States hell bent on closing down existing coal-fired power stations using carbon dioxide emissions as the excuse, getting funding for a new coal-burning facility of any sort is going to be a difficult sell. The consequence of that is that the United States is denying itself its largest potential source of liquid transport fuels commercially viable with current oil prices and technology (that definition allows me to avoid mentioning the Green River Shale).

Let’s put the potential for liquid fuels from coal in the United States into perspective. In the four weeks up to 17^th May, the Unites States produced an average of 7.315 million barrels per day which is an annual rate of 2.670 billion barrels. In those same four weeks, the United States had net petroleum imports that were slightly higher at 7.324 million barrels per day which is an annual rate of 2.673 million barrels. All up that is an annual consumption rate of 5.343 billion barrels. For those who still think that the Bakken Formation in North Dakota has untold wealth and should be factored in, the United States Geological Survey recently released an assessment of that formation’s potential of 7.4 billion barrels of undiscovered, potentially recoverable oil. So the potential of the Bakken accounts for about one and a half years of the current consumption rate.

The United States currently burns about one billion tonnes of coal per annum in power stations. Put through CTL plants, that one billion tonnes could make 2.2 billion barrels of liquid transport fuels, largely replacing the imported component of oil demand and making the country energy independent. It is not the price of oil that is stopping that from happening. It is the witchcraft and voodoo of official climate science. Of course the electric power coming from coal would have to come from another source, but that is doable too.

Now let’s go back to that quote from the International Energy Agency analyst: ”energy policy needs to replicate a war blockade.” and “the only country that has meaningful investments in coal to liquids is China.” It seems that one of the reasons that China is investing in coal-to-liquids is that it expects to be subject to a war blockade in a war that it will start itself. On the other side of the Pacific, the United States, which will do the heavy lifting in any such war started by China, is handicapped by denying itself a potential supply of liquid transport fuels and the optimum allocation of its resource endowment. That, dear readers, is the worst consequence of the witchcraft and voodoo that is the current state of official climate science.