Can We Replace All Crude Oil Within 20 Years with Cellulosic Liquid Hydrocarbons?

May 29, 2023 |

By Charles Forsberg ([email protected]) and Bruce Dale ([email protected])
Special to The Digest

In the United States, crude oil products provide 48% of the total energy to the final customer: residential, commercial, industrial and transportation. Replacement of crude oil products (gasoline, diesel, jet fuel, chemical feed stocks, etc.) made from non-fossil-fuel carbon sources, principally products made from cellulosic biomass, would decarbonize about half the U.S. economy.

Within this context, we asked four questions to determine the technical and economic viability of this option [1-4]. First, what is the long-term demand for liquid hydrocarbons? Second, can we replace all crude oil with liquid bio-fuels derived from cellulosic materials? Cellulosic biomass is the primary form of biomass on earth and is not a food for humans. Plants remove carbon dioxide from the atmosphere to grow; thus, converting plant matter into gasoline, diesel and jet fuel and then burning these products does not increase atmospheric carbon dioxide levels. Third, what are the hydrogen and heat requirements to convert cellulosic biomass into liquid hydrocarbons? Finally, how fast can we transition away from crude oil in an affordable manner?

There is sufficient cellulosic biomass, to replace crude oil without large impacts on food and fiber prices. However, massive quantities of hydrogen and heat must be supplied to large integrated bio-refineries to convert the biomass. This strategy would result in a quarter to half of U.S. natural gas consumption being used to produce hydrogen with co-produced carbon dioxide sequestered underground to avoid increasing the carbon dioxide content of the atmosphere. In the near-term, using natural gas is the lowest cost hydrogen production option and the only option that can deployed at the scale required.

In the longer-term, low-cost hydrogen may be available from nuclear and agricultural biomass sources. Heat to the refineries would ultimately be provided by nuclear reactors; likely becoming the largest market for nuclear energy. Involving the agriculture sector enables the total system to have large negative carbon dioxide emissions—reducing atmospheric carbon dioxide levels to potentially become a very large biological energy with carbon capture and storage (BECCS) system.  This option could potentially replace most crude oil in 20 years because it is based on American strengths in agriculture and the oil/gas industry. It would also use mostly existing technologies and infrastructure, thereby reducing the cost and shortening the time required for this large scale energy transition.

What is the Future Demand for Liquid Hydrocarbons?

We use liquid hydrocarbons (gasoline, diesel and jet fuel) because of their remarkable chemical properties including high energy density, low storage costs and low cost to transport long distances from producer to ultimate consumer. If crude oil had never existed, we probably would have invented gasoline, diesel and jet fuel because of their remarkable properties.

These liquid fuels can be made from any carbon-containing feed stock. They are currently made from crude oil, coal, natural gas and biomass. If we are to draw down atmospheric carbon dioxide concentrations, liquid hydrocarbons must be made from non-fossil feed stocks. The first questions are (1) what is the future demand for hydrocarbon fuels and (2) do we have sufficient non-fossil carbon feed stocks to produce the desired quantities of hydrocarbon liquids?

We assessed [1] the demand for liquid hydrocarbons—gasoline, diesel, jet fuel and chemical feed stocks. The U.S. currently consumes 18 million barrels of crude oil per day. The demand for liquid hydrocarbons could potentially go as low as 10 million barrels per day before the costs of replacing liquid hydrocarbons with other technologies would dramatically increase, thereby causing serious reductions in the U.S. standard of living.

This 10 million barrels per day target is fixed by the set of current markets where economic replacements for hydrocarbons are (probably) prohibitively expensive. In many cases, there are currently no viable replacement technologies for liquid hydrocarbons. New industrial technologies typically take decades to develop and deploy because of the time to build pilot plants, pre-commercial plants and finally commercial plants.

Our estimates for future liquid hydrocarbon demand include chemical feed stocks, jet fuel, diesel, and gasoline. Gasoline demand is significantly reduced using hybrid vehicles (gasoline-fueled vehicles with a small battery to improve engine efficiency) and plug-in hybrid electric vehicles (vehicles fueled with grid electricity and gasoline).

In our analysis, we do not include large-scale deployment of battery all-electric vehicles (BEV) that have large batteries. A single BEV requires about 9 times as much battery materials as a single hybrid or plug-in hybrid vehicle. We believe this battery material constraint will likewise severely constrain BEV vehicle deployment. The liquid hydrocarbon fuel demand could be as high as 20 million barrels per day if liquid fuels have to replace any significant fraction of the hourly to annual energy storage functions of natural gas and coal. There are multiple technology options [5] to meet these needs.

In addition, we concluded [1] that massive deployment of BEVs is unlikely because: (1) they are unaffordable for the majority of Americans and most of the world, (2) long deployment times and (3) their large-scale use significantly increases electricity prices for everyone. Other reports [6] also describe the many challenges with large scale deployment of BEVs. This fact has major policy implications. It implies that production of cellulosic hydrocarbon liquids is likely the fastest de-carbonization strategy.

There are also four crucial BEV supply-chain challenges:

  • BEVs made of less-abundant elements. Internal combustion engine vehicles are inexpensive because they are made of earth-abundant iron, aluminum, plastic and sand—and contain only very small quantities of less abundant materials. In contrast, BEVs require large quantities of non-earth-abundant materials where the costs are already high and prices will only increase with larger-scale deployment. The average BEV [7] includes: Copper: 53.2 kg, Lithium: 8.9 kg, Nickel: 39.9 kg, Manganese: 24.5 kg, Cobalt: 13.3 kg, Graphite: 66.3 kg, Zinc 0.1 kg and Rare Earths: 0.5 kgs.  The raw material costs are 50 to 70% of total battery costs [8]. Costs are high partly because of low ore grades. For example, the amount of rock ore that must be crushed to just produce the nickel in one of these batteries exceeds that for the steel in a gasoline-fueled Consequently, building vehicles with non-earth-abundant elements results in vehicles affordable for only the wealthiest 5% of the planet—or about 20% of Americans.
  • Distribution of less abundant elements. Earth-abundant materials, such as iron and aluminum ore, are found in many countries. Most non-abundant elements are only found in large quantities in a few countries. Many of these countries are taking steps to raise prices and force manufacture of batteries and other such products from these non-abundant materials in their own countries. For example, Indonesia has a large fraction of the global nickel supply and now requires initial processing of nickel in-country. Chile, with a large fraction of the global lithium and copper resources, has announced new rules for lithium and plans to build batteries in Chile. Going forward, it is likely that China, South Korea and/or Japan will make deals to build the local battery plants serving global markets in exchange for access to these materials. China currently dominates the industry [9]. At the same time, the U.S. government has denied mining permits for nickel mining in Minnesota and copper mining in Alaska. Dependence on foreign non-abundant elements for such batteries will likely make the U.S. non-competitive in battery manufacturing.
  • Time frame to open mines. It takes an average of 16 years [8] to open a new mine from the time of ore body discovery. To meet global projected demand, nickel mining must increase by a factor of 20 and lithium mining must increase by a factor of 40 by 2040 [8]. It implies many decades to increase mining for a transition to all-electric transportation systems.
  • Fossil fuels required for mining. Huge quantities of fossil fuels are required to mine, transport and process these ores to their required purity. Fossil fuels are likely to become more expensive and less available as time goes forward, even if other factors (e.g., political considerations, wars, etc.) do not also constrain their availability.

There are other challenges in addition to the battery supply chain issues. All-electric vehicles have significantly higher weights. That implies a major effort to upgrade roads and bridges for the higher wear and tear on roads. Last, there is a radical difference between plug-in hybrid vehicles and BEVs in terms of impacts on the electricity grid and future electricity prices for everyone [1].

Liquid fuels are inexpensive to store and transport while electricity is expensive to store and transport. Plug-in hybrid vehicles can be recharged when electricity prices are low, and the grid has excess transmission capacity because these vehicles also run on gasoline or diesel. With liquid fuel on board, mobility is assured. Electricity transport (transmission and distribution) is 40% of the cost of electricity to the consumer. Using more electricity in plug-in hybrid vehicles can lower the average transport cost of electricity and thereby reduce costs to the consumer because the existing grid will be used more efficiently. With BEVs, we must expand the entire electricity system to meet peak demand everywhere because all-electric vehicles are useless if they can’t be recharged. Doing so raises everyone’s electricity bill.

All of these consequences of BEVs are tied to the remarkable chemical properties of liquid hydrocarbon fuels which enable low cost energy transport and storage systems. We need a low-carbon way to produce liquid hydrocarbons, not replace liquid hydrocarbons.

Can we replace all crude oil with cellulosic liquid bio-fuels?

The United States currently consumes 18 million barrels per day of crude oil while we estimate that the future demand could be as low as 10 million barrels per day of liquid hydrocarbons. We developed a pathway [2-4] to replace all crude oil with cellulosic hydrocarbon drop-in fuels that (1) could produce 25 million barrels of hydrocarbon liquids per day without significant impacts on food and fiber prices and (2) provide large-scale sequestration of atmospheric carbon dioxide.

Cellulosic biomass is the most common form of biomass on earth and includes a very wide variety of plant materials including crop residues, energy crops, woody biomass and even kelp. Plants remove carbon dioxide from the atmosphere. If we use plants to make liquid fuels, burning the fuel returns that carbon dioxide originally derived from the atmosphere back to the atmosphere with no net increase in atmospheric carbon dioxide.

However, our strategy does not rely on the sugars, vegetable oils or carbohydrates that are currently used for most biofuels production. These feed stocks are insufficient to replace crude oil and potentially compete with human food needs.

Gasoline, diesel and jet fuel are made of carbon and hydrogen. Most current biofuels strategies use biomass as (1) a carbon source incorporated into the hydrocarbon product and (2) an energy and chemical source for the chemical conversion process. The traditional conversion of biomass into gasoline, diesel and jet fuel involves using some of the biomass carbon for (1) removal of the oxygen in biomass (oxygen is 40% of the total weight of biomass) as carbon dioxide, (2) production of hydrogen that is incorporated into the hydrocarbon product and (3) the energy to operate the process. Therefore only a fraction of the biomass carbon ends up in the final product.

In contrast, our strategy uses massive quantities of external heat and hydrogen to convert cellulosic biomass into hydrocarbon liquids. Cellulosic biomass is the carbon source in the product hydrocarbons, it is not also the energy and hydrogen source for the conversion process. The oxygen in biomass is removed by adding external hydrogen to produce water, rather than removing oxygen as carbon dioxide.

Within the conventional strategy, U.S. biofuels production is limited to ~6 million barrels per day versus 25 million barrels per day with external heat and hydrogen inputs to the bio-refinery. The major difference between this strategy and the traditional biofuels strategy is that we abandon the campfire model of biofuels processing in which much of the biomass is consumed (“burnt”) in the biofuels production process. Campfires should be left to the Boy Scouts and people who like fireplaces.

The use of external heat and hydrogen inputs has two very important effects. First, it doubles hydrocarbon liquid fuels produced per ton of cellulosic biomass feed stock, thereby reducing the time and costs required to materially replace fossil hydrocarbon fuels. Second, this approach makes hydrogen (not biomass) the primary cost of liquid hydrocarbon fuels. If biomass feedstock is not the primary cost component of biofuels, we can afford to pay more for cellulosic biomass without large impacts on final liquid fuel costs. Paying more for cellulosic biomass would greatly increase the rate and extent of farmer adoption of the proposed model for biofuel production.

The overall system design is shown in Fig. 1. The low density of biomass makes it uneconomic to ship long distances. However, we must have large scale biorefineries if we hope to compete with very large scale oil refineries (~250,000 barrels per day). To overcome this challenge, cellulosic biomass is shipped short distances to local depots where it is converted into intermediate products that can be shipped long distances to large integrated bio-refineries. There are four major depot options for which the choice partly depends upon biomass characteristics.

The bio-refineries convert the intermediate products provided by depots into gasoline, diesel, jet fuel and other products. Most of these bio-refineries will be existing integrated oil refineries with additional front-end processing of the feed stocks. In this way, the refineries can incrementally convert over time from processing crude oil to processing biomass-derived feed stocks.

Fig. 1. Near-term Design for a Cellulosic Liquid Hydrocarbon Production System

The proposed system enables recycle of stabilized carbon, soil nutrients and carbon char to the soil—primarily from the depots located near the farms. This feature helps enable long-term sustainable agriculture and forestry with large scale sequestration of atmospheric carbon dioxide as soil carbon. Our approach uses a small fraction of the total cellulosic bio-carbon (orange lines) to make the total system strongly carbon negative by sequestering carbon in soil where it improves soil properties and soil fertility.

In this context, there is a major difference between biofuels and food production. With food production, we mine nutrients (potassium, phosphorus, etc.) from the soil by consuming food because they are needed for human health. Soils eventually become depleted. With biofuels production, these elements must not be in the final hydrocarbon fuel—they destroy engines. The chemical processes are chosen to recycle nutrients and some carbon to improve long-term soil productivity.

The first three depot options are already commercial for some types of biomass. Pelletization is used to densify biomass for shipment to furnaces and boilers as a fuel. Anaerobic digestion is used for farm wastes such as from dairy operations and in some sewer plants. Pyrolysis is used for some types of forest wastes. Direct hydrogenation is not commercial. There is not an existing hydrogen pipeline system to supply the hydrogen to near-farm depots and thus this is not currently a viable commercialization strategy. In contrast, the first three depot options are already commercial today in some situations

Example feed stocks [3] include corn stover (the inedible part of the corn plant) and a variety of double crops. In this context, what is not generally appreciated is the remarkable productivity of American agriculture. Agricultural productivity has grown about twice as fast as manufacturing productivity. For example, corn yields in the past century have gone from 20-25 bushels per acre to 180 bushels per acre—with proportional increases in corn stover (leaves and stalks).

Double cropping was done in the Midwest in the early 1900s to grow forage crops for horses—plant in the fall and harvest a forage crop in the spring. When tractors arrived, the horses disappeared, and the land was left bare in winter. That land is now available for cellulosic biomass production while continuing to grow corn and soybeans in the summer.  The goals of the overall system we propose are large-scale cellulosic biomass production without affecting food or fiber prices while also increasing the sustainability of agriculture and the fertility of American soils.

What are the hydrogen requirements to convert biomass into liquid hydrocarbon fuels?

The conversion of cellulosic biomass to liquid hydrocarbons requires massive quantities of hydrogen—about 20 kilograms of hydrogen per barrel of liquid hydrocarbon biofuels. In the U.S. hydrogen is currently made from natural gas with the byproduct carbon dioxide released to the atmosphere. There is currently a rush to build large plants to produce hydrogen from natural gas with underground sequestration of the byproduct carbon dioxide. For example, Exxon has announced plans to build a billion cubic foot per day hydrogen plant in Texas.

This rush to produce hydrogen from natural gas with carbon dioxide sequestration is partly because of the process chemistry. Carbon capture and sequestration is expensive for fossil-fuel power plants because of the expense in removing carbon dioxide from the stack gas (10 % carbon dioxide). In contrast, disposal of concentrated carbon dioxide underground is inexpensive.

There are two only two large-scale processes that produce nearly pure carbon dioxide as a waste stream: 1) biological fermentation, for example fermentation to produce ethanol or biomethane and 2) conversion of natural gas into hydrogen. The U.S. government has offered incentives for sequestering carbon dioxide. It should come as no surprise that there is a massive effort to collect nearly pure carbon dioxide from ethanol plants in the Midwest and sequester it underground. That effort is being followed by the efforts to rapidly decarbonize hydrogen production. In contrast, there is no significant effort to add off-gas systems to industrial furnaces and fossil power plants to capture the carbon dioxide from the stack gas and inject it underground; that process is much more expensive.

The near-term viability of converting cellulosic biomass into hydrocarbon liquids at affordable costs is built on this chemistry that enables conversion of the natural gas industry into an industrial hydrogen supplier producing relatively inexpensive hydrogen. In the longer term, hydrogen from nuclear, wind and solar may become major producers.

Most refineries in Texas and Louisiana have been connected for many decades by hydrogen pipelines where refineries buy and sell hydrogen to each other depending upon their daily demand for hydrogen. Hydrogen production and storage facilities are part of these pipelines. The hydrogen is used in refineries to remove sulfur and convert crude oil into products such as gasoline. This large-scale industrial experience is one of the key enabling technologies for fast societal conversion from liquid fossil hydrocarbon fuels to liquid hydrocarbon biofuels.

It is an entirely separate question and a much more difficult task to convert completely to a “hydrogen economy” where the customers are measured in millions of individuals (versus a couple of hundred oil refineries). These millions of individual customers do not have the decades of large-scale experience with a highly-skilled workforce nor the many small hydrogen distribution pipelines that would be required to implement the “hydrogen economy”.  Therefore this broader hydrogen economy is not a realistic near term option (next few decades) to decarbonize the economy,

There are process tradeoffs between the hydrogen required, the quantities of biomass available and the characteristics of different types of biomass.  In the near term, the low-cost, low-carbon hydrogen source is conversion of natural gas to hydrogen with underground sequestration of the byproduct carbon dioxide. To produce 10 million barrels per day of liquid hydrocarbons, this input will require a quarter or more of U.S. natural gas production capability. Because of the existing hydrogen and natural gas industries, this appears achievable. Hydrogen would be shipped via pipeline to the bio-refineries. In the longer-term or in locations without low-cost natural gas, nuclear hydrogen and other hydrogen production methods would be used.

The main bio-conversion processes would be done at large bio-refineries [2] with typical throughputs of 250,000 barrels per day—probably mostly existing refineries with front-end modifications. The gigawatts of steady-state heat required per refinery are provided by nuclear reactors co-located with bio-refineries. This may become the world’s largest use of nuclear energy because of the scale of liquid hydrocarbon demand.

These would be high-temperature reactors to match refinery requirements. Heat can only be shipped short distances. Existing refineries use gigawatts of heat and consume about 10% of the energy value of the crude oil to run the refinery. Dow Chemical recently announced plans to buy four high-temperature nuclear reactors to provide heat for its Seadrift Texas chemical plant—the first such announcement intended to decarbonize the chemical industry.

How fast can we transition away from crude oil?

As experts in oil refineries, biofuels and agriculture would probably recognize, the technologies to implement the above approach exist at different commercial scales—some for different purposes. The largest barrier to rapid adoption is the variable price of crude oil that has, on an inflation adjusted basis, varied from $20 to $180/barrel during the last 50 years. Oil prices are currently about $80/barrel, near the estimated cost for such large-scale cellulosic biofuels systems assuming hydrogen prices at $2/kg.

The cost of hydrogen is the principal cost driver in our proposed system. The primary business and financial risk to replacing crude oil with liquid hydrocarbon biofuels is the risk that the price of crude oil will collapse about the time refineries convert to liquid hydrocarbon biofuels production [10]. That economic risk can be eliminated by (1) a carbon tax on fossil carbon dioxide emissions and/or (2) a government guarantee of a minimum price per barrel of cellulosic hydrocarbon biofuels. The government would provide payments for hydrocarbon biofuels only if crude oil prices went below some agreed upon price per barrel.

This strategy requires changes in agriculture and modifications to the big oil refineries but it does not require changing the entire U.S. economy. This difference enables a fast transition off fossil crude oil with large-scale sequestration of atmospheric carbon dioxide as carbon char and soil carbon, and massive economic benefits to rural America. The current fossil natural gas industry becomes the hydrogen supply industry where the primary near-term hydrogen markets are approximately100 large integrated bio-refineries—mostly the existing crude oil refineries with some front-end modifications.

Renewable natural gas may also be converted to hydrogen; however, low-carbon hydrocarbon liquid bio-fuels are much more valuable than natural gas. We expect that liquid hydrocarbon production will be the primary market for biomass in non-food and fiber markets. In each case the byproduct carbon dioxide is sequestered underground. American agriculture provides most of the biomass with systems that recycle nutrients and carbon char to the soils for long-term agricultural and forest sustainability.

This approach is built upon existing American strengths and infrastructure in agriculture and the oil/gas industry—thus there is real potential for deployment within 20 years based on the historical track record including the American agriculture-led buildout of ethanol plants and the speed of the natural gas fracking revolution. This approach uses the existing crude oil refinery infrastructure and thus provides a fast evolutionary pathway for the oil/gas industry [2] to become a negative carbon emitter producing liquid hydrocarbon biofuels (gasoline, diesel and jet fuel) and using natural gas for hydrogen production with sequestered carbon dioxide.

In this approach, existing oil refineries incrementally change to process biomass-based feed stocks, increase hydrogen inputs and add nuclear reactors as heat and hydrogen sources—each step reducing U.S. greenhouse gas emissions. Industry is already slowly heading toward this solution. Some biofuels plants are producing bio-crudes that are shipped to large refineries where they are blended with crude oils to be refined. If risk were mitigated by appropriate legislation, the existing transition would speed up dramatically.

Oil products provide 48% of the energy to the final customer in the U.S. and a third of global energy supplies. Thus replacing crude oil with hydrocarbon biofuels made from cellulosic biomass with massive inputs of hydrogen make this the largest future hydrogen market.

This approach is also the fast route to decarbonize half the U.S. economy because it is built upon American strengths and mostly on existing infrastructure. It does not depend upon (1) rebuilding much of the U.S. economy (vehicles, electric power grid, road system, industrial plants, etc.), (2) dealing with the massive social disruption by collapsing entire industries with local and regional unemployment—while making light vehicles less affordable for many Americans, (3) the development and scale-up of many new technologies and (4) creation of global less-abundant-element supply chains for BEVs in direct competition with China, Europe and the countries that control most of the world’s supplies of less abundant materials.

America leads globally in agriculture and oil/gas—partly because of our extraordinary advantages in farm land and the right geology for oil, gas and sequestering carbon dioxide. Replacing crude oil with cellulosic biomass as a feedstock for liquid hydrocarbon production is not an easy task even though it is built on American strengths—but it will certainly be easier, cheaper and faster than using electricity to replace liquid hydrocarbons with their remarkable chemical properties that enable easy storage and transport compared to electricity.

We may be surprised how much faster and easier the low-carbon transition is when we run with the wind rather than against it.

References

  1. W. Forsberg, “What is the Long-Term Demand for Liquid Hydrocarbon Fuels and Feedstocks?” Applied Energy, 341, 121104 (1 July 2023) https://doi.org/10.1016/j.apenergy.2023.121104
  2. W. Forsberg and B. Dale, “Can large integrated refineries replace all crude oil with cellulosic feedstocks for drop-in hydrocarbon biofuels?”, Hydrocarbon Processing, January 2023. Can large integrated refineries replace all crude oil with cellulosic feedstocks for drop-in hydrocarbon biofuels? (hydrocarbonprocessing.com)
  3. W. Forsberg and B. Dale, Can a Nuclear-Assisted Biofuels System Enable Liquid Biofuels as the Economic Low-carbon Replacement for All Liquid Fossil Fuels and Hydrocarbon Feedstocks and Enable Negative Carbon Emissions?, Massachusetts Institute of Technology, MIT-NES-TR-023. April 2022. https://canes.mit.edu/download-a-report
  4. C. W. Forsberg, C. W, B. E. Dale, D. S. Jones, T. Hossain, A.R.C. Morais and L. M. Wendt, “Replacing Liquid Fossil Fuels and Hydrocarbon Chemical Feedstocks with Liquid Biofuels from Large-Scale Nuclear Biorefineries”, Applied Energy, 298,  117525, 15 September 2021. Replacing liquid fossil fuels and hydrocarbon chemical feedstocks with liquid biofuels from large-scale nuclear biorefineries – ScienceDirect
  5. C. Forsberg, “Addressing the Low-Carbon Million Gigawatt-Hour Energy Storage Challenge“, The Electricity Journal,December 2021. https://doi.org/10.1016/j.tej.2021.107042
  6. R. C. Charette, “The EV Transition Explained”, IEEE Spectrum.https://spectrum.ieee.org/files/52329/The%20EV%20Transition.final.pdf
  7. J. Winters, “By the Numbers: Electric Vehicles Require Imported Numbers”, Mechanical Engineering (March 2023)Infographic: Electric Vehicles Need Imported Minerals – ASME
  8. International Energy Agency, The Role of Critical Materials in Clean Energy Transitions, March 2022
  9. X. Chen et. al., Decoding China’s Energy Transition, Peking University Institute of Energy, March 2023
  10. D. Reihter,  J. Brown and D. Fedor, 2017. Derisking Decarbonization: Making Green Energy Investments Blue Chip, Stanford University. 2017. https://www-cdn.law.stanford.edu/wp-content/uploads/2017/11/stanfordcleanenergyfinanceframingdoc10-31_final.pdf

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