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Prepared by the
Institute for the Analysis of Global Security

May 24, 2004
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China and US should set up a strategic dialogue on energy issues
Interview with Dr. Gal Luft of the Institute for the Analysis of Global Security, originally published by 21st Century Business Herald in Chinese.

A crude threat
The terrorist campaign against Iraq's pipelines demonstrates that pipeline attacks are no longer a tactic but part of a sustained, orchestrated effort that can deliver a significant strategic gain. They can also cause significant damage to the global oil market.
Next in line to emulate the insurgents in Iraq could well be Islamist terrorist groups operating in Central Asia, among them Chechen separatists and the Islamic Party of Liberation, a group that seeks to carry out a holy war against the West and is a suspect in the recent wave of deadly attacks in Uzbekistan.

Chilly response to U.S. plan to deploy forces in the Strait of Malacca
Whether something is profoundly wrong in the dialogue between the U.S. and the two Asian powers is an important question in itself, but the real issue is what is the best mechanism to secure the world's most important shipping corridor, through which one quarter of world trade and half of the world's oil and two thirds of liquefied natural gas move each day.

Highlights from the Department of Energy’s International Energy Outlook 2004-2025

North Sea oil is declining
Since the 1970s North Sea oil has not only been a major source of wealth for both the British and Norwegian economies but also a way for Europe to cut its dependence on Middle East oil. Now many of the major fields in the North Sea are in decline and the North Sea is about to lose its prominent role as one of the world's leading oil domains.

Terror's Big Prize
Since September 11, pipelines, tankers, refineries and oil terminals have been attacked frequently. Except for a sharp increase in maritime insurance premiums in these regions these attacks had marginal strategic consequences. But in at least two cases oil terrorism could have rattled the world.

Libya: changing its spots?
Libyan crude oil is particularly attractive due to its very low sulphur content, which requires much less refining than higher sulphur oil. It is extremely high quality crude, whose characteristics are not easily found elsewhere. Despite its unique treasure, Libya's production capacity is relatively small, standing on 1.5 mbd of crude, or 2% of world supplies.
Since the 1988 Lockerbie bombing Libya had been under U.S. and UN sanctions which hindered its ability to generate enough investment to develop its oil sector. Libya's decision to embark on a rapprochement with the U.S came at unsurprisingly perfect timing, just as concessions for major U.S. oil companies were about to expire.

On the technology front

Fuel Cell power plant installed at NJ College
The fuel cell will provide 250 kilowatts of electric power as well as heat, to several buildings on the campus.

Biomass-to-Ethanol Progress
The enzyme costs of converting cellulosic biomass into sugars for fuel ethanol production have been reduced approximately twenty-fold with technology developed by the National Renewable Energy Laboratory (NREL) and Denmark based Novozymes, biotech-based leader in enzymes and microorganisms.

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Back Issues

EU study: Methanol from biomass - competitive with gasoline

A study of a new patented Swedish technology concluded that the alchohol fuel methanol can be produced from biomass via black liquor gasification at a cost competitive with that of gasoline and diesel. Methanol, also known as wood alchohol, can be used to fuel flexible fuel vehicles, and since it is rich in hydrogen and has physical characteristics similar to gasoline, can also be used as a hydrogen carrier fuel to power fuel cell vehicles.

In a recently completed EU-project titled BLGMF (Black Liquor Gasification with Motor Fuels production) a consortium of companies - Nykomb Synergetics, Volvo Bus Corporation, OK-Q8, Methanex, Chemrec, STFI and Ecotraffic - investigated production of transportion fuels from biomass via gasification of black liquor, a byproduct of the pulp and papermaking industry.

The group made a technical and economical comparison of the new technology with the conventional technology used today to process black liquor. The objective was to maximize the chemical and energy recovery cycle efficiency of a pulp & paper mill and at the same time cleanly produce transportion fuels, such as bio-methanol and dimethylether (DME,) from added biomass via black liquor gasification.

According to Tomas Ekbom, coordinator of the BLGMF project at Nykomb Synergetics, the results show that a modern Swedish pulp & paper mill could produce bio-methanol at a cost competitive with gasoline.

The total bio-methanol production potential in Sweden is about 4 million tons/year, which could replace almost 30% of transportion fuel consumed in the country. In the U.S. and Canada the production potential is 28 million tons and 7 million tons of bio-methanol, respectively. The gasification technology, developed by Chemrec, yields biomass to bio-methanol efficiency as high as 66%.

The technology will be verified in a 20 ton dry solids per day development plant at the Kappa Kraft liner pulp mill in Piteć, Sweden, which will start production at the end of 2004. A demonstration plant 20 times the capacity will follow within the next few years.

Also see:
Black Liquor Gasification with Motor Fuels production: executive summary; full report
Biomass to ethanol progress
Clean Coal-to-Methanol project a success