IAGS logo Energy Security
Prepared by the
Institute for the Analysis of Global Security

May 27, 2004
Contact IAGS: info@iags.org
To subscribe, send a blank email to subscribe@iags.org
To unsubscribe, send a blank email to unsubscribe@iags.org

Terror's Next Target
Attacks on the West's oil and gas infrastructure -- from production facilities to pipelines and tankers -- are likely to be the next "mega" target of terrorists, and could wreak havoc with the world's economy, according to an in-depth IAGS analysis of the susceptibility of the energy industry featured in the latest Journal of International Security Affairs (Winter 2004).

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.

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.

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.

IAGS is a publicly supported, nonprofit organization under section 501(c)3 of the Internal Revenue Code. IAGS is not beholden to any industry or political group. We depend on you for support. If you think what we are doing is worthwhile, please Support IAGS. All contributions are tax deductible to the full extent allowed by law.

Property of The Institute for the Analysis of Global Security © 2003. All rights reserved.

Back Issues

DOE should say "GO" for further research in on-board fuel processing for fuel cell vehicles

In Philadelphia this week, the U.S. Department of Energy (DOE) is holding a program review meeting to consider its hydrogen and fuel cell research activities. As part of this discussion, a review panel will be considering its input to a pending DOE "go/no-go" decision on whether to consider further research in on-board fuel processing for fuel cell vehicles. By all indications, the DOE will likely announce a "no" decision by early July. This would be a short-sighted decision that could have a significant impact in delaying the race to commercialize fuel cell cars.

Over a period of several years, the Department of Energy has sponsored research programs designed to develop a "multi-fuel" process capable of generating hydrogen from a range of fuels, including gasoline, methanol, ethanol, and natural gas. Despite the stated desire to process a range of liquid and gaseous fuel, the program’s central focus has been on processing a "gasoline-like" fuel as an interim "transition" to a hydrogen economy. Individual projects with Nuvera, and McDermott/Catalyitca on multi-fuel processing are only judged on their ability to meet technical performance targets for "low-sulfur gasoline." Needless to say, running fuel cell vehicles on hydrogen generated from gasoline would not reduce dependence on foreign oil.

Notably, a study on "Microchannel Fuel Processor Development" by Pacific Northwest National Laboratory (PNNL,) found that "Methanol was the most easily reformed, and was completely reacted to the highest space velocities tested" (U.S. DOE, 2002 Annual Progress Report, Hydrogen, Fuel Cells and Infrastructure Technologies Program). The PNNL work focused on the simple steam reformation of fuels, rather than the use of autothermal reformers by Nuvera and McDermott/Catalyitca. Steam reformation is the workhorse of the oil and petrochemicals industry. It is a proven, and well-known technology. The technical challenges identified by the DOE as the basis of their decision-making regarding vehicle start-up time/energy and cost are far more pronounced with autothermal fuel processing than with steam reformation. If ultimately the goal is to identify an efficient and economical on-board fuel processing system and readily available liquid fuel that can provide a bridge to the hydrogen economy and reduce petroleum dependence, the autothermal reformation of gasoline is the wrong technology and the wrong fuel.

Known as "wood alcohol," methanol is a clear and colorless liquid chemical that is an ideal hydrogen carrier fuel. As a liquid at ambient temperature and pressure, and a simple molecule - CH3OH - methanol readily releases its hydrogen. For fuel cell applications, methanol offers unparalleled versatility. The ability to reform methanol on-board a vehicle or within the walls of a stationary or portable fuel cell power system has been demonstrated extensively. Methanol also can be reformed "off-board" using commercially available small packaged reformers that can be located at corner service stations for fueling of gaseous hydrogen fuel cell vehicles. Finally, direct methanol fuel cell technology will be the first to reach broad commercial markets powering cellular phones, laptop computers, PDAs, and a host of electronic devices.

As a hydrogen carrier for fuel cell vehicles, methanol has several distinct advantages. First, proven steam reformation technology produces very high purity hydrogen gas from liquid methanol at relatively low temperatures (250°C). Steam reformation is the simplest of the primary reformer designs, with the others being partial oxidation and autothermal reforming. With their simple design, methanol steam reformers offer the potential for high efficiency, low cost, and small-sized engines. Current draft specifications for hydrogen will require hydrogen purity to "six nines" (99.9999%), which is less of a challenge when reforming methanol.

Second, methanol is a widely available chemical commodity with extensive distribution and storage capacity in place. More than 500,000 metric tons of methanol are moved from seller to buyer in the United States each month, with much of the bulk shipments moving by rail.

Third, methanol is a cost-effective hydrogen carrier fuel, with historic spot pricing in the range of just 45˘ per gallon.

Fourth, liquid methanol is moved, stored and handled in much the same way as conventional diesel fuel and by following similar safety guidelines. INDY racecars switched from gasoline to methanol over three decades ago for the fuel's inherent safety benefits, and not a single driver has died due to fuel related fires.

Fifth, the methanol industry is moving aggressively to support the development of new markets, and stands ready to support an effort to demonstrate the use of methanol as a hydrogen carrier fuel for fuel cell locomotives.

Most critically, methanol can be made in the USA from domestic energy resources, thus greatly reducing our dependence on foreign oil. The U.S. has 25% of the world's coal reserves and the Department of Energy's own Clean Coal program demonstrated commercial scale production of methanol from coal at 46˘ per gallon. The U.S. produces billions of tons a year of biomass and technologies for the production of methanol from these renewable feedstocks are already in commercial use, with prices approaching that of conventional feedstock production.

Unfortunately, one of the key messages to come out of a series of DOE-sponsored hydrogen and fuel cell industry stakeholder workshops held in 2002 and 2003 was been largely ignored by the Department in its Report to Congress and subsequent publications. The "Infrastructure" working group which met on February 21-22, 2003, identified several key messages, the first of which reads: "All fuel sources/production methods in play - don't pick winners, too early, focus on domestic sources." While the DOE often states, "it is not the role of government to pick 'winners and losers.'" It appears that the Department is attempting to do just that by abandoning on-board fuel processing, and in the process disavowing one of the central themes expressed by the industry stakeholders.

Clearly, the use of methanol as a hydrogen carrier fuel offers significant benefits. The industry stakeholders gathered by the Department were quite emphatic in stating that fuel cell technology has not reached the point of maturity that we - as a nation - should be resting the success of the technology on one specific fuel. The Department's apparent effort to pick a single winner for the choice of fuel for fuel cell technology undermines the energy security imperative to move as rapidly as possible towards economically feasible solutions that can reduce our dependence on foreign oil. The DOE should not only continue its important research in on-board fuel processing, but it should refocus this effort on what is clearly the most promising technology, the steam reformation of methanol.

More info:
Clean Coal-to-Methanol project a success
EU study: Methanol from biomass - competitive with gasoline