Molecular Manufacturing vs. Peak Oil

Civilization could be facing a big problem in the next few years. Oil could get considerably more expensive soon.

"Peak Oil" is not when we "run out" of oil; it's simply when our collective ability to extract enough oil is exceeded by our demand for oil. There's disagreement about when it will happen; pessimistic estimates say it could be in the next few years, while official estimates put it a couple decades out. Some people, including Alan Greenspan, say it won't happen at all: that new technology will create new supply from non-oil hydrocarbon reserves like tar sands and oil shale.

In evaluating these opinions, it's worth considering that global demand was within 1% of supply a couple of months ago. Demand keeps growing, while the oil production rates of most countries are already maxed out. This doesn't look like a very good safety margin. Another clue: In 1998, a report by the International Energy Agency listed "unidentified unconventional" oil as supplying 17% of the world's needs in 2020. In other words, they didn't know where it would come from.

For an overview of the Peak Oil argument, see Jack Zagar's presentation, especially charts 10 (vs. 9), 14 and 15, and 23. (It looks to me like Zagar is a bit pessimistic, as (if I read him right) he backdates advances in extraction by assigning the total oil in a field to the discovery date. But it looks like he's right that the standard discovery curve is far too optimistic.)

If oil supply ever does fall below demand, we can expect prices to rise steeply. At this point, it could take years for alternative technologies to come online, no matter how much economic incentive there is--and meanwhile, since oil demand is relatively "inelastic," the price of oil will be bid up until it slows the global economy enough to reduce demand. That's an ugly picture.

So how does this relate to molecular manufacturing? Well, to avoid a "Peak experience," some new technology will have to come online and grow quite rapidly. It will have to support rapid research and development (meaning, rapid prototyping of industrial-scale projects). Then it will have to support rapid trillion-dollar-scale building of infrastructure.

How rapid is "rapid"? It depends on how far in advance people are willing to admit they need a new technology. It's worth noting that after journalists noticed the 1998 "coded message" of scarcity the IEA reports transferred the "unidentified unconventional" oil to other categories. And in 2000 the USGS published a report (see "Chart 31" of Zagar's presentation) which appears to grossly overestimate the yet-to-find oil; the "Mean" curve is a sharp departure from history.

If corporate and national politics delay admissions of trouble until the signs are unmistakable, or if the Peak Oil camp is even close to right about a peak as early as 2008, then we could have just a few years in which to design and ramp up a new trillion-dollar infrastructure. The only way to do this without severe economic pain is large-scale, general-purpose, exponential manufacturing. And the only technology that appears to fit the bill is molecular manufacturing of the mechanosynthetic variety.

This appears to be a fairly strong argument for early development of advanced molecular manufacturing.

Chris

Comments

[Brett Bellmore]

If the only way to cope with the oil peak without terrible economic pain is to resort to ultra-rapid development of nanotechnology, then we're in for terrible economic pain.

At the point where the oil peak has conclusively arrived, and nobody in a position of authority can credibly deny it, we'll be in a life or death emergency. And in life or death emergencies, if your choice is between massive reasearch which might supply way to solve the problem, or a solution you know for a fact will work, even if it's painful, you go with what you know will work.

Which means that, while we probably would wee increased funding of nanotech research under that circumstance, most of the effort would go into building breeder reactor farms. We have the designs already, we know they work, all we'd have to do is build them. The only obstacle is political, and $100 oil would clear the way politically.

[Michael Vassar]

What about thermal depolymerization?
It would take a few years, but breeder reactors can't power existing cars, or any plausible airplanes.

No-one will fund MNT for energy if they aren't already funding it. The problem isn't one of economics, it is one of belief.

[Brett Bellmore]

Thermal depolymerization will certainly contribute at the margins, and might even be enough to power the transportation system, but it won't handle the whole load. Ultimately, it's just a fairly inefficient form of solar power, with waste disposal thrown in as a side effect.

And, actually, my boss drives a car that can be powered by a breeder reactor. It's not cost-effective at current oil prices, though. Fortunately, he's got a short commute. And there have been some promising studies of the potential for powering aircraft with beamed power.

[mark]

could anyone supply me with a ratio between oil used for general electricity needs to oil used in unconnected transport needs..? I'm just wondering and can't find one online ATM.

[Tom Craver]

The "peak" isn't any one year - it's a period of roughly 5 to 10 years where production may vary up/down significantly but is relatively flat compared to previous growth, and in retrospect will be seen as the period after which production very consistently declined. We're probably in the early part of this period now - the best evidence is the recent sharp price increases.

It looks like the US is making efforts to flatten the peak (to soften the impact) by gaining influence over the middle east (Iraq) and by getting China to cool down it's economy (the US consumes a lot of energy in the form of manufacturing done there and other places from which we import). The Fed is starting to bump up interest rates to keep the inevitable inflation under control.

China building pebble bed reactors is a good sign - maybe we'll soon hear an "energy gap" theory being pushed by the administration - i.e that China will be getting abundant zero-greenhouse-gas energy which will cause heavy job transfers from the US if we don't do something soon to match them and improve our "energy independence". The combination of zero-GHG to divide the Greens, and job protection to get the unions on board ought to be sufficient to get it through congress pretty fast.

I'm guessing that the big conservation push will have to wait until 2009 and the next President, when the "crisis" has become obvious, but the nukes aren't built yet.

[Chris Phoenix, CRN]

I agree that MM won't be funded if it's not close to done by the time Peak Oil hits. That's why I said maybe we should develop it early, preemptively. It's true we're not at all ready for it--but we're also not ready for Peak Oil.

I found another good article on Peak Oil.
"But the event will occur, and my analysis is leaning me more by the month, the worry that peaking is at hand; not years away. If it turns out I'm wrong, then I'm wrong. But if I'm right, the unforeseen consequences are devastating. .... unfortunately the world has no Plan B if I'm right."

Once we have the basic nanofactory, then further development to replace oil could happen pretty quickly as such things go. We wouldn't have to replace it all at once--just enough to take pressure off the remaining supplies. We could certainly create a new set of infrastructures in a decade--as we did with the Internet when the Web arrived.

Michael, good question about TDP. They claim [PDF] that they can process dirty heavy oil, tires, coal, and cornstalks. The oil they produce, apparently, is high quality and doesn't have sulfur even if the feedstock does. I wonder how it would work on Canadian tar sand? But we'd still have to build the processing plants. How quickly can we build 2,000 plants to ramp up from 500 barrels per day (the one existing plant, processing turkey guts) to 1 million?

The plant cost $20 million. So it'd cost $40 billion per million barrels (ignoring economies of scale). The 17 million barrels of "unidentified unconventional" oil would require $680 billion by 2020. This seems doable.

Where does the feedstock come from? Remember that TDP needs high-energy input. One possible source, as I said, is ugly hydrocarbons: tar sand, coal. Of course this adds carbon to the atmosphere, though the TDP helps some because it extracts some carbon in solid form in the process of producing its light oil.

It'd be great if we could use agricultural waste, since that doesn't add carbon to the atmosphere. But that takes oil to produce. According to this, Florida peanuts require 6610 BTU of energy, equivalent to 0.047 gallons of diesel fuel, per pound. Peanuts are oil-rich, so I'll assume they're about as good as turkey guts. 146 g of peanuts (1 cup, .32 pounds) has 828 kcal. So a pound has 2577 kcal or 10,229 BTU, of which 85% or 8,695 BTU would be available. Throwing in the rest of the peanut plant might improve that balance. And TDP produces fertilizer, so you wouldn't necessarily be depleting the fields--in fact, local fertilizer production might save some of the energy. And other crops might do better. But peanuts just don't work. Peanuts cost about $800 per metric ton or $.36 per pound at late-90's energy prices (was that $1.50/gal diesel?), implying energy cost contributed $.07 or 20%. With 3/4 of the energy produced being required to grow the crop, each pound of peanuts would produce 0.015 gal of excess oil: 67 pounds per gallon. If energy cost nothing, then that gallon would cost $19. But that would drive up the cost of peanuts to $1.19 per pound. Which implies another tripling of the cost of energy, which drives up the price... it doesn't appear to work.

According to this, sunflower seeds cost $500 per ton, and crude sunflower oil $540 per ton. So it doesn't look like peanuts are especially expensive as oil plants go.

Corn stalks and hay cost about $25 per ton. Assuming (very optimistically) that price is proportional to energy use, then they only use 1/32 as much energy. And they might provide (I'm guessing) 1/4 to 1/2 as much energy in processed hydrocarbons as vegetable oil. At that point, the energy used to grow them is a small fraction of the energy they would provide, and the main costs would be for equipment (including TDP) and land. That might be able to produce oil at $50 or 60 per barrel, but at the cost of substantial land usage.

Chris

[Richard Jones]

I'd recommend Vaclav Smil's recent book "Energy at the Crossroads" (MIT press) for a very thoughtful overview of these issues. The chapter entitled "Against Forecasting" is a particularly salutory warning about relying on future projections of any kind.

Of course there has to be a peak in oil production some time, but I don't think the arguments presented for it happening right now are as compelling as they first look. Whatever the truth about that, one thing is certain - hydrocarbon fossil fuel is still massively abundant. The reserves of unconventional fossils - tar sands and heavy oil like the huge Venezuelan reserve - are well known, and there are many hundreds of years of coal left (much of it, as it happens, in China). Of course there are political difficulties in that the bulk of hydrocarbon reserves aren't in the place where the bulk of the energy is used (i.e. the USA). But the bottom line is that we probably should wean ourselves off hydrocarbons, but the pressing reason for doing this is more likely to be to head off climate change rather than because we run out.

As for high oil prices right now, it seems very unlikely that this is a reflection of a peak. For one thing, they are still a long way from their historic high point in the late 70s and early 80s. And there are plenty of more immediate reasons for high oil prices. Choose from: strong demand from a rapidly industrialising China, recent foreign policy choices by the USA, and the fact that oil is priced in dollars, a currency whose value is universally believed by markets all over the world to be heading rapidly downhill.

[Brett Bellmore]

Agricultural waste such as corn stalks and the like, are produced in any case, the charge for them represents mostly the cost of collecting them, instead of plowing them back in. If there were substantial demand for them, (About the only demand for cornstalks right now is for halloween displays.) the same machinery that's collecting the corn could separate and collect the stalks, at little additional cost.

[Tom Craver]

Collecting cornstalks would require quite a bit of modification to conventional combines. More likely, whole plants - corn and stalks - would be cut and chopped using existing "silage" machines.

While corn is pretty fast growing, I suspect there are other plants that grow faster with at least equal whole-plant energy content, perhaps allowing two yearly crops. I wouldn't be surprised if some plant that farmers currently treat as a weed might be a candidate - weeds are notoriously fast growing.

[Chris Phoenix, CRN]

As a matter of fact, cornstalks (plus supplement) are used for cattle feed, and cost about $17.50 per ton to collect into bales (example 4 of http://www.extension.iastate.edu/agdm/crops/pdf/a1-70.pdf).

As a useful feed competitive with hay, their value is about $31.50 per ton (baled). At 25% moisture content, and 40% oxygen content in the remainder (I'm guessing), and 75% TDP conversion efficiency (I'm guessing), then each ton of cornstalk would produce 1/3 ton of oil--that is, oil equivalent, since the fuel gas produced counts toward the efficiency--and the fuel gas probably isn't shippable, being high-oxygen. There's about 6.8 barrels per ton of oil, so that would add about $14 to the cost of each barrel. Not bad!

As to heavy oil: check out this BusinessWeek article saying refineries can't handle any more heavy oil right now, as shown by the price spread between heavy oil sour oil at $35 and light sweet oil at $50.

"Timothy M. Donohue, a principal at Booz Allen Hamilton Inc., figures the $8 to $10 per barrel discount for heavy crude would have to remain for up to seven years to justify a large-scale shift" to upgrade existing refineries.

The article concludes, "No matter how you look at it, heavy, sour crude won't offer consumers sweet relief from rising oil prices anytime soon."

Seven years seems a long time, compared to industry people saying Saudia Arabia has to bring 3 more mbpd online by the end of this year to prevent a shortage--and won't be able to.

Chris

[Brett Bellmore]

There's turnover in combines, Chris; I'm assuming that if we DID get into using this process on biomass in a big way, we'd design new dual-purpose combines, and bring them into service as the old ones wore out.

[Chris Phoenix, CRN]

Brett, I wasn't disagreeing with you on new combines--just pointing out that equipment already exists. I was disagreeing with you on whether cornstalks are valuable today.

Chris

[Derrick]

It seems to me,if we want to ultimatly solve our energy problems we're going to have to get serious and "look the denom in the eyes".It would appear to me, if we spent as much on energy research as we do in Iraq, we would have this problem solved once and for all.

[Brett Bellmore]

They've got their uses, but I can tell you for a fact, they're not so staggeringly useful that every farmer goes to the trouble of collecting them. My next-door neighbor certainly doesn't.

The key, I think, is that if you're going to collect them for silage, you do it while they've still got some moisture in them, and the whole plant gets used. If you're raising the corn for dry corn, by the time the corn itself is ready for harvest, the stalks are too far gone to use for silage.

Now, if this process can use the dry stalks, so that it provides an added revenue stream for farmers raising corn as a grain, that would be a substantial gain in efficiency, since those dry stalks are the ones that go to waste now.

[Matt]

I wonder how attractive large deposits of methane hydrate will look like 5 years from now, and how large its impact on the energy market and the environment will be. Has anybody heard of it lately?

Worldwide, estimates of the natural gas potential of methane hydrates approach 400 million trillion cubic feet -- a staggering figure compared to the 5,000 trillion cubic feet that make up the world's currently known gas reserves. link

[Chris Phoenix, CRN]

Richard, on your comments on prognostication--the more I think about the mechanisms of peak oil, the more worried I get.

Increased margin of oil supply-vs-demand can come from one of only four places.
1) Finding new fields. Zagar's case seems pretty strong that this won't be a significant resource.
2) Pushing existing fields. As I understand it, this is a good way to make them collapse irreversibly.
3) Unconventional oil. Requires money and time to build equipment; produces a lower-grade product.
4) Replacing current oil uses with something else. Requires even more money and time.

On the other hand, I just found an article written in 1980 from the USAF Academy that sounds very familiar: "By 1985, total world demand for OPEC oil, including that of nonindustrialized and communist countries, is likely to be from 47 to 51 mb/d. Yet maximum production capacity--even if expanded significantly by Saudi Arabia, the only producer with reserves sufficient to support production at this level--will fall short of these figures by from 4 to 12 mb/d, or about 16 percent of total world demand."

So maybe you're right that things aren't as bleak as they seem this time either. Maybe high prices will slow the economy in time to reduce demand so there won't be a shortage. Maybe TDP plants will turn out to be a great way to process tar sand, and five years from now we'll have plenty of light sweet "TDP crude".

But I keep thinking about that 1% margin between supply and demand. That's no way to build a stable system.

Chris

[Chris Phoenix, CRN]

One article on hydrates from BBC says there may be a lot less than we thought:
"One widely cited estimate proposes that 10,000 gigatonnes (Gt) of methane carbon is bound up as hydrate on the ocean floor. But Dr Alexei Milkov of BP America says his research shows reserves are between 500 and 2,500 Gt..."

But Milkov agrees that whatever is there is concentrated enough for extraction.

It looks like we're still doing research on how to extract the gas.

Chris

[Chris Phoenix, CRN]

In my original article, I wrote that I thought Zagar was pessimistic in backdating advances in extraction. Well, I emailed him to double check, and he wrote back. Quoted with permission:

"At best 5 to 8% of the world's oil fields are candidates for EOR (enhanced oil recovery - e.g. polymer, miscible floods). Of these candidates, even less have actual EOR projects in place. Furthermore the additional recovery from these processes on average increase the recovery factor by about 5% pts (e.g. recovery factor improved from 40 to 45%).

The uncertainty in reported and estimated P50 reserves is much greater than any contribution / difference EOR reporting would make to the backdated discovery trend."

Chris

[Michael Vassar]

Brett: Thermo Depolymerizatino is also useful for coal liquification. Anyway, "low efficiency solar" is fine. If you need feedstock you can grow plankton on the oceans. There's LOTS of space available for solar if your collectors are cheap. BTW, sugar cane provides the most usable calories per acre, about 8 times as much as corn. Bamboo might be similar, producing fiber.

Mark: Essentially all oil is used for transportation. 1-2% is for electricity. 1-2% are used in lubricants, polymers, and msc functions.

Chris: Markets don't usually deliver stable solutions, a 1% gap between deliverable and demand isn't surprizing. They deliver a mess of ups and downs. However, predicting the near term (<5 year horizon) future direction is very difficult, even when one can predict a bubble's bursting. Fortunately governments can stabolize prices somewhat through policy, through using oil reserves, etc.

All: rising oil prices will moderate demand, pushing people towards carpooling and slower driving, Towards hybrids and public transporation, and away from SUVs and Hummers. Non MNT nanotech can help a great deal on the efficiency front. So can info-tech for telecommuting. Unasked in most of this is how much oil could be extracted from old but newly economical fields before prices reached $100/barrel.

At any rate, if one is confident in oil prices increasing, one should buy oil futures. I recommend asking people who are in the business of doing so first.

Even 500 GT of methane clathrates, if useful, would take us past the time horizon that MNT speculators should focus on.

[Chris Phoenix, CRN]

Michael, according to this from the DOE, 1/3 of US oil is used for non-transportation. "Transportation is the greatest single use of petroleum, accounting for an estimated 67 percent of all U.S. petroleum consumed in 2000. The industrial sector is the second largest petroleum consuming sector and accounts for about 25 percent of all petroleum consumption in the U.S. Residential/Commercial and the electric utility sectors account for the remaining 8 percent of petroleum consumption."

Michael says: "rising oil prices will moderate demand, pushing people towards carpooling and slower driving"

I'll believe that when I see it. I'm feeling smug about my Prius, but the fact is that fuel inefficiency is a small fraction of the cost of owning a car. Say you drive 100,000 miles in 5 years at 25 MPG at $2/gallon; that's $8,000. By driving significantly slower, you might get your mileage to 30. That saves you a whopping $266 per year, less than most people spend on cable. Basically, by driving significantly slower, which is aggravating and frequently a traffic hazard, you save $.50 an hour--an order of magnitude less than the cost (figured at minimum wage) of simply sitting in the car! If you have to worry about that, you probably don't own a car anyway--and I suspect that's true worldwide.

So, fuel prices will probably rise quite a lot before they actually have an impact on driving habits. Rather than making everyone conserve, prices will rise until they start to cause severe pain for the poorest fraction of users. In America, I'm guessing prices could at least double to $4 a gallon. That would cause pain for politicians. But the other thing it would do is double the cost of that 25% of oil that's used in industry (plus whatever fraction is used for commercial transportation). That will significantly increase the price of goods across the board. And that would take a major chunk out of everyone's paycheck--which modern debt-ridden American consumers can't afford.

Chris

[Derek]

The methane hydrates on the ocean floor evaporate into the water, and then into the air, as they approach sea level. Methane hydrates retain their form(methane surrounded by water molecules) if kept under pressure. Furthermore, using pressurized methane injected into water is currently the fastest(and cheapest) way currently being researched to purify water. If this method were completely controlled, we'd not only have an unlimited supply of pure water, but also a virtually unlimited supply of methane, all for a (relatively) small amount of money, and in a short amount of time. This information can be found here. Although methane is an alternate fuel, it would solve the fuel shortage problem. It would be much easier and infinitely cheaper to develop a methane internal combustion engine than to research and develop a nuclear reactor for a car. Although this is only one specific example, it does provide an out for the peak oil crisis, and it would allow for more time to research and develop a feasible nano-assembly process for oil/fuel, or an entirely different fuel system based on entirely different systemics.

[Brett Bellmore]

I don't think anybody is proposing to develop a nuclear reactor for a car, though it could be done. You power cars with nuclear power by using the nuclear power plant to supply power to charge batteries, or manufacture some secondary fuel.

[Tom Craver]

An interesting site regarding solar power economics:

http://www.consumerenergycenter.org/renewable/estimator/

a cost/savings calculator that lets you make various assumptions.

[Derek]

I'm aware of that, and I guess that was a bad example, but that's all it was, an example. Any other alternate fuel other than methane or gasoline is going to be complex to R&D, and might not even be worth it. However, I did have a thought. If nanobots were released into a tank of water, they could easily break apart the oxygen and hydrogen bringing to life the age-old idea of a car that runs on water. I've always been pro-nanotechnology ever since I first learned about it earlier this year, and have done extensive reading on it since. The only problem with that idea is you'd have twice as much hydrogen as oxygen, which might possibly cause a repeat of the Hindenburg on a national scale. ;-) In any case, a more abundant fuel is the direction this world has to go toward, be it solar, methane, hydrogen or manufactured oil-based fuels.

[Janessa Ravenwood]

Actually, the water-combustion car was an idea I worked on for some time in high school. I never built a model, but I remember the general concept I came up with (at age 16, it wasn't fully fleshed out and we didn't have the technical resources then that kids have access to now). The gist of it was:

1) Split the H2O into H and O using electrolysis and route each to separate storage containers.
2) From those containers, route 2 parts H and 1 part O to the combustion chamber (I and a fellow collaborator we looking at the rotary engine at the time).
3) Combust the mixture, turning it back to water which is then drained away, filtered, and send back to the water tank to be broken down and used again.

There are some technical problems with the design that I wasn’t educated enough to deal with at the time (thermodynamic issues being #1 if I recall correctly), but I hear a Toyota R&D team tried something like this a few years ago. Interesting concept, but the electricity needed to break down the water was the real sticking point.