The new century's growth industry: energy isolationism

If a group of US lawmakers and governors has its way, Americans will be able to obtain all the fuel that they ever need from domestic resources and know-how

NY TIMES NEWS SERVICE , WASHINGTON

Sun, Jul 16, 2006 - Page 12

US imports of oil could be eliminated by 2030, a new study by an interstate consortium asserts, if the nation turns to an aggressive program of energy efficiency and commercialization of four already-demonstrated technologies for making transportation fuels.

The study, sponsored by a nonprofit group of legislators and governors called the Southern States Energy Board, urges a crash program to meet fuel needs without imports, a strategy it says will lead to an American "industrial rebirth." It says that such a strategy could create more than 1 million new jobs, reduce the trade deficit by more than US$600 billion, and end oil price shocks that hurt the economy.

Roger Bezdek, an author of the report to be released tomorrow, said that the volatility in fuel prices is driven by the narrow dependence on a limited number of big oil-producing countries as practically the sole source of energy for transportation.

"Right now," he said, "if a couple of oil workers get kidnapped in Nigeria, the price goes up US$5 a barrel."

But for the strategy to work, the study said, an expansive investment of private funds would be required, with encouragement from "appropriate fiscal, regulatory, and institutional support mechanisms" for 20 years.

The study also suggested that the current push to produce ethanol from corn as a fuel supplement is largely a misdirection.

The four technologies for producing the fuels are profitable when the price of the oil they replace is US$35 to US$55 a barrel, the study said.

Three are closely related to one another. The one with the biggest potential -- estimated to displace 29 percent of imported oil -- is making liquid fuels from coal using the Fischer-Tropsch method.

A second is to take CO2 created in both this process and other combustion processes and use it to put pressure on old oil fields to push more oil to the surface, a technique called enhanced oil recovery.

A third is to use organic material, including wood and crop wastes, as feedstock for factories that make a fuel gas consisting of carbon monoxide and hydrogen. That so-called synthesis gas is the same as that made from coal in the Fischer-Tropsch method and it can then be turned into a liquid.

The fourth is production of oil from shale, a technique tried after the oil shock of 1979, but abandoned when prices fell.

An energy expert not connected to the study, Jason Grumet, executive director of the National Commission on Energy Policy, said that the goal of saving or displacing the amount of oil contemplated in the study was probably possible over the time period, although he said the challenge was "herculean."

But Grumet, the executive director of the National Energy Commission -- a private group that produced a study on electricity, transportation fuel, climate change and security -- warned that such a program still would not eliminate oil imports, because oil from abroad would be less expensive than oil from domestic sources.

Every barrel saved or replaced would still be a big benefit to security and the economy, he said.

To some extent, the study is a platform for the states to call for a national push to use the resources found within their own borders. Several of the member states have significant coal mining operations and old oil fields that could be brought back into production with carbon dioxide flooding. And all produce organic material that could be used. But the raw materials for this approach are also present in much of the rest of the US.

While the study does not put much support behind using corn to make ethanol, it does anticipate the production of ethanol from cellulose -- the woody part of plants -- in a process that has been demonstrated but not made commercially effective.