Alternative fuels from the tar sands

Alternative fuels from the tar sands

Methanol and dimethyl ether from the tar sands can replace gasoline and diesel.
by Byron de la Fuente  |   Monday, June 11, 2012
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Demand for natural gas and gasoline (but not the actual pump price for gasoline) is currently at an all time low in the US, forcing some refiners to close up shop or voluntarily reduce their output. The depressed price of natural gas can be attributed to increased supply brought about by the widespread application of horizontal drilling and multi-stage fracking on gas shales. The current economic slump, the blending of gasoline with ethanol, and the enactment of federal and state low-emission or higher-fuel-economy standards for passenger vehicles in the US have in turn contributed to decreased demand for gasoline.

On the other hand, US and worldwide demand for diesel fuel has been steadily increasing. The  bitumen (or extra-heavy crude oil) from the Canadian oil sands has in fact been scheduled for refining by Texas-based refiners into diesel and other middle distillates.

But the decision on whether to go ahead and allow the completion of the final link (phase 4) of the Keystone XL pipeline from Alberta to Texas has been put on hold until at least next year. In the meantime, what can Canadian government and private industry do with the excess capacity in natural gas and bitumen in Alberta? One possible answer could be to increase Alberta's capacity to refine bitumen into ultra-low-sulfur diesel, naphtha, and other middle distillates, and to convert the excess natural gas and methane into methanol, and then convert this methanol into olefins and dimethyl ether.

As mentioned previously, world diesel demand is currently stable and is steadily rising, and will likely remain so in the near future, while naphtha (a raw material for the chemicals industry) also has a stable and growing market. Naphtha is also used as a diluent or viscosity reducer for tar sands oil. Methanol, in turn, is a versatile compound with various applications. It is extensively used in fracking for tight oil and the olefins that can be derived from it can also be used as bitumen diluents. (Naphtha is also a source of olefins.) Dimethyl ether, on the other hand, could be used as a sulfur-free substitute for diesel.

Methanol has been the fuel of choice for the Indy racing cars since the 1960s; and dimethyl ether has a higher cetane number than petrodiesel. And just like ethanol, methanol (and dimethyl ether) can also be produced (by gasification instead of fermentation) from other types of organic matter such as waste pulp from paper mills, corn husks, wheat stalks, and bio-digested animal manure or human sewage.

Bitumen, heavy crude oil, and natural gas from coal-bed deposits (and from the coal itself) will likely become the major sources of petroleum products in the foreseeable future as conventional and unconventional petroleum resources are depleted, including tight oil. Now could be the best time to invest in the development of the know-how and the preliminary infrastructure to begin to efficiently utilize these largely untapped and potentially huge sources of energy. At present, about one third of methanol demand already originates from the energy sector.

There are already active or soon-to-be-adopted regulations in Europe and North America that mandate the blending of more environmentally friendly fuels with regular petroleum-based fuels. Canada, for one, might be able to significantly mitigate the increased levels of greenhouse-gas emissions resulting from the increased utilization of the oil sands by mandating the blending of domestically produced methanol, along with ethanol, with gasoline; and dimethyl ether (and biodiesel if practicable), with petrodiesel. Canada would benefit tremendously if it became totally self sufficient in hydrocarbon fuels as it has the second largest deposits of heavy crude oils, with deposits that are about as extensive as the conventional petroleum sources of Saudi Arabia.

The Canadian federal and provincial governments provide tax exemptions, grants, and other financial incentives to various companies that pioneer environmentally friendly technologies. Presently, the current budget surpluses derived from the tax and royalty revenues from oil sands production and tight-oil exploration could allow at least some provincial governments to make pilot investments in such a bitumen-driven type of “methanol-based economy.”

But, to have a significant effect, such an initiative in Canada, or even in the USA, would require the participation of the majority of Canadians and Americans. If more Americans and Canadians purchased more diesel-powered vehicles than gasoline-powered vehicles, for example, then instead of exporting the petrodiesel output of Texas refineries, this fuel can instead be sold domestically, thereby reducing the overall need for foreign crude oil.



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