Charon...what say you on ethanol

[crowMAW]

Charon...you still out there in bbs land?  Some interesting articles being published in Fortune on ethanol:

http://money.cnn.com/magazines/fortune/fortune_archive/2006/02/06/8367959/index.htm

I was really surprised to read about Brazil, where 40% of motor gasoline has been replaced by ethanol thanks to flex-fuel cars.  And I was more surprised to learn that a significant number of US cars are already flex-fuel enabled!

What are the thoughts from the oil industry on this?  Will there be an Exxon and ADM merger in the near future??  

BTW, I searched and read a few of your previous ethanol posts (especially the one from 2002).  But given the apperent success story in Brazil, have you reconsidered some of those positions?  I wonder if it would be possible to provide consumers with the option of E-85 at the pumps and let the market decide.

[Toad]

A lot of options open up when oil hits $80 a barrel.

Just think... France and Japan both generating well over 50% of their electrical needs from nuclear power.  Oh..wait... we just couldn't do that.

Ethanol powering our vehicles, nukes supplying electricity to our homes. Someone in Saudi would cry, I bet.

[Charon]

The big issues with ethanol are acerage for production, problems with transport (picks up water easily) and the debatable "fact" that it likely consumers more energy in production and transportation than it provides in return.

Having said that, ADM got a huge ethanol mandate pushed through with a lot of additional tax incentives for carrying the product (and people cry about welfare mothers - BOHICA ). Marketers located near supplies are excited because they get a piece of the subsidy now . It's been a blizzard of press releases in the past 12 months with all sorts of conferences, etc.

Functionally, supply (and base cost) and logistics are the real limiters with ethanol, as well as consumer education. Ethanol had a bad rep in the 1970s, and even people with flex fuel vehicles typically don't know they drive them. E85 can be a great thing ($) for a consumer if you live in the right place and drive the right truck or car (plenty actually on the road today). Though actually, you're just getting a percentage of the tax you gave away back in a lower fuel price. Strong interest in the Midwest today for sure, and as Toad said, with crude and wholesale gasoline where they are now... some actual margin on fuel products for a change at the retailer and marketer levels.

My gut take... a fuel that both overseas and in the US is more subsidy/artificial support driven than naturally driven. Good for octane boosting though.

Charon

[Vulcan]

<--- waiting for biodiesel to get more mainstream (its gaining momentum)

[Toad]

Cellulosic Ethanol: Both Promise and Problems for New Tigers in Your Tank

The secret ingredient?

"Jungle rot," Mr. Passmore said. More formally, Iogen is using Trichoderma reesei, a fungus that company officials say was discovered by American soldiers on Guam in World War II. "They couldn't figure out why their canvas tents were dissolving," Mr. Passmore said. Now, with some genetic modifications that Iogen refers to as "directed evolution," T. reesei is producing abnormally large amounts of the enzyme that breaks down cellulose into sugar. The next stage, turning sugar into alcohol, may be one of the oldest industrial activities....

...Straw looks a lot like hay, but has fewer nutrients and therefore less value. A ton of baled straw goes for about $40 and yields 80 to 85 gallons of ethanol, making the price of the main raw material about 50 cents a gallon. By contrast, with oil at $70 for a 42-gallon barrel, the raw material for gasoline is about $1.67 a gallon. Iogen chose to use straw because the technology to bale it is available. Brian Foody, the president of the company, said other wastes could be used, including the entire corn plant, not just the kernels, which are used in existing ethanol plants. Even old newspapers are an option. Rapping on the wooden top of his desk, Mr. Foody said, "We could even use this," although presumably people would choose scrap lumber over office furniture.

The trick is the enzyme, which is essentially a digestive juice of the fungus. Iogen sells enzymes that help convert wood pulp into paper, fade and soften denim and process animal feed. T. reesei, it turns out, works very well on cellulose, normally a tough material to break down....

If we ever get to the place where a ton of our agricultural waste...say corn stalks.... is putting out a gallon of ethanol for less than the cost of gasoline... well, the Arabs won't be building ski runs in  Dubai too many more times.



Then there's thermal depolymerization.

I think the answers are out there but I don't know how long it's going to take to get to the point that it's all "mainstream".

[rpm]

I'm seriously thinking about starting a bio-diesel plant. I can produce it for 50 cents a gallon from used cooking oil. All it takes is lye and ethanol.

[Rolex]

If your motivation is put frowns on the faces of Saudi Arabians, you're going to be disappointed, Toad. The US is really more dependent on Saudi Arabia than the Saudis are dependent on America. It's not 1986, it's 2006 and most of the oil from the ME is flowing east, not west.

I'm sure Exxon and Mobil will continue to have your best interest at heart (maybe they've had enough of the oil business anyway and want to get out), so you can count on their support for ethanol  

[ygsmilo]

The Brazilians use sugar to make ethanol, big shift in acreage over there from cotton and beans to sugar,

[crowMAW]

Originally posted by Charon
My gut take... a fuel that both overseas and in the US is more subsidy/artificial support driven than naturally driven.

Interesting thoughts.  I wonder how Brazil has overcome the transport issue.  And it sounds like some technological breakthroughs have increased the yield during production.  Not to mention that it sounds like the production process is far less complex than that required to refine gasoline.

As far as consumer education...it sounds like GM's yellow gas cap campaign might raise awareness when it launches.

If there is a significant price difference at the pump, I would imagine consumers will buy it.

[Toad]

Originally posted by Rolex
If your motivation is put frowns on the faces of Saudi Arabians, you're going to be disappointed, Toad. The US is really more dependent on Saudi Arabia than the Saudis are dependent on America. It's not 1986, it's 2006 and most of the oil from the ME is flowing east, not west.

I'm sure Exxon and Mobil will continue to have your best interest at heart (maybe they've had enough of the oil business anyway and want to get out), so you can count on their support for ethanol  

You're right Rolex. If every vehicle in the US ran on ethanol and 78% of our electricity was produced from nuclear power the way France does, it would have no effect on the world oil market whatsoever.

Funny thing about oil vs ethanol too; oil has to be found. Ethanol is found whereever you grow it and it's renewable. So, I kind of don't think there's going to be a corner on the market. I think "wildcatters" will have a much easier time of it.

[mora]

Ethanol has a negative Energy Return On Energy Invested ratio.

[Suave]

Ethanol is ok in moderation.

I can boil a pint of water with 10ml of it and it's cheaper than using the microwave and almost as fast.

[Toad]

Originally posted by mora
Ethanol has a negative Energy Return On Energy Invested ratio.

Right now. I think that's what this whole Trichoderma reesei aspect is about.

From the previous link:

Cellulosic ethanol, though, requires far less energy to make, particularly if it is piggybacked on conventional corn ethanol, by using part of the corn that a conventional ethanol factory can't. Cellulosic and conventional ethanol could displace half of gasoline use, backers say. Cost remains a question.

It hasn't all been worked out yet but it holds promise. There's a lot that goes into the cost equation. There's a certain amount of money that goes into raising a corn crop and a certain amount normally expected as a return. IF you sell your corn AND sell the stalks, the cost equation would most definitely change. In the same way, making ethanol from waste products instead of commodities changes the cost equation, with the added plus that using cellulosic ethanol takes less energy to convert.

It's still early in the game but it sure isn't over either way yet.

[Mustaine]

Wisconsin is a huge source of ethanol. there have been alot of debates about it, and alot of bills put forward in the state legislature. do a search on some of it.

personally the farmer's lobby to "force" it into being used pisses me off. they have alot of power in these midwest states, and you can bet they are like any other lobbist. they are looking to make themselves money. they don't give a crap about the environment, or anything else.

some of the "studies" they have had independant ecologists do directly contridict what other ones say. according to te crown growers of wisconsin, there is nothing on the planet cleaner or more efficent than ethanol, especially if the refinery plants are here in wisconsin. personally it seems they have bought off the EPA here too. when the independant results did nto match the EPA results, the EPA said their own test was using wrong data or some crap.

the whole 10% ethanol in gas being manated to reduce smog here in the milwaukee area was debunked over 5 years ago. modern cars (newer than IIRC 1994) actually get 2-3 miles per gallon worse using the reformulated gas. that extra fuel burned actually puts more pollutants, and more carbon monoxide into the local atmosphere. (we have been forced to use reformulated gas for over 10 years now, and the smog and ozone advisories get worse every year)

[mora]

Originally posted by Mustaine
the whole 10% ethanol in gas being manated to reduce smog here in the milwaukee area was debunked over 5 years ago. modern cars (newer than IIRC 1994) actually get 2-3 miles per gallon worse using the reformulated gas. that extra fuel burned actually puts more pollutants, and more carbon monoxide into the local atmosphere. (we have been forced to use reformulated gas for over 10 years now, and the smog and ozone advisories get worse every year)

5% ethanol content is fine and reduces emissions. 10% can be too much if the car isn't designed to run with that mixture. Sounds  more like a farming subsidy than an enviromental act.

Reformulation in itself is a very positive thing, and does significantly reduce emissions. If reformulation involves adding too much oxygenates(it's only a small part of reformulation), then the result may be the opposite, as in the case of gasoline with 10% ethanol content.