Tech Talk - The ExxonMobil 2014 Outlook for Energy

Each year the large oil companies produce their forecasts for future demand and supply of fuel, and these can be compared – both with earlier forecasts and with each other and the forecasts from different agencies. Last week, for example, I looked at the IEA forecast through 2035, while today’s subject is the ExxonMobil (EM) 2014 Outlook for Energy. (See also the 2013 Outlook Review and the 2011 Outlook Review).

In conformity with the IEA review EM consider that the energy growth rate for India will be perhaps one of the more significant metrics of the future. EM note that by 2040 one third of the global population will live in either India or China and between them they amount for half the global increase in energy demand, which is anticipated to be about 35% higher than the 2010 figure. India has already become the third largest energy consumer (after China and the United States).

One of the greatest drivers to energy demand growth comes as the population moves from the farms to the city and, as EM note, China has seen the urban population grow from 25 to 50% of the total in the past 20 years increasing residential power demand 20-fold. But that growth will slow in the future, reaching 75% by 2040. India (and Africa) are however further behind this curve with India being at 30% and Africa at 40%. Thus, as they still have further to move up the ladder, EM anticipate there will be concomitant increases in demand as these changes occur.

Figure 1. Projected growth in energy demand for major groups until 2040. (Illustrations are taken from EM The Outlook for Energy:A View to 2040 except where stated) (The key growth countries are Brazil, Indonesia, Saudi Arabia, Iran, South Africa, Nigeria, Thailand, Egypt Mexico and Turkey).

One of the small niggles with this projection is that it assumes a virtually limitless source of fuel.

Ongoing advances in exploration and production technology continue to expand the size of the world’s recoverable crude and condensate resources. Despite rising liquids production, we estimate that by 2040, about 65 percent of the world’s recoverable crude and condensate resource base will have yet to be produced.

While that projection will be discussed a little further later, it should be noted that in the next decade China’s energy demand will continue to grow at roughly current rates and that they have been quite assiduous in finding new sources to provide that energy. This is already providing some of the backstory to the growing tensions between China and its neighbors in the South and East China seas.

This is noteworthy because, as yet there is not much gap in the world between the quantities of fuels desired, and those available. Yet China is moving aggressively to ensure that it will be able to get what it needs when this changes. Such is not the case either with India, which has often failed in head-to-head bids for energy supplies when going against China, or much of the rest of the world who continue to accept the assurances that EM inter alia are promulgating with reports such as this, that there is a plentiful sufficiency.

Continuing along this unrestricted “ideal world” trail that EM are laying out, they continue to foresee that there will be a substantial improvement in energy efficiency over the next decades, leading to an increased decoupling of the relationship between GDP growth and Energy demand.

Figure 2. Projected growth in GDP and Energy demand through 2040.

Some of this EM project will come from the increased efficiency of automobiles and the greater acceptance of hybrid vehicles, with a penetration of 35% of the market – up from the 1% it held in 2010. While they do not expect that natural gas will have much impact on personal vehicles they do expect some impact with commercial transportation. The changes will lift the light vehicle mileage from the 24 mpg of 2010 to 46 mpg by 2040. (This is 1 mpg lower than their projection for mileage change given last year).

Figure 3. Changes in the composition and size of the global car fleet.

In terms of electricity supply EM foresee a sharply changing picture of the composition of the fuel sources for global supply, with coal barely holding its own throughout the period, and oil declining, while the remaining sources all grow in market size.

Figure 4. Sources of fuel and market size for electric power generation through 2040.

So where will the oil supply come from? Well EM remain confident in the future growth of North American oil.

North American liquids production is expected to rise by more than 40 percent from 2010 to 2040, boosted by gains in oil sands, tight oil and NGLs. With production rising and demand falling, North America is expected to shift from a significant crude oil importer to a fairly balanced position by 2030.

Latin American liquids production will nearly double through 2040 with the development of the Venezuelan oil sands, Brazilian deepwater and biofuels.

The Middle East is expected to have the largest absolute growth in liquids production over the Outlook period — an increase of more than 35 percent. This increase will be due to conventional oil developments in Iraq, as well as growth in NGLs and rising production of tight oil toward the latter half of the Outlook period.

The concern with these projections (which are substantially more optimistic than the IEA forecast, lies in their assumption of unfettered growth. As Ron Patterson just noted the EIA is anticipating that US volumes will peak in 2019, and then decline.

Figure 5. EIA projections for US petroleum production through 2040 (EIA).

Ron, has refined this plot and shows that US production may well peak in either 2015 or 2016, and go into significant decline by 2020. This is quite a contrast to the EM projection.

Figure 6. EM projection for change in liquids production through 2040

EM expect that Deepwater production will increase with major supplies coming from Angola, Nigeria, the Gulf of Mexico and Brazil, with production rising to a peak in around 2040. They expect tight oil supplies, however, to increase by a factor of tenfold from 2010 to 2040. The major new player in that field is anticipated to be Russia whose output is still expected to trail that in North America (which includes Canada and Mexico).

One of the great questions of the next decade relates to the development of the heavy oils of Venezuela and Canada. EM expects that the Canadian production will increase 200% with the rest of the total gain of 300% of the 2010 total presumably coming from Venezuela. However Venezuelan development remains a complex situation.

One of the most promising developments that EM describe is the use of extended reach horizontal wells, that are now allowing sub-sea deposits to be tapped using land-based rigs. At Sakhalin Island, for example, they note that they were able to drill one well in the Chayvo field that extended out 7 miles.

Figure 7. Illustration by EM of their extended reach well capabilities.

The other source that EM cite for increased production comes from OPEC and production gains in the Middle East. Given that Saudi Arabia have stated that 10 mbd is their intended upper limit to production (give or take a little) one presumes that the roughly 9 mbd gain is largely anticipated to come from Iraq. EM don’t actually say, nor did they last year, but it is interesting to end by comparing last year’s projection for future growth with the one shown in Figure 6.

Figure 8. The projected volumes for liquid supply growth as provided by ExxonMobil last year in their 2013 report.

On which cheerful note I wish you all the Compliments of the Season, and hopes that you have a safe and happy break.

OGPSS - Shell looks to the future

Each year the larger oil production companies provide their views of the future, and I recently reviewed that for ExxonMobil. Shell has now produced their projections, though in a somewhat different format as the document “New Lens Scenarios” which deals with future projections as a set of differing options. That does not make these views less informative.

In reviewing where the world will go, Shell looks more to political impact as the future unrolls. They see the European Union stuck in a Trapped Transition” where:

the ‘can’ keeps being ‘kicked down the road’ while leaders struggle to create some political and social breathing space.
so there is continuing drift, punctuated by a series
of mini-crises, which will eventually culminate in either a reset involving the writing off of sign and political capital (through pooling for example) or the euro unravelling.

On the other hand countries such as China and Brazil are resilient:

in their different ways, they had the financial, social, political, or resource ‘capital’ to respond and reform, following a room to Manoeuvre pathway.

Within the next thirty years, as the population grows, so a greater percentage, up to 75%, will live in cities. And these will consume a greater fraction of the global energy supply, perhaps as high as 80%, up from the current 66%.

The document is very much slanted as a Socio-political forecast, with considerable polemic in regard to the weaknesses that the company perceives to exist in the West.

Shell postulate two different scenarios for the future. There is the Mountain scenario, where business continues very much as usual, and then there is an Oceans scenario where the” powers that are” work toward a more accommodative approach to those in the developing world, and the less fortunate layers of society.

The document begins with the impact if the Mountain scenario is to prevail, driven through a top down control, largely through existing institutions. Shell is not enamoured of this:

In the US, for example, income and wealth inequality continue to increase, with stagnating middle-class earnings, reduced social mobility, and an allegedly meritocratic higher education system, generously supported by tax exemptions, whose main beneficiaries are the children of the successful. superimposed on this class divide is an increasingly serious intergenerational divide, as commitments to the elderly via entitlement programmes crowd out discretionary expenditures that could rebuild economic and social infrastructure. Similarly, in Europe an ageing population and commitments to high levels of entitlement, which are frequently underfunded, create a mixture of social and political strains that deflect attention from the core structural economic issues facing the region.

Driven by this gloomy picture of the future Shell anticipate that global GDP growth through the 2030’s will average under 2%. This will, in turn, moderate the growth in energy demand. Increasing urbanization, the growth of the service sector and the greater use of electricity in developing countries, Shell anticipate that the strong correlation between economic and energy demand growth will be broken.


Figure 1. Shell projection of future energy supply, through 2060 under the Mountain scenario. (Shell)

N.B. All the illustrations come from the Shell New Lens Scenarios document.
Shell anticipates that hydrogen, an up and comer just a few years ago, and now largely neglected, will undergo a “phoenix-like” resurrection and find a market both in industrial and transportation as an alliance of government and private industry push a hydrogen infrastructure post-2020. They anticipate that the use of liquid fuels for passenger road transport will peak in 2035, and that by 2070 the global passenger transportation network, using roads, could be nearly oil-free, as hydrogen and electric powered vehicles take over.


Figure 2. Shell future projection of vehicular fuel sources.

The energy burden will transfer from crude oil to natural gas, which will increasingly underpin the global economies, as China joins the top tier of natural gas producers.


Figure 3. Sources of liquid fuels through 2060 (Shell)

The increase in the volumes of natural gas that become available from tight shales and coalbed sources are sufficient that, by 2035 Shell anticipates that natural gas will not only displace crude oil as the primary transportation fuel, but that it will also encourage a robust pretrochemical industry based on methane. Shell sees the possibility of US energy self-sufficiency in the 2030’s as peak oil theories are abandoned.

The availability and broad use of natural gas will also allow time for credible carbon capture and sequestration technology to be developed and demonstrated, so that by the time that coal is needed as a fuel (around 2075) it will be usable while sustaining the zero-carbon dioxide levels for electricity generation that become widespread by 2060.

In the alternative Oceans scenario, the more accommodative approach, Shell looks to a willingness to share technology and compromise on issues of ownership and profit as a way of encouraging globalization and developing productivity. Societal interconnectivity is encouraged by greater use of the Web, and this leads to significant changes, with existing leaderships yielding to allow a broadening of governance and significant reform. The greater spread of information and connectivity makes for the more fluid nature of geopolitics that names the scenario, as increasing populism is both a source of innovation and a challenge to stability. Populism is seen as a challenge to US dominance, and is considered likely to cause “destructive and violent reactions” as globalization progresses.

This progress is seen as most likely to through technological interconnection between entities that creates a new class of Mandarin who is less accountable to traditional masters. In this scenario Shell see the world increasingly run by more flexible, and decentralized governments “that have embraced radical pathways 
to economic sustainability”. And this includes both the United States and China. In this regard they quote the work of Anne-Marie Slaughter of Princeton on a New World Order.

This change from the current business-as-usual (BAU) model has an impact on fuel availability and use. The encouragement of entrepreneurship is seen to significantly increase the penetration of solar power into the energy mix, while sustaining the era in which crude oil contributes beyond that of the Mountains scenario.


Figure 4. Energy Sources under the Oceans scenario projected by Shell.

In comparison with the projections under the BAU natural gas is less of a player, though Shell don’t explain either where the additional oil will come from, or why the rush to invest in natural gas is turned off. They anticipate that the reliance on hydrocarbons will cause a rise in price that will open the door to new resources and technologies, particularly with solar power.

In this future Shell sees the developing world taking more of the energy pie, yet transitioning rapidly into a lighter industrial society, with a large service component. (One wonders where the necessary heavy industry goes, as it also transitions to become 80% more efficient?) Heat pumps become a widespread domestic unit, with their benefits in energy efficiency. And, in order to sustain their market share, internal combustion engines become increasingly efficient and technically advanced. While crude oil use will increase until the 2040’s, beyond that time the increased use of biofuels will allow liquid fuel dominance to continue in vehicular use. There are two main sources for these biofuels, first generation fuels, mainly sugar based ethanol, which will contribute some 4 mbd by 2050, and second generation biofuels from non-food crops which come to dominate beyond that time. As this transition occurs so traditional biomass use will disappear by the end of the century.

The different consequences of the two scenarios, as they impact fuel sources, and the unconventional nature of the Shell answers to “where will the resource come from” is shown in two plots that summarize the two energy futures.


Figure 5. Energy sources of the future, as seen by Shell under two different scenarios – Mountains and Oceans.

Under the BAU Mountain view the additional required energy will come in the natural gas side of the house, with Methane Hydrates being the major new source of fuel. With the competing Oceans scenario the energy comes from the development of kerogen from the oil shales of Colorado, Wyoming and Utah. By the end of the century renewable energy will supply more than half the electricity demand around the world, with solar carrying the greatest share of this. However they do not see the electricity generating industry becoming carbon neutral until the 2090’s, as CCS penetrates the industry.


Figure 6. Shell’s view of electricity power sources by 2100.

Shell foresee that the problems of energy storage (80% of the solar power in many OECD countries is generated in the summer) will be overcome through the use of electrolysis and the storage of the resulting hydrogen.

There is much to debate over the basis on which Shell have derived the scenarios that form this report. It remains more optimistic about the oil and gas futures that I can find a basis for accepting, but nevertheless it is well worth reading as it provides two views of what might come about. The impact of societal pressures and drivers produce two different energy futures, and while I suspect that reality will be quite different, with “unknown unknowns” having great influence, the effort is worthwhile.

On the Road again

Last Monday we took delivery of the Ford Fusion Hybrid, that I have mentioned in earlier posts, and we are now on our first trip driving it instead of the Camry.

For those looking at both, they are, from a comfort point of view, both enjoyable, the trunk space in the Ford is a little smaller, but given the needs of two adults not restrictively so.

One of the items that delayed our receipt of the car was that we wanted the Ford GPS system installed. It turns out that this is not quite as helpful as the Magellan that I keep in the Camry, and was a bit more expensive (it fails to lead you to the door in certain addresses) there are perhaps compensating benefits, but we will have to be further down the pike before we can identify them.

We like the collision avoidance features. They tell if someone is in your blind spot by putting a small orange light onto the right wing mirror, and the car seems to get more milage per tank, but we haven't enough miles yet to say that this is significant.

As far as anecdotes about the trip, the restaurants seem a little fuller than they have been recently and the roads a little busier, but it is early days on the trip yet, so I'll be back with more comments in a couple of days.

Some short notes

The end of the month, and the enforced rest, was going to give me time to catch up on a couple of things, but it turns out that there is a good reason (in the level of medication among others) for the rest, so things will needs must wait. And talking of waiting, it turns out that , despite some earlier predictions to the contrary, spring has been coming later to parts of the Arctic rather than the uniform earlier spring that is usually reported. The location of the relatively earlier warming zone along the southern Norwegian coast makes it appear that the phenomenon may be sea current based).

By the way, also in regard to waiting, the Actress went ahead and ordered her Fusion this weekend, in the same color as the story, but had to travel, and make a number of calls, to find a dealer who had one. Even so the single one on the lot was not quite right, hence the order. We were told to expect a wait of 3-6 months, before delivery. We’ll keep you posted.

Last summer Lausanne became the first Swiss city with an underground metro and there are still plans to move ahead with a more comprehensive metro system for the country, with the goal of allowing a train ride that will take only 12 minutes to get from Zurich to Bern. It was in Zurich, this past weekend that the Nurse became a Grandma, welcome to Pippa Fiona.

Despite heavier than usual snows most of the glaciers in Switzerland are continuing to retreat, but while the headlines are for the one that retreated most (the Gorner retreated 290 m) the average retreat was less than 25 m. No-one makes much mention of the two that advanced.

Why we aren't buying a new car (yet)

I have mentioned earlier this year that we are thinking of buying a car. In fact we are planning on replacing an eleven-year old vehicle with a new hybrid. Last year we bought, for my use, a Camry Hybrid, with which I have been quite happy, both in around the town driving and in trips from Missouri to Maine. It introduced me to the joys of Hypermiling. Motivated by a post from Robert Rapier, this time we decided to look into the Ford Fusion for the Actress. It purportedly gets better mileage that the Camry (so that we could get to Maine in 2 tanks of gas, rather than 3), and promised many of the features that we like in the Camry. We aren’t however there yet, and this is perhaps a message to the Administration about what they are doing to the car buying public.

When we started the process we recognized that there is a difference in price between the pure gasoline model (starts at $19,270) and the Hybrid (starts at $27,270). Some, but not all, of that can be made up by the better mileage (from 34 to 47 mpg on the highway). But if we drive the car for 100,000 miles, even if gas gets up to $5 a gallon (on average over that life) we would only save around $4,000 on gas. (I actually believe that, with the likely impact of Peak Oil being felt within a couple of years the $5 price is optimistic, but I might be accused of padding the argument if I went much higher). There is, however an additional incentive. Because this is a new hybrid, there is a tax incentive or credit, if one buys the Fusion. At the moment it is $3,400. Which, given that there are some other benefits, brings the price of the two models to being sensibly the same. So we get on the phone and chat with a local dealer, or two. Ah, but here is the rub; that tax credit expires at the end of March. Yup! That’s right, tomorrow night! After that, the tax credit drops to $1,700, and in October it drops further, to $850.


So we re-call our closest Ford dealer, a very nice lady, and trying to be very helpful – but she hadn’t heard of the tax credit. (A little odd, but never mind). And so we asked about seeing one. She did some checking on the Internet and there is apparently one in Kansas City, and maybe another in Indiana, but those are the closest two, and one is sold. She will get back to us as soon as she has a model that we can test drive, but has no idea when this will be. So there goes $1,700 through the window – and I suspect that there are several folks in the MidWest, who, like us, never even got a look-in at that particular incentive.

But wait, in today’s New York Times, there is a report of President Obama’s ultimatum to the car makers, in which appears the following paragraph

Other salient features of the latest plan to pull Detroit out of its decades-long skid include a tax break, being started by the Internal Revenue Service at once, for auto purchases made between Feb. 16 and the end of 2009; incentives for people to turn in older, less fuel-efficient vehicles and buy more energy-efficient cars, and government-backed warrants to assure customers that they have nothing to fear by buying a car from G.M. or Chrysler.

The concept of encouraging people to buy more fuel-efficient cars, which has been tried with considerable success in Europe, will require the cooperation of Congress. Mr. Obama said he would work with lawmakers to identify portions of the recently enacted multibillion-dollar stimulus package that could be trimmed to finance the purchase-incentive idea — and make it effective at once.

I commented favorably when I first heard of this as a means of improving German car sales, that Chancellor Merkel had introduced. And noted that Russia had also adopted the idea. In Germany, in February, it spurred a 21% sales increase (y-o-y), while U.S. sales fell 41%. So it sounds as though it is a good idea.

The only thing is, as we sit here waiting, is that we don’t know what the new plan is going to be, and when it is going to be implemented. So, in the meanwhile, we won’t be buying that car after all. And I suspect, as word gets out, that we won’t be the only ones. So if the Administration and Congress want a hint, they might decide one way or another what is going to happen with this, since if it is at the level of the European deal (2,500 euros or $3,284) then it will be worth the wait. Particularly if we can also get the hybrid credit. But until they decide, we won’t.
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Of hybrids and algae

As I had mentioned in an earlier post, we are thinking of getting a second hybrid in the family, with thoughts turning toward the Ford Fusion. At the time of the decision, there still seemed to be an aura around the concept of hydrids that continued to make them seem a more desirable product. With the drop in gas prices, and their higher initial price over conventional gas models, that is no longer the case.

"When gas prices came down, the priority of buying a hybrid fell off quite quickly," said Wes Brown, a partner at Los Angeles-based market research firm Iceology. "Yet even as consumer interest declined, the manufacturers have continued to pump them out."

Last month, only 15,144 hybrids sold nationwide, down almost two-thirds from April, when the segment's sales peaked and gas averaged $3.57 a gallon. That's far larger than the drop in industry sales for the period and scarcely a better showing than January, when hybrid sales were at their lowest since early 2005.

I hadn’t realized that we were planning on joining such an exclusive group. And perhaps we can see why Ford have not been more aggressive in selling (they aren’t).

executives at other automakers (than Toyota) concede they lose money on every hybrid sold. "If we were making money on the Civic hybrid, we weren't making a lot," Honda spokesman Chris Martin said.

That may help to explain why fewer than two of every 100 Chevy Malibus sold last month had the hybrid powertrain and why Ford priced its new hybrid Fusion, which dealers expect to start receiving this month, $8,000 above the gasoline-only version.

Ford expects to produce about 20,000 Fusion and Milan hybrids this year, or about 1% of its total production. . . . . . . Three weeks ago, Jerome Haig, a lawyer in Torrance, put down a $500 deposit on a Fusion hybrid, even though he hasn't even test driven one because they have yet to hit lots. "I do like the idea of getting a hybrid," Haig said.

But he admits that he may not have considered the car if not for a $3,400 tax credit on Ford hybrids and a deduction on new car sales tax. The latter was part of the $787-billion federal stimulus package. "The tax advantages are a pretty big incentive."

However sales of the Honda Insight seem to be doing better than expected, but this is because the new model is cheaper than a Prius. if the price can hold under $20,000 then that sales growth is expected to continue.

Shell appear content to continue funding of their algae program. Back in 2007 the reviews were mixed:

algae always seemed promising as a biofuel feedstock. They devour CO2, multiply like rabbits, are oily, and don’t need much land. The U.S. Department of Energy spent almost twenty years studying more than 3,000 varieties of algae to see what would work. Nothing did; Clinton pulled the plug in 1996.

That is because algae-to-oil is a balancing act: Only the hardiest strains thrive with temperature variations, and they have fewer lipids. Really greasy algae aren’t outdoors types. So a lot of small algae biofuel companies prefer “photobioreactors,” or grow closets for algae. Others go back to the farm, but keep algae under wraps.

Shell says its pilot project will determine which strains of algae are commercially viable and which will best be able to suck up CO2 emissions from power plants. In the meantime, its Hawaiian project will be using bottled CO2.

The Hawaiian pilot plant on Kona is run by a joint venture called Cellana and uses non-modified species in a surface “racetrack” set of ponds. The first step in the process was to find the right local species. This involved putting test tubes of different strains out to find which ones grow the best.

In the next step in the development last June the partners were talking of having the first commercial plant available within three years. A site has been found in Maui near a power plant, that would provide a source for the CO2, and with high interest from officials, the date for the plant to be started moved up to 2011. The technical breakthough has been to limit the amount of time that the algae spend in the open ponds, the crop is harvested, and a new stock is injected, with new nutrient, at an already high concentration, so that the residence time is short, and competition from other species is limited before the algae have consumed the nutrient, multiplied, and are ready for harvesting. By doing it this way, it is claimed that costs are reduced. To bring the feed stock up to the required volume needed for injection, the algae are first bred in plastic tubes. In regard to the volumes of carbon dioxide that are consumed

A very rough calculation would be a minimum of 250,000 tons of CO2 per year captured by 1,000 hectares (roughly 2,500 acres) of algae, for a coal-fired or diesel-fired power plant. So a very large commercial facility, say 20,000 hectares (roughly 50,000 acres), could perhaps capture 5 million tons of CO2 per year. This calculation will be further refined during the joint venture demonstration phase.

The nutrient added to the seawater will largely be nitrates and phosphates, as it depletes in the water, the concentration of oil in the algae increases.

Cellana meanwhile is moving ahead with algae selection at the the facility on Kona. They have screened some 5,000 possible candidates down to 75 who were evaluated for high throughput, cutting the number down to 12, of which 8 were considered viable for outside cultivation. These will be studied and screened down as the Kona pilot plant develops in 2010. That facility will be a 2.5 ha size, and will be used to help plan the full commercial facility that has now been targeted for 2014. They have now down-selected to 7 species and hope to have their first harvest this quarter, with the first oil produced in volume by the end of the year. One of the team partners, Bodo University in Norway, is evaluating the de-oiled biomass as an animal feed. The production plant has the following objectives

The project will use 10 percent of the Maui Electric plant’s CO2 emissions as feedstock. The CO2 will be delivered by pipe from the Maalaea pipe, and the plant will produce up to 3 Mgy of algae oil based on a projected 750-acre algae farm producing 5,000 acres per gallon.

The company said that it expected that it would take up to three years to obtain permits for the operation, which would be profitable in the first year of production according to HR Petroleum execs.

There are some doubts about the longer term and larger scale production that will be needed if algal biodiesel is to make a significant contribution to fuel supplies. But even with those doubts the potential for removing carbon dioxide remains attractive, and the Alberta Research Council has joined with Innoventures Canada to look at this .

The ARC says the preliminary target for its Carbon Algae Recycling System project is a 30 per cent reduction of the greenhouse gases produced by an average 300 megawatt coal-fired power plant. CARS proposes to feed flue gas (CO2, nitrogen oxides and other emissions) directly from industry into ponds to feed algal growth.

"We are in the early stage of looking at carbon dioxide bio-fixation to micro-algae," says Quinn Goretzky, project manager for strategic initiatives at the council. "Our vision is to transform carbon into a value-added good."

To date they have focused on green algae. Of 21 samples under examination, nine failed to thrive.

"Five were taken to characterization, and that relates to biomass and rate of growth," Goretzky says. "Algae is made up of fatty acids and lipids, which is the most important since they go to fuel. The carbohydrates go to ethanol and the proteins to animal feed and fertilizer."

He admits the process as it stands right now is energy-intensive. The ARC consortium favours a large greenhouse-covered pond system. "This maintains temperature, delays evaporation and reduces contamination."

The Canadian system has a target set of data (ppt)
•Total algae pond system area : 400 ha
•Algae yield : 30 – 120 g/m2/day
•CO2 captured : 77 500 – 310 500 tonnes/Year
•Algae oil = 3.5 barrels/tonne algae
•Carbon credit : 15 $/tonne CO2
It has an anticipated 7 year return on investment if it can sell the biodiesel for over $3.46 a gallon (which is currently isn’t).