43. COAL LIQUEFACTION

Coal liquefaction is going to play a big role on the downslope, so let's note a few things about it:

1) The sound bite that "oil is a feedstock with no substitutes" is a myth (see #30). All petrochemicals can be made from liquefied coal, and coal gas (syn gas). There is no significant difference in chemistry between natural crude oil and synthetic crude produced from coal (except that synthetic crude is a lot cleaner). Detergents, pesticides, fertilizer, plastics, synthetic fibers and synthetic rubber can all be made from coal. Also, coal can be profitably liquefied in the U.S. today, provided that the price of crude oil stays above $35/bbl.

2) Clearly, these new synthetic liquids are going to be called "oil". They are chemically identical to oil products, and they do the same jobs as oil products. They will also be mixed together with oil products in the refining step. It's really pointless to separate the two.
This means that coal reserves are in fact oil reserves. Total recoverable coal reserves in the U.S. are estimated at about 250 billion short tons. At 20,754,000 btus/short ton, the U.S. has 5.2 x 10^18 btus of recoverable coal reserves. The thermal efficiency of coal liquefaction is about 65%. So if we liquefy the coal reserves of the U.S., we get 3.4 x 10^18 btus of synthetic oil. There are about 5.8 x 10^6 btus in a barrel of oil, so total reserves of oil located in coal reserves in the U.S. is roughly 5.9 x 10^11 barrels = 590 giga barrels. That's about 80 years of oil at current U.S. consumption rates of 20 mbd.
The point is not that all of that coal will be liquefied. However, a substantial portion of it will be, and that portion needs to be reclassified as "new oil". ASPO prints the following graph in its newsletter every month as proof that we must peak soon because discoveries are not keeping up with production (click on the images for a clearer picture):

Note that the "discoveries" do not include include new oil from coal (or from heavy, tar sands, deep water, polar, shale, gas-to-liquids, sugar cane ethanol or any other unconventional source). This is a major error which undermines ASPO's argument. The discoveries of unconventional oil must also be factored in.

3) We have way more coal than we had oil.
Crude oil URR (ultimate recoverable reserves) for the U.S. appears to be in the neighborhood of about 205 Gbarrels.



On the other hand, if we liquefy all recoverable coal reserves in the U.S., we have a total of about 590 Gbarrels (as calculated in 2) above). The U.S. has about 3 times as much potential oil available in the form of coal as all the oil it has ever pumped (or will pump).

Since U.S. oil maxed out at a rate of 10mbd on a reserve basis of 205 Gbarrels, an intensive effort to produce coal liquids might potentially max out a rate 3 times that (about 30mbd) because the resource base is 3 times larger.