SynFuel, the Petroleum Alternative
With the coming oil crisis looming directly ahead, there are going to be many opportunities in the energy sector to cash-in. One such opportunity will be alternative petroleum sources such as coal-to-liquid-fuel and natural gas-to-liquid fuel (GTL), otherwise known as synthetic fuel or SynFuel. SynFuel is rapidly becoming a popular alternative to increasingly expensive petroleum.
According to the U.S.E.I.A, the Middle East has an estimated 1.4 trillion cubic feet of untapped natural gas resources. In comparison the U.S. uses approximately 22.4 million cubic feet of natural gas per year. The problem for the Middle East is that it is difficult to get these vast resources to market; there is no existing infrastructure (i.e. pipelines, transport, etc.). With GTL technology, the natural gas is converted to liquid fuel (diesel, naphtha, and kerosene) and then transported to market utilizing existing infrastructure. This enables the Middle East to exploit vast natural gas resources and bring natural gas to market cheaply and efficiently.
The International Energy Agency recently released a report detailing the projected energy demand to grow over 50% by 2030. The estimated dollar amount to bring the energy supply inline with the increasing energy demand is $17 trillion. It is highly unlikely that the funds will be invested in enough time to keep the energy market from reaching supply deficiencies. This means that the price of oil will increase until the increasing demand is met with an increasing supply.
Two progressively more popular petroleum alternatives are coal liquefaction and natural gas-to-liquid fuel; otherwise respectively know as Clean Coal Technology and GTL. Recently, a company called Waste Management and Processors Inc. (WMPI) received government approval along with $100 million in federal funds to build the United States’ first waste coal liquefaction facility in Pennsylvania. The major technology used in liquefaction and GTL technology is the Fischer-Tropsch (FT) process.
The primary materials used in the FT catalytic conversion process are nickel, cobalt, and molybdenum. The better the catalytic material, the more liquid output obtained from the process. Molybdenum is the best catalyst and is becoming the most widely used. A full-scale SynFuel operation uses several tons of catalytic material per day ! As more and more countries around the globe begin utilizing the FT process to convert coal and natural gas into liquid fuel demand for catalytic material will proportionately increase.
Look for investment opportunities in the catalyst and catalyst materials markets. As new SynFuel plants come online, the demand for materials like molybdenum and cobalt will rise dramatically.
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July 12th, 2020
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