The Phoenix “Replacement Energy” Initiative — 2011 Outlook

We see accelerating rhetoric in the press and from governments on world climate change, global warming, toxic emissions, greenhouse gases and environmental degradation. The inevitable, and relatively near term, depletion of the world’s economic fossil fuel energy resource (including “clean coal”) is “gathering steam,” so to speak.

By definition, reserves of conventional liquid fossil fuels are finite — simply because the world is consuming more of its economic, accessible energy resources than are being discovered and developed. Even if world oil consumption remains reasonably flat — hardly likely considering the exploding demand in China and India, for example — grave energy supply problems are a relatively near-term certainty. The energy industry urgently needs to develop more than 50-million barrels per day of new oil production capability — equal to four new Saudi Arabias — to offset the accelerating decline in proven, producible reserves. Call the pending status “Peak Oil” — or employ any other definition — for years, the world has been discovering only about 50% of current consumption. The irrefutable “hard” numbers suggest that the world’s 170-year old hydrocarbon “honeymoon” is winding down.

Let’s elaborate on those “hard” numbers. The world now consumes more than 85-million barrels of oil per day — for an aggregate of over 31-billion barrels per year! That’s a billion barrels every 12 days! How often does the industry report billion barrel oil discoveries? Further on the significance of these “hard” numbers, correlate them with Brazil’s recent, highly publicized discoveries of 3 to 5, or even 8, billion barrels in their deep sub-salt offshore basins — the largest in the Western Hemisphere in over 30 years. Using simple arithmetic — these discoveries add only a few months to the world’s oil reserves — based only on current consumption! Further, each sub-salt well’s drilling, completion and on-line costs exceed $250-million!

As recently suggested by the CEO of one of Europe’s largest oil companies — much more than $25-TRILLION must be spent on energy investments over the next 20 years to meet the anticipated 40% increase in demand (“think” China and India) — and to replace aging infrastructure, all without any guarantees of success. The conclusions are obvious — despite the “climate change doomsayers,” the world will continue to need massive new reserves of conventional liquid fuels for transport (surface, air and water), for heating and cooling, and for the manufacturing and processing of goods, materials, foods and our myriad lifestyle essentials.

A conservative analysis of the broadly discussed alternative and renewable energy universe brings the Phoenix “Replacement Energy” initiative into special, unique focus. Briefly reviewed below are the most highly promoted alternatives and renewables in the “new energy” universe — covering solar, wind, biofuels (including ethanol), algae, and the more obvious conventional coal and nuclear options:

• Solar Power:
Solar power generation is obviously inherently limited by intermittent atmospheric events — which include non-productive evening down-times — and by climatic conditions of overcast skies, snow, rain and dust storms — all adversely affecting solar panel efficiency. Solar power generation also requires concurrent investment for standby power capability. Costly storage facilities, still not technically feasible, also adversely impact economic operations – and are paid for with taxpayer and consumer subsidies — forever! Solar power costs are slated to exceed those for conventional utilities by upwards of 1,000% — again, likely forever!

• Wind Power:
Wind power generation is also complicated by unpredictable atmospheric conditions, including intermittent and directionally-variable air movements. The visual and aural blights (and claimed noise effects on health) are further inherent environmental downsides of wind power installations that limit their locations for optimum operations. Further investments are also required for essential standby power facilities and for power storage capabilities (not yet technically practicable). Wind power systems will require upwards of 400% increases in consumer tariffs above those for conventional power generation (further consumer and taxpayer subsidies?).
• Biofuels (including Ethanol):
Edible crop source biofuels consume essential agricultural commodities and can generate disastrous food price inflation — before accounting for the additional input costs of fertilizers, planting, harvesting, storage, processing, transport and infrastructure. Ethanol-based fuels generally operate with a negative energy balance (more energy input than energy output) and are very corrosive in their use — in handling, storage, transport, and in their combustion. Waste sources of biomass are comparably subject to costly collection and delivery requirements to their points of processing. Costly enzymes and chemicals, still under development, remain essential for viable commercial biofuel production.
• Algae:
Due to algae’s sensitivity to temperatures, and its need for extensive land coverage and nutrition for cultivation, authoritative reports currently indicate that useable algae energy fuel may sell for upwards of $25 per equivalent hydrocarbon gallon. Also questionable is the technical feasibility of algae’s currently uneconomic batch-production process vs. potential continuous-flow algae fuel production.
• Coal and Nuclear:
Though currently considered prime conventional energy resources, coal and nuclear are also recognized as environmentally degrading and/or dangerous in their commercial production and use. The nuclear power option must still resolve the substantial costs and dangers in routine power plant operations — not the least of which is the essential provision of spent nuclear fuel disposal sites that must be secure for upwards of 1,000 years!

Summing Up:
With exclusive ownership of its Synfuel technology, Phoenix has applied for U.S. and international provisional patents pending covering the compounding of Hydrogen, from diverse sources, with captured carbon dioxide emissions, also from diverse sources. Both the Hydrogen and carbon components are synthesized to produce conventional liquid transportation fuels, or Synfuels, ranging from light-end jet fuel and kerosene, to mid-range gasoline, and through heavy-end diesel oil products, all available for routine distribution and sale through long established infrastructure.

The proprietary Synfuel technology can also play a central role in developing economic Carbon Capture and Storage/Sequestration (CCS) programs — which can now be advanced by the environmentally more benign Phoenix Captured Carbon and Recycling (CCR) system. Phoenix also plans for a leading role in the future “Hydrogen Economy” through its long term control of proprietary developing technology covering the light-powered production of lower cost Hydrogen gas that is generated by “splitting” an ordinary water feedstock.

December 2010

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