The “Hydrogen Economy” — The REPLACEMENT Energy System

In line with the ballooning numbers currently defining the world’s economies — do consider that the global energy sector is now a $6-TRILLION enterprise — and expanding rapidly in both production and consumption. There is also no shortage of plans and proposals to expand into energy “alternatives” and “renewables” to meet the growing energy demand from the new global-sized consumer populations (think “China and India”).

Fossil fuels, at least 90% non-renewables — largely crude oil, natural gas and coal — have stoked 200 years of industrial growth. We are now at the point where global energy supplies begin (if we are not already there) their irreversible decline. We can reasonably anticipate new oil and gas price shocks that will make current prices look like “the good old days!”

It is not exclusively our view that the world is a decade or two away from the onset of the terminal collapse (the “Peak Oil” scenario) of the global energy economy — the background of this report’s title — “The Hydrogen Economy — The REPLACEMENT Energy System.” Never mind the climate-change fearmongers! The world will run out of fossil fuels long before burning enough of the toxic (possibly?) stuff to seal the demise of our energy-dependent civilization. We have a rapidly expanding supply gap now — where production is declining to 50% of consumption — when liquid transportation fuels are needed to move everything and anything required to power a sustainable future for our energy finite world.

Let’s evaluate the world’s current oil consumption — about 85-million barrels per day — compared with recent headlines generated by the “exciting” once-in-a-decade 5 to 8-billion barrel offshore oil discovery (Brazil) which generated major stock market action by way of a 26% increase in the price of publicly-traded shares. But what the press did not cover was that, even if an 8-billion barrel find, the newly discovered reserves replaced only 3 months (and, if a 5-billion barrel find, covered only 2 months) of the world’s reserve depletion.

Also, considering the $250-million cost of that recent major discovery well, the world’s current oil finding rate — increasingly difficult and costly in any event — amounts to only about 50% of the world’s current oil consumption rate. In our world of inexorably increasing oil consumption (again, think “China” and “India”), the industry must also factor in recurrent supply uncertainties deriving from natural disasters — and the increasing number of unstable political regimes controlling major reserves and production rates. Phoenix suggests that its “Hydrogen Economy” technology can be considered the obvious REPLACEMENT energy resource.

Expanding upon the commercial applications for our hydrogen technology, Phoenix has filed a provisional U.S. patent application covering the proprietary production of synthetic hydrocarbon liquid fuels (“liquid synfuels”) deriving from hydrogen and carbon monoxide/carbon dioxide feedstocks. Liquid synfuels, employed for all conventional transportation applications, would be environmentally pristine — as deriving from diverse pure hydrogen gas sources and combined, for example, with carbon dioxide emissions from U.S. coal power plants which now total over 2-billion tons annually, yielding about 660 pounds of capturable carbon per ton. Widely publicized Carbon Capture and Storage (CCS) programs may then be replaced by much lower cost Carbon Capture and Recycle (CCR) technologies. Daily headlines report on the environmental imperatives of research on carbon capture and storage systems. An obvious “fall-out” may be the potential for redundancy of considerable crude oil refinery capacity and their attendant pollution generation.

Liquid synfuels will employ the entire range of conventional liquid fuels, ranging from light-end jet fuels and kerosene, through medium-end gasoline, to heavy-end diesel fuels. Long established wholesale and retail liquid fuel distribution infrastructure would be maintained intact — and even more important, no material changes would be required for the very wide range of conventional transportation equipment and systems, including, without limitation, automobiles, trucks, railways and airline transport.

Phoenix has also filed, under international Patent Cooperation Treaty (PCT) rules, to extend its U.S. provisional patent pending on its liquid synfuel technology through the international patenting process to practically all of the world’s largest industrial economies, (once again — think “China” and “India’) most of which have limited or rapidly depleting domestic energy resources.

An update on the current status of the widely publicized and increasingly costly alternative energy universe would be constructive. The limitations of all the known alternatives are evident –their economics start and end with admittedly substantial and permanent taxpayer subsidies. Starting with the corn-based ethanol “bust” — and realistically including the solar and wind sectors — they survive, economically, only on the taxpayers’ largesse and political favoritism. Solar and wind are both intermittent in operation and require at least 50% fossil fuel back-up capacity — simply because the sun does not always shine — and the wind does not always blow. There is no politically feasible level of taxpayer subsidies that can render these technologies competitive. Denmark is an interesting example — where energy utility costs are the highest in Europe by up to over 250% — and no less than the Energy Policy Chairman of the Danish Parliament has publicly declared that their alternative energy policy is “a terribly expensive disaster!”

About Phoenix:
The Company plans for a leading role in the future “Hydrogen Economy” — following the milestone grant of U.S. Patent 7,122,171 in October 2006. Phoenix, through its U.S. unit, Phoenix International Energy Inc., holds worldwide exclusivity for the innovative, proprietary hydrogen gas generation system maintained under a long term Technology License Agreement with a major U.S. research university. The intellectual property rights are held for a period of 20 years beyondthe 17-year term of the last patent issued under the accord. The U.S. Patent issue confirms that the rigorous pre-patent examination process has disclosed no “prior art” that conflicts with the Company’s proprietary “foundation” technology covering the light-powered generation of hydrogen gas from an ordinary water feedstock.

26 May 2009

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