In the midst of a major recession, giant oil tankers are sitting idle, rail cars are slowly rusting in the sun because there aren't enough storage sheds for them, airlines are reducing routes as much as possible to keep from flying nearly empty aircraft, and few people are taking major road trips this year. Given this backdrop, it may seem odd to be worrying about oil prices and concern about having sufficient local capacity, but as anyone who has filled up lately (or who spends much time monitoring financial markets) knows that oil prices have been hovering around $70 a barrel for crude oil for most of the summer.
To put that price (or the corresponding price of gasoline) into perspective, it's worth noting that oil prices first broke this level only three years ago, a time when demand was actually far higher. While some of this is due to speculation, a very worrying part of it is due increasingly to the fact that even with a lot of oil tanks holding massive reserves, there's no longer the same level of production there was three years ago, while demand hasn't dropped all that much for most petroleum distillates.
Put another way, as the economy starts to recover, oil prices will likely drop a bit at first then hold steady as existing supplies are drawn down, but after that happens, prices will likely climb higher (perhaps much higher) within only three to four months as increasing demand meets significantly reduced supply. This could very well nip any recovery in the bud, as high energy prices have proved to be act as a significant brake on any economic improvement, especially if much of this oil is coming from imported sources. This consequently raises an important point - so long as the any country is dependent upon external oil imports, their economy remains vulnerable to extreme swings in oil prices.
In the US and Canada, there are still oil reserves that can effectively be tapped, but, if the US were to switch solely to these reserves (primarily in the Baken Shield in North Dakota, the Alberta tar sands in Canada, polar oil fields and in the Caribbean Sea and Gulf of Mexico, it's likely that, at present levels, it would draw down most of those fields within a quarter century or less.
This has led, in the past few years, to an explosion in the development of alternative oil fuel sources, primarily through biofuels. The development of corn-based ethanol kick-started much of this research, but one of the unforeseen impacts of this was that this took a significant amount of feed corn off the market and caused a massive price spike all up and down the food chain, given the degree to which corn oil and corn syrup is used in food manufacturing.
Other bio-sources, including sawgrass and hemp, have also been experimented with, but sawgrass in particular has a cellulose structure that has been particularly difficult to break down, while the possibility massive hemp growing operations no doubt keep country sheriffs awake at night - despite the fact that hemp used to produce fuel oil is different from that used for marijuana production, it's not hard to imagine both being grown side by side, undistinguishable at a casual glance.Power Scum and Leavened Fuel
However, one biofuel is beginning to gain a great deal of research (and investor) interest: Algae. It turns out that there are a number of strains of algae which, when cooked, produce a remarkably pure grade of composite hydrocarbons, from ethanol all the way up to octane and higher chains. In a way, this isn't surprising - most oil and natural gas that currently exists in the world came not from decaying trees and dinosaurs (generally) but rather came as algae in shallow oceans and seas absorbed sunlight, photosynthesized various sugar energies, then died and drifted to the sea floors. Deprived of the oxygen free radicals that would have decomposed them on land, the algae formed thick layers, hundreds or even thousands of feet deep, with the bottom-most layers becoming increasingly compressed by the weight of sludge and water on top of them.
Most of this natural process occurred over the course of millions of years during the Cretaceous and Jurrasic eras, between 110 and 90 million years ago, and again during the late Triassic and early Cenozoic era, about 70-55 million years ago, when high global temperatures created inland seas that in turn slowly dried out as temperatures (and consequently sea levels) dropped. Similar activity occurred earlier as well, creating the necessary pre-conditions for coal to form.
Much of the twentieth century has been devoted to mining and pumping this ancient algae, but there are a significant number of signs that indicate that many of these reserves are close to being tapped out, at least to the point where the cost of energy extraction will climb well beyond the level of profitability. However, given the existence of contemporary technologies, it's becoming increasingly likely algae-to-oil production can be dramatically accelerated, with the costs dropping accordingly.
There are a couple of different aspects of the algae-to-oil lifecycle that are currently being explored. The first, intensive algae production, is currently following two distinct approaches. One approach is to grow algae in dedicated ponds for the purpose. This is probably the least costly approach, at least initially, but it suffers both from the danger of contamination (as other algae strains or chemical contaminants may end in the ponds as well) and the fact that you need to have reasonably large bodies of water to grow the algae that aren't used for other purposes. The second approach involves the use of long plastic tubes filled with algae and medium, which can be exposed to sublight or artificial light as appropriate to cause the algae to grow. A variation of this approach (and one that shows great promise) is to actually grow the algae in the dark, but to provide a medium high in sugar, which the algae then converts into high energy hydrocarbon chains. One consequence of this is that you get a much denser medium (as algae on the interior of the tubes in sunlight based systems are less likely to get the critical energy that htey need, though this also comes at the cost of using sugar to feed the process.
Typically, you can grow a tube (or a tub) of algae in ten days. Processing the algae then involves extracting and filtering out the agile (and re-sterilizing the growth environment) and cooking the algae down over the course of several days in what are called bioreactors. The resulting liquid tends to be rich in a number of different oil compounds, with the specific composition depending very much upon the algae strain itself. Recently, bio-engineering of algae strains has made it possible to select for different compounds - one variety of algae produces gasoline grade fuel, a second, jet fuel (JP4, JP5 and JP8 fuels) while still others produce oils that can be used for lubrication or even food production, as such oils can be used for creating both saturated and unsaturated fatty acids.
This same process, though primarily via the sugar medium, is also used with a similar set of one-cell organisms - yeast. Yeast doesn't photosynthesize but rather consumes simple sugars to build complex hydrocarbons, but otherwise both algae and yeast production can be adapted to create fuel grade products. Algae has somewhat of an advantage here, as algae can grow very quickly compared to yeast products, but yeast-to-oil production may prove to be more efficacious in terms of urban settings, as you can create portable bioreactors that work better with yeast and have a somewhat shorter overall production lifecycle.Algae Fuel Concerns
Given the advantages given here, its perhaps natural to question the downside, especially given the ethanol fiasco of the last few years. Algae fuels aren't perfect. Production level algae fuel facilities are not cheap to create, given that you have to include both the initial growing operation and initial processing facilities (though as an advantage, once the bioreactors crack the algae into initial fuel sources, existing fractioning systems used for petroleum processing can still be utilized with little modification).
Cross contamination is also a problem, and one that goes both ways - algae is a remarkably prolific organism, and given that, the potential for genetic mutation of algae is always high. This means that this is a technology that both needs to constantly monitor the genetic signatures of the algae stock in order to insure that there is no contamination, and you need at least some clean-room facilities up to the point of cooking the algae in bioreactors in order to insure that genetically modifed algae does not contaminate natural algae stocks (given that such algae plays a fairly significant part in many aquatic ecosystems makes this an especially high concern).
Algae-fuel does have the potential as well to run into the same food production pipeline that ethanol did, especially given the use of sugars as part of the algael medium. There are admittedly many lower grade sugars that aren't normally used in food production which could in turn be adapted for algae medium, but this does represent a fulcrum that could cause problems overall with algae or yeast production.
The cost for production of algae fuel is still higher (especially now) than the equivalent cost for pumping the equivalent energy BTU of petroleum, which may tend to limit investment somewhat. This may in part be due to the fact that a lot of money is still going into research, which raises the overall costs for algae considerably at this stage of the game. While some estimates have indicated that the US could ultimately replace its entire import component of oil with algae, in practice it will take years if not decades before this becomes a reality.
Finally (and rather ironically), another problem with algae is that it requires a fairly significant source of carbon dioxide in order to rapid grow the plant. While this may seem to be a perfect solution for carbon sequestration, the logistics of getting carbon dioxide emitters (such as industrial factories) to feed into algae farms is a not insignificant logistical hurdle that would need to be addressed. Moreover, algae is at best net neutral with regard to carbon emissions with algae - the carbon dioxide that is used to grow the algae that would be taken out of the atmosphere would be put back into the air when the fuel is burned.Fuel for the Future
None of these issues are insurmountable. Indeed, most of the major impediments that face the algae-oil movement are more ones of engineering and logistics rather than a need for major technological breakthroughs. It's likely that at least in the short term, algae fuel will be a supplemental source of oil rather than a primary one, though one that likely will develop in conjunction with other technologies such as solar photovoltaics, wind and geo/hydro-thermal as well as most conventional sources of energy.
It's noteworthy that algae has also become one of the hottest areas of development in an increasingly aggressive alternative energy sector. Large, traditional oil companies are creating joint ventures with bio-savvy startups. For instance, Shell Oil set up a joint venture partnership with HR Biopetroleum early in 2008 called Cellana, which will be making biofuels from marine algae, Dow Chemical partnered with Algenol Biofuels in June 2009 for their own algae-oil efforts, British Petroleum is working with Martek Biosciences to take an alternative approach - using algaes to convert sugars into lipids that can be turned into biodiesel.
Many other startups in this sector are going it alone, up to and including the Karl Strauss Brewing Company, which has developed a home bioreactor for converting spent beer yeast into ethanol via the E-Fuel MicroFueler. We're not quite to the point where you can just pour your dead soldiers into the home reactor and get gas for the car in order to get some more, but the future of algae biofuels looks intriguing nonetheless.
Image courtesy Algaeventure Systems.