Transition to the Hydrogen Economy

Home , Scotford Upgrader, Syncrude, Upgrader

Energy Independence for North America - Transition to the Hydrogen Economy

Dr. James J. Eberhardt, Chief Scientist FreedomCAR and Vehicle Technologies Program Energy Efficiency and Renewable Energy U.S. Department of Energy

2003 Diesel Engine Emissions Reduction (DEER) Conference Newport, RI August 24-28, 2003 Outline

Pathways to Energy Security

Transportation Energy Demand Reduction

Energy Resources from More Secure North American Sources

Foundation for Transition to Hydrogen Pathways to Transportation Energy Security

Transportation energy demand reduction (through improved energy efficiency, e.g., via dieselization and/or hybridization); Greater use of non-conventional resources

¾ heavy oils;

¾ oil sands;

¾ shale oil;

¾ biorenewables;

¾ GTL/Fischer-Tropsch Transition to the hydrogen economy. The President’s National Energy Policy

Using Energy Wisely – Increasing Energy Conservation and Efficiency

“The NEPD Group recommends that the President direct the Secretary of Energy to establish a national priority for improving energy efficiency.” Increased Fuel Efficiency from Vehicle Propulsion System

Direct Injection Diesel Now { Gasoline Direct Injection Gasoline-Hybrid

DI Diesel-Hybrid Near Future Homogeneous Charge { Compression Ignition Low-Temperature Combustion

Far Future Hydrogen Combustion Engines { Hydrogen Fuel Cells Dieselization of Light Trucks Significant Potential Impact on Light Truck Fuel Use 20 Actual Projected 18 on 16 ati on eliz zati ies seli 14 e-d t-die Pr Pos 12 rucks 10 ss 1-2 T ) Cla s, SUVs ps, Van 8 (Picku Automobiles 6 Off-Highway 4 Railroad 2 Marine Class 3-8 Trucks 0 Energy Use - Million Barrels per Day 1970 1980 1990 2000 2010 2020 Sources: EIA Annual Energy Outlook 2003, DOE/EIA-0383(2003), January 2003 Transportation Energy Data Book: Edition 22, ORNL-6967, September 2002 Market Data Book, Automotive News, May 2000. The President’s National Energy Policy Strengthening Global Alliances – Enhancing National Energy Security and International Relationships “Estimates of Canada’s recoverable heavy oil sands reserves are substantial… Their continued development can be a pillar of sustained North American energy and economic security.”

“The NEPD Group recommends that the President direct the Secretaries of State, Commerce, and Energy to engage in a dialogue through the North American Energy Working Group to develop closer energy integration among Canada, Mexico, and the United States and identify areas of cooperation, fully consistent with the countries’ respective sovereignties.” NEP p. 8-9. Oil Sands

A Major New Hydrocarbon Resource

"You will observe with concern how long a useful truth may be known and exist, before it is generally received and practiced on." -- Benjamin Franklin U.S. Imports of Crude Oil & Refined Products (2002)

17 percent of total imports come from Canada Canada 1,971 Thousands of Other Non-OPEC*** barrels per day 3,407 *includes field production of crude oil plus Alaskan supply US Domestic* 8,043 **includes Kuwait, Iran, UAE, Indonesia, Qatar, Libya and Algeria Other OPEC** 575 ***includes but not limited to Iraq Angola, Colombia, Russia, China, 459 Norway and United Kingdom. Mexico 1,547 Venezuela Nigeria Saudi Arabia 1,398 1,552 Source: EIA Petroleum Supply Annual 2002, Vol. 1 621 North American Oil Reserves (2002)

Location Billion Barrels Reference Canada 178.31 Alberta 175.60 EUB Others 2.71 CAPP

U.S. PADD V U.S.A. 22.45 EIA 4.85 billion barrels Mexico 12.62 OGJ 175.60 billion barrels TOTAL North America 213.40

U.S. PADD V U.S. PADD IV U.S. PADD II 3.63 billion barrels 1.22 billion barrels 1.33 billion barrels

U.S. PADD I 0.09 billion barrels U.S. PADD V U.S. PADD III 0.55 billion barrels 6.48 billion barrels References:

U.S. PADD III Alberta Energy and Utilities Board (EUB) 4.29 billion barrels Canadian Association of Petroleum Producers (CAPP) MEXICO 12.62 billion barrels Oil & Gas Journal (OGJ) U.S. Energy Information Administration (EIA) Canada’s Oil Sands Resources Stagger The Imagination World’s largest single hydrocarbon resource 400 billion m3 of bitumen (2.5 trillion barrels of oil) in Canada’s oil sands 48 billion m3 (300 billion barrels of oil) or 12 percent of the resource considered “recoverable” with today’s technology Global oil demand for next 100 years could be met if all of Canada’s bitumen could be recovered and refined Data Source: Canada’s Oil Sands and Heavy Oil, Petroleum Communication Foundation, April 2002 (originally from Alberta Oil Sands Technology Research Authority) The Athabasca Oil Sands Deposit

Almost the Size of Lake Huron (58,880 sq. km.)

The world’s largest “oil spill”!!! What Are Oil Sands?

Composition sand and clay 70 – 80 % water < 10 % bitumen 0 - 18%

Water Layer

Sand particle Bitumen film

Sources: “Canada’s Oil Sands and Heavy Oil,” Petroleum Communication Foundation, April 2000. What Is Bitumen?

Has been described as hydrogen-deficient oil. Composed of two major fractions ~ 85 percent maltenes ~ 15 percent asphaltenes Maltene fraction dissolves in “pentanes” (natural gas liquids) Asphaltene is insoluble in “pentanes” What Is Bitumen?

Bitumen contains extremely large hydrocarbon molecules

¾ Diesel oil – C20-30H62

¾ Bitumen – can be as high as C2,000 To be used, it needs to be upgraded

¾ by “coking” (removing some of the carbon)

¾ By “hydrogenation”or “hydrocracking” (adding hydrogen) Bitumen from Oil Sands U.S. Definition High viscosity

10,000 cP at reservoir conditions (water = 1.00 cP)

must be “mined” to be produced photo credit - Syncrude 8.3 9.2World Heavy Oil and Bitumen Resources Billion m3 29.3 United Kingdom Heavy Oil 31.4 Mexico Bitumen (oil sands) Nigeria 32.2 United States

34.4 Ecuador 40.5 Kuwait

Iraq 238.5 Venezuela

358.9 Former Soviet Bloc 406.0 CANADA

Source: Canada’s Oil Sands and Heavy Oil, Petroleum Communication Foundation Original Source: Alberta Oil Sands Technology Research Authority 1 m3 (oil sands) ~ 6.8 barrels of bitumen Trend of Oil Production in Alberta, Canada 2,700

2,400 Oil Sands

2,100 Conventional Heavy 2001 2010

1,800 Crude & Condensate 77% 1,500

1,200 43%

900

thousand day barrels per 600

300

0 1975 1980 1985 1990 1995 2000 2005 2010 Source: “Focus on Canadian Oil Sands,” Non Conventional Oil Conference, Nov. 25, 2002 Companies Involved in Alberta’s Oil Sands In-Situ Projects 2000 (Can$17B 2006 (Can$56B projects invested to date) planned to be invested)

Imperial Imperial Murphy AEC Encana JACOS CNRL CNRL Deer Creek Shell Shell OPTI PanCdn Suncor BlackRock Numac Northstar PetroCanada Conoco Murphy Northstar Husky

Not an all inclusive list TotalFINAElf Source: Focus on Canadian Oil Sands, Alberta Department of Energy, presented at the IEA Non-Conventional Oil Conference, Nov. 25, 2002 What’s Old? - $20 per barrel

Bucketwheel Loaders Draglines

Source: Syncrude.com Source: Syncrude.com What’s New? - $16 - $12 per barrel

Steam Shovels and 350-Ton Trucks

Source: Syncrude.com What’s Newest? - $9 - $6 per barrel

Steam Assisted Gravity Drainage (SAGD)

Source: McGraw Hill Construction (enr.com) Source: Alberta Department of Energy (energy.gov.ab.ca)

Source: Deer Creek Energy (deercreekenergy.com) Syncrude from Oil Sands Is Getting Cost- Competitive with Conventional Crude Oil

New Extraction Technologies and Virtually No Exploration Cost for Syncrude

20.02 20 16.58 15 12.41 11.74 11.92 11.08 9.95 9.14 * * 9 10 8.51 * *

US$ per barrel 5

1981 1991 1992 1997 1998 1999 2000 2001 2002 2003

* Major increase in cost due to lower than forecast production and much higher energy costs (natural gas). Muskeg River Mine and Extraction Plant

Source: Western Oil Sands, Annual Report 2001. Muskeg River Mine – Located on a 121-sq. km. area estimated to contain 1.7 billion barrels of bitumen reserves Muskeg River Mine and Extraction Plant

Source: Western Oil Sands, Annual Report 2001. Scotford Upgrader

Key design characteristic:

¾ coupling of hydro- conversion and hydro- treating components of the light carbon fining upgrading technology. Other advantages

¾ sharing of utilities and services between the upgrader and the adjacent refinery.

Source: Western Oil Sands, Annual Report 2001. Infrastructure In Place for Closer Energy Integration Major Canadian and U.S. Crude Oil Pipelines and Markets

Potential U.S. Markets for Energy from Canadian Oil Sands Additional trunkline expected to serve PADD*s II and IV based on estimated increased production of synthetic crude and bitumen over next 15 years. Additional market in PADD V (mainly WA) as ANS** supplies decline. Source: Canada’s Oil Sands: A Supply and Market Outlook to 2012, October 2000 *Petroleum Administration for Defence Districts **Alaska North Slope Life-Cycle CO2 Emissions

Conventional Process of Bitumen Production and Upgrading to Syncrude Using Natural Gas as the Hydrogen Source

600 Overall, total life-cycle Ave. NA Crude Imports

CO2 emissions, including 500 Upgraded Crude from Oil end use (transportation Sands sector), are 7.6% higher 400

than average imported , kg per barrel crude. 300

This reinforces the 200 Emissions

importance of increasing 2

end-use efficiency. CO 100

0 Production Transport Refining End-Use

Source: Petroleum Communication Foundation Life-Cycle CO2 Emissions – Alternative Scenario

Alternatively: 600

¾ 35% less GHG 500 Ave. NA crude emissions compared to imports/ SI engine conventional process 400 Syncrude from oil (using H2 produced via sands/ SI engine

electrolysis for upgrading kg per barrel of bitumen); 300 Alt. syncrude/diesel engine ¾ 35% less GHG using 200 diesel engines in lieu of gasoline engines

CO2 Emissions, CO2 Emissions, 100 Overall, total life cycle GHG emissions, including 0 consumption, are 28% Production Transport Refining End-Use lower than average imported crude. Foundation for Transition to Hydrogen (?)

Oil sands (bitumen) have been described as hydrogen-deficient petroleum. Bitumen requires hydrogen in substantial amounts (1,500 scf per barrel) to “upgrade” and remove sulfur compounds. As the oil sands are exploited in ever growing quantities, more hydrogen will be required to be generated and delivered, thereby stimulating the development of a hydrogen infrastructure. Bottom Line: Large quantities of hydrogen are needed to upgrade bitumen to syncrude. Transition To A Hydrogen Economy

What Would It Take? Transition to Hydrogen Economy

Estimated Electric Energy Need via Electrolysis/Hydrogen/Fuel Cell Route 2025 Scenario Light-Duty Vehicle Energy Needs ~ 13.37 MMBOE per Day Electricity to Produce Hydrogen for all Light-Duty Vehicles ~ 1,300 GW Nearly 1,500 Additional GW Nuclear Plants (88% capacity factor) OR 3.7 Million 1MW Windturbines (35% capacity factor)

*MMBOE – Million Barrels of Oil Equivalent; FC eff. = 2x ICE eff. Hydrogen Data Source: Eliasson, Baldur and Bossel, Ulf “The Future of the Hydrogen Economy: Bright or Bleak” Transition to the Hydrogen Economy

Transportation Energy via Oil Sands Route

At 2MMBOE per Day Syncrude Production Electricity to produce Hydrogen for upgrading bitumen ~ 15.1 GW Need about 17 GW Nuclear Plants (88% CF) OR 43 Thousand 1MW Windturbines (35% CF)

*(Hydrogen for Upgrading ~ 1,500SCF per bbl bitumen) Transition to Hydrogen 70 2 60 Barrels of Oil Hydrogen ), 50 Electric Energy 4

40 tricity to Produce H tricity

20 Million Barrels of Oil per day, Oil per Barrels of Million 10 Hundreds of GW Elec Tons of Hydrogen per day (x10 per day Tons of Hydrogen 0 2004 2025 2025a2025b 2025c a b Desulfurization of (11+2) (0+13) H2 for All Light- Gasoline Desulfurization of Gasoline Duty Vehicles + Bitumen Upgrading a,b (conv. crude+syncrude) The Path To The Hydrogen Economy Will Likely Be the “Asphaltene Highway”

Energy Independence

H2 Bridge to Energy Independence

Energy Dependence: Petroleum Fuels Summary

The NEP supports improving energy efficiency as well as collaborating with North American countries for regional energy security. Hybridization and DI-dieselization promise to moderate the rate of increase in demand. Dieselization of the light truck fleet will have a significant impact on total U.S. fuel consumption. Engines operating in new combustion regimes promise even higher efficiency and lower emissions. There is a vast North American resource of new non- petroleum hydrocarbon fuels for combustion engines. The increasing hydrogen requirements for removing sulfur from petroleum fuels plus “upgrading” bitumen (oil sands) and heavy oils will serve to stimulate the development of a hydrogen infrastructure for transportation vehicles.