Delta Scan: The Future of Science and Technology, 2005-2055: Synfuels as a Real Alternative to Oil

Key Pages

Category:
Science and Technology

Domain:
Energy

Keywords:
Energy - synfuels, tar sands, oil sands, Canada, oil shale

Outlook:
Price spikes and geopolitical concern over secure oil supplies could motivate increasing investment in synfuels and its exploitation by large energy companies.

Summary Analysis:
Synthetic fuels (called synfuels) are one of very few alternatives to oil-based transportation fuels (hydrogen and biodiesel are others). Synfuel technology involves converting non-oil fossil fuels (such as coal, natural gas, shale, or oil sands) into fuel. By some estimates, both Canada (with its Athabasca oil sands) and the US (with its Green River Basin shale deposits) have more reserves of oil than Saudi Arabia. The process of synfuel production is significantly more expensive than drilling for oil, but recent price spikes and geopolitical concern over secure oil supplies are driving many countries to consider investment in synfuels. Indeed, Canada has been investing in its oil sands for decades and currently supplies 10% of the North American oil market (a percentage that is growing rapidly). The Chinese, who are keen to develop secure fuel resources, are also investing in these Canadian fields. Advanced countries with large reserves of non-oil carbon-based deposits (such as the US) could become a net exporter of fuels after decades of infrastructure development.

The nascent synfuel industry and the existing oil industry are economically enmeshed. The main factor inhibiting large-scale investment in synfuel is the low price of oil. If prices rise, synfuel may attract more investment, but the threat this would pose to long-term demand for oil might depress the oil price again. Since most large energy companies have been cut off from new oil fields by nationalised oil empires, they may be keen to exploit this opportunity. Oil will not disappear, but the parallel development of synfuels may help regulate its price. Canada is spearheading the development of synfuels. The US and/or other advanced countries with large deposits of non-oil fossil fuels may follow.

Implications:

Potential for lower, more stable oil prices
Revitalization of energy giants cut off from new oil fields
Potential reduction (at best) or shifting of geopolitical conflicts and alliances
Rebirth of the mining industry in advanced countries

Early Indicators:

Rapid growth of synfuel production from Canada’s oil sands

What to Watch:

Production of synfuels from Canada’s oil sands grows from the current 1 million barrels a day to 2 million a day by 2010, rising to 3 million by 2020 and later to as much as 5 million for decades to come.
Governments increase investment in exploring synfuels as an alternative to oil.

Parallels/Precedents:

Germany's development of a synfuels industry to fuel its armies during World Wars I and II in response to its oil supplies being largely cut off

Enablers/drivers:

Sustained high oil prices
Large investment from national governments willing to establish a synfuels industry
Continuing geopolitical turmoil in oil-producing regions

Leaders:
Regions:

Canada
South Africa

Institutions:

Sasol, South Africa [link]
Syncrude Canada Ltd. (world's largest producer of crude oil from oil sands) [link]
Suncor Energy Inc. (producer, in 1967, of the first commercial barrel of synthetic crude oil; strategically focused on developing Canada’s Athabasca oil sands) [link]
Geoscience Australia [link]
Tallin University of Technology, Estonia [link]
Colorado School of Mines, US [link]
Department of Trade and Industry, UK [link]

Figures:

Sources:

"Oil Shale." World Energy Council Survey of Energy Resources. [link]
Collier, Robert. 2005. "Fueling America: Oil's Dirty Future." SF Chronicle, May 22. [link]
"International Energy Agency" International Energy Agency [link]
"International Energy Outlook 2005." Energy Information Administration [link]
"Can heavy oil avert an energy crisis?" New Scientist. Aug 02 2003 [link]
Reinsalu E. "Oil Shale Industry in Estonia at a Crossroads." Oil Shale. Vol 22. No 3. 2005. pp259-260 [link]
Brendow K. "Global Oil Shale Issues and Perspectives." Synthesis of the Symposium on Oil Shales. Estonia. Nov 2002 [link]
Fischer P. "Hopes for Shale Oil are revived." World Oil.com. Aug 2005 [link]

At A Glance:
When:
21–50 years +

Where:
Global

How Fast:
Years

Likelihood:
High

Impact:
Medium-Low

Controversy:
Low

Related Outlooks:

About this outlook: An outlook is an internally consistent, plausible view of the future based on the best expertise available. It is not a prediction of the future. The AT-A-GLANCE ratings suggest the scope, scale, and uncertainty associated with this outlook. Each outlook is also a working document, with contributors adding comments and edits to improve the forecast over time. Please see the revision history for earlier versions.

Category:	Science and Technology
Domain:	Energy
Keywords:	Energy - synfuels, tar sands, oil sands, Canada, oil shale
Outlook:	Price spikes and geopolitical concern over secure oil supplies could motivate increasing investment in synfuels and its exploitation by large energy companies.
Summary Analysis:	Synthetic fuels (called synfuels) are one of very few alternatives to oil-based transportation fuels (hydrogen and biodiesel are others). Synfuel technology involves converting non-oil fossil fuels (such as coal, natural gas, shale, or oil sands) into fuel. By some estimates, both Canada (with its Athabasca oil sands) and the US (with its Green River Basin shale deposits) have more reserves of oil than Saudi Arabia. The process of synfuel production is significantly more expensive than drilling for oil, but recent price spikes and geopolitical concern over secure oil supplies are driving many countries to consider investment in synfuels. Indeed, Canada has been investing in its oil sands for decades and currently supplies 10% of the North American oil market (a percentage that is growing rapidly). The Chinese, who are keen to develop secure fuel resources, are also investing in these Canadian fields. Advanced countries with large reserves of non-oil carbon-based deposits (such as the US) could become a net exporter of fuels after decades of infrastructure development. The nascent synfuel industry and the existing oil industry are economically enmeshed. The main factor inhibiting large-scale investment in synfuel is the low price of oil. If prices rise, synfuel may attract more investment, but the threat this would pose to long-term demand for oil might depress the oil price again. Since most large energy companies have been cut off from new oil fields by nationalised oil empires, they may be keen to exploit this opportunity. Oil will not disappear, but the parallel development of synfuels may help regulate its price. Canada is spearheading the development of synfuels. The US and/or other advanced countries with large deposits of non-oil fossil fuels may follow.

	Implications:	Potential for lower, more stable oil prices Revitalization of energy giants cut off from new oil fields Potential reduction (at best) or shifting of geopolitical conflicts and alliances Rebirth of the mining industry in advanced countries
	Early Indicators:	Rapid growth of synfuel production from Canada’s oil sands
	What to Watch:	Production of synfuels from Canada’s oil sands grows from the current 1 million barrels a day to 2 million a day by 2010, rising to 3 million by 2020 and later to as much as 5 million for decades to come. Governments increase investment in exploring synfuels as an alternative to oil.
	Parallels/Precedents:	Germany's development of a synfuels industry to fuel its armies during World Wars I and II in response to its oil supplies being largely cut off
	Enablers/drivers:	Sustained high oil prices Large investment from national governments willing to establish a synfuels industry Continuing geopolitical turmoil in oil-producing regions
	Leaders:	Regions: Canada South Africa Institutions: Sasol, South Africa [link] Syncrude Canada Ltd. (world's largest producer of crude oil from oil sands) [link] Suncor Energy Inc. (producer, in 1967, of the first commercial barrel of synthetic crude oil; strategically focused on developing Canada’s Athabasca oil sands) [link] Geoscience Australia [link] Tallin University of Technology, Estonia [link] Colorado School of Mines, US [link] Department of Trade and Industry, UK [link]
	Figures:
	Sources:	"Oil Shale." World Energy Council Survey of Energy Resources. [link] Collier, Robert. 2005. "Fueling America: Oil's Dirty Future." SF Chronicle, May 22. [link] "International Energy Agency" International Energy Agency [link] "International Energy Outlook 2005." Energy Information Administration [link] "Can heavy oil avert an energy crisis?" New Scientist. Aug 02 2003 [link] Reinsalu E. "Oil Shale Industry in Estonia at a Crossroads." Oil Shale. Vol 22. No 3. 2005. pp259-260 [link] Brendow K. "Global Oil Shale Issues and Perspectives." Synthesis of the Symposium on Oil Shales. Estonia. Nov 2002 [link] Fischer P. "Hopes for Shale Oil are revived." World Oil.com. Aug 2005 [link]

At A Glance:	When:	21–50 years +
	Where:	Global
	How Fast:	Years
	Likelihood:	High
	Impact:	Medium-Low
	Controversy:	Low