In the next ten years, the demand for oil from growing economies such as China and India is expected to rise to about 14-million barrels of oil a day, exceed- ing the production capability of Saudi Arabia, synfuels producer Sasol's CE Pat Davies said at the Pittsburgh Coal Conference earlier this year.

However, with the tightening oil prices and oil shortages currently being experienced, the extended demand for oil from the growing economies could cause the oil shortage to feed into the transportation-energy sector. He further stated that about 40% of the world's energy was devoted to transportation, with oil as the only significant feed into that demand.

Oil deposits are found in nine countries throughout the world, representing about 5% of the world's population, while about 80% of the world's coal deposits are found in six countries, representing 45% of the world's population. Davies said that, through the use of Sasol technology, these coal reserves could be made available to the transportation energy sector, and could help ease security-of-supply concerns.

The South African producer is, by far, the leading producer of coal-based synthetic fuels made using the unique Sasol Fisher-Tropsch technology to manufacture synthesis gas from low-grade coal. This, in turn, is converted into a large range of petrochemicals, including petrol and diesel.

Davies added that, although there were other alternatives to the coal-to-liquids (CTL) technology that Sasol was suggesting, one had to take into account the logistical infrastructure required for these alternatives.

'These alternatives have to be easily stored, easily transported, and easily converted. 'At the moment, there are not too many alternative energies available that can fit those requirements.'

Davies stated that coal-derived synthetic fuels would be functional, since they could be used in existing distribution systems, transportation systems, pipeline systems, and service stations. 'So coal-derived fuels are much easier to get to market than alternative energies.'

The CTL technology, however, is not without its challenges, stated Davies. The first challenge is that of capital cost. The coal industry has always been prone to high capital cost, said Davies, but in recent times capital costs have increased dramatically in line with the skills shortage and the global capacity shortage in the engineering construction industry.

Davies said that the industry had seen an increase of about 60% in capital costs within a three-year period, but in studying the trend, Sasol had predicted that capital costs would eventually trend downward from the current high base.

'We don't see capital costs going down all the way to the original base, though, since engineering and construction companies now have a measure of pricing power. We now have to get smarter. 'A lot of technology is required, along with smarter methodologies of interact- ing with clients and contrac-tors to share the risk appropriately, and to make sure that we cut out any unnecessary costs.'

The other challenge facing the technology is related to climate change and the production of carbon dioxide in the production process. Davies stated that as a member of society, Sasol had an obligation to reduce its carbon footprint to prevent negative consequences in the future. 'But we have to do this gently. We cannot prevent the developing economies such as China and India from growing, but they need to do this in a much more responsible way.'

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