Australia consumes about one million barrels of oil per day and produces a quarter of that. We have two remaining refineries: the Ampol refinery at the mouth of the Brisbane River and the Viva refinery in Geelong. But ships pass in the night – most of the oil they refine comes from overseas and 80% of Australian oil production is exported to refineries in Asia.

The Houthis, not even a nation-state, have been blocking oil tankers from transiting the Red Sea. This is what will happen when China starts its war in the Western Pacific. South Korea has announced that it will remain neutral in a war over Taiwan. China may instruct South Korea not to send oil products to countries defending Taiwan. Then there are Japan’s refineries. Japan has a long supply lines to the Middle East and across the Pacific. Both of which are relatively easily interdicted. Another problem for Japan is that all its oil refineries are within range of China intermediate range ballistic missiles. Whatever refinery capacity remains after the volleys of ballistic missiles will be needed for Japan’s own needs.

That leaves south Asia. Singapore is a big refining centre and will be on the edge of the battle zone. Singapore may have decided not resist Chinese expansion and so might obey an instruction from China not to supply Australia. What’s left is India which cannot be relied upon.

There is another problem in that Australia, while trying to be a moral exemplar to the world in so many things, is delinquent with respect to our obligations under the International Energy Agency treaty. We are required to have 90 days’ worth of consumption as emergency stocks to contribute to the pool. Instead, we have perhaps a quarter of that. Australia is the only country that is delinquent and we have been so since 2011. We may think we are free-riding that agreement but when the crunch time arrives, all the other countries might decide not to supply us because we are loathsome free-riders.

Then there is another problem. All the island countries of the Pacific rely upon imported diesel to do everything – fishing and keeping the lights on. If we can supply them with fuel when life has become very difficult for them, that will give us enormous leverage in keeping China out of the western Pacific.

The solution to our problem, this existential problem, is commercial now. But first Australia has to put Net Zero aside until our strategic situation improves. There is a simple metric from an external party that can be relied upon to measure the strategic situation – the graph of Chinese incursions into Japan’s territorial waters around the Senkaku Islands. This is updated every month by the Japanese Ministry of Foreign Affairs:

Figure 1: Chinese incursions into Japanese territorial waters around the Senkaku Islands

Until that graph goes to zero and stays there for a couple of years, war is coming to Asia and Australia has to, regrettably, put aside our commitment to Net Zero. Everyone will understand.

Besides the problem of physical supply of oil there is the matter of price. The growth in world oil consumption over the last 15 years has been met by US tight oil production. Resource extraction theory says that the production rate will fall just as fast as it rose. At the moment 50% of US tight oil production is coming from wells drilled in the last 18 months and the production rate of new wells has been falling for the last couple of years as the best acreage is drilled out. We would keep all the money we pay for fuel in Australia if we produced it ourselves.

Figure 2: US tight oil production by year of wells drilled 2002 – 2023

The technology to adopt is the Bergius coal liquefaction process in which hydrogen is forced into coal molecules at 300˚C and 250 bars of pressure. Those conditions are quite achievable. My stove is rated to 250˚C and this process is only another 50˚ beyond that. Similarly, 250 bars equate to 3,650 psi. Scuba tanks with a wall thickness of 5 mm are rated to 3,000 psi. So, some sporting goods approach the pressure needed in the Bergius process. The combination of temperature and pressure isn’t difficult. The only complication is that carbon steel is affected by hydrogen embrittlement at process conditions over 200˚C so the process vessel will be made of stainless steel. Stainless steel isn’t expensive at the moment because of a glut of nickel that is forcing nickel mines to close. A stainless-steel tube with a diameter of 900 mm and a wall thickness of 10 mm is likely to be the optimum.

The current fad for renewable energy and the hydrogen economy also helps. As with most processes that require hydrogen, hydrogen for the Bergius Process has been generated by steam-reforming part of the process stream. The steam reformer would be 30% to 40% of the capital cost of the plant. Using electrolysis to generate hydrogen means that it can use power generated by wind and solar at times of the day when there is no other use for that power and it is much cheaper. Electrolysis plants can be turned down to 25% of rated capacity without affecting efficiency. Intermittent hydrogen supply produced using intermittent power from wind and solar could be accumulated and smoothed out in a gasometer. Operating the Bergius plant will be much easier without a close-coupled steam reformer. There is another benefit of using hydrogen from electrolysis – the yield from the coal used will be 20% higher.

Figure 3: Flow diagram of the Bergius process from Bergius’ 1931 Nobel Prize acceptance speech

At those operating conditions, the process residence time is one hour. In a lab setting, microwaves can speed up the process and this would be worth pursuing to cut capital and operating costs. A plant module with a throughput of 5,000 barrels per day would have a process tube length of 60 metres for that one hour residence time. Five such modules clustered in a plant could feed a 25,000 barrel per day distillation column. Four such plants would produce 100,000 barrels per day and 40 would provide us with all our fuel needs. A bit more and we could start supply some of the needs of our friends.

Figure 4: Bergius Process using Electrolysis with External Power

A Japanese research project in the early 1990s of processing Latrobe Valley lignite to liquid fuels using the Bergius Process determined that the operating cost would be US$40 per barrel then, equating to US$110 per barrel now. Australians are already paying more than that now for fuel. At $2.00 per litre for diesel, and then less the $0.50 Federal Government fuel excise, Australians are paying US$157 per barrel at the pump. The Federal Government could, and should, use that $0.50 per litre to provide a price floor for operators setting up Bergius plants.

There is an analogy from Australian history. When the Bass Strait oilfields were found, they couldn’t compete against Middle Eastern oil that then sold at US$4 per barrel. So Australian consumers paid a premium over the imported price so that Bass Strait could be developed. That was very timely because when the oil sanctions of the Yom Kippur War of 1973 came along. We sailed through that period while most of the rest of the world had queues and shortages. If we start building Bergius plants now, that will stand us in good stead when China’s war starts.

There is currently a portion of our commentariat who are enthralled by the notion of the hydrogen economy. This remains, and will every remain, a chimera because of the actual physics and chemistry of hydrogen. Diesel is 13% hydrogen by weight with the balance of 87% being carbon. That hydrogen provides 39% of the energy though. Looked at properly, carbon is the carrier that allows hydrogen to be used as a liquid fuel. Hydrogen enthusiasts should accept this as the best they will ever get if they want to be happy. Diesel via the Bergius process is the closest we will come to a hydrogen economy.

We should be conserving coal from power generation to save it for liquid fuel production. It follows that coal-fired power generation should be replaced by nuclear plants to achieve that. In turn, the technology that will make the most of our uranium endowment is fast breeder reactors producing plutonium. All the U235-burning light water reactors are quite wasteful of our U238 endowment and effectively throw away 98% of it.

Fortunately, a design has appeared for a 100 MW breeder reactor with a capital cost of $530 million, a cost of $0.076 per kWh for the power produced and a build time of two years. This is the ARC-100 reactor which is a descendent of the US Department of Energy Experimental Breeder Reactor program which operated for 30 years from 1964 to 1994. Figure 4 shows a cross section through the reactor vessel design:

Figure 5: Arc-100 reactor vessel cross section

With a reactor vessel height of 15.6 metres and diameter of 7.6 metres, it is readily transportable by road. The vessels would be produced in factory conditions in South Korea and shipped in.

Australia’s necessary liquid fuel and nuclear power buildouts could be faster and cheaper and less painful than anyone is expecting.

David Archibald is the author of The Anticancer Garden in Australia.

SUGGESTED ARTICLES