The Catalyst Review - February 2015 - 1

INDuSTRy RuMORS
The views expressed are those of the individual author and may not reflect those of The Catalyst Review or TCGR.
More on u.S. Energy Policy
under the current u.S. administration all of the fossil fuels have been minimized while "green" alternatives
mainly have been stressed. Many people disappointed with the election results cited the low cost of gasoline
as a plus for the incumbents, but this was either a non-issue or the opposition was given credit for the development.
Republicans have already stated they are going to approve the Keystone pipeline that will bring in more
Canadian oil into the united States.
The large drop in crude oil prices and oil products (e.g., gasoline, diesel, jet fuel) is directly attributable to horizontal drilling. A
reduction of a dollar per gallon in gasoline keeps over $100 billion a year in consumers' hands. Adding to this total will be the lower
cost of all the other products from the hydrocarbon industry (e.g., LPG, jet fuel, kerosene, heating oil). This helps lower-income
people the most.
The real development in oil production is not fracking. This technology has been used for over 80 years and has been commonly
referred to as tertiary oil recovery. It is the ability to horizontally drill that puts so much more drill pipe in contact with the pay zones
that is the real development. Opponents of increased use of hydrocarbons would rather use the fracking term since their hope is
to get the technology barred by raising fears of water contamination. The drilling industry must counter this by working with the
EPA to establish the necessary safeguards, such as proper well sealing and minimal water usage, for responsible production. Several
important factors must be taken into consideration for the short and long term future of energy usage in the U.S. These are:
1. Oil production in the U.S. can exceed 10 million B/D within two years with the proper incentives. It has reached nine
million B/D this year.
2. Natural gas production will increase and remain stable. This will benefit consumers with cheaper energy and promote
the switch from non-efficient and/or environmentally deficient coal plants.
3. OPEC is trying to manipulate the price of oil by flooding the market. Their objective appears to be to force high cost
production to shut-in, thus preserving OPEC's market share and accommodate gradually rising prices. The U.S. must
adopt an energy policy that is right for the United States. Such a policy should include Canada and possibly Mexico, our
natural trading partners.
4. The ethanol mandate should be revisited. Reducing ethanol usage would be better for the environment and would
help cap grain prices; a positive development for the least fortunate around the world. The production of ethanol
from renewable sources has not occurred. While technically feasible, it is not economical. A sustainable policy should
be economical. Methanol would be the best alcohol to use since it would not need to be subsidized. The main driving
force for the original law was to reduce oil imports, a motive that is no longer valid. Reducing ethanol would also lower
water use and run-off that pollutes rivers and the Gulf of Mexico.
5. Creating new environmental standards before the current ones are completely enforced and without a real cost
benefit analysis just drives up the cost of energy for everyone. The benefit claims get much more tenuous when a
standard already exists. The recent justification of reducing gasoline sulfur from 30 to 10 ppm claimed a 67% sulfur
reduction. Sulfur in gasoline used to be 340-350 ppm (industry average), so a reduction of over 90% had already been
obtained. The latest reduction scheduled for 2017 will reduce the original sulfur content about 5% more, bringing the
overall reduction to over 98%. The remaining sulfur is negligible. An upcoming ozone proposal is premature at best
and could make U.S. industry non-competitive with the rest of the world.
An energy policy should make energy as economical as possible since this provides the highest standard of living that benefits the
entire nation. It does not have to exclude energy conservation or the development of longer term "green" solutions; but it should
be based on existing technologies and not on energy wishes. Near term oil and gas production (the next decade) will benefit from
fracking in other areas besides the United States. Just how much is generated will have a major impact on the world economy and
the various regions that are able to establish significant production.
About the Author
Warren S. Letzsch has 45 years of experience in petroleum refining including petroleum catalysts, refining,
engineering and design. His positions have included R&D, technical service and sales which led to senior
management positions in sales, marketing and technology development and oversight. He was one of the
developers of the Technip/Axens R2R process and has authored over 80 technical papers and holds eight patents
in the field of fluid catalytic cracking. He was the FCC/DCC Program Manager at Stone & Webster for 10 years and
is now a Senior Refining Consultant for Technip, as well as a private consultant to the refining industry. He can be
reached at: wletzsch@verizon.net.
The Catalyst Review
February 2015
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The Catalyst Review - February 2015

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