South Africa has a way to get more oil: make it from coal

For decades, scientists have known how to convert coal into a liquid that can be refined into gasoline or diesel fuel. But everyone thought the process was too expensive to be practical.

The lone exception was South Africa, a one-time pariah state that had huge reserves of coal and, thanks to anti-apartheid sanctions, limited access to foreign oil. Sasol Ltd., a partly state-owned company, built several coal-to-liquids plants, including the ones at Secunda, and became the world’s leading purveyor of coal-to-liquids technology.

Now, oil prices are above $70 a barrel, and Sasol has emerged as the key player at the center of the world’s latest alternative-energy boom.

..Current estimates indicate the world has just 41 years of known oil reserves and 65 years of natural-gas supplies. It has enough coal reserves to last an estimated 155 years, with some of the largest reserves in the two biggest oil-consuming countries, the U.S. and China.

It’s far from clear, however, that the world would be better off — economically or environmentally — by burning more coal to fuel cars and trucks.

One problem is that coal-to-oil projects are extremely expensive. A single plant capable of producing about 80,000 barrels of oil equivalent a day — less than 0.5% of America’s daily oil diet — would cost an estimated $6 billion or more to build.

An extensive report at Moneyweb