One of the technologies that are making news to ease the effects of high crude prices or rather that has been more cost effective is the gasification of coal and other carbon based naturally occurring fuel. Such technologies are least liked or supported by the environmentalists. Most of these technologies emit more carbon into environment than the production of crude oil based fuels. Technologists on the other hand rely on their technical prowess to trap the carbon emissions and bury them deep into earth. Such trapped and banished carbon can become nucleus of future energy as the natural processes take over assimilating the buried carbon. In any of these methods we end up spending energy and emissions at the place of production so that consumers every where can have their fuel supplied the way they can use.

Additionally research and investing has been going on to make the naturally occurring gas in user friendly forms. Such transformed gas reserves are estimated at 1 trillion barrel equivalent of crude and perhaps can last for two generation needs of oil at the current levels of consumption. Technologies involved in making fuel out of gas score over others as they deliver environment friendly fuel devoid many harmful naturally occurring and inseparable elements, mostly sulfur, found in the crude based fuels such as petrol, diesel, kerosene etc.

How this is relevant?

One look at the distribution of fossil fuel will convince the reader that coal based fuels are the future of the people living in South Africa, Australia, India, China, Russia and USA which are endowed with large reserves of coal. It is significant these very countries also do not have much of crude reserves. South Africa relied on this technology to fight its way through economic sanctions in 80’s and perhaps has some of the best known commercially exploited coal mines in the world where the fossil fuel is made into much more user friendly fuels. It is notable that such a technology was made sustainable through a slew of concessions by the government and society. Society around these plants paid with health as converting coal involves releasing large amounts of sulfides, sulfur dioxides besides carbon mono oxide which exposed population around them, mostly black, to high levels of pollutants. Current technical competence does not allow the producers to trap these gases and reduce pollution.

How is India and China involved?

Sasol has set up an office in India. It has also signed an agreement with China to take up feasibility to establish a plant in Shaanxi province. India and China have vast reserves of coal. They also are net importers of crude and crude based products. Both these countries are sustaining and pushing at growing faster to increase level of employment and improve quality of living. Fossil based fuel that can be delivered at consumer end is best they can aim at. Coal gasification promises to be solution. However the environment aspects of such method make one shudder. South Africa has extended many fiscal concessions and has been lax in enforcing pollution control on Sasol. It has allowed the company to get away with damages it is causing to the local populace by absorbing these social costs. Both the countries can evaluate the positive and negative aspects of this technology.

It is notable that this technology was tried in USA to fight the effects of first oil price rise in the 80’s. When it was found that technology could not sustain in the market place it was quietly abandoned. It is probable that in the current technology newer and alternative methods can be evolved to reduce the environmental impacts given the good margin oil price increases have brought about.

What an investor can look forward?

Well Sasol of South Africa promises to be good company to revisit now although the polymer line of their business is hit by rising costs. As a proven leader it has two of the faster growing economies of India and China within its reach. However the lead of time 5-7 years to establish a green field venture and high capital costs, $ 1 Billion for 10,000 barrel/ day and $ 6.5 Billion for 80,000 barrel/ day plant, will ensure that investing in companies based on coal gasification prospects a real long term investors area. In the meantime look at technology peddling companies that can ingest carbon into fuel to give a better blend or energy packed and environment friendly fuel. Major oil refiners have such a technology and market place is willing to pay for a break through carbon ingestion in the fuels that can optimize the fuel use. For the present it is tough on oil companies as most nations are asking their citizens to cut on oil consumption an easier way to handle the oil price rise.