All energy comes from the Sun, or the Suns of Our Fathers. Our Sun and solar system is a so-called second-generation star system. Nuclear and geothermal are powered by the fission or decay of ultra large atoms created in supernovas of ancient stars, the debris of which later coalesced to form our Sun and solar system. It took billions of years. Coal, oil & gas are thousands to millions of years’ worth of stored sunlight from our Sun. What we’ll call “sunlight of the day” powers hydro, wind and solar and because of that these three sources of energy have generally been given the moniker of “renewables.” They have a siren’s call, one that appeals to us all on a basis we suspect has origins deep in our feudal past. We feel it too.

At Lot Cheaper Than Jackson Hole and All The Civilization You Need | Source: Thermocon

As the powers that be gather in Jackson Hole this week, it may be instructive to reflect on our collective energy past in regards to renewables. In 1978 Congress passed the Energy Tax Act introducing the Investment Tax Credit (ITC). It resulted in a lot of investment. So much so our first images of oil-stained non-spinning wind turbines in California’s Altamont Pass began to make the rounds in the 1980s. It was part and parcel of the myriad of non-optimal energy “solutions” that came out of the 1970s and that have somehow seduced us with a morbid fascination we can’t seem to shake to this day.

Subsequently, after some consideration, it was decided to subsidize the actual production of electricity instead of merely the installation of capacity. Proceeding with renewed vigor, Congress passed the Energy Policy Act of 1992 which created the production tax credit (PTC) of $15 per megawatt-hour, indexed to inflation and set to sunset in 1999. Paying homage to the time honored saying that there’s nothing quite so permanent as a temporary government program, 27 years later, the PTC may have actually just taken a powder recently, we’ll see.

Why our continued and baffling fascination with living off the so-called sunshine of the day? We believe it is due to the fact that the qualitative argument in favor of renewables is beyond the pale. It goes like this. Imagine a world where mankind has taken our finite carbon resources and used them to learn how to live in harmony with the nature, taking only from the Sun what is required for our daily needs. That argument is so seductive and so powerful that it may have no peer. The trouble is it’s dead wrong, with emphasis on the dead.

Primary energy is all over the place and the vast majority of it is too worthless to measure. What is required to power anything is a source of primary energy that can be forced through a thermodynamic cycle by a machine, whether made by man or Nature, at a time, location and rate of relevance to produce dispatchable power out the other side. That dispatchable power then needs to cover the manufacture, operation and maintenance of the machine, gathering of the fuel, with enough left over to power the modern human condition. It is the key to all life on Earth.

Sunlight of the Day is the Primary Energy Source for Hydro, Wind and Solar | One of These is Not Like the Others | Source: Thermocon

To investigate this further, we republish a graphic from our last piece which shows average calculated subsidy levels from various primary energy sources and the machines chosen to process them. We’re not the only ones to have calculated these estimates, and no one’s numbers are ever the same, but the pattern always is. Subsides for the stuff that actually works round to zero, wind blows and then solar totally sucks.

The primary energy source for hydropower, wind, and solar is the same, namely the sunlight of the day. Think about that for a second. The same primary energy source can be configured to yield arguably the best source of dispatchable power available (hydroelectric dams) one that medieval mankind was able to harness to some productive use (wind turbines) or something that is just a flat-out energy sink (solar panels.) The choice of the thermodynamic cycle to push the primary energy through, and the machine to do the pushing, matters.

There’s another hugely instructive element of this chart. The average subsidy of geothermal energy used to round to essentially zero. Zero it is no longer. Now the subsidy for geothermal is roughly on par with raw wind. So, used to be geothermal plants were forced to site where they could be economic. In our zeal to develop something that is simply carbon free we have enacted subsidies that allow geothermal to make due with sub-par sites that simply should not be trifled with. The kicker is there is carbon dioxide in that subsidy.

If one takes the view that money is merely an overlay for the exchange of dispatchable megawatt hours at a sufficient rate to do something, or the embedded energy in all the collective “doing something’s” that constitute the existing capital stack of society, the problem immediately becomes apparent. It can’t be done. The subsidy is in fact a cover for the fact that what you’re planning can’t physically be done. It’s all powered by putting carbon dioxide in the air, splitting uranium atoms, or damming rivers, wind and solar are just hiding beneath the subsidy overlay.

And never mind, that all the rest of life on Earth needs that energy from sunshine. It’s all they have. And here we are trying to take that from them as well. All to satisfy some feudal need that can’t be done in the first place. Look at what we did to the buffalo, or how about the cod population in the North Atlantic where they used to literally jump in the boat. Now we want to harvest the only energy available to Mother Nature to attempt to power a standard of living that she simply cannot provide. What kind of monsters have we allowed ourselves to become?

Wrong Way Indeed | Source: Thermocon

It gets better. The wealthy are being fooled into financing this nonsense and the forcing of nobility on the poor. The nobility being struggling to live without being able to put carbon dioxide into the air. There’s an element of economic eugenics to this that we’re finding harder and harder to ignore. First, they came for the coal, and we didn’t say anything because we weren’t in the coal business. Then they came for the oil, and we didn’t say anything because we weren’t in the oil business. Then they came for the natural gas and nuclear, and we didn’t say anything because we weren’t in those businesses either. Then our wind turbines and solar panels wore out and there was no way to repair or replace them and we died.

So, what to do about it? First and foremost, please don’t tear anything down. We have a saying around here that we’d prefer a thief to a vandal any day. At least a thief is participating in the economy; all a vandal does is destroy the existing capital stack we have collectively accumulated as a society. We postulate that you cannot subsidize the energy system, anywhere from primary energy on through to dispatchable power. Simply eliminate all the subsidies. We can subsidize food, water, housing, hospitals, and education as well as many other things, but we cannot subsidize energy as that is what creates everything else. All of the above isn’t going to cut it, we need the best of the above.

Lastly, succumbing to this feudal fascination with subsistence level energy is making us collectively less astute. We have a class of highly educated people engaging in what we call; we have a mathematical model and we’re here to help. Specifically modeling the physical effects of increasing carbon dioxide in the atmosphere via a crapload of math and assumptions that constitute a mathematical model. It’s fundamentally a great academic exercise. The trouble is a potential problem is identified that may or may be a real problem and anyone who dare disagree is shouted down, or worse, with the word – science! Then the solution of wind and solar is promulgated that violates the second law of thermodynamics; you can’t make this s**t up.

That said, we humans are truly marvelous beings, apex predators the likes of which the world has never seen. Even if we have to wrestle with these intellectual concepts that arise from time to time that are at their base thinly disguised eugenics; whether you believe in creation or evolution, we are the point of the Earth. Granted it wouldn’t hurt if we learned to share it a little better by making peace with fissioning uranium and putting carbon dioxide in the air. If we’re wrong let us all be smothered by some tasteless, colorless, odorless, invisible gas somehow.

“♡ Like” this piece to celebrate low entropy. – TC

In 1650 the archbishop of Armagh, James Ussher, began studying the Old Testament as well as ancient Egyptian and Hebrew texts with an eye towards calculating the day of Creation. He came up with one fine Sunday evening on October 23^rd, 4004 BC. Others would nit-pick it a bit and say that technically the effort began bright and early first thing the next morning, and none other than Sir Issac Newton was reported to have a take, saying Creation was six years later in 3998 BC. In 1859 Charles Darwin published The Origin of Species, and in 1953 Caltech chemist Clair Patterson dated the age of the Earth as 4.55 billion years plus or minus 50 million years. So, there you have it, a couple different views on the origins of the Earth and the low entropy life forms that inhabit her. Either way you view it a tremendous amount of energy was involved in order to drive the high entropy environment of the time down to the low entropy Earth, flora and fauna that we enjoy today.

Low Entropy Fauna | Spotted Walking the Dog, Keeping a Sharp Eye on Us | Source: Thermocon

This tremendous amount of energy required to create the Earth and the life forms aboard her is not just any old kind of energy. It was and is energy with a purpose. Energy with a purpose is created by primary energy being forced through a thermodynamic cycle by Mother Nature or man, to yield dispatchable megawatt hours at a time and location of our choosing out the other side. Furthermore, and crucially when it comes to understanding the root of the problem is that this portion of the energy game is amenable to theoretical analysis from first principles. Also required is a machine, whether manufactured by Mother Nature or man, to carry out this energy conversion and this portion of the energy game is not amenable to theoretical analysis from first principles.

We stepped through some of the amenable theoretical analysis in our first piece, Pants, where we profiled a theoretical steam turbine with a furnace burning methane, effectively pushing said methane through the Steam Rankine Cycle. We arrived at a theoretical HHV thermal efficiency of 36.5% extracting 1,016 MW from our imaginary steam turbine with the pump requiring 16 MW on the front end to arrive at a net 1,000 MW (1 GW) power plant.

In our second piece, Friends, we stepped through a theoretical gas turbine analysis, again burning methane and pushing said methane through the Brayton Cycle. We arrived at a theoretical thermal efficiency of 37.2% extracting 1,774 MW from our imaginary gas turbine with the compressor on the front end chewing up 774 MW leaving a net 1,000 MW (1 GW) power plant. One thing that jumps out at the astute reader – the pump absolutely saves the Steam Rankine Cycle. That also brings to mind what we’ll call Thermocon’s Three Laws of Operational Uptime:

Law 1 – Rotating Equipment is the bane of your existence

Law 2 – If you have to…use a Pump

Law 3 – If you really…really…have to then use a Compressor

There is a theoretical limit to just how high the efficiency of these heat engines can be as posited by French engineer Sadi Carnot in 1824. Yale physicist Josiah Williard Gibbs would flesh out the problem in its entirety in a series of papers between 1873 – 1876 defining what came to be called the Gibbs Free Energy, and we made this the subject of our third piece, Energy’s Ladder. We had a reader provide a great comment to one of our later pieces regarding the subject of Gibbs Free Energy, and we look to pay off on this refresher below. It only took us a year to get to it, but better late than never, and we list the key part of the comment below.

Although energy and entropy are understood by a fair number of STEM educated people, Gibbs free energy is uncommonly encountered and likely needs a bit of a refresher for most of us. Your way of linking it to the economics of energy production is very clever as we struggle to compare the apples, oranges, and walnuts of energy production with a common metric. Thanks.

The Gibbs Free Energy of any fuel is its enthalpy, or heat content, minus the inherent entropic haircut of the Second Law of Thermodynamics. Physically, this represents the theoretical maximum amount of work, the maximum available force in a defined direction at a time and location of our choosing, or dispatchable megawatt hours, available in any primary energy source. The rest of any primary energy source must be dissipated as random heat and cannot be used to actually do anything. The Gibbs Free Energy concept is broader than the physics governing a heat engine alone, it covers everything; chemical reactions, wind, thunderstorms, solar panels, life on Earth, you name it, everything. It is a theoretical impediment that cannot be sidestepped and, in our view, is the most practical manifestation of the Second Law of Thermodynamics. Another key aspect of Gibbs Free Energy is that it is not conserved. Pockets of Gibbs Free Energy have collected over time and we as humans run around this planet looking for those pockets, our whole lives depend on it.

Back to our theoretical analysis, the nice thing about using methane is that it is a defined molecule with defined properties that have been measured by scientists. In the case of methane, and if we’re following things correctly, the Gibbs Free Energy available in that molecule is 91.8% of its total primary energy, the other 8.2% must go to random heat. Our theoretical steam turbine and gas turbines were only able to extract 36.5% and 37.2% respectively as work. These efficiencies may feel a little light relative to the theoretically posted number of 91.8%, but they are actually extraordinary compared to the efficiencies achievable prior to the invention of these machines.

In our fourth piece, For Whom The Wind Blows, we took a shot at estimating the thermodynamic cost of the high entropy of wind by turning to a monetary measure, as this portion of the problem is not amenable to analysis from first principles. We estimated the subsidy required by wind power as $10.65 per megawatt hour and posited that this was the amount of monetary overlay required to paper over the high entropic penalty of wind. We further posited that this was due to the fact that in order to generate power wind was forced through something called the Betz Cycle. The theoretical maximum Gibbs Free Energy available in the Betz Cycle is 59.3% of the primary energy entering the front end. This is a substantial haircut relative to methane with its 91.8% Gibbs Free Energy on the front end and a big part of the reason why power plants based on methane don’t require a subsidy and those based on wind do.

Proceeding undaunted, in our fifth piece, The Sun Also Sets, we estimated the subsidy required by solar photovoltaic panels as $33.62 per megawatt hour and posited that this was the amount of monetary overlay required to paper over the high entropic penalty of sunshine. We then posited that this increased subsidy relative to wind was due to the fact that the maximum available energy in sunlight according to the Shockley-Queisser limit is 33.2% and that this theoretical degradation of the primary energy source straight out of the gate was the source of the higher subsidy.

With all this talk of the high subsidies related to wind and solar, it was high time to add hydrocarbons to the list. We did this in our sixth piece, Sins of Our Fathers, and the number we arrived at was $0.52 per megawatt hour, a mere fraction of the others, and one that essentially rounds to zero. We posited that to the extent money is actually just an overlay for the exchange of dispatchable megawatt hours, applied energy, a force through a defined direction at a time and location of our choosing, whatever you want to call it, the hydrocarbon subsidy must by definition be zero as they power the whole thing, our whole lives depend on them.

In our seventh piece, Saving the Atmosphere (By Destroying The Earth,) we added the average price of wholesale power to the plot. In this case we arrived at $50.25 per megawatt hour wholesale power price, you read that right. Solar is being spotted thirty-four bucks and wind eleven bucks out of a total energy game of around fifty bucks. These numbers were generated by gathering subsidy data and generation data from various sources that are listed in those respective pieces. It would be nice if there were a single source of truth, so to speak, that we could run the numbers on. Turns out there is.

Power Generation Subsidies by Primary Energy Source | Data: EIA Federal Financial Interventions and Subsidies in Energy Fiscal Years 2016 – 2022

The EIA produced a report in 2023 titled “Federal Financial Interventions and Subsidies in Energy Fiscal Years 2016 – 2022.” All data for primary energy production and subsidies paid are included right in the report along with a reference to the heat rates used. This report was produced right in the heart of the Biden administration, so one would think the report to be about as friendly to wind and solar as possible. The outcome of our analysis is shown in the plot; the results don’t exactly match with what we previously produced, but they sure do rhyme, and they essentially round to our previous numbers by any reasonable measure.

The report does however provide us a clue to pay some attention to. The subsidies for nuclear, coal, oil & gas, and hydropower are essentially zero. The subsidy for wind is non-trivial and then as usual solar is completely beyond the pale. Nothing particularly enlightening there, however, look at what is happening with geothermal. It started out at essentially zero subsidy in 2016 but has steadily increased to a level commensurate with wind. In our zeal to pursue geothermal energy we are increasing the subsidy level to where it is no longer an energy source at all. The second law lurketh, and it hath cometh for the ideologues pursuing geothermal.

Our first seven pieces were essentially all created to lay the groundwork for and flesh out the magnitude of the inherent entropic haircuts lurking in various fuels. As previously mentioned, the first portion of this is amenable to theoretical analysis from first principles and is focused mainly on thermal efficiency, and while admirable, being to wedded to these analyses alone can lead to a boneheaded energy understanding. As an example, a lot of thermodynamic texts say fuel cells are not subject to the same entropic haircuts as heat engines, which is true. Then some of the newer texts will go on to say this means generating electricity with a fuel cell is more efficient than burning methane in a gas turbine, which is not true. Note that old thermodynamic textbooks don’t eschew nonsense like this.

Energy Flow Through a Machine | Heat Rate 7,000 BTU/kW-hr | Source: Thermocon

There is a second aspect of the inherent entropic haircut in any fuel and that relates to the applied energy required to gather the fuel, build the machine in the first place, as well as operate and maintain the machine throughout its viable lifetime. Then what remains we can use to lower the entropy of our surroundings, also known as enjoying a higher standard of living.

This portion of the problem is not amenable to analysis from first principles; thus, the result of this analysis can quickly devolve into the desired outcome of the analyzer. It has been largely given the label of Energy Return On Energy Invested (EROEI) and a concise summary of that concept that we enjoyed reading can be found here: The Energy Cost of Energy.

As it sits, we have estimated theoretical measures of the first portion, and monetary measures of the second portion of the inherent entropic haircut in any fuel; that was the point of our first seven pieces, and as attested to earlier we figured it would all scale with Gibbs Free Energy, but that turns out not to be the case. The diffuse nature of wind and solar results in an excessive capital expenditure that essentially buries them from the git-go, particularly solar as shown above, and unfortunately geothermal is now getting in on the subsidy action.

In our eighth piece, Peak Cheap Oil Already Happened (And We Lived) we began to stray off into a series of pieces more focused on hydrocarbons, where we actually come from in the first place, but we did circle back to the subject of energy subsides in our 12^th piece, Don’t Save Me Chief. There are two sources of entropy that these subsidies are papering over. The first is the inherently high entropy of the energy sources themselves that we just broke down into a thermodynamic portion and a capital expenditure portion. The second aspect of the increased entropy of wind and solar is the fact that they are intermittent.

As with the capital expenditure portion of the diffuseness issue, there is no way to calculate the thermodynamic haircut of intermittency from first principles, so once again we turned to a monetary measure. In order to estimate the entropic cost of intermittent energy we looked to Norway, where they were kind enough to allow the British and the Germans to connect to their perfectly well functioning grid in 2021 and visit all kinds of entropy upon it. All the while providing climate lecturing no doubt. We won’t reproduce the plots here, but if you want to revisit Don’t Save Me Chief, it is just blatantly obvious that everything was just fine until 2021 when the British and Germans showed up with their so-called Shangri La of wind and solar. We estimated the entropic cost of intermittency at $50 per megawatt hour.

Average Power Generation Subsidies by Primary Energy Source 2016 – 2022

We’ve added that $50 per megawatt hour to the subsidy tally of wind and solar and provided an average across 2016 – 2022 also including nuclear, coal, oil & gas, and hydropower. The average subsidy of the things that actually work essentially rounds to zero. Geothermal has got in on the subsidy game now being spotted the same amount as wind pre-intermittency. The average US wholesale power price during this period was $47 per megawatt hour with the median being $36 per megawatt hour. When “firmed-up” by being connected to a grid, wind and particularly solar are not energy sources at all, they are purely parasitic.

We had a reader provide a great comment to our estimate of the effective subsidy provided by grid connection to wind and solar, and upon reflection we tend to agree that our estimate may be a little light. It is most certainly penetration dependent, and when taken to its logical conclusion, the intermittency cost of a 100% wind and solar grid may in fact be infinite. A portion of the comment is below.

That is the reason why the retail rate for power in California with its huge quantity of high-entropy solar and wind generation is typically the highest in the continental U.S. We think your estimate for absorbing the increase in entropy is low because the electricity price in California is about double the national average.

If we’re understanding things correctly, the Gibbs Free Energy available in sunlight is 86.8% of the primary energy coming in. It has been measured by scientists. Why then is photovoltaic solar power so utterly horrible from a thermoeconomics perspective? Turns out it’s the entropy stupid. Full disclosure, we had eyeballed the folly of wind and solar a long time ago and thought, well it’s the Gibbs Free Energy, and that turns out not to be the case, it’s broader than that. The Gibbs Free Energy doesn’t account for the increased capex, opex or intermittency.

From a second law perspective, how the energy game works is as follows. Find a source of low entropy energy and force it to a high entropy. As a reward for doing this, one can then force the high entropy of their surroundings to a low entropy minus a humungous haircut. This haircut consists of the thermodynamic cycle chosen, the thermodynamic cost of the fuel and the machine and any thermodynamic cost to provide said energy at a time and location of relevance.

A solar panel is a very low entropy device. It is highly ordered. Sunshine is very diffuse; its entropy is very high. So high in fact that sunshine captured by a solar photovoltaic panel cannot provide the energy to manufacture itself. It can’t produce any net dispatchable power. To add insult to injury the only thing worse than a solar panel is a solar panel with battery backup. The sunshine can’t make the panel in the first place, how’s it going to make the battery; another highly ordered low entropy device.

ERCOT Grid Power Sources July 31^ST 2026 | Source: ERCOT

As an illustration, we provide a plot of the energy sources on the ERCOT grid for July 31^ST 2026. This is going to be hard for some readers to stomach, but the energy from solar panels shown on this plot is not from sunshine. It is from the coal that was used to manufacture the panel in the first place. However, the high-quality low entropy energy in that coal has undergone some sort of crapification process where the high entropy of sunlight has been allowed to infiltrate it. The same is true of wind, only to a lesser extent. Energy from wind turbines is definitively superior to that from solar panels, but still insufficient to power a modern society. A sane summary of the above plot is as follows; except for the nuclear, it is ALL carbon.

We fear that the ERCOT grid is headed for a blackout. These percentages of wind and solar are too high. Texas has an incredible energy bounty and thus has many low entropy sources that can beat back the forces of all this entropy, but there is a limit, and we fear they may be approaching it. Plus, the sheer lunacy of it all – imagine all the thermal cycling these wonderful, low entropy, methane burning gas turbines have to endure to carry all this virtue signaling nonsense forced upon the grid by the intelligentsia.

At the risk of rolling it Don Quixote, we can’t believe more people are not seeing this. Solar panels are not energy addition; they are energy subtraction. They provide less than zero. Wind turbines and solar panels have no place on a modern electric grid; the entropy of sunshine is too high. The effects of this high entropy are beginning to permeate through society in ways that are hard to comprehend due to the subtleness of the second law, beginning with the poor and now increasingly hurting the middle class; and wealthy people are being fooled into financing it. Not so fooled that they quit flying private of course, let’s not get crazy here. When people wake up to the realities of energy this is going to go down in human history as one of the greatest departures from sound science of all time. There may be hell to pay. We hope not but we are a little surprised that it has gone this far.

“♡ Like” this piece to celebrate low entropy. – TC

On December 29, 2023 the Mexican government issued an order expropriating the U‑3400 hydrogen plant at the Tula refinery. PEMEX had sold the unit to Air Liquide in September of 2017 in return for two things; around fifty million in cash and a commitment to upgrade, optimize and operate the plant. In return Air Liquide received a 20-year contract for hydrogen supply. By the end of the first quarter 2018, Air Liquide had upheld their end of the deal, duly installing upgrades, bringing the plant online, and settling in to operate the thing for twenty years. Six years in, the Mexican government decided to roll things Darth Vader and alter the terms of the deal.

HF Sinclair – Best Mascot in the Business | Thermocon

Refineries began as a simple separation problem, with the objective to separate the marketable products from the crude oil by heating it to around 650°F and pumping the product through an atmospheric distillation tower. As we have simplistically modeled it in the past, this means separating out the naphtha from crude oil and turn it into gasoline with on average eight (8) carbon atoms, separate out and turn distillate into jet/kerosene with an average twelve (12) carbon atoms and diesel fuel with an average sixteen (16) carbon atoms. The gases that come off the top can be burned in the furnace that provides the driving force for the entire exercise and the bunker fuel that comes off the bottom end can be burned in ships, for electricity generation, or used in roads and just as critical to modern society processed into lubricants as well as many other things.

One may ask the question of why does a refinery even need a hydrogen plant in the first place? The general answer is that broadly speaking crude oil is a little light on hydrogen, on balance the hydrogen to carbon ratio is just a little bit less than what is required to turn the crude oil into finished fuels via simple separation. This low hydrogen to carbon ratio is most prominently manifested in the bottom of the barrel material and most crude oils have a good bit more bottom of the barrel material than the market can absorb. There are a couple different ways to address this, namely reject carbon or add hydrogen. Historically carbon rejection was the preferred option as cat crackers, cokers, visbreakers and the like catalytically and thermally drive carbon to the solid phase thereby increasing the hydrogen to carbon ratio of the oil and breaking it down into gasoline, jet fuel and diesel size molecules. The resulting coke can be marketed for electricity generation, sent to a steel plant, or burned in the furnaces that provide the thermodynamic driving force for the exercise in the first place. The liquid fuel streams coming off these thermally driven devices are what chemists call very olefinic and need to have hydrogen added to formulate them into finished fuels in a unit that is simply called a hydrotreater. As opposed to carbon rejection, another way to increase the hydrogen to carbon ratio of crude oil is to add hydrogen in what is simply called a hydrocracker.

The second reason for hydrogen in a refinery is the most modern and that is to remove impurities, which are primarily sulfur atoms, but there can also be nitrogen atoms, even oxygen atoms and a few others. This second reason kind of began to take off in the 1970s as our society got wealthy enough to divert some of the embedded energy in these materials into removing heteroatoms in order that the hydrocarbons themselves may be burnt cleaner. Rightfully so in our opinion as previously all these bad actors just went right through the process and on out the tailpipe or the exhaust stack as the case may be. So, with this broad-brush summary we can say that hydrogen in a refinery is generally a good thing.

Where does a refinery get the aforementioned hydrogen? In another broad-brush summary there are two hydrogen producers in a refinery. The first and foremost is what folks call the catalytic reformer that takes heavy naphtha, which we approximate here as C7 thru C12 material, and using a catalyst and a furnace drives off hydrogen to make high octane aromatic molecules at the expense of some yield. The octane of naphtha is generally too low to formulate finished gasoline so the fact that the reformer makes high octane gasoline along with hydrogen as a byproduct is a nice touch. The astute reader may note that here we are driving hydrogen off the light end of the crude so that we may add it to the heavy end of the crude.

The second way to manufacture hydrogen is to take natural gas and water using a catalyst and another furnace to drive the carbon to carbon dioxide and the hydrogen to the molecular state. This is what folks call a steam methane reformer (SMR), or simply a hydrogen plant. It makes what today is derisively termed grey hydrogen as the aforementioned carbon dioxide is vented to the atmosphere in what some would term the embodiment of pure evil while others would simply call plant food. The U‑3400 hydrogen plant at the Tula refinery is an SMR that was originally installed in 1992. The Tula refinery has no catalytic reformer and as such depends on this SMR for all of its supplemental hydrogen needs. Therein lies the weak rational for the expropriation of the U-3400 hydrogen plant – it is critical to the manufacture of finished fuels at the Tula refinery and as such must be owned by PEMEX. Given this criticality, some may question why they elected to sell the thing in the first place.

The Carbon Curve | Thermocon | Data: EIA

It has been posited by many, and we would count ourselves among them, that crude oil is worthless until it gets to a refinery. However, that statement improves upon consideration as the market appears to have a more nuanced take. Liquid fuels are thermodynamically superior and that fact is reflected in the price they command in the marketplace relative to other fuels. We explored this theme in depth in our piece Carbon Is Good. There appears to have been a disturbance in The Force with respect to the increasing value of the liquid thermodynamic state in 2009. A plot of that results in what we have termed The Carbon Curve and it gives a good hint that the value of refining is not increasing commensurate with the overall value of liquid fuels in the marketplace. That begs the question of how does the market parse out the value of liquid fuels. Along those lines we plot the percent of Brent crude relative to a 2/3 gasoline and 1/3 diesel barrel using EIA monthly data from 1987 on the US Gulf Coast.

Median Percent Crude Oil Cost in Finished Fuels Since 1987 | Thermocon | Data: EIA

We find the result to be highly interesting. Unlike overall product prices there is not a whole lot of difference between before and after 2009 and if anything, the data indicates the relative value of refining has decreased since that time. In round numbers the market is placing a value of 4 to 7 times on the crude oil itself relative to the value of refining. So, what is this value of crude oil? Near as folks have figured it begins with the Earth synthesizing plant and animal life composed of largely oxygenated hydrocarbons from the carbon dioxide and water in the air and sea via photosynthesis.

Once these organisms die, they settle into the ground where they become subject to pressure, temperature and time in a giant hydrotreater that we call the Earth. A few million years here and a few million years there, most of the heteroatoms consisting of oxygen, nitrogen, sulfur, phosphorus, potassium, etc., have been driven off and we’re left with oil, gas and everything in between. So that’s all it takes really, pressure, temperature, and time…well…that and a big damn poster. Bad puns on great movie lines aside, it may be of value to level set the time involved.

A growing season on the Earth is about half a year, call it 250,000 minutes. Many of the organisms that are synthesized by photosynthesis actually form in a couple days or weeks, call it 2,500 to 25,000 minutes. This is what chemists call an endergonic reaction that requires the constant influx of energy in the form of sunlight to drive the reaction. Once the resulting organisms die, they then need to be “refined” in the giant hydrotreater we call the Earth and this takes place over the course of around about a million years or 500,000,000,000 minutes, also known as 500 billion minutes. Let’s contrast that with how methane is turned into synthetic crude oil in a gas to liquids plant and then refined into liquid fuels

We covered the Fischer Tropsch process in our piece titled A Pearl in The Desert. One thing we didn’t mention in that piece was time. When methane enters the front end of a gas to liquids plant it is first reformed into carbon monoxide and hydrogen, also known as synthesis gas. This typically takes less than a second. The synthesis gas then spends about a minute in a Fischer Tropsch reactor. That’s how long it takes to synthesize synthetic crude oil from the synthesis gas. It is a spontaneous exothermic reaction that essentially results in the partial oxidation of methane into synthetic crude oil, and in the jettisoning of 25% of the energy in the feed at a decidedly thermodynamically non-optimal temperature of around 500°F plus or minus. The resulting synthetic crude then spends about 5 minutes in a hydrotreater or hydrocracker of some sort, and is then separated into gasoline (mostly naphtha unfortunately), jet fuel, and diesel fractions.

The difference in time required is a factor of 500 to 500 million between how humans synthesize fuel in a gas to liquids plant and how the Earth does it. We should note that humans start with methane or coal which have already been through the synthesis and refining process courtesy of the Earth. So, whether looking at what we’ve termed The Carbon Curve or the percentage cost of crude oil in finished fuels, it is obvious that the real value is in the synthesis of larger hydrocarbons done by the Earth, the market seems to regard refining as more of a necessary evil.

Molecular Weight Based Cracks | Thermocon | Data: EIA

One way to tunnel in to this refining value is to plot what we’ve termed molecular weight-based cracks to inspect the difference between gasoline (C8), jet/kerosene (C12) and diesel (C16). Just by visual inspection of the plot, the lowest molecular weight molecule, gasoline, with on average eight (8) carbon atoms, has posted a distinctly lower crack than the other two. It may be useful to ask just how the crack premium of jet fuel and diesel has evolved over time. The relative value of the median monthly cracks has risen from roughly par in the 1990s to around six or ten bucks a barrel in the 2020s.

Median Relative Cracks Over Time | Thermocon | Data: EIA

The same question can be asked of the origin of the value of this relative crack as we previously asked about the crack spread in general, namely, is it coming from the refining or from the Earth’s synthesis of the molecules in the first place. To explore this, it is worth having a rough mental picture of how a refinery works. We have drawn up a schematic of a conceptual integrated refinery and chemical complex in order to assist with the visualization of how the different size hydrocarbon molecules that essentially power the entire human condition if you add coal and uranium, are produced. Full disclosure it is heavily patterned after the excellent material available online from Professor John Jechura at the Colorado School of Mines.

We’ve color coded the flows as brown being sulfur, red being natural gas, green being LPG, blue being gasoline, grey being jet fuel, orange being diesel and black being the heavier stuff, lubricants, asphalt, bunker fuel and finally coke. Oh, and we forgot one, namely the purple – if there is a steam cracker to send the ethane (C2), propane (C3) and butane (C4) to the entire commodity chemical complex flows from there provided some electricity is available to power an air separation unit (ASU) to make nitrogen (N2) and electrolysis of brine to make chlorine (Cl) and caustic soda (Na) which we broadly group under the purple moniker. We’d add that the fuels market dwarfs the chemical market so an important aspect of the integration is that any C3 and higher chemical products whose markets take a powder can fairly easily disappear into the fuels processing units.

Refinery Schematic | Source: Thermocon

One thing immediately jumps out from the schematic – making gasoline is a giant pain in the… The reason for this is the Earth doesn’t manufacture many high-octane molecules; therefore, they need to be manufactured by a refinery. Roughly speaking C4 materials go to the alkylation unit to make alkylate (C8), light naphtha (C5/C6) to isomerization units to make isomerate, heavy naphtha (C7/C12) to the catalytic reformer to make reformate, cat cracker gasoline to the gasoline hydrotreater to make olefinic gasoline and finally the gasoline range molecules off the hydrocracker that some call hydrocrackate. Add to that once octane requirements are met, some of the naphtha that was simply hydrotreated can be blended into the gasoline pool as what is called straight run naphtha. So, there you have it, all one needs for gasoline is straight run naphtha, isomerate, reformate, alkylate, olefinic gasoline, hydrocrackate and if its winter time go ahead and throw in a little butane for good measure. Counting them up, that’s a seven-component blend.

Contrast that with jet fuel and diesel refining. All that’s necessary for those fuels is to get the molecules to the correct size, and then hydrotreat them. Yet the relative crack for jet fuel and diesel is climbing. So, the fact that the refining of distillates is infinitely simpler than gasoline kind of tells us that the majority of the value is in the Earth’s synthesis of the molecules in the first place and lacking that, making them a little heavier so the cat cracker, the coker, or particularly the hydrocracker can resize them downward to jet and diesel.

Daily Molecular Weight Based Cracks 2026 | Thermocon | Data: EIA

Inspecting a plot of molecular weight-based cracks on the US Gulf Coast since January, it readily becomes apparent that given a free drop refineries generally want to make gasoline like a hole in the head, but as avid consumers of the fuel, count us as glad they do. That brings up a couple different conceptual approaches to operating a refinery. The first philosophy is to make whatever your refinery is configured to make at maximize throughput, market be damned, sweat the steel. Another philosophy is to make what the market wants without too much concern about maximizing throughput. If you’ve ever had the pleasure of seeing a couple experienced refinery hands arguing the various pros and cons of these two different philosophies you’d be surprised at just how nuanced the answer really is, if there is one.

Crack Percentage of Finished Fuels Since 2020 | Thermocon | Data: EIA

Lately crack spreads have blown out, so, have refiners learned how to run their businesses, or is there even a business to run in the first place; just keep everything running flat out and that’s that. We don’t know, but one thing we do know is that commodity markets bounce along some minimum level required to provide sufficient capital for operations and maintenance while occasionally bouncing up against a price that allocates scarce molecules. Using the daily data from the EIA since 2020, plotting the data and calculating some numbers, looks like around 20% of the market value of finished fuels is in the refining, essentially the same as it’s been forever. There was kind of a sweet spot in the data from April 2022 through September 2023 where refineries captured a full quarter of the value in finished fuels, and turns out when that happens refineries start getting nasty letters from the President.

Refinery Schematic of Hydrogen Loop | Source: Thermocon

Returning to the Tula refinery and the U-3400 hydrogen plant we publish a schematic above of a hydrogen loop of a modern refinery. There are hydrogen consumers galore and only two main sources, an SMR and the catalytic reformer. As the Tula refinery has no catalytic reformer, it’s SMR is indeed of paramount importance. So then perhaps luring in foreign talent and capital to get the thing in tip top shape and then rolling it Lucy with the football at the end is good business, who knows. If you’ve ever had the good fortune to be in a refinery, they are truly modern marvels. There are pipes and plants all over the place, it’s a miracle the things work. But work they do and they produce the lion’s share of the substances that allow humans to populate planet Earth to the extent we do without destroying it.

In return for performing this generally low margin, highly dangerous and at the same time life giving task refineries face all manner of badgering from locals and even on occasion those shipped in from far away. That said badgering and a nasty letter is a whole lot less bad than expropriation or even outright forced closure, which have become something of a tradition anywhere south of the Rio Grande, east of the Atlantic Ocean, or even east of Pittsburgh and west of the Pacific Ocean, or even west of the Arizona, Nevada, and Idaho borders. But hey, as we alluded to at the outset, refining ain’t for wusses.

“♡ Like” this piece to remain low entropy. – TC

Noted scientist, engineer, and thermodynamics champion Winston Churchill became First Lord of the Admiralty in October 1911. With Europe being on the brink of World War I it might be easy to imagine that he sensed a disturbance in the Force. With that insight he began to lobby that the vaunted British Navy turn from safe and secure Welsh coal to foreign oil as a fuel source. Many of his compatriots thought he had gone mad, and as such he faced huge resistance from the establishment, and who could blame them considering the vast increase in the quality and quantity of life that coal power had brought them. However, oil is a superior fuel, even when simply burned in a boiler. Historically, when the going got tough, the tough got to scooping, in particular scooping coal from further and further back in the hold up to where the boilers were. One could be alleviated of this mundane and potentially life-threatening laborious task for the small price of some atmospheric tankage and a low-pressure pump, provided there was oil to put in that tank. The logistics of oil fueled power provided a small energy edge in the larger energy game of war, and if wisely employed, that’s all it takes.

Low Entropy Energy | A Day at the Pub | Kings Road, Chelsea, London, 1967 | David Hurn | Magnum

Right at a thousand years earlier in 911, the Vikings, or Norsemen, as they came to be known conquered the area of Northern France that is to this day tagged with the moniker of Normandy. They compelled the Frankish king Charles III to sign the Treaty of St. Clair-sur-Epte, ceding said Normandy to the Norse. Their Viking ancestors had developed a technology to harness the primary energy in the wind via the sail and turn it into a defined force in a defined direction. As long as some wind was blowing, a boat with a keel would allow them to sail in any direction desired at a time and location of their choosing. It was another example of a small energy edge in the larger energy game of war, and if wisely employed, that’s all it takes.

About 150 years later, William of Normandy would cross the English Channel and defeat the English at the Battle of Hastings on October 14th, 1066. He would be crowned William I, King of England. Turns out the Vikings had settled down a bit and as such he would retain and incorporate the Anglo-Saxon Law that had taken a foothold on that Sceptered Isle. After another 150 years or so, King John of England had lost a hold on Normandy and in order to keep his head about him was forced to share more power with his nobles than he would have liked in the English lands he still controlled. They wrote it down and called it The Magna Carta. On June 15th, 1215, King John signed it into law. He died the following year in 1216 and his successor, Henry III, would preside over revisions to the document in 1216, 1217 and 1225. It is hard to overstate the importance of this particular development; it was the genesis of English Common Law. A partial indication of the astuteness of all this is illustrated by the fact that King Henry III enjoyed a long rule after sharing a little power at the start of it; he died, as King Henry III, 56 years later.

All that said, once the English had developed their revered sacred parchment, why didn’t freedom just effortlessly flow to the masses? After all, it was just a mere 434 years later that in 1649 the British noblemen won The British Civil War and the resulting Parliament executed King Charles I…the English had had enough of that Divine Right of Kings thing. They then had a brief dalliance with a Parliamentary led government implemented by the military under Oliver Cromwell. There were rigid social and religious laws created along Puritanical Protestant lines. Church attendance was compulsory. Upon Cromwell’s death in 1658 the English began to think that King thing wasn’t such a bad idea after all and invited King Charles II to return from exile…no more blaming everything on the Catholics. Charles II would serve as King with a significant haircut applied to his powers and by all accounts, all were more than happy with the bargain.

The question of the lack of mass freedom remains though and it turns out the answer is low entropy energy, or the lack thereof. The strength and freedom of a society flows from low entropy energy, and prior to 1712, the English simply hadn’t discovered enough of it yet, or how to properly implement it, but they would. They had been utilizing coal in a non-mass production manner for hundreds of years but in 1712, Newcomen introduced his steam engine. James Watt introduced his new and improved steam engine in 1769. Less well-known English inventor and mining engineer Richard Trevithick produced the first successful pressurized steam engine in 1800. Then it was off to the races, the full power of what we’ll call Her Majesty’s Three Laws of Societal Success had been unleashed.

HMSS Law 1 – Adopt High Quality, Low Entropy Energy Sources

HMSS Law 2 – Implement a System Based on English Common Law

HMSS Law 3 – Embrace the Resulting Freedom

The main takeaway of this piece is that this evolution is path dependent. These things have to be done in that order. English Common Law has an outstanding intellectual footing, but it’s nothing without low entropy energy. It’s worth repeating – all the intelligence in the world (Law Two) and adroitness (Law Three) are nothing without low entropy energy (Law One); it’s absence will relegate us all to being very intelligent and adroit inhabitants of our caves.

It’s Low Entropy Energy, Then High-Mindedness| Source: Our World In Data

A plot of human energy consumption by source over time thoroughly illustrates this principle. Around the year 700, the Vikings invented the keel that allowed them to take the primary energy in wind and turn it into a defined force in a defined direction at a time and location of their choosing. While this was insufficient power to unleash modern freedoms, it was sufficient to allow them to drastically expand their foreign policy to influence the domestic policy of those less possessing of such dispatchable kilowatt hours.

In 1215 the sacred parchment that was and is the Magna Carta came to fruition, and despite its brilliance as a key origin of English Common Law, it was still not sufficient to unleash widespread human freedom. It would take low entropy energy in the form of coal, and a machine to force that energy through a thermodynamic cycle to yield dispatchable power out the other side. Once that genesis met with English Common Law, then freedom began to spread around the world, and despite our enjoyment of having a little fun at the expense of the British from time to time, we must acknowledge that they showed the rest of us the way.

One way to get a good appreciation for the value of English Common Law is to spend a good amount of time in the great state of Louisiana. Louisiana is different. They certainly have implemented a sound energy system based on high quality, low entropy energy so that can’t account for the difference. Upon further consideration, in contrast to the other 49 states, the legal traditions in Louisiana fall from Napoleonic Law, and we will maintain that this is more than just a cosmetic difference. There, the only one who can fire the Sheriff is the Coroner…go figure. In our opinion, all else being equal the de-centralized bottom-up foundation of English Common Law trumps the Franco-German legal tradition on the European Continent that places more value on leadership from the center.

Unfortunately, the British have now lost their way. They have forgotten HMSS Law 1; adopt high quality, low entropy energy sources. Below is a great graphic illustrating what power sources have been present on the UK grid for the past year. Some would celebrate this as the British learning to live in harmony with Mother Nature as 41.2% of the generation has been from wind turbines and solar panels. Nothing could be further from the truth, Net Zero is destroying Britain.

It’s actually not the primary energy in wind and sunshine that shows up on this graph. It’s the Chinese coal that was used to manufacture these things hamstrung with the inherent high entropy of sunshine and wind, as well as the concomitant intermittency (an even greater source of entropy) that has been allowed to connect to a perfectly functional, low entropy grid. The 41.2% of so-called renewable energy is parasitic on the 58.8% of dispatchable energy. That fact is hiding in plain sight as Britain is, or at least was, wealthy enough so as not to be able to tell the difference. It’s hard to understand as it’s the second law of thermodynamics, but we stepped through this in detail in our piece Energy’s Ladder. That has proved to be our least popular piece, not that we have produced a popular piece to this point, but again we digress.

Net Zero is Destroying Britain | UK Grid Electricity Balance Past Year| Source: grid.iamkate.com

We will posit that countries that want to pursue Net Zero need to do so on their own. They need to endure the pain that higher entropy energy brings as opposed to transferring that pain to others via the grid. Norway, Sweden and Finland appear to have wised up to the folly that is so-called green energy. Continental Europe, much less so. Like dealing with someone who panics when scuba diving or swimming, the only solution is to swim down and away. Net Zero is destroying Britain and Western Europe. We need to make an exception in the case of Britain and try to bring them back into the fold; but we need to let the folks on the Continent go. We say that with some regret as a good deal of our lineage originates from that Continent long ago, but the rest being the British Isles and Scandinavia so it is what it is. There is a phenomenon that has played out countless times on that vast European plain and venerable thespian Darth Vader did some seminal work on that subject when offering the advice, “if you will not fight, then you will die.”

Less Is More | Renewables Electricity Grid Penetration| Source: 2025 SRWE

One way to identify folks who are slowly destroying themselves via a suboptimal understanding of thermodynamics is to plot so-called green electricity as a percent of the electricity grid for the past year. If we have done the math right, that plot is shown above using the data from the 2025 Statistical Review of World Energy. It is apparent how high Britain is on this graph and the sad part is that it is all for naught. There’s nothing green about wind, and especially solar, and to add insult to injury, there’s no energy in them either. It is impossible to overstate the value of the low entropy energy in dispatchable flowing electricity. Those to the left of this graph are slowly destroying one of the single greatest freedom generating devices of all time, an always on, affordable electricity grid. English Common Law is not powerful enough to overcome it, nothing is.

There was another aspect of the British Empire that may bear particular fruit when considering at this juncture, and that was how they chose to wield the power originating in their preemptive mastery of the energy system. A couple of those poignant traits were their ability to win magnanimously and to selectively forgo vengeance. In 1947 the inhabitants of the Indian subcontinent were able to successfully run off the British. Did it result in a Shangri La for all involved? No, without the common enemy in the British, the Indians and Pakistanis looked around at each other, remembered why they hated one another, and began killing each other en masse. In summary, it only changed who got killed.

We were unable to come up with a fourth societal law to describe this characteristic of the British Empire, and laws typically seem to come best in threes, but consideration of it does bear some merit. Before existing management took over, Port of Aden, Yemen was known as the Pearl of the Arabian Sea. The locals ran off the British in 1967. Has it been a Shangri La since? No, quite the contrary, it turned into a free for all that persists to this day; it only changed who got killed.

On New Year’s Eve, 1958 old fashioned strongman Fulgencio Batista fled Cuba leaving the island to a bunch of revolutionaries led by Fidel Castro. Batista’s government had been particularly brutal in suppressing all forms of dissent. In a pattern that was poised to repeat, the traditional western media fell for it hook, line and sinker writing stories of Castro’s tolerance and all that. However, nothing could have been further from the truth. Upon his ascent to power, Cuba began a purge to cleanse the ranks of the enemies of the revolution. That purge continues to this day. It has been 67 years. We would venture to say Castro’s PR has no peer when it comes to brutal dictators, but the fact of the matter is Castro’s regime has been no less brutal than the one it replaced. Previously, Havana had been known as the Pearl of the Antilles, and had a party scene rumored to make Las Vegas looks like a Chuckie Cheese’s. To sum up the whole exercise; it only changed who got killed.

As another illustration, on February 11th, 1979 the Iranian secret police informed the Shah of Iran that the riots in the streets were getting out of control and the only way to suppress them would be to unleash machine guns on the populace. The Shah was a brutal dictator, ruling with all the characteristics of that moniker, but at least he drew the line at mowing down protesters in the streets with machine guns. The Shah abdicated. Upon his exit, the Ayatollah Khomeini returned triumphantly from his exile in France amidst reports from western media of his tolerance and all that. He immediately installed a cleric led government that began a purge of the enemies of the revolution. That purge continues to this day. It has been 47 years. On New Year’s Eve 2025, protests in the streets of Iran once again got out of control to the extent that the only way to suppress them was to unleash machine guns on the populace. This time around the religious based rulers of Iran had no qualms about mowing down protesters with machine guns. Once again, despite lofty talk of Shangri Lai, it only changed who got killed.

There are countless examples of the above phenomenon littered throughout human history. We’d note what we believe to be another observable fact; that if a human sees, or seeks out, too much evidence of man’s inhumanity to man, one morning they wake up and look in the mirror and there stands the monster. Therefore, we close with the Iranian example as it is particularly poignant to the concepts laid down above. By any measure Iran has top five energy assets per capita in the World, yet they remain poor. If you’ve had the good fortune of meeting technically educated Iranian expatriates here, two things stand out, namely that they are as competent as the day is long and when it comes to chemistry the girls might be smarter than the boys. It illustrates that even with high quality energy (Law One) and adroitness (Law Three) an incorrect system of Law can ruin the whole damn thing. So, ring one up for the British as they showed the rest of us the way. They certainly weren’t perfect and was Churchill a jerk? Sure. But so was Ghandi, Johnson, Nixon, etc. They all did good things as well, but when you play the game at that level…it only changes who gets killed.

High Entropy Energy | Different Water Carrying Methods | Mersham-le-Hatch near Ashford, Kent, 1960 | Source: Getty

On March 18^th, 2026 Iran bombed Qatar’s Ras Laffan Industrial City. Part of the damage sustained on that day was damage to Train 1 of Shell’s Pearl Gas to Liquids (GTL) plant. The plant consists of two trains producing 70,000 barrels per day each of some of the finest hydrocarbons on the planet. Of those 140,000 barrels per day, 30,000 barrels are the synthetic lubricant base stocks manufactured on site, also first in class. To say that a 30,000 barrel per day synthetic lubricant plant is a large unit is to make a Promethean understatement. Originally Shell had planned on the unit being 9,000 barrels per day and its expansion is often sited as a part of the reason the capital expenditure of Shell Pearl GTL went $13 billion over the original budget. Manufacturing lubricant molecules from synthesized Fischer-Tropsch wax is not for the faint of heart, but once done, it yields what can only be said to be superior fluids. Finished synthetic lubricants containing these base stocks synthesized half way around the world in the State of Qatar are available at your local auto parts store anywhere in this country; at least for the time being. We profiled the Shell Pearl GTL plant as part of our yarn around the siren’s song that is the Fischer-Tropsch process in our piece A Pearl In The Desert. https://thermocon.substack.com/p/a-pearl-in-the-desert

From Qatar to a Shelf Near You | Synthetic Lubricant Made With Natural Gas | Thermocon

Lubricants serve a distinctly different purpose than the other hydrocarbons previously featured in this substack. Other than the small amount that is burned in internal combustion engines as a natural part of the lubrication process, lubricants are not burned to produce high grade heat as is the case with gasoline, jet fuel, and diesel. Instead, they are part of a class of hydrocarbons that have crossed over from the world of heat into the world of stuff. Like so many other things, lubricants are essential to modern life on this planet. They are also expensive. There has been and continues to be a large economic driving force to minimize the amount of lubricant required per unit of economic output. As a way to wrap some intuition around where lubricants fall on what we have termed “The Carbon Curve,” we re-publish a graphic below with lubricants added. Lubricants fall between diesel and bunker fuel on the carbon count coming in around twenty (20) to fifty-five (55) carbon atoms per molecule and their pricing is beyond the pale relative to fuels.

The Carbon Curve | Where Lubricants Fall| Source: EIA, Thermocon

In a very much similar fashion to emissions, engines have continued to consume less and less lubricant over time. For those who remember when Detroit Diesel 2-stroke engines were commonplace, the old joke went that Detroit Diesel also made a very fine belt buckle, but folks had to get rid of them because the damn things kept leaking oil on their jeans. Cars and trucks that used a quart of oil every 1,000 miles were once commonplace; checking the oil at every fuel stop was mandatory lest ye burn up an engine. Today’s vehicles don’t even use a quart of oil every 10,000 miles. It is yet another small example of the modern marvel that is the Western World we live in.

So, why make such a big deal about 30,000 barrels per day of synthetic lubricant capacity going offline half way around the world? After all, the world currently processes roughly a hundred million barrels per day of crude oil all told, and given a free drop would like to add a million barrels per day to that total every year. The answer is because it is a significant fraction of the overall lubricant market and a ginormous fraction of the synthetic lubricant market. In order to level set the number, consider the lubricant base stock refining capacity in the United States.

US Lubricant Base Stock Plant Production | Source: EIA, Thermocon

These plants total somewhere in the neighborhood of 260,000 barrels per day. Historically, lubricant base oil plants depended on a crude oil that contained lubricant molecules. Like the oil they were a part of, they had been synthesized by Mother Nature over millions of years, and that synthesis process just happened to produce hydrocarbons that fell in the range of twenty (20) to fifty-five (55) carbons with a structure commensurate to that of a lubricant. These crudes were and are known as a “lube crudes.” Many of some of the best lube crudes were and still are found in the oil fields of Pennsylvania and that historical geography has persisted with us in lubricant brand names to this day.

The Quaker State | Home To Many A Lube Crude | Source: Thermocon

That all changed in 1993 when Chevron commissioned their 14,000 barrel per day Richmond Lubricant Oil Plant (abbreviated RLOP and pronounced “are-lop”) based on the ISODEWAXING™ lubricant manufacturing process they invented in the 70s and 80s. It did a few key things, namely allowing essentially all crudes to become “lube crudes” by hydrotreating a vacuum gas oil stream to turn all the molecules in that molecular weight range into lubricant molecules. It also made them pretty well entirely composed of iso-paraffinic molecules which are generally superior molecules when it comes to engine lubrication. It also drastically reduced the sulfur level, sulfur being a catalyst poison so there has been a push within industry to lower the sulfur, and as an aside, phosphorous content of engine oils to protect catalytic converters from chemical poisoning…if only there were some way to poison the thieves that steal these things…but we digress.

The process has been a resounding success, Chevron RLOP stocks are now produced to the tune of 34,000 barrels per day and the process has been licensed and implemented by others. Two of those others are Motiva in Port Arthur, TX at 39,000 barrels per day and Excel-Paralubes in Lake Charles, LA at 30,000 barrels per day. In 2013 Chevron brought online a 25,000 barrel per day version at their Pascagoula, MS refinery suitably known by the Pascagoula Lube Oil Plant (PLOP) moniker. The orange bars in the graphic represent lube oil plants based on this newer technology and it can be seen that they’re about half the lubricant production in this country, to say nothing of the plants built by our friends North of the border.

At this point, one may justifiably ask the question why the deep dive into these lubricant molecules of all things? The main reason is the markets loss of Shell Pearl GTL’s 30,000 barrels per day of synthetic Group III lubricant base stocks increases the likelihood that Chevron will tough it out a little bit longer with their Richmond, CA refinery. The ISODEWAXING™ process can be pushed a little harder to produce even higher quality Group III lubricant base stocks at the expense of some yield. They won’t exactly match the properties of the Pearl stocks as they are not synthesized from single carbon atoms into a lower entropy, higher molecular weight structure, but refined from what is already a high molecular weight fairly low entropy molecule to begin with. That said modern society will need to stay lubricated and as with everything at some point perfect is the enemy of good enough.

This brings up a predictive signpost, namely if reports start surfacing about Chevron increasing the capacity of their Pascagoula (PLOP) stocks or planning construction of a lubricant base oil plant at their Pasadena, TX or Salt Lake City, UT refineries, that is a good indication that the Richmond refinery is headed with an appointment to be turned into a fuel and lubricant terminal. We should note that there is one unique thing about the Excel-Paralubes base stock plant referenced in this piece. It is not part of a refinery and the process does not start with an atmospheric distillation tower. Instead, the plant is fed with vacuum gas oil from the Phillips 66 refinery next door. That brings up another option, Chevron could shut down the Richmond, CA refinery and then arrange to ship in or somehow obtain a vacuum gas oil feed for the lube oil plant. That is generally something about as appetizing as a root canal, but hey, crazy things happen in that state.

Refinery and Lubricant Manufacturing Capacity in the United States | Data: EIA

While we’re on the subject of lubricants, in our piece a Pearl in the Desert we referenced global lubricant capacity as being roughly half a percent (0.5%) of the overall barrel. In researching this piece, we have found that to be a little light. The market is probably a little closer to, but still under, one percent of the overall barrel, still waiving a finger in the air a bit here, but a better number is something like 800,000 barrels per day worldwide. Plotting the US refinery and lubricant capacity together on the above plot, it is looking like lubricants are holding tight at a little over one percent of the barrel. Making lubricants is not easy, and we know for a fact that engines today are infinitely drier than they were in 1982 when this data starts. Therefore, we suspect that a good deal of this product is made for export to countries not so adroit at manufacturing lubricants. All else being equal we would expect the percentage of lubricant used in the US economy to be 0.5% or even lower, and today’s lubricants are modern marvels that can handle oil change intervals of 10,000 miles or better with relative ease. All that said, if you like to “Cadillac” your maintenance program and run synthetic oil in your car or truck, might not be a bad time to get an oil change.

“♡ Like” this piece to remain low entropy. – TC

On January 14^th, 2026 BP announced it was taking up to a $5 billion write-down on it’s low-carbon energy business. That’s because there may be no such thing as a low carbon energy business, but we digress. Near as we can figure, there are only four ways to produce net motive power on this planet, or what we’ve taken to calling dispatchable applied energy. Those four are burning hydrocarbons, nuclear fission, water behind a dam, and select geothermal around the globe in places such as Iceland, New Zealand and California. The trouble is it takes diesel fuel to build the last three, so some would argue it’s all carbon. Burn stuff and build stuff, such is the mantra of the human condition.

Twenty days later, on February 3^rd, 2026 a group of climate activist investors representing 0.42% of BP’s outstanding shares demanded BP demonstrate that it’s pivot back to investments in oil and gas will generate sufficient returns. Not to be outdone, a mere 16 days after that on February 19^th, 2026 climate activists in Paris sued the French supermajor Total demanding they end oil and gas exploration. As they say in the American South…are these folks touched?

We’ve stepped through the concept many times; the way the energy game works is one must find a low entropy energy source that can be driven to a high entropy by a machine to produce motive power, or applied energy. That applied energy can then be used to manufacture the machine in the first place and gather the fuel required, leaving the remainder of the applied energy, at a time and location of our choosing, to drive the entropy of our local environment to a lower value. This is also known as not having to run around in your skivvies’ hunting rabbits and picking berries, or simply enjoying a higher standard of living.

Many others have stated that the exchange of money is in fact an overlay for the exchange of energy, what we have taken it to mean the exchange of dispatchable applied energy, or motive power. More specifically, it is the ability to wield a force in a defined direction through a distance at a time and location of one’s choosing. This manifests itself as the real time goods and services of the economy and it is stored as the embedded capital stack of society. It is an observable fact that so-called renewable energy as represented by wind turbines and especially solar panels cannot exist without a subsidy. If this surmising is correct, then certain deductions fall from that which we expressed as follows in our piece The Sun Also Sets:

In the case that money has a thermodynamic character, we strongly suspect that anything from primary energy on through to dispatchable power cannot be subsidized as they are the basis of literally everything else. It also means that any energy business based on solar panels or wind turbines will by definition end up in bankruptcy. Their entropy is too high, so they consume applied energy, and if money is really applied energy, they simply consume it until it’s gone.

Thermodynamics, let alone thermoeconomics, is a field that takes years to master. In particular the concepts of the applied energy embedded in the existing capital stack of society as well as the dispatchable applied energy required to beat back the relentless forces of entropy. With luck there is some dispatchable applied energy left over to expand and improve the existing capital stack. All that said, these concepts are available to anyone who would like to put in the work, one need not be a degreed scientist or engineer. As an example, Robert Bryce is a journalist who has figured this out, and on his January 31, 2022 episode of the Power Hungry Podcast he interviewed John Constable, a philosopher from Cambridge who later in life caught the thermodynamics bug. When questioned by Bryce about economists not appreciating the physics of spent capital he replied as follows, edited slightly for obvious errors in the transcription algorithm:

…And what is wealth? Well, it’s an improbable state of matter, in relation to a human requirement. How do you achieve improbability...through energy. So, everything, all wealth states are created by energy. And everything in the room behind you is a highly improbable object, same in my room, so in our economy it is exactly the same. And much of that was created in the deep past. So, we’re still benefiting from energy conversions, creating improbable states of matter, going back 1000s of years. And you can give very strange and curious examples of this to show just how much it matters. Dutch cities are built on piles driven into the mud in the 15th and 16th centuries. There are roads in Britain running over very wetland areas, which are still held up and supported by bales of wool put down in the medieval period. Our whole economies rest on all the energy conversions that we’ve accumulated over our economic history. And of course, we replace, and we renovate on the hoof all the time. So, the instantaneous energy conversion in the economy, which is roughly about five to ten percent of the cost of any one year, is only part of the story. The whole economy is energy over time. So, you have to be very careful what you do with your energy supply. It’s not something that is trivial, even economists sometimes say it’s only five or so percent of the economy, we can get away with an increase in cost, you can’t, because what you’re doing is storing up trouble for the future. So, I wonder whether economies that have been heavily committed to renewables will have increased their costs and in creating capital, high-cost energy, will start to see signs of increasing costs that they can’t completely understand or explain. Germany, for example; has the German economy been poisoned by all these years of renewable energy? Well, we shall see. I want us to stop as soon as we can in the UK. And to get us back on to an economically sustainable path. Because we’re heading into a situation right now where we may not be able to maintain our position. We’re very far from thermodynamic equilibrium, and we don’t want to slip back, and slipping back may be hard to arrest. Once you start moving back, you may find it very hard to stop it slipping further and further back.

As a follow on, Bryce questioned Constable about energy being worthless unless we can make it flow. The question alone is worthy of note; therein lies the second law of thermodynamics as well as a few other practical matters. Constable gave the following response, again edited slightly for obvious errors in the transcription algorithm:

So, oil is a substance, it happens to have very high-grade energy properties, it can cause change, it’s the ability to cause change. And there is great potential for change in oil and coal, and in gas. There’s much less potential in solar and wind, they’re much closer to random heat. In fact, they’re nearly useless. So you think of it like this, you think of the wind and the sun coming into the solar panel or the wind turbine, and then you think of the electricity being supplied to the consumer, you’ve got something very random, on the one hand, the wind and the sun, you’ve got something highly ordered, very, very useful, as you say, coming out of the socket. Well, obviously, something’s happened in between, to convert the high entropy to the low entropy of the service, what’s actually happening is that a lot of correction is taking place. It’s taking place through the wind turbines and the solar panels themselves. It’s taking place through the system management of the electricity grid operator, and then it’s given to the consumer to make use of so there’s a big flow of negative entropy going in there to rectify the defects of the solar and wind input. Question is, and I think the answer is no, can wind and solar correct itself; oil and coal and gas and nuclear are all such high-grade sources that they can provide and pay for their own channel to carry themselves to the consumer. Wind can’t do this, and the sun can’t do this. Their entropy is too high. They require correction from another source of precedent. They’re parasitic on the wealth created by high grade fuels such as coal and gas and nuclear and oil indeed.

These responses to a journalist probing the subtleties of energy states and flows by a philosopher are astounding. They are spot on and really worth a listen; the questioning, the prose, and the presentation are simply outstanding. The punchline is that the principles of thermodynamics and thermoeconomics are yours by right as much as anyone’s. One need not have a BS, we all know what that stands for, or an MS, also known as More of the Same, or a PhD, also known as Piled Higher and Deeper. To our knowledge neither Bryce nor Constable has any formal education on the subject. They sought all this knowledge out on their own and in our opinion, they get it. Full disclosure we here at Thermocon carry some of the aforementioned academic monikers and believe the US higher education system to be exceptional, but as of late they have been derelict in their teaching of, and at this point we suspect even their basic comprehension of, the second law of thermodynamics.

To add insult to injury, we’re actually a little concerned that even those in the oil and gas business, including the supermajors, may have lost or never acquired a proper understanding of the second law of thermodynamics. BP doesn’t need to be “Beyond Petroleum” when they can just go back to being British Petroleum. The operational history of BP can rightfully be questioned, but one thing never should be and that is their ability to find oil. Even among the technological powerhouses that are the modern supermajors, in our opinion BP’s ability to find oil has historically stood out. We will posit that the main problem at BP is that they are simply too close, mindset wise, to the European continent. We believe a plot of a decade’s worth of oil and gas production, in barrels of oil equivalent per day, thoroughly displays the issue.

A Decade of Production | The Nine Sisters | Source: Company Annual Reports

In an ode to Enrico Mattei’s coining of the term the “Seven Sisters” in the 1950s we add Eni to the plot of the largest public oil & gas producing companies in the world and title it the “Nine Sisters.” No need to rail against a club you’re not in, if all a sudden, turns out you’re in it, albeit bringing up the rear. As near as we can figure, these are the nine largest non-state-owned oil and gas producing companies in the world and as can be seen from the plot, despite our poking a little fun at Eni, they are doing just fine, but there is something wrong with BP and to a lesser extent Shell. Their energy production is shrinking. A portion of this is by design as they’ve been attempting to accommodate an investor class that is visiting increased entropy upon them by pushing them into renewable investments which are thermoeconomically and thus monetarily cannibalistic from the git-go.

This plot can literally be viewed as a surrogate for the life force available to humans on this planet. So, who’s adding life force? Inspecting the plot, looks like Exxon, Chevron, Petrobras, ConocoPhillips, and the aforementioned Eni. With the exception of the Italians, these companies that are growing production are all based in the Americas. Let’s extend a little credit to the Norwegians (Equinor) and the French (Total) for having held production steady over the last decade in the face of all manner of badgering to act in a thermodynamically non-optimal manner. Especially Total, sitting right there in the heart of it. We enjoy having a little fun at the expense of the French as much as anyone, but ring one up for them here and harken back to two of the greatest calls of all time. In the 1960s and 1970s, the French decided to build a boatload of nuclear and they got the hell out of Vietnam…absolutely…legendary…calls. While we’re at it, ring one up for BP, they are back to doing what they do best as evidenced by their recent Bumerangue discovery, and it’s a monster.

Bumerangue Discovery Offshore Brazil | Source: BP 4Q and FY 2025 Presentation

Like it or not, and it mostly appears to be not, oil and gas are the greatest environmental tools we have at our disposal on this planet; especially oil, there is nothing like it…except nuclear fission, which blows everything out of the water…but we digress. Along those lines, it appears to us that the continent of Europe is hell bent on heading down the energy path of no return. They will destroy the Earth. We propose to let them destroy their part of the Earth by paving it over with solar panels and dotting it with wind turbines and then wondering why all a sudden they’re burning more coal. Let them rediscover the principles of thermodynamics of their own volition; irony of ironies literally right over top of the same ground where those principles were discovered in the first place. The amount of blood and treasure we have spilled on that continent will have gone for naught, but it need not be an entire waste. There are three supermajors who would be much better off being domiciled here in the United States; BP, Shell and Total. The other two, Exxon and Chevron, are already here, and we just as well have all five.

It is hard to overstate what a crying shame this situation has devolved into. Western Europe has been at the forefront of so many progressive goods with respect to the treatment of women and all manner of different creeds and colors. Furthermore, from the cathedrals to the castles and stunningly beautiful countryside, continuing on through to the legal traditions, intellectual achievements and of course Irish beer, Scottish whiskey, and the wines of Italy and France; can we get Lee Greenwood to do a God Bless Western Europe song before it all goes to s**t?

What they’re going to find out is that at the base of it all was and is high quality, low entropy energy and without that modern society is not politically stable. Returning to a time when the land and the accompanying sunshine and wind were the energy system, there won’t be enough applied energy for the existing population. In an effort to stay alive, the remaining humans will cannibalize the existing capital stack until that too is gone along with them. All for some far off, ill-defined Utopia that is actually a hell-hole. But hey, at least we got some great music out of it. To shamelessly quote Tho Who in 1982; eminence front…it’s a put-on.

On a Windy Day No Less | High Entropy and Self Explanatory | Source: Thermocon | We Don’t Own Any BP Shares Just Yet

“♡ Like” this piece to remain low entropy. – TC

On November 1st, 1478, The Holy Office of the Inquisition was established by King Ferdinand II of Aragon and Queen Isabella I of Castile. It was light on Holy and long on Inquisition and was finally disbanded a mere 345 years later on July 15th, 1834, after killing a whole bunch of people. The fundamental idea behind this was fighting off heresy, which meant someone just had a fundamental difference of belief that would lead to their eternal damnation, so by torturing them you were almost doing them a favor. If they died in the process, it just went to show they were a lost cause.

Not to be outdone, the English outlawed witchcraft in 1541, punishable by death of course, and then proceeded to dust a few folks before wizening up in 1735, a mere 194 years later. King Henry VIII had broke with The Vatican to create The Church of England in 1534 in order to get his marriage to Catherine of Aragon annulled, so no more blaming everything on the Catholics, Jimmy Jones anyone? The English prohibition on witchcraft may have had a little more nuance in that the perpetrators had a fundamental difference of belief that was in theory being wielded as a weapon; thus, preemptively dusting them ahead of time was a wise and prudent act of self-defense. Not to be outdone, The Salem Witch Trials of 1692 – 1693 in the States proved we were no better in avoiding this mental disease. Thankfully now we are so intellectually chiseled and mentally adroit that we have dispensed with these seductive theories of moral rectitude that at their core are really about killing people, or at least hurting them a good bit. Sit tight grasshopper, being told this may not be the case.

This Is Nuts | Evidently We Missed the Party | Holiday Inn Parking Lot | Source: Thermocon

In 2004, Micheal Crichton published a book titled State of Fear. In it he wrapped a story around the possibility that those who portrayed global warming due to the increased concentration of carbon dioxide in the atmosphere as an existential threat to humanity may have been seduced by the latest creation of the human mind that involved hurting people to help them. In the epilogue of that great book, he provided two examples, one of which was Lysenkoism. Lysenkoism involved the rejection of the rapidly developing field of genetics in favor of a communal model of agricultural genetics that appealed to the feelings of the powers that be. He gained enormous power and thousands of competent scientists who simply disagreed with him were executed for said disagreement. History would show that the competent scientists who simply disagreed were in fact correct, and in theory should have been celebrated by a governmental system that prided itself on the rejection of religion and following the science. The result; millions died of starvation. The other example was eugenics, and for a reminder of how that went over we point you to the Nuremburg Trials.

By the 2004 publication of State of Fear, the reduction of emissions from humans burning fossil fuels had been truly astounding. The air quality of crowded and prosperous US cities had improved by a couple orders of magnitude, maybe more. Well prior to that, in 1967, none other than California Governor and noted eco-warrior Ronald Reagan signed the Mulford-Carrel Act creating the much-maligned California Air Resources Board. Famous physicist Dick Feynman moved to Caltech in 1950 to partake in the superb physics program there as well enjoy the absolutely wonderful Southern California weather. He would later call Hans Bethe back at Cornell to ask for his old job back, despite the feet of snow in the winter. The air in Los Angeles was that bad. However, in the interim we as a society rightfully peeled off some of our applied energy budget to reduce the emissions of the combustion process. If one compares the emissions of a 1964 vehicle to a 2004 vehicle there was and is simply no comparison. The emissions of a 2004 vehicle rounded, and still round, to zero relative to those of a vehicle produced in 1964, with two exceptions. Those exceptions are carbon dioxide and water.

Hydrocarbons are made of hydrogen and carbon and when burned in an ideal world they produce only water, carbon dioxide and life-giving applied energy. The Earth is covered in 70% water. The atmosphere ranges from 0 to 20,000 parts per million (ppm) water depending on where you’re at and when you’re there. Water is a liquid, solid, or gas at atmospheric conditions and thus any increase in the water content of the environment caused by humans burning hydrocarbons can easily be masked by its collapse into the liquid or solid state. Carbon dioxide however is quite different, it is a gas at all atmospheric conditions on Earth, and in stark contrast to water, the amount of anthropogenic carbon dioxide emissions from humans can be measured. Turns out it’s from around 280 ppm roughly 250 years ago to around 430 ppm today. This 150 ppm increase in carbon dioxide concentration in the atmosphere has caused all kinds of consternation.

Many have posited that it has lately become in vogue to call carbon dioxide an emission largely because its increase in the atmosphere can be measured, and we would agree. The old joke about the drunk looking for his keys comes to mind – even though he had dropped them a half a block back, he was looking under a street lamp because the light was better there. We thought we had become so intellectually adroit as a species that we were no longer subject to such weaknesses of the mind…guess not.

Water, carbon dioxide and sunlight form the basis of all life on Earth, but evidently now carbon dioxide is the embodiment of pure evil. Therefore, we must avidly pursue the high entropy primary energy sources of our forebearers with wild abandon and no thoughts of the consequences. The consequences are enormous unfortunately; we have already forced the entropy of our modern world below that which can be provided by so called renewables. Their entropy is simply too high.

There are two aspects to this high entropy that leaves wind and solar unable to power the modern world, or indeed any world in the case of a solar panel we suspect. The first is the high entropy of the primary energy source itself. In order to transform any primary energy source into something useful a machine is required to push that primary energy through a thermodynamic cycle to yield useful energy out the other side, what we have called applied energy. Some of that applied energy is then required to manufacture the machine in the first place, as well as gather the fuel, provided said fuel is not “free.”

This Is Nuts II | Subsidies | Source: EIA, Congressional Research Service Reports and The Statistical Review of World Energy (2025)

If money is just an overlay for the exchange of applied energy, then the subsidy in dollars per megawatt-hour (MW-hr) is a measure of any excessively high entropy. To that end, we are republishing a graphic from our piece – Saving the Atmosphere…By Destroying the Earth. It was the culmination of a series of pieces that involved the delineation of subsidy levels for various primary energy sources. We started with For Whom the Wind Blows where we estimated wind subsidies at around $11 per MW-hr. In The Sun Also Sets we estimated solar subsidies at $34 per MW-hr. Following that in Sins of Our Fathers we estimated fossil fuel subsidies at around $0.52 per MW-hr, even after using a higher heat rate of 10 million BTU per MW-hr. As a way to level set the data, the average wholesale power price was $50 per MW-hr over roughly the same period. The average cost of natural gas was $27 per MW-hr at a heat rate of 7 million BTU per MW-hr leaving an average spark spread of $13 per MW-hr. Wind and solar are being spotted one to three times the gross margin from cogeneration using natural gas.

The second aspect of the high entropy of wind and solar is the fact that they are intermittent. An interesting question to ask is how does this source of high entropy compare with that just discussed, namely the fact that they are much too close to random heat to be of much use. In order to get an estimate of that we need to find an instance where a perfectly functional low entropy grid was attached to a high entropy grid. One such case is in the southern Norwegian power market NO2 where two electrical interconnects to the tune of 1.4 gigawatts each were installed in 2021, one with the UK and the other with Germany. A graph of power prices in Norway demonstrates the increased entropy, also known simply as pain and suffering, the British and Germans were able to visit upon the Norwegians in their quest to reach a Shangri Lai powered by wind and solar.

Day Ahead Electricity Prices in the South of Norway | Disturbance in The Fource Circa 2021 | Source: Nordpool via Watt-Logic

In order to level set the data we provide another graph which shows the yearly average of differences in power prices between the southern tip of Norway (NO2) and the northern part of Norway (NO4). The northern part of Norway is above the Arctic Circle, even shares a border with Russia. It’s a part of the world where the energy system cannot be trifled with, the penalty for choosing poorly is freezing to death in the winter. The graphs above and below are available on the great Watt-Logic website, we added the callout and did a little formatting, but the core data was left unchanged.

This Is Nuts III | Got An Extra Fifty Bucks Per Megawatt Hour? | Source: Nordpool via Watt-Logic

Visually inspecting the graph, the median increase in electricity prices caused by attaching to and absorbing the increase in entropy from connecting to the UK and German grids can be estimated at $50 per MW-hr. We maintain this is a thermodynamic measure of the second aspect of increased entropy brought about by the adoption of so-called renewables; intermittency. This contrasts with the previously estimated $11 per MW-hr for wind and $34 per MW-hr for solar that originate in the high entropy nature of the fuels themselves, irrespective of intermittency. It is interesting to note that the two are roughly the same magnitude, although the effect of intermittency is materially greater by the measures we’ve laid down here.

Totaling things up, we arrive at a combined subsidy of $61 per MW-hr for wind and $84 per MW-hr for solar in contrast to the $0.52 per MW-hr for fossil fuels. As the numbers for wind and solar are greater than the average wholesale power price of $50 per MW-hr, we posit that they are fully parasitic, their entropy is too high to power modern society. They consume net applied energy in the still of the night and under the cover of darkness and thus will lead to the end of civilization along with the concomitant human pain and suffering.

So, there you have it, once again we have a theory invented by those at the intellectual pinnacle of the human condition which requires a good portion of the human population to endure some pain and suffering in order to reach some far-off, ill-defined Utopia. While they fly all over the damn place and eat the finest foods and stay in the finest hotels, the rest of us are left to imagine a world where mankind has taken this treasured pulse of carbon-based energy and used it to learn to live in harmony with nature, taking from nature only what’s required for our daily needs. Sans the blatant hypocrisy, it’s a beautiful argument, it almost has no peer, the trouble is it’s dead wrong, with emphasis on the dead. Thankfully we don’t live in medieval times or Stalin’s Russia where the penalty for disagreement was being burned at the stake or summarily executed. But we would argue that the similarities are not trivial. The theory that wind and solar are the answer to anything violates the second law of thermodynamics, yet those who point this out have been avidly pursued by the intellectual elite with cancellation, the loss of jobs, and generally just trying to hurt them and their families as much as possible given the constraints of a modern democracy.

Unfortunately, to add insult to injury, the Germans have fallen for it hook, line and sinker. We’ve never been to Ludwigshafen, but we have been to German refineries and German farms. They’re spotless, incredibly well run, the proverbial saying you could eat off the floor comes to mind, and for good reason. Oddly enough the English have fallen for it as well, which we find a little disconcerting. The reason being is the English showed the rest of us the way – 1) adopt low entropy primary energy sources, 2) adopt a system based on English Common Law and then 3) enjoy the resulting and expanding freedom…in that order because once it takes hold, it’s autocatalytic. Go back to stage one (1) and repeat…Katie bar the door. The low entropy energy is listed first because that is the key to the whole thing, you can’t do anything without it; pass the salt, light up a smoke, crack open a roadie…you know, all the important, healthy things.

Lest we ourselves get a little too preachy, full disclosure, by the 2004 publishing of State of Fear we here at Thermocon were all well over a decade past the start of our oil and gas careers and we had fallen for the wind and solar story. Let’s face it, there are a lot of unlikeable characters in the oil and gas space, engineers in general seem to effortlessly comprise this category, and the history of oil and gas leaves a little bit to be desired. Luckily, we’ve been avid fans of Michael Crichton since the 1970s and reading that book caused us to wake up and smell the entropy. That book was written by a medical doctor, not a physicist, engineer or someone such as us who in theory should’ve been better positioned to smell a rat. Then again, it turns out that it’s not really an engineering problem so sending engineers out to try and fix it ain’t gonna work anyway. Quintessential thespian Tommy Norris from the great series Landman comes to mind.

“Good and bad don’t factor into this Rebecca. Our great grandparents built a world that runs on this s**t. And if we don’t feed it, it stops. There is an alternative. You can throw your phone away and trade that Mercedes away for a bicycle or a horse and start hunting for your food and living in a tent. But you’ll be the only one and it won’t make a difference. Plus, I heard the moral high ground gets really windy at night.” – Tommy Norris

Nonetheless, when looking at what the interconnect with the UK and German grids has done to the Norwegians, we have to posit that any country that wants to pursue a society based on wind and solar needs to go it alone. Let them eat entropy. For those of us who are avid water sportsmen and women – if someone near you panics when swimming or scuba diving, simply swim down and away. They will not follow you, and it may save your life. There are trained professionals that can handle that action, but unless you are one, it proves wise to simply swim down and away and let them figure it out, and for the most part they will. It has been said that men go mad in droves and all at once, only coming to their senses slowly, and one at a time. Thankfully, it appears that is starting to happen. Even tents are made with hydrocarbons these days. Follow the science.

Swim Down and Away | Scandinavian Nordpool Price Areas | Source: Nordpool via Watt-Logic

“♡ Like” this piece to remain low entropy. – TC

At 8am on December 4th, 1988 Barry Sanders was awarded the Heisman Trophy in Tokyo, Japan. That reads odd because the Heisman Trophy that year was awarded at 6pm on Saturday Night December 3rd at the Downtown Athletic Club in New York City. Difference being Sanders and the rest of the Oklahoma State Cowboys were in Tokyo across the International Date Line to play in the final game of the 1988 regular season against the Texas Tech Red Raiders. He accepted the award “via satellite” back when that was actually kind of a big deal.

Barry Sanders would go on to rush for 332 yards on the day he won the Heisman, is there a Guiness Book Squared? That is a record we can confidently say will never be broken. Speaking on that subject in 1988 Barry Sanders started off the season by taking the opening kickoff back for a touchdown, the same way he started off the 1987 season. In 1987 he was second string if you can believe that, behind a Hall of Famer named Thurman Thomas. In 1988 however it was Sanders’s time to shine and shine he did. He rushed for 2,682 yards in 11 regular season games, averaging 239 yards per game, a feat unmatched before or since. In fact, no one has even come close.

If you were lucky enough to see some of it in person, we believe you saw the greatest athletic exhibition of all time. Furthermore, if you were prone to inspirational addresses, one could say there was a Pearl on the Plains that year and his name was Barry Sanders. Sanders himself was not prone to inspirational addresses, in fact the grace he displayed was to such an extent that it bordered on nonchalance, as if he were doing all this for reasons known only to him. You were more than welcome to watch, but he wasn’t going to explain anything to you. Back then we had a term, “that’s Midwest” and Barry Sanders manners were a classic demonstration of the genre.

Come Fly with Me | The Football Version | Source: Everywhere

There was another Pearl on the Plains in the 1980s and it began construction in 1981 and commenced operation in 1984. It was and is the Great Plains Synfuels Plant in North Dakota and is arguably the only successful application of technology to come out of the myriad of emergency energy programs that were part and parcel of the 1970s. It had support from both sides of the isle. In 1978 a $1 billion loan guarantee was authorized under President Jimmy Carter and in 1982 another billion was thrown on top with the full support of President Ronald Regan. As Everett Dirksen has reportedly counselled, a billion here, a billion there, pretty soon you’re talking real money.

The plant finished construction on time and on budget, and it was designed to turn 18,000 tons per day of North Dakota lignite, 160,000 barrels per day of water and 120 MW of electricity into 155 million standard cubic feet per day (MMscfd) of synthetic natural gas. As a way to level set those numbers that 155 MMscfd of synthetic natural gas could be burned in a combined cycle power plant to produce 1 GW of power, which is approaching as large as they come, and just happens to coincide with the paper steam turbine we profiled in our first piece (Pants), the paper gas turbine we profiled in our second piece (Friends), and 1/10th of the size of the Shell Pearl GTL plant we profiled in A Pearl In The Desert.

Part of the rationale that justified the construction of the Great Plains Synfuels Plant was a projected shortage of natural gas in the upper Midwest. We don’t have access to price data for natural gas in the upper Midwest in the 1970s, although we can personally attest that the winters of 1976-1977 and 1977-1978 were cold as hell and there was snow all over the damn place. Folks could be forgiven for wanting to ensure future years had ample supply of natural gas in order to avoid the fate of freezing to death in the winter, even if that meant synthesizing if from North Dakota lignite.

Upon completion of construction and commissioning the natural gas price arbitrage the plant was designed to exploit promptly took a powder. In commodity markets oddly enough that happens a lot, and it happened in North Dakota in the mid-1980s. Add to that bringing a new technology online always comes with the expectation of significant teething problems and the Great Plains Synfuels Plant was no exception. They kept at it though and got the plant lined out and operating as it continues to do till this day, some 42 years later.

Great Plains Synfuels Plant Co-Product Production History | US Gulf Coast Monthly Natural Gas Prices | Data Source: EIA, St Louis Fed, 2025 Statistical Review of World Energy

They also began systematically exploiting the by-products and co-products that are inherent in any coal gasification plant. Despite its lack of uniformity, there is considerable complexity and structure in the molecules that constitute lignite and coal. This complexity and structure is a form of low entropy energy, and in the energy business, entropy isn’t everything, it’s the only thing and the lower the better. The fourteen Lurgi Dry Ash Coal Gasifiers in use at The Great Plains Synfuels Plant gasify the lignite at around 2,200 degrees Fahrenheit, which oddly enough is somewhat of a low temperature in the gasification business. It has the disadvantage in that the ash present in the lignite does not melt in the gasifier and thus can bridge off necessitating a unit shutdown and breaking out the jackhammers. Also, as the ash is not melted, it doesn’t undergo vitrification and remains leachable when considering future storage.

However, when considering the stated objective of the plant, namely turning North Dakota lignite into natural gas, the Lurgi Dry Ash Gasifiers were an excellent choice. They use a lot of steam in lieu of oxygen which drives a lot of the lignite to methane and carbon dioxide within the gasifier itself. This combination of long steam, light oxygen and thus temperature also drives the formation of tar oil, phenol, cresylic acid, and anhydrous ammonia, again within the gasifier itself. These co-products are on balance significantly more valuable than natural gas, and from a capital expenditure point of view, the air separation units (ASUs) required to produce the oxygen are some of the most expensive units, if not the most expensive, in any synfuels plant, so the smaller the oxygen plant the better.

The lignite in use at The Great Plains Synfuels Plant (Dakota Gas) has a fairly low level of sulfur, around 0.8%, or 8,000 ppm, which while fairly low in the coal business, is beyond the pale in the natural gas business. Natural gas is limited to a maximum sulfur level of more like 4 ppm, so the large amounts of sulfur must be dealt with. Rectisol units are used to clean the gas coming off the gasifiers, and they are the gold standard when it comes to gas purification. The resulting synthesis gas is bone dry and has a sulfur level less than 1 ppm. To deal with the sulfur stream, the original plan was to produce elemental sulfur by using a Stretford unit but that proved problematic. Subsequently, a Sulfinol unit was installed as a replacement but it fared no better. Given that as originally designed approximately 85 tons per day of ammonia were formed in the gasifiers, the best solution to the sulfur problem proved to be using an ammonia fed flue gas desulfurization (FGD) unit to produce 330 tons per day of ammonium sulfate fertilizer. The FGD unit was installed in 1996 and was Dakota Gas’ first entry into the fertilizer market. It used most of the anhydrous ammonia produced at the plant with a little leftover for the local market, and regarding the path function of getting there, those willing to embark on a similar endeavor would be wise to study this sequence of events.

The market for anhydrous ammonia in the Midwest was strong in 1994. As such an investment decision was made by Dakota Gas to purchase a 1200 ton per day brownfield ammonia plant down in Iowa and relocate it to North Dakota. The logic for this move was exceptionally strong. The relocated plant had no primary reformer of its own to produce synthesis gas, which was advantageous as The Great Plains Synfuels Plant was flush with synthesis gas from cheap North Dakota lignite. This should in theory impart an enduring feedstock cost advantage, which in any business is the leverage everyone is looking for, but in the commodity business it is of paramount importance, there is no substitute for it.

Plant installation was completed and the unit was brought online in 1997, and the anhydrous ammonia market promptly took a powder. Such is life in the commodity business, investments designed to exploit arbitrage often destroy it. Furthermore, the market for ammonia fertilizer is seasonal, namely in the spring before planting while hoping against a late freeze and in the fall after harvest while hoping against an early frost. Add to that when connecting a plant to the agricultural market, the high entropy of the weather ultimately reaches its ugly head back into the plant. Ammonia is a gas and thus difficult to handle and store, with two market windows per year and exposure to weather dependency. Luckily, the natural gas optionality the Great Plains Synfuels plant provided would prove to be an enduring competitive advantage during the 2000s when natural gas prices were strong.

Dakota Gas would continue to look to exploit the co-product availability afforded by the cheap low entropy energy available in North Dakota lignite. In rough numbers, for each atom of carbon that ends up in methane, one atom of carbon ends up as carbon dioxide. To the extent we’re playing horseshoes and hand grenades with our precision here, it’s close enough to say 155 million standard cubic feet of natural gas production implies an accompanying production of 155 million standard cubic feet of carbon dioxide. It just so happened that 200 miles North of the Great Plains Synfuels Plant in Southern Saskatchewan, Canada was and is the Weyburn Oilfield that was primed for enhanced oil recovery (EOR) via carbon dioxide flooding. To that end, agreements were put in place and 205 miles of 14-inch pipeline were installed along with two 19,500 hp compressors to compress the bone-dry carbon dioxide stream already available courtesy of The Great Plains Synfuels Plant from 3 psi to 2,700 psi for a one-way trip to the North.

At the termination of that one-way trip, every 8 thousand standard cubic feet (Mscf) or so of carbon dioxide would result in some permanent sequestration along with an accompanying barrel of oil production. It has been a resounding success in terms of oil production, and represented the fourth bolt on investment at The Great Plains Synfuels Plant to further exploit the unique co-product and by-product characteristics of a plant based on gasification of lignite. All else being equal the CO2 flood of the Weyburn oilfield has yielded 20,000 additional barrels per day of life-giving liquid low entropy primary energy with which we can yield a defined force in a defined direction to accomplish standard of living and environment improving tasks. It’s also known as oil, so it has a branding problem, but we digress.

Weyburn Oilfield Production | Southern Saskatchewan | Source: Petroleum Technology Research Centre, Whitecap Resources

In 2018 Dakota Gas would complete the construction and commissioning of a plant to enable the re-route of a little over half of the ammonia production to produce granular urea fertilizer. A portion of that urea could also be dissolved in water to produce diesel exhaust fluid (DEF). This enabled the production of a fertilizer in urea that was solid and could be stored much more easily than ammonia. It could also be dissolved in water as DEF and routed to the fuels market which has always been, and continues to be, very liquid and very deep. Since the investment in ammonia in 1997 and CO2 in 2000, The Great Plains Synfuels Plant has derived over half of its revenue from co-products and by-products other than natural gas. The investment in urea in 2018 has positioned the plant as being only tertiarily dependent on the aforementioned natural gas, the original justification for the construction of the plant.

Dakota Gas Revenue Split 2024 | Source: Dakota Gasification Company

The above graphic is a little striking. A full 60% of the revenue of the plant in 2024 was tied to the production of ammonia. If we’ve done the math right ammonia production only represents 8% of the primary energy imbedded in the 18,000 tons per day of North Dakota Lignite and 120 MW of electrical power that provide the thermodynamic driving force for the plant. The phenol, cresylic acid, naphtha, tar oil, krypton, xenon and liquid nitrogen represent 15% of the revenue and only account for 3% of the total energy flows. In 2024 an average of 112 MMscfd of natural gas were sold at an average price of $1.94 per Mscf. The concomitantly produced 135 MMscfd of carbon dioxide produced were sold at an average price of $0.33 per Mscf FOB North Dakota. The compression and pipeline costs are likely a little more than that, but up in the Weyburn Oilfield of Southern Saskatchewan that carbon dioxide is the cheapest source of life force around, they’re no doubt glad to have it.

Methane and carbon dioxide constitute by far the lion’s share of the mass and energy flows in the the Great Plains Synfuels Plant, in this case a full 41% of the primary energy entering the front end, and together they represent only 25% of the revenue on the back end. Products wise the final tally of the plant is a yield of approximately 52% thermal efficiency based on the higher heating value not counting some of the steam production which likely finds use next door at the Antelope Valley Station.

Process Flow Diagram of a Modern Marvel | Source: Dakota Gas | Urea and DEF Added

For those with sufficient interest, above is a graphical process flow diagram of the modern marvel that is the Great Plains Synfuels Plant. The graphic demonstrates how the plant has diversified its product mix in the intervening 41 years since it was first brought online. Through thick and thin, and a lot of it thin as those accustomed to energy markets can attest, it has displayed much resilience. By diversifying the product mix, production of 75% of the plant’s revenue has been obtained with only 11% of the primary energy flows entering the front end. A full 41% of the primary energy entering the front end is still used to yield low value natural gas and carbon dioxide; granted that low value carbon dioxide produces high value oil in southern Saskatchewan. Basis current oil and gas development, any place North of approximately Panama needs more natural gas like a hole in the head, thus it would appear to us that the product diversification of the Great Plains Synfuels Plant is poised to continue.

The Carbon Curve | Data: EIA | Analysis: Thermocon

As far as where that product diversification might be headed, we have republished a graphic above from our last piece, Carbon Is Good. This time around we’ve titled it The Carbon Curve as the more carbon the better…until it isn’t…as with everything. By inspection, converting coal to natural gas in the New World has proved to be economically non-optimal for the 14-year window in time from 2009 to 2023. While there is virtually no energy arbitrage between coal and natural gas as selected and plotted, we’d note that North Dakota lignite trades for around half the Central Appalachian marker used above. As half of dirt cheap is still dirt cheap it may seem pedantic, but as many advocate the free energy of wind and solar as being a pathway to dancing through the tulips playing with the duckies and fuzzy bunnies, it seems material to point out that for a mere dollar per million BTUs of lignite one can obtain a source of primary energy with an entropy low enough to actually do something about something.

One of those somethings to be done is turn syngas into 70 cetane diesel via Fischer-Tropsch. It’s non-trivially more difficult than the methane route, but a whole heckuva lot more profitable, and well worth taking a peek. The Great Plains Synfuels Plant has proven to be nothing if not adaptable and resilient and one sentient pathway into the future would be to pivot to diesel production by Fischer-Tropsch. There are many other routes as well. As with everything, we must pay homage to the British 200 years ago for discovering carbon monoxide based chemistry, and a tip of the cap to the Germans for flushing out the commercial applications some 100 years ago. Once in possession of synthesis gas that has been cleaned by a Rectisol unit, the World is your chemical oyster so to speak, the trouble is liquid fuels markets are typically the only ones deep enough to handle that action. There you have it, should the pivot to diesel be made, the theoretical spreadsheet arbitrage is substantial.

Spreadsheets Yield Shangri Lia | Thermocon

In the intervening years since Barry Sanders and the Oklahoma State Cowboys laid down a performance for the record books, there has been a disturbance in The Force with respect to Middle America. In the 1980s and before, it was lovingly referred to as The Heartland. Now in the minds of many it is derisively referred to as Flyover Country. We can’t put our thumb on exactly how this transition happened, but strongly suspect it is related to the so-called energy transition, which for the most part is a transition to dead due to the high entropy of the proffered alternatives.

We view this as an unfortunate confluence of history and one we’d like to see steered in the reverse. To the extent it is related to the lack of low entropy energy available in rural areas, the Great Plains Synfuels Plant is one of those mechanisms with which to power a reversal with high quality low entropy primary energy. Coal and lignite are all over this country, we have the largest reserves in the world. It is embedded with high quality low entropy primary energy that can improve whatever local environment it finds itself in. A review of history will tell us that a superior path is to produce liquid fuel from solid lignite before gasifying the remainder and then tackling the energy headache that is Fischer-Tropsch, but we’re quite certain any rural area of this country would be more than willing to take on the challenge. Keep calm and carry on.

The Truth Is Out There

“♡ Like” this piece to remain low entropy. – TC

Can we extract thermodynamic data from the market? The question may seem buffoon-like at first, but it improves upon consideration. On Monday September 15, 2008 Lehman Brothers filed for Chapter 11 bankruptcy. A little over a hundred days later, in January 2009 a bifurcation began in the hydrocarbon market that persists to this day. It was as if there had been a disturbance in The Force. The several hundred-billion-dollar event that was the Lehman Brothers bankruptcy at long last came to a close a scant 14 years and 13 days later on September 28, 2022, but the schism in hydrocarbon valuations continues.

That schism is centered on human standard of living and particularly mobility; upwards, downwards, forwards, sideways, you name it, it is all powered by liquid fuels. An illustration of that fact is shown below in the calculated ratio of gasoline, jet fuel, diesel and Brent crude to Henry Hub natural gas. Gasoline has approximately 5.3 million BTU’s per barrel and the others more like 5.7 million BTU’s per barrel. From 1991 through 2008 the ratios were a modest premium above and beyond their simple heating value. Then in 2009 those ratios began to blow out and the remnants of that blow out continue to this day.

As outlined in a previous piece titled Peak Cheap Oil Already Happened there is no geographical arbitrage to speak of here and we postulate this is physically and thermodynamically related to the fact that the marginal barrel now comes from wells that have had to create their own permeability through the combined processes of horizontal drilling and hydraulic fracturing. The liquid molecules are simply bigger and thus require larger fractures and higher relative thermodynamic driving forces to be brought to the surface. Note we only plot diesel and Brent crude below to avoid littering up the graphic. Gasoline and jet fuel fall just below the diesel line on average and in practice muddy up the plot.

Liquid Hydrocarbons to Natural Gas Ratio | Data: EIA

As we touched on in The Sun Also Sets, the Nobel Prize winning physicist Dick Feynman intimated that the pinnacle of human intellectual achievement is the atomic hypothesis, namely that the world is made of atoms. These atoms randomly bounce around the universe driven by various sources of radiation, the ones we most commonly experience being light and gravitation. So, there you have it young grasshopper, the world is made of atoms running around bouncing off one another via forces that are mediated by exchanging particles of light with a net bias of attraction.

The trouble is the person who takes that point of view is never going to build a toaster, and oddly enough Feynman was an all-time great theoretical physicist who fully subscribed to the ethos of giving a little deference to those who could actually build toasters. In the case of this piece, our “toasters” we’re looking to build are finished fuels that we burn to avoid running around in our skivvies’ hunting rabbits and picking berries. There are pretty much ninety different atoms that make up the Earth with which to build things, but the two we are dealing with in this piece are carbon and hydrogen, and they are so randy that there is a whole side of chemistry devoted to them called Organic Chemistry. The rest of chemistry is simply termed, NOT Organic Chemistry.

Price of Hydrocarbons Based on Heating Value | Oil & Gas: US Gulf Coast | Coal: Central Appalachia Bituminous | Data: EIA

The most fundamental hydrocarbon is methane, one carbon atom and four hydrogen atoms. To a first approximation, it is natural gas. The next hydrocarbon on the board, ethane, has two carbon atoms and six hydrogen atoms, and there is a touch of it in natural gas. That touch is limited to twenty percent or so for physical reasons but even sans all that ethane is ideally sent to a steam cracker to produce the fundamental building blocks for damn near everything, but we digress. It is a physical fact that methane and ethane can only be liquified with a ginormous refrigeration unit we call an LNG plant, a compressor alone won’t do it. The market somehow knows this. It is reflected in the price of methane and ethane molecules on a heating value basis, and we posit that this is due to the thermodynamic superiority of the liquid state.

If you take a half empty propane tank and shake it, the sound of the propane sloshing back and forth makes it apparent that the propane in there is a liquid. Propane has three carbon atoms and eight hydrogen atoms and doesn’t require a refrigeration unit to be liquified. A compressor will do the job and a common pressure rating for a propane tank is 250 psi. For comparison a common tire inflation pressure is around 70 psi on a bicycle, 40 psi on a car, and always use care to ensure your footballs are inflated to a minimum of 12.5 psi or the NFL will come fine you and take away your draft picks.

The next hydrocarbon on the board is butane. It has four carbon atoms and ten hydrogen atoms. It comes in a pressure vessel like propane and is often combined with propane and marketed as liquified petroleum gas or simply LPG. Following that we have pentane, five carbon atoms and twelve hydrogen atoms and it still requires a pressure vessel for storage. As we continue up the carbon atom chain following this, no compressor is needed.

Once you arrive at hexane with its six carbon atoms and fourteen hydrogen atoms, transportation and handling can be accomplished with simple atmospheric tanks for storage and pumps for transfer. It is a liquid. Same for gasoline with eight carbons (C8), jet fuel with twelve carbons (C12) and diesel fuel with sixteen carbons (C16). We model crude oil here as having thirty carbons (C30) just to give it a number. The actual number will vary widely and the only thing that can confidently be said is that it lies somewhere between diesel and bunker fuel. Speaking of bunker fuel, it is the bottom of the barrel, also known as residual fuel, and is the last liquid on the board basis this analysis. It requires a constant influx of heat to maintain its liquid state or it will turn into a solid that we call asphalt. Makes for a great road, but no longer such a convenient fuel. We model bunker fuel as having seventy carbons (C70) for the sake of giving it a number, all we really know is it’s higher than crude oil but lower than coal.

In a way we’ve come full circle here from methane (C1) and ethane (C2) which also require a constant influx of energy to be maintained in the liquid state. Ending our climb up the carbon ladder we come to coal. It’s a solid at all conditions and we give it the one hundred and fifty carbon atom moniker (C150) just to post one on the board as all we really know is that it’s a bunch of carbons.

Heating Value Arbitrage by Carbon Number 2002 – 2008 | Data: EIA

An interesting aspect of the thermodynamic argument delineated above is that the market already seems to know this. Plotted above is the median price of all the various hydrocarbons discussed for the time period from January 2002 through December of 2008. Propane and butane are essentially a draw relative to crude oil and all the standard liquid fuels trade at a suitable premium to crude oil of around two and a half ($2.48) dollars per million BTUs. This is the crack spread stated in dollars per million BTUs as opposed to the more commonly used dollars per barrel. As a way to level set, the 3-2-1 refinery crack spread on the US Gulf Coast based on two barrels of gasoline and one barrel of diesel for every three barrels of Brent crude was $11 per barrel during this time. Henry Hub natural gas traded at a median value of $6.25 per million BTUs during this period. So, what changed, if anything following January 2009? The answer is the relative value of fuels that are liquid at standard atmospheric conditions increased markedly.

Heating Value Arbitrage by Carbon Number 2009 – 2023 | Data: EIA

Above is the same plot on the same scale except using data from January 2009 through July 2023. There was a disturbance in The Force commensurate with the depths of the financial crisis. The market value of fuels that are liquid at standard atmospheric conditions are the only ones that trade at a premium to crude oil, and the price of a million BTUs of crude oil has gone up significantly. Natural gas and ethane have taken a thermodynamic and monetary dirt nap, propane, butane and even pentane are now valued at a significant haircut relative to crude. The value of bunker fuel has gone up significantly; from 65% of Brent crude prior to January 2009 to 80% of Brent crude since. Coal is holding steady like a rock at $2.21 to $2.37 per million BTUs which makes sense considering it pretty much is a rock. In fact, it is a rock that burns and the United States has the world’s largest reserves of such rocks. The value of the refinery crack spread as calculated here has essentially remained unchanged, clocking in at $2.18 per million BTUs on a thermal basis and $13 per barrel on a volume basis. It is readily apparent that the value of liquid fuels has gone up significantly on an absolute basis and even more on a relative basis. What if we combine these two plots?

Heating Value Arbitrage by Carbon Number 2002 – 2023 | Data: EIA

The difference between before and after January 2009 is striking. The increase in the relative value of the heat content embedded in gasoline, jet fuel, and diesel really stands out. The value of extracting and manufacturing these fuels from crude oil as represented by the refinery crack spread has essentially remained unchanged. Therefore, the increase in thermal value of human mobility has originated in the price of crude oil. These fuels are the pinnacle of convenience; they can be cheaply pumped around and stored in tanks and then utilized to produce power at a time and location of our choosing.

Going down in molecule size to propane, butane and pentane, they have been unchanged in their thermal values over the entire period from 2002 – 2023. So, the market knows that they are great fuels but a bit of a pain in the neck to deal with. They are only liquids when held under pressure in a pipeline or a pressure vessel. If we continue down to methane and ethane, things have undergone a significant revaluation to the downside. One way to view this is the market is pricing in the significant cost of maintaining these two fuels in a liquid state. A refrigeration unit known as an LNG plant is required to cool things down to -260 degrees Fahrenheit, a capital-intensive endeavor if there ever was one.

At this point, a reasonable person could stop and say the above plot is just a reflection of supply in a create your own permeability world. Methane and ethane molecules are smaller and thus travel through man-made fractures in the Earth more easily. One could say look Poindexter, this isn’t thermodynamics, it’s just the market. Not so fast my friend, as the great Lee Corso was prone to saying, take a look at bunker fuel on the other side of the plot. Prior to January 2009 it traded at thermal par with natural gas, both clocking in at around $6 per million BTUs. Subsequently, the thermal value of residual fuel has gone up to $10 per million BTUs while natural gas has taken a dirt nap. It is a physical fact that all that is required to maintain bunker fuel in a liquid state is a furnace to make some low-quality steam. That is a whole lot cheaper and easier, both thermodynamically and economically, than the ginormous refrigeration unit required to liquify natural gas into LNG and the equipment required to maintain it in that state. The market knows this.

At the dawn of the LNG market natural gas as LNG was routinely priced at 85% of Brent crude oil on a heat content basis to account for it being a little harder to handle. Basis our historical review above, one would have to say that pricing was done by engineering, overvaluing the heat content of methane. Prior to 2009 this data set indicates natural gas is worth right at two-thirds (67%) of Brent crude oil. Since 2009 natural gas has been worth right at one-quarter (25%) of Brent crude oil. What value do you think the marketing department would put on LNG today, maybe it’s worth half?

If you want the fundamental thermodynamic reason for the difference in thermal values presented in this piece, it’s because the gaseous state has an inherently higher entropy than the liquid state. Lower entropy is better and we believe the market knows this. Viewed another way, it’s almost as if since 2009 the market has sharpened up the lines, for those who partake that will ring true.

Be Careful Out There | The 2^ND Law Lurketh

A word on the data used for this piece. The price of coal was Central Appalachia Bituminous as available on the EIA website in a couple different spots, and there is technically some geographical arbitrage there that we simply ignored. Coal is dirt cheap and is all over this country, so we figure it’s a wash. The rest of the data is EIA US Gulf Coast. In 2006 the US began to phase in a 15 parts per million sulfur maximum for all over the road diesel sold in this country and the EIA’s USLD diesel refinery rack post ends in June 2006. We are unable to locate the previous 500 ppm sulfur USGC refinery rack diesel post just now and in order to extend the diesel data back to 1991 we used the NY harbor heating oil post plus 3.5 cents per gallon as that’s been the average delta relative to USGC ULSD over the last 20 years or so. In order to get a data set for fuel grade pentane (C5) we assumed natural gasoline is 50% pentanes (a very solid assumption) and calculated that value assuming the other 50% of natural gasoline would command a value the same as gasoline (a much less solid assumption, but not crazy) and assume that the separation energy is zero, which is totally untrue, but at some point perfect is the enemy of good enough. That said, perhaps we’re just creating a data stream to back our theme here, but we believe the resulting data stream for pentane (C5) to be instructive, and the rationale and source have been thoroughly stated.

For a central measure, we used median values as opposed to average values as the residual/bunker fuel and coal data were not contiguous or complete from January 2002 through July 2023 in contrast to the rest of the data. Also, using the median versus the average makes the effect of oddball data de minimis. As one can see from the 2nd graphic in this piece, there’s certainly more than enough data there with which to draw solid conclusions. Lastly, what commodity markets do is bounce along some minimum cost of production and occasionally oscillate up against a price that allocates scarce molecules, another reason using the median as a central measure has merit. Those bounces allocating scarce molecules can be awfully big bounces.

“♡ Like” this piece to remain low entropy. – TC

In July of 1899 the University of Geissen awarded Franz Fischer a PhD in Chemistry. Hans Tropsch was ten years old. In 1913 Badische Anilin-und Soda-Fabrik (BASF) in Ludwigshafen patented a process for combining carbon monoxide and hydrogen to form liquid hydrocarbons. It was the first vestiges of what would come to be called the Fischer-Tropsch synthesis. The trouble was it didn’t work all that well and with World War I on the horizon they had better things to synthesize, such as mustard gas. Bad puns on old man’s inhumanity to man aside, Franz Fischer had noticed this patent and by 1913 had been named director of what is today known as the Max Planck Institute. Fischer would later begin working with the aforementioned Hans Tropsch who by then had a PhD of his own and was a sought-after young researcher of his time. They would patent their superior process in 1925, some twelve years after BASF. It takes time to figure these things out and with World War I and the hyperinflation of the Weimar Republic in those intervening years, it’s a wonder they got anything done. All that said the siren’s song that is the Fischer-Tropsch process was off and running.

Mr. Coffee | Standard Coffee | Source: The Henry Ford

In an unrelated development, but one that some would say no less important, in 1972 the Mr. Coffee was invented in Cleveland, Ohio, not all that far from the genesis of Standard Oil. It was an automatic drip coffee maker that would make five cups of coffee in a more consistent and convenient manner than the traditional percolators of the time. Such was the gravity of this development that none other than Joltin’ Joe DiMaggio was the pitchman. In a way, Fischer-Tropsch offered the same thing, namely that as long as you could find a source of carbon, and drip some high temperature steam through it, a clean, consistent, and liquid motor fuel could be manufactured from the resulting synthesis gas. We live on a planet covered in carbon-based life forms, both past and present. Carbon is everywhere. The remaining necessary ingredient is hydrogen, which being contained in water, is also everywhere.

Once again in what had become a tradition, the British had led the way. In 1812 William Murdoch created the Gas Light and Coke Company in London. The process produced a solid carbon residue called coke, a portion of which could be burned to liberate synthesis gas and drive the remaining carbon to the solid phase in the first place. Light is listed first for good reason. It was the higher value application. It allowed people to push back the night in a superior manner relative to candles. There were yet higher value applications…and the Germans would be the first ones to master them.

Germany had and has no oil or natural gas resources to speak of, unlike England and France who did have at least some indigenous resources and geographical positioning that enabled them to obtain more. While the Germans were light on comparative advantage, they were adroit, industrious, intelligent, and long coal. That coal could yield carbon monoxide, hydrogen, ethylene, propylene, butylene, butadiene, benzene, toluene and xylenes. Take those nine substances and add in nitrogen from the air, chlorine and caustic soda from seawater, and you have the twelve commodities that form the basis of the modern chemical industry…and the Germans flushed it out and mastered it.

We left out one key ingredient, namely the applied energy to make all this happen. Thankfully all these processes when based on coal invariably yield a low entropy carbonaceous residue that can be forced to a high entropy, also known as burned, to power the whole thing by providing dispatchable applied energy. They also yield gas that could be used in lieu of, or to supplement, the solid carbon. There’s a phase of matter not listed here, and it is the most thermodynamically superior one, namely liquid. Such enlightening devices as tanks and military aircraft cannot be powered by solids or gases, those wishing to establish strategic hegemony must have liquid fuels, particularly aviation gasoline, jet fuel, and diesel. That is where Franz Fischer and Hans Tropsch come in.

The Fischer-Tropsch process involves passing carbon monoxide and hydrogen over a catalyst based on iron, cobalt or ruthenium to create higher molecular weight hydrocarbons that are or can be refined into liquid fuels. Ruthenium is a precious metal, goes for about $13,000 dollars a pound. Iron is dirt cheap, say twenty-five cents per pound. Cobalt is in the goldilocks spot, around $20 dollars per pound and the cobalt catalyst is technologically superior to iron in many respects and cobalt is what the German Fischer-Tropsch industry would be based on.

Eleven cobalt-based Fischer-Tropsch plants would be built producing diesel and lubricants to the tune of 6,000 barrels per day during World War II. Such was the technological astuteness of the Germans in general, and their synthetic fuel effort in particular, that the Allies assembled “The German Document Retrieval Project” at wars end to run all their written technical acumen to ground. There was also a concomitant “Scientist Retrieval Project” to run all their walking technical acumen to ground. That effort was highly subscribed as the Soviets were also in the walking technical acumen retrieval business at the time. Hans Tropsch had died in 1935 in Essen, Germany at age 46 and Franz Fischer would die at age 70 in Munich in 1947 so it would fall to others to take the technology forward. Having discussed the Germans who had excess coal to turn into liquid fuels, we’ll now turn to those since who’ve engaged in the same challenge with spurious natural gas.

Methane is a wonderful fuel. If you’ve ever boiled in the backyard with methane piped from the house or propane in a tank, the difference becomes apparent straight away. Propane will blacken the bottom of the pot, methane won’t. Furthermore, if you’ve ever used a tank of butane in lieu of propane, it will really blacken the bottom of the pot. Methane has one atom of carbon and four atoms of hydrogen in every molecule for a hydrogen to carbon ratio of 4:1. Similarly propane pencils out at 2.7 to 1 and butane at 2.5. At this point, combustion purists would point out here that the difference in emissions of fuels of this caliber is a function of HOW they are burned and not their composition, and we would agree. With special attention to burner design, propane and butane can burned just as clean as methane, and they don’t have the excess hydrogen atoms that make things gaseous and problematic from a handling point of view.

After touting all its benefits, the question becomes why screw with it? The answer is because it’s stranded, and/or it’s coming out of the ground whether we like it or not in some oilfield in the boonies. But what if there were a thermodynamic reason? Could the liquid state impart an enduring thermodynamic arbitrage separate from the vicissitudes of man? Or perhaps the human condition is so imbedded with thermodynamics we can’t tell the difference…the truth is out there Scully.

In order to extract the thermodynamic information, we divided the price of crude oil by natural gas in our previous piece titled Peak Cheap Oil Already Happened…and we lived. Methane is a finished fuel, whereas crude oil is not. Given that distinction here we divided the price of No 2 diesel at the refinery rack on the US Gulf Coast by natural gas at the Henry Hub in Erath, Louisiana. They are both finished fuels, they’re both essentially wholesale locations and there is no geographical arbitrage to speak of. The results are below and it is apparent that something happened circa 2009. The market is extracting a thermodynamic premium for diesel fuel above and beyond its heating value. It’s thirty-five years of data, split right down the pipe, and we believe there are thermodynamics in this plot. That said, others in the past have put this proposition to the test, so let’s see what they found.

US Gulf Coast Refinery Rack Diesel Price Divided by Henry Hub | Data Source: EIA, St. Louis Fed

In 1951 the American Hydrocol Company started up a 7,500 barrel per day gas-to-liquids (GTL) plant in Brownsville, Texas. You read that right. A single plant making the same to a little more than the aforementioned eleven German Fischer-Tropsch plants combined. There are a couple reasons for this, the first one being that everything is bigger in Texas. The second is that GTL technology is thermodynamically advantaged over the coal-to-liquids (CTL) synthesis gas based technology that the Germans were using from both an operational and capital expenditure perspective. And there may be a third reason, namely that Brownsville, TX was not being routinely carpet bombed at the time. Nonetheless, with the discovery and further delineation of the vast oil reserves in the Middle East, even spurious natural gas was insufficient to keep the Brownsville GTL plant in business and after a six year run the plant was shut down in 1957.

Inherent in the above commentary is a fourth reason the plant was built, and it is the most important. We don’t have access to price data that far back, but implied in its construction and later mothballing is an arbitrage between gasoline and natural gas that opened…and then closed. Turns out if Mother Nature will do the synthesis, it’s a whole lot better for everybody. There are any number of key differences but one worth mentioning is the Brownsville plant used an iron-based catalyst and made primarily gasoline. Thirty-five years after the Brownsville plant was shut down, in 1992 South Africa’s Mossgas commercialized a 22,000 barrel per day GTL plant based on stranded natural gas from offshore Mossel Bay using an iron catalyst synthesizing primarily gasoline. It can generally be credited with being the world’s first commercial GTL plant. In the intervening 40 years, South Africa’s Sasol had been producing primarily gasoline, but also a little diesel via coal gasification followed by Fischer-Tropsch using an iron-based catalyst. Mossgas had a sound technical footing for building a commercial sized GTL plant based on an iron catalyst straight out of the gate.

What is the impetus for these gas-to-liquids concepts in today’s world? After all, 1951 and even 1992 are getting to be a long time ago now. There has to be a thermodynamic arbitrage involved, otherwise why do anything, and in a capitalist society we call that a price arbitrage, so what’s it look like in the case of Fischer-Tropsch technology? One approach is to take methane and make as much diesel as possible, and the price history of such an endeavor is plotted below. If we assume any idiot can build a Fischer Tropsch plant converting 10 MCF of Henry Hub natural gas into a barrel of diesel on the US Gulf Coast the theoretical spreadsheet arbitrage we arrive at has been great since 2009, not so much prior. For level setting we’ve included a calculation of the US Gulf Coast 3-2-1 crack spread based on Brent Crude for reference. As evidenced by the plot, theoretical GTL plants on the Gulf Coast prior to 2009 were facing an almost certain appointment with bankruptcy. Those since 2009 could have printed money, such is the history of the commodity space.

US Gulf Coast 3-2-1 Crack Spread vs GTL Synthesis Spread | Data Source: EIA, St. Louis Fed

In the spirit of the above arbitrage plot, the cobalt catalyst would not be relegated to the dustbin of history just yet. Things would come full circle and in 1983 Shell started up a GTL pilot plant producing a few gallons per day based on a cobalt catalyst, and as with the Germans fifty years prior, targeting diesel production. Ten years later in 1993 Shell would commission a 12,500 barrel per day GTL plant in Bintulu, Malaysia geared towards the production of kerosene, diesel, lubricants, wax, and generally as little gasoline range material as possible. The Bintulu GTL plant would later be debottlenecked to 14,700 barrels per day and the all in capital expenditure for both initial construction and debottlenecking has been reported as $900 million, or $61,000 per barrel per day capacity. For those who follow such things, that’s a lot relative to a refinery. The key is can it be justified by the production of superior fluids provided the natural gas is truly stranded.

Based on the success of Bintulu, Shell would go on to build the Pearl GTL facility in Qatar to the tune of 140,000 barrels per day producing an even more refined version of the same product slate; when in doubt, make it up on volume. It was and is a GTL tour de force, a modern marvel if there ever was one. It has the largest air separation unit (ASU) complex in the world. It has the largest synthetic lubricant basestock plant in the world; 30,000 barrels per day. This was a significant fraction of the world lubricant market at the time. Even today the global lubricant market stands in the neighborhood of 500,000 barrels per day or something like half a percent (0.5%) of the global barrel. Shell Pearl also dominates the global premium wax market (yes, we still have a wax market) and it’s approaching rounding error, but the wax market still commands say one twentieth of a percent (0.05%) of the global barrel or 50,000 barrels per day.

The thermodynamic crown jewel of Shell Pearl GTL is the diesel it produces. It has a 70 cetane number on a bad day, and it can be used as the cleanest burning diesel fuel on the planet, or as a blend stock to expand the existing diesel pool. The process also produces 160,000 barrels per day of freshwater, something quite useful in the deserts of Qatar, or arid West Texas. Due to the innate 2nd Law loss that is part and parcel of the process, it also has the ability to produce much more electricity than is required to run the plant. Scratching out some back of the envelope calculations, we get 400 MW being needed to drive the air compressors on the ASUs and 100 MW for the oxygen compressors, and that leaves 500 MW or so for electrical export, also something quite useful in the deserts of Qatar…or arid West Texas, especially if there’s a data center nearby. Perhaps we are being a little overly optimistic here as some additional rotating equipment will be required, but basis this analysis, what’s 100 MW amongst friends.

Did we mention Shell Pearl GTL is based on sour gas? If reports are to be believed there is a sulfur plant on the front end to the tune of 600 tons per day. By modern refinery standards this sized sulfur plant certainly isn’t a “small,” and operating a sulfur plant of this magnitude in front of a system based on precious metal catalysts is certainly doable, but is not for amateurs. Cobalt based Fischer-Tropsch catalysts are not things one can risk exposure to sulfur, their cost is too high, so the sulfur plant on the front end is followed by zinc-oxide guard beds on the back end to limit sulfur to forty parts per billion. Yup, that’s 40 parts per billion with a B. To say this is a low level is a promethean understatement, it is a hugely energetic and capital expenditure intensive proposition but one that is justified given the value of the products produced and the cost of the cobalt catalyst needed to synthesize them. We would also be remiss not to mention that the project also produces 120,000 barrels per day of natural gas liquids, again not a small.

Sulfur Pyramids of Alberta | Source: Flickr

The FID cost of Shell Pearl was $6 billion circa 2005. If we add in the 140,000 barrels per day of GTL products it produces to the natural gas liquids, that gives 260,000 barrels per day, a world scale plant by any measure, and a specific capital expenditure of $23,000 dollars per barrel. Obviously if that number had held, these things would be all over the damn place. And indeed, it didn’t and they aren’t. The final all in cost of Shell Pearl has been reported at $19 billion or $73,000 per barrel. The nice thing about analyzing the liquidity of major oil companies is they’ve always got the extra $13 billion lying around in a pinch.

If the production from Shell Pearl were simply burned in a combined cycle gas turbine (CCGT) to produce power, it would be a 10 GW power plant. Power plants don’t come in a 10 GW. That illustrates the size of the energy and material flows involved here. It also brings up a word on the thermodynamics involved. As just proposed, if the methane were fully oxidized, or burned, it would yield carbon dioxide, water, and the inert nitrogen from the air at a temperature of something of the order of 3,000⁰F. From that 3,000⁰F, 10 GW of dispatchable power could be extracted.

Fischer-Tropsch is essentially partial oxidation of twenty-five percent of said methane to yield 160,000 barrels per day of water, along with 140,000 bpd of LPG, naphtha, gasoline, kerosene, jet fuel, diesel, lubricants, and wax in varying proportions. Using the Fischer-Tropsch process this 25% of the primary energy involved that is oxidized is hydrogen turned into water and it is jettisoned at around 500⁰F. That is a whole lot less than the 3,000⁰F that could be obtained if it were simply burned and is the source of the inherent 2nd Law haircut that is part and parcel of the Fischer-Tropsch process. It is a theoretical impediment that cannot be sidestepped.

In addition, a portion of the carbon involved is driven to carbon dioxide either on the front end in the gasifier or on the back end to manufacture the hydrogen required and this turns out to be another 15% or so of the primary energy flows involved and can theoretically be extracted at a much higher temperature and thus efficiency. In practice this is achieved to some extent, but all told at 10 MCF natural gas per barrel the process yields 60% of the thermal energy in liquids and say 10%, or 1 GW in this case, of electrical power. Driving this portion of the carbon involved to carbon dioxide is not a theoretical eventuality. Thus, increasing the carbon efficiency of GTL plants is one of the major drivers in the design of these things. For example, Shell Pearl GTL actually uses about 9 MCF per barrel, we just use 10 MCF per barrel as it’s a nice round number and has also by coincidence been the conversion generally used in the oil and gas business as long as we can remember. The heat equivalent is more like 5.7 MCF per barrel (EIA) but when dealing with the headaches gas brings nothing is a nice round number so may as well post one and 10 MCF per barrel it is.

By far the lion’s share of the value of these plants is in the 60% that gets turned into liquids. The trouble is the other 40% can’t simply be discarded, it has to be managed properly, and with some difficulty. The construction of Shell Pearl strained world heat exchanger manufacturing capacity at the time it was built. Removing all this low-quality heat to make the best of things essentially means you go broke buying heat exchangers, the primary ones of which are the reactors themselves which are in essence ginormous heat exchangers. Add to that the Fischer-Tropsch process makes essentially all hydrocarbons from one carbon (methane, which is what you started with so naturally it is imperative to minimize the methane make) on up to C100 (a hundred carbons) which are not liquid and thus by definition not the optimal make of a gas-to-liquids project. In order to minimize the methane make what is done with cobalt catalysts these days is to run the plant in maximum molecular weight mode and then hydrocrack the wax back to kerosene, jet fuel, diesel and unfortunately some naphtha, LPG and even a little ethane and methane. Just as a convenient summary of the four-stroke engine cycle is referred to as suck, squeeze, bang, blow – if a similar homily is desired for cobalt-based GTL that would be break it down, string it up and crack it back.

All this makes for re-asking the question, given all the headaches previously highlighted, what is the siren’s song of Fischer-Tropsch? After all, as discussed above the project makes a bunch of poor heat, costs a fortune and makes everything carbon under the Sun. It is then necessary to refine a good bit of it into the products that are actually desired and indeed even marketable. We believe it is the thermodynamic superiority of liquid fuels combined with the fact that liquid fuels are the essential arbiters of human freedom. Never mind their utility in farming, growing the food is for the rubes. The ability to go to the beach, lake, lunch, dinner, fishing, hunting, dancing, the movies, basketball, baseball, softball, football, and, gulp, dare we say soccer are in some ways the pinnacle of the human condition. All this mobility is powered by liquid fuels, efforts at doing so with natural gas and electricity have been almost exclusively policy forced.

Liquid fuels are also indispensable when it comes to powering tanks, ships, and planes which are alternatively known as the Army, Navy, Air Force and Marines. Gasoline, kerosene, jet fuel and diesel are strategic fuels, natural gas and coal much less so. Add to that the coup de grace, the siren’s song concept that one could make a “Mr. Fuel” and manufacture liquid fuels from scavenging opportunistic carbon sources far and wide. Brings to mind the Mr. Fusion from 1985, and what we believe is the ultimate genesis of the lure of Fischer-Tropsch technology.

Mr. Fusion or Mr. Fuel? | 1981 DeLorean DMC-12 with Time Travel Option | Chandler, AZ | Source: davidsclassiccars.com

Despite all the detail above, we’ll close with some generalities that are of paramount importance. The gas cost for Shell Pearl GTL is zero; it is contributed to the project by the State of Qatar. This allows for the investment of ten to twenty billion dollars with the certainty that there will always be some positive arbitrage across the plant. That is not the case for a gas-to-liquids plant plugged into the natural gas grid of the United States. Shell Pearl GTL started up in the summer of 2011. Had it been concomitantly constructed on the US Gulf Coast it would have printed money. Had it started up in the same place twenty years earlier, not so much. Turns out these things are path dependent.

The main path dependence for GTL plants is right at the rock face of natural gas production. One of the obvious rock faces at the moment is in West Texas, near the Waha natural gas price hub where natural gas prices took a dirt nap a good while back and look poised to continue said dirt nap for the foreseeable future. Even given that, in order to clone Shell Pearl in the Permian, there are only a dozen or two non-governmental balance sheets that could carry that action, and while the market for offloading natural gas price risk in the Permian in exchange for exposure to a premium diesel posting in Houston would no doubt be quite robust, it is not a slam dunk. On the plus side, there are endless uses for the two unwanted byproducts, namely fresh water and dispatchable rural power, and we’d be hard pressed to find any part of the civilized or uncivilized world that would pass on diesel with a 70 cetane number, but methane in a pipe at 1,000 psig is nothing to sneeze at, so the siren’s song continues.

Gross Margin Based on Free Gas - Now That’s More Like It | Data: EIA | Inflation: Statistical Review of World Energy

“♡ Like” this piece to remain low entropy. – TC

From March 7^th – 9^th of 1956 the Southern District Division of Production of the American Petroleum Institute held their spring meeting at the Plaza Hotel in San Antonio, Texas. At that meeting a geologist named Marion King Hubbert made the call to end all calls. He predicted that United States oil production would peak between 1968 and 1972 at a little under 10 million barrels per day. United States crude oil production peaked in 1970. He was a bit off on the absolute volume, but suffice to say the timing of the call was just superb, and terrifying. The greatest standard of living increasing substance ever located had peaked and begun to decline as predicted by a scientist…fourteen years beforehand.

Peak Oil? | Ruh Roh Raggy! | Yikes! | Thermocon

This had huge geopolitical ramifications, except when discussing nuclear weapons, it’s impossible to overstate. Prior to 1970 many nations had attempted to use their oil production as a geopolitical weapon to improve their standing and independence in the world. They were unsuccessful. To touch briefly on the most famous one, in 1951 the Shah of Iran was forced to share more power than he would’ve liked with the democratically elected Prime Minister Mohammad Mossadegh. “Old Mossy” as he came to be known, was a force to be reckoned with. He had royal blood himself, was a supreme populist and was maniacally bent on nationalizing the Iranian oil industry, and running off the British.

The Iranian oil industry was run at that time through the Anglo-Iranian Oil Company, which had started as the Anglo-Persian Oil Company. In 1952, with his new found power, Old Mossy attempted said nationalization and went down swinging. What he couldn’t have known at the time was that the thermodynamics were not on his side. The British simply stopped oil production, isolated the Iranian economy, and froze their hard currency assets…sound familiar? It can work against thermodynamically disadvantages countries, no so much others.

Old Mossy was forced to back down. Then in 1953 after he was increasing and consolidating his own power by dismissing hundreds of top military brass and hundreds of judges, including all members of the Supreme Court, many well connected Iranians began slipping by the US Embassy saying you’ve got to take this guy out. The US and the British then made their own colossal geopolitical blunder…and they did it. In what the CIA called Operation Ajax and MI-6 called Operation Boot, the Americans and the British orchestrated a coup to remove Old Mossy and re-instate the Shah of Iran as an old-fashioned strongman. They ran the operation out of the US Embassy, and on November 4^th, 1979, the Iranians would return to run their own operation from the US Embassy.

Historical Oil Price in 2024 Dollars | Thermocon

The thermodynamic problem that Old Mossy and others were facing was that Peak Cheap Oil 1.0 hadn’t happened yet. By simply plotting the inflation adjusted oil prices provided by the Statistical Review of World Energy (2025 Edition) and looking for the low spots, we kind of come up with three of them. The first was in 1931, but as that was the heart of the Great Depression, we’ll call that Peak Cheap Everything due to the deflation of the time. Peak Cheap Oil 1.0 happened in 1970, coinciding with the peak in United States oil production. Once the high permeability oil production in the United States rolled over, those wanting to use the oil weapon were ready to pounce, and they did.

Oregon | October 1973 | U.S. National Archives and Records Administration

Other than the music and the dystopian movie tradition, which arguably have no peer, a good portion of the 70s were a giant buzzkill. For those who came of age during that time, Peak Cheap Oil 1.0 was just the beginning of it. We had the senseless loss of life, and the war, in Vietnam. The Watergate scandal where our President was revealed to have assembled a political SWAT team. Saturday Night Live debuted in 1975 with Chevy Chase brilliantly playing a bumbling President Ford. To our knowledge the winters of 1976 – 1977 and 1977 – 1978 remain the snowiest, if not the coldest, on record. Then add to that the presidency of Jimmy Carter who thoroughly demonstrated that he was an honest man, but at the same time that maybe an honest man doesn’t make such a great president. On July 15^th, 1979 President Carter gave his “Crisis of Confidence” speech which later became unfortunately known as the “Malaise Speech” as he expressed some dismay at the sense of disillusionment spreading throughout the country. The Three Mile Island Unit No 2 had melted down 109 days earlier on March 28^th, 1979 and we would finish out the decade with the Iranian hostages being shown on the news every night, be it ABC, NBC, CBS or PBS, those were your four choices.

Was it all actually all just a manifestation of the underlying thermodynamics of the time? The truth is out there Scully…

That brings us to Peak Cheap Oil 2.0. If you happened to be working in the oil industry in 1998, it is a year that sticks with you. We have seen some inflation adjusted charts that show the 1998 price of crude oil at or below that of 1970. However, the Statistical Review of World Energy is a solid reference, free to all, so we have just used it here. The oil industry was one of the few industries to remain profitable during the Great Depression, although they remained so just barely. For the oil industry, 1998 was kind of a mini-depression and it led directly to the era of the Super-Major…when in doubt, make it up on volume!

Horizontal Wells Plus Hydraulic Fracturing…Katie Bar the Door | Thermocon

We’d like to briefly touch on a key point about oil and its presence in the Earth. Having spent all our time in the oil and gas industry working from the wellhead on out, we will now proceed to opine widely on what’s going on down hole! Oil is contained in rocks, and those rocks have pores in them, the more pores, the greater the oil carrying capacity of the rock. The rock also has a quality called permeability, which is how well the pores are connected so the oil can flow a good distance to the well you’ve drilled. Rock with oil filled pores is all over the place. Rock with oil filled pores and high permeability, well, that rock is a lot harder to find. It’s got high porosity and high permeability and we’ve pretty well found it all.

This is what Marion King Hubbert realized back in the 1940s and by using some fairly straightforward mathematics was able to make his call to end all calls. That said, once you introduce a horizontal well drilled through high porosity rock and then use hydraulic fracturing to in effect create your own permeability, well, then it’s Katie bar the door. That is reflected in the above plot of United States oil production from the 1965 onwards. Imagine what awaits as we go around the world looking for high porosity, low permeability, oil filled rock.

While we’re on the subject of opining, there are four classical states of matter. They are solid, liquid, gas, and plasma. There is a lot to be said for the order in which they have been stated. The first sources of energy humans were able to master were solid, the penultimate one of which being coal. With a little more hindsight maybe it’s actually uranium. Once oil was discovered though, it quickly became apparent that its ability to flow was hugely important. Even though its energy density was lower on a volume basis and you couldn’t store it by simply making a pile of it on the ground, it was vastly superior to coal. The gaseous hydrocarbons, primarily methane, have a lower energy density and you need a pressure vessel to store them, or a long skinny pressure vessel we call a pipeline to deliver them somewhere. Then fusion plasma is what’s powering the Sun and we’re attempting to replicate here on planet Earth. The point is there’s a peak in the system, an optimum if you will, and it’s liquid hydrocarbons. The gaseous thing and plasma thing are tremendous headaches.

That brings us to Cheap Peak Oil 3.0 which we will maintain occurred in 2003 when the ratio of the price of oil to the price of natural gas reached a low of 5.1 million BTU’s per barrel. The nice thing about this plot is money has been taken out of the equation via simple division. It varies by barrel, but a good number for crude oil, and the one the EIA currently uses near as we can figure, is 5.7 million BTU’s per barrel. That is oil’s equivalency based on the 1^st Law of Thermodynamics. Fuels also have value with respect to the 2^nd Law of Thermodynamics and we believe the liquid state imparts a lot of value to a fuel, especially in a low permeability world.

Peak Cheap Oil 3.0 | The Thermodynamic Version | Thermocon

The above chart is telling us that prior to 2008 the 2^nd Law premium of a liquid fuel as measured by oil was about 3 million BTU’s per barrel. From 2009 onwards the chart is saying that premium has increased to 18 million BTU’s per barrel. That’s damn high, but it’s decades of data, there is something to this.

There are at least a couple physical origins of this thermodynamic premium that we can discern. The first is increased physical utility as liquids are more energy dense, can be stored in an atmospheric tank and be pumped to a high pressure with relative ease. By contrast natural gas is a pain in the you know what. The second is that in a low permeability world, the gases are physically a lot easier to get to the surface. To a rough approximation, natural gas has basically one (1) carbon atom per energy producing unit, gasoline has eight (8), jet fuel has twelve (12) and diesel has sixteen (16). Simply because the molecules are smaller, they’re going to travel faster through man-made permeability and be thermodynamically and monetarily cheaper.

We will maintain that this thermodynamic premium of liquid fuels will persist as we enter a low permeability world, although perhaps not at a level quite so high. There is a natural arbitrage of thermodynamic superiority of a liquid fuel over a gaseous one in a low permeability world and we suspect that will turn out to be around ten million BTU’s per barrel. We’ll have to see as the combination of horizontal drilling plus hydraulic fracturing spreads around the world and physics dictates an arbitrage between natural gas and crude oil with its imbedded gasoline, jet fuel and diesel.

Peak Cheap Oil 4.0 | Is World High Perm Oil Peaking? | Thermocon

We suspect we’re currently hitting Peak Cheap Oil 4.0 and it’s around fifty bucks a barrel in 2024 dollars. As an aside, it is possible that high permeability world oil production is currently peaking in the neighborhood of eighty million barrels per day. We don’t have a mathematical model here, we’re just plotting the data and taking a peek, so take that for what it’s worth. The creation of OPEC+ in 2016 has resulted in an intentional tempering of world outside of the US oil production and of course in 2020 with the pandemic everything took a powder. So, it’ll be interesting to see how that number progresses.

Same Data Plotted Differently | OPEC+ Has 50% of the Market | Thermocon

We’ve taken the same data and plotted it slightly differently above. It shows the last time the oil weapon was used successfully OPEC production had risen to 50% of world oil production. Also evident is during the 1970s OPEC successfully put a cap on their production, it obviously could have risen much higher. Today with the creation of OPEC+ there is again an entity, albeit loosely held, that has 50% of the market, but US production is not in decline…yet. We suspect as US oil production rolls over there may be an appetite for others around the world to see if the oil weapon can be used successfully again. All told we collectively paid a helluva price last time this was done, but there is a part of the human condition that leads us to constantly look under rocks, and maybe even facture a few.

“♡ Like” this piece to remain low entropy. – TC

On July 6^th, 1936, Steele, North Dakota experienced a high temperature of 121 degrees Fahrenheit. On February 15^th, 1936, just 142 days earlier, Parshall, North Dakota experienced a low temperature of minus 60 degrees Fahrenheit. Both are records that stand to this day. Over the course of 1936, atmospheric carbon dioxide concentration averaged 310 parts per million, up from 280 parts per million before humans had figured out how to use fire to turn a wheel. Over the course of 2024, atmospheric carbon dioxide concentration averaged 425 parts per million. Can you imagine the extent to which people would literally be wetting their pants if North Dakota experienced such a heat wave and a cold spell in the same year today? Climate change indeed.

A similar scenario played out that same year of 1936 in South Dakota where they experienced a high temperature of 120 degrees on July 5^th, and a low temperature of minus 58 degrees on February 17^th. Again, both are records that stand to this day. It was cold…and hot in the Midwest in 1936. If you’ve talked to folks who were around at that time, they’d tell you it was a good thing they didn’t have air conditioning, so at least they didn’t know any better. Then they’d say something to the effect of hoping you never had to experience anything like that and shake their head and walk away. Same thing they did when mentioning the Depression or the War.

Unnerving and Impressive at the Same Time | Witthaya Prasongsin | Getty

Everyone is aware of the stock market crash that began in 1929, but many fewer are aware of its agricultural equivalent which began in 1920. The Midwest had geared up, literally, to produce enough food for the United States and her Allies in World War I. Once the war ended, that excess production of food was no longer required, and thus the agriculture section of the economy began engaging in the time-honored tradition of losing a little bit on every sale…but making it up on volume. What started out as 40 acres and a mule, quickly became a quarter section (160 acres) and a tractor building up to a full section (640 acres) with several tractors in the 1960s and 1970s. These days if you don’t farm 3,000 acres you pretty well need to have a job in town.

Farm Near Liberal, Kansas in 1936 | Arthur Rothstein | Library of Congress

During the 1920s farmers began farming fencerow to fencerow in an attempt to outrun the deflation of the time. They had a newfound source of applied energy with which to ply this trade and that was liquid hydrocarbons in the form of gasoline and diesel. These fueled imbedded applied energy in the form of tractors which were just mobile steel versions of coal. Indeed, they had no choice but to try and out farm the situation, the trouble is they were not doing so intelligently. The resulting sub-optimal treatment of the land left them unprepared for a drought that could and did lead to the Dust Bowl of the 1930s. That in combination with the Depression, heat in the summer, cold and snow in the winter, made the 1930s a bit of a tough slog, the year of 1936 in particular.

Also 1936 | Sylvan Road Yellowstone Park | Powhusku | Flickr Creative Commons BY-SA 2.0

From another point of view, those born in 1836 would say that 1936 wasn’t all that bad as our forebearers in this country had a begun toiling down a path of developing more and more supplies of applied energy. Farmers learned from their mistakes and then had enough applied energy in the budget to actually do something about it. Contour farming practices began, no-till practices began, fewer and fewer trips through the field were required, folks realized that the land would heal itself in a hurry if they just treated it a bit more intelligently.

Beautiful Contours, Polk County, Iowa, 2009 | Carl Wycoff | Flickr Creative Commons BY-SA 2.0

In our previous pieces For Whom The Wind Blows, The Sun Also Sets, and Sins of Our Fathers, we plotted energy subsidies over decades of time in both primary energy as MMBTU and applied energy as power, what we actually want, in MW-hrs. It’s high time we add the average price of wholesale electricity to the graph. For the price of wholesale electricity, we use EIA data from 2001 thru 2024. Ideally, we’d have a price point right next to the Henry Hub for natural gas…ever been to Erath, LA? There doesn’t appear to be one readily available so we just averaged the data over the entire US by year with whatever the EIA was able to gather.

The above is decades of data and should be setting off alarm bells. The price of electricity is not taking a dirt nap due to the influx of our beloved wind and solar, it’s simply tracking natural gas. The subsidy for solar is more than half the total price of wholesale electricity, and the above includes several high price years for natural gas, it’s a very friendly data set for solar. That’s how crazy this stuff is. If we’re able to locate Investment Tax Credit (ITC) data for 2001 through 2011 we’ll gladly post an update.

Bison Skull Pile, 1892 | Michigan Carbon Works in Rogueville, MI| Burton Historical Collection, Detroit Public Library | Image Clean Up by Chick Bowen

There have been many occasions in the past where humankind has stumbled upon a new source of energy and gone hog wild, or bison wild as shown in the unfortunate picture above. In 1892 bison skulls were ground up at the Michigan Carbon Works to be processed for use in dyes, inks, glue and all sorts of things that we thankfully have oil and gas for today. Some say the Roman Empire ended because they ran out of trees within a reasonable transportation distance. To this day one can fly into arctic communities and see the treelined outskirts begin a few miles from town as they’ve cut down all the trees at interim distances to keep from freezing to death in the winter. Who says diesel fuel and heating oil are all that bad?

At this point we could plot overlays of the sheer area of land required by wind, and especially solar, to mildly attempt to do anything about anything. Thankfully, this has already been done by others. We’d point interested readers to a great report titled Shattered Green Dreams: The Environmental Costs of Wind and Solar by Sarah Montalbano of the Center of the American Experiment. Robert Bryce is a journalist who has produced a great mini-documentary called SUNBLOCK: The Global Fight to Save Farmland From Big Solar and at the 5:03 minute mark has a great illustration of the absurd amount of area required by solar panels relative to combined cycle natural gas. As an aside anything Bryce writes on energy is must read, and keep in mind you’re reading a journalist who has a consummate understanding of the energy game sans the formal education, so there is hope out there. Another excellent resource is a book titled Sustainable Energy Without The Hot Air by David JC MacKay. It shows many figures outlining the Earth destroying amount of land area required by wind and solar, and a pdf version is available free of charge online here.

It is an observable fact that forests are cooler than grasslands, which are cooler than dirt clods, which are cooler than concrete parking lots, which are cooler than asphalt parking lots. To the extent people are peddling a bewildering fear of the Earth getting a little warmer, we really should stop and ask ourselves how much warmer a field of solar panels is than a field of food. Well, people have asked that question and it turns out to be around 5 degrees Fahrenheit, even relative to a surrounding desert, or a surrounding field…at night no less. We can’t help but think that land use was a key contributor to the hot temperatures in the 1930s. Twenty-three states established high temperature records in 1936 that stand to this day, and here we are again with a new technology with which to abuse the land.

We’re destroying the Earth here folks to prove that the nice duckies and fuzzy bunnies’ energy of wind and solar beats the big-meanie energy of hydrocarbons, hydropower, nuclear and select geothermal, also known as the stuff that actually works. We’d be remiss to end a piece so heavily featuring 1936 without arguably the most famous image of the 1930s. Good ole days hell, the good ole days are right here and now, provided we’re wise enough and humble enough to stay the course.

Good Ole Days in Nipomo, CA, March 6^th, 1936 | Florence Owens Thompson and Children Photographed by Dorothea Lange | Library of Congress

“♡ Like” this piece to remain low entropy. – TC

At noon on Sunday June 22, 1969, Lake Erie caught fire, or at least that was the catchy headline. More specifically the Cuyahoga River caught fire as it flowed through Cleveland, OH on its way to Lake Erie a stones throw from Standard Oil No 1 Refinery, where it all began for one John D Rockefeller. At the time natural resources were generally viewed more as a part of the industrial base, rivers in particular, and less as a part of the natural world. The Cuyahoga River had caught on fire on at least thirteen occasions since the 1860s according to local lore. This cavalier treatment of the natural world was all about to change though as momentum had been building amongst the United States populace for some time. In 1967, none other than California Governor and noted eco-warrior Ronald Reagan signed the Mulford-Carrel Act creating the California Air Resources Board. The air in Los Angeles was that bad. Turns out a conservative is just an environmentalist that hasn’t choked on the air yet, just as a liberal is a conservative that hasn’t been mugged yet; we like to keep things even here at Thermocon.

One hundred forty-five days earlier, on January 28, 1969, at 10:45am in the waters off Santa Barbara, CA well A-21 on Unocal’s Dos Cuadras Platform A blew out. The crew had to wrestle with the well for about fifteen minutes to get the well under control. They stopped the blowout, but little did they know that trouble was brewing below the surface.

Dos Cuadras Oil Platforms – Platform A Second From Left | Antandrus | Wikipedia

Platform A as well as its three sister platforms, were located six miles offshore, about a half mile apart, in 190 feet of water almost due South of Summerland, CA where the world’s first offshore wells had been drilled from piers in 1896. California at that time had a much different, and positive, view of the oil industry and a whole lot less indoor plumbing. We suspect that those two things are highly correlated. The Dos Cuadras Oil Field has cumulatively produced to date 260 million barrels of life giving, low entropy liquid energy that we call oil. It is still producing to this day and is a nice sized field, the 24^th largest oil field in California. California is no stranger to large oilfields, with a few that have produced over a billion barrels, and billions of barrels yet to go from a geological perspective.

In January 1969, however, a tremendous mistake had been made on Platform A. They were in federal waters past the three-mile limit, subject to only the light regulatory touch of the feds at the time, and they took full advantage by not even installing enough casing to meet those requirements. That resulted in a game of whack-a-mole breaking out on the seafloor as oil and gas found natural seeps and fissures near the surface and made them a whole lot more effective. They finally got the well killed, or so they thought, in the wee hours of February 7^th after nine days of impromptu education. Then on February 12^th three more locations on the seafloor were identified as flowing oil and gas to the surface, the whack-a-mole game had begun in earnest again. Ultimately it would take a relief well to stop the flow and even then, small seeps continued into 1970. It created a god-awful mess in a beautiful part of the country and the varied responses are illustrative of the different attitudes of the time and why this event is credited as the beginning of the modern environmental movement.

Thankfully, no one died as a result of the accident aboard Unocal’s Dos Curadas Platform A that fatefully day. According to Wikipedia, in response to questioning from a U.S. Senate Subcommittee, Union Oil President Fred Hartley replied "I don't like to call it a disaster, because there has been no loss of human life. I am amazed at the publicity for the loss of a few birds." To someone who was used to a pristine beach with a great view of Santa Cruz Island in the background, that may come off as a bit callous, and those four platforms that were tolerable previously now become a constant source of visual blight. But Fred Hartley was born in 1917, started with Unocal in 1939, rose to president in 1964, ultimately stepped down as president in 1988, resigned as Chairman of the Board in 1989, and died in 1990. If he had served in World War II that would have made him a card-carrying member of the Greatest Generation, as it sits, he was the quintessential civilian version. He held the attitudes towards nature that many of his time did, it was there to be bent to human will, and he didn’t need any long-haired hippies bemoaning the environment standing in his way.

Clean Up on Aisle Lake Erie | May 24^th, 1976 | Cleveland Press Collection | Cleveland State University Library

People from that era were on the tail end of humans in the West living with very little applied energy at their command. They died from all sorts of things, childbirth, snake bites, stepping on an underground beehive, being bit by a hog and the resulting infection, getting caught up in early rotating machinery, smallpox, polio, tuberculosis, you name it, everything. Even here at Thermocon, we are of an age where not necessarily all of our fathers managed to retain all of their fingers. Add to that there were a plethora of rivers that if you caught a fish out of them…you couldn’t eat it. Those of us born in the West after World War II have pretty well always had access to an ample amount of applied energy, as well as indoor plumbing, hard to overstate the importance of that. This has allowed us to place more value on peeling off some of our applied energy budget for safety regulations and environmental regulations, things our forbearers judged to be spurious.

Summerland Offshore Oilfield in 1915 | G.H. Eldridge (1854–1915) | Nature and Science on the Pacific Coast, Pacific Committee of the American Association for the Advancement of Science

Summerland Offshore Oilfield in 2009 | Antandrus | Wikipedia

This ample energy budget has allowed us to take the position, and rightly so, that not being able to eat a fish out of the river, enjoy a beach and the associated wildlife without a giant oil slick, or having bodies of water catch on fire are environmental disasters and they’re unacceptable. A beautiful and practical example of this is the difference between the beach head for the Summerfield offshore oilfield in 1915 and the pristine recreational beach that it was before oil and is now again.

At the risk of being a giant buzzkill, we’ll touch on a social aspect before turning to the thermoeconomics, the Equal Credit Opportunity Act of 1974. This act made it unlawful for banks to discriminate based on the usual laundry list of items, including sex. Prior to that many banks would require women to have a male family member co-sign on their account in order to obtain banking services. So, there’s really nothing new under the Sun, the de-banking thing has certainly been enthusiastically practiced in the past. This brings into possibility the scenario where a woman could be traded in for a younger model and then have the additional humiliation of having to get a male family member to go with her to the bank so she can get independently set up to finish raising the kids. This kind of thing certainly did happen, although it is important to note that even back then significant financial responsibly certainly did follow the man around and most lived up to their part of it. It’s an illustration of the importance of getting an education knocked out ahead of time as that degree may need to be dusted off, the trouble is, 1974 wasn’t that long ago.

The remainder of the laundry list of protected classes in that act were race, color, religion, national origin, marital status and age. Prior to 1974 there were a number of laws passed to codify the civil rights for these various classes as the way they were being treated was ethically and morally wrong. Per capita applied energy availability had increased drastically in the century before, so the concomitant increase in civil rights was not a coincidence, there was a bigger pie to share, and it was a whole lot easier to do the sharing. The reason we focus on women is that they are unique in that they must bear the children that keep the human race going and in the high entropy world of the past each woman had to have five to six children just to keep the population stable. What woman in her right mind would want to have six children in a high entropy world? In a future high entropy world women could in theory have their freedoms restricted out of necessity, a uniquely horrible possibility.

Different Water Carrying Methods | Mersham-le-Hatch near Ashford, Kent, 1960 | Getty

If you happened to catch the tail end of the WWII generation being in the workplace, a lot of them were a real treat, but in their own way, and of course some less so. They didn’t believe in Stop Work Authority; they believed in Stop Pay Authority; not going to have a greenhorn holding up one of their jobs. If you were too much of a pollution wuss to throw all that crap in that hole so we can all get out of here, you could be replaced with someone who would. They believed in traditional gender roles, even the women, at the time if you were male best to give the kitchen a wide berth, decent chance you’d get run out of there. They also believed in sticking with common blood and common Gods, a universal trait of all creeds and colors rooted deep in our tribal and feudal pasts, and one in particular that could and did lead to all sorts of man’s inhumanity to man.

So, they certainly had their faults. As a group they were not afraid of day drinking, and given the war wasn’t that far in the rear-view mirror, a lot of them were very privately wrestling with memories of the things that they had seen and the things that they had done. They couldn’t stand Elvis Presley or The Beatles but had a truly bewildering appreciation for The Lawerence Welk Show…good grief the horror. But even if it were done somewhat begrudgingly, a faction of them did initiate the increase in social freedoms that applied energy had made possible. Ultimately it fell to the next generation to properly implement it.

That brings us to the question of the day, why our continued and baffling pursuit of wind and solar? It is demonstrably inadequate energy. We believe they have positioned themselves as the energy sources of the environmental and civil rights movement; clean, green, freedom energy if you will. The truth is actually exactly the opposite, especially for the ladies. But proceeding undaunted, imagine a world where humankind has taken the finite, buried carbon energy in the Earth as a treasured gift from Mother Nature and used it to learn how to live in harmony with nature, taking only what the Sun provides us for our daily needs. A good PR outfit can weave that into a persuasive narrative that almost has no peer. The trouble is it’s dead wrong, with emphasis on the dead.

In our previous pieces For Whom The Wind Blows and The Sun Also Sets we plotted energy subsidies over time in both primary energy as MMBTU and as power, what we actually want, in MW-hrs. It’s high time we add fossil fuels to the graph. For the total primary energy of United States fossil fuels production, we used the Statistical Review of World Energy (2025) and for fossil fuel subsidies we used Congressional Research Service Report R4485 Figure I.

One Of These Is Not Like The Others | Thermocon

The above should be setting off alarm bells. The subsidy level for fossil fuels essentially rounds to zero. On a primary energy basis, the subsidy for fossil fuels, over the last 30 years, works out to a nickel, or $0.05 per million BTUs. Taking the 2^nd Law and Murphy’s Law haircut to get to dispatchable power yields $0.52 per MW-hr subsidy at a heat rate of 10,000 BTU per kW-hr, or 34% HHV thermal efficiency. That is the heat rate used for the calculation of the Dark Spread, so a nice connection to the marketplace. Also included for comparison is the total cost of natural gas, and it is less than the subsidy solar panels are being spotted by policy.

The subsidy for fossil fuels essentially rounds to zero because it must, the applied energy supplied by them is the basis of money in the first place, full disclosure we lifted this concept from the great Doomberg Substack. In the above calculation fossil fuels were knee-capped a bit by using a lower efficiency assumption and they still come out definitively on top. Fossil fuels generate taxes in amounts that are approximately the same, and many times actually greater than the subsidy amounts, something we may review in a future piece. That said, anytime an oil & gas operator wants to drill and produce oil & gas on a piece of property they must pay the mineral owner a royalty. Historically this was often an eighth (12.5%), a sixth (16.7%), or a fifth (20%) but these days the marketplace has pretty much driven that number to a quarter (25%).

When oil & gas is produced at the wellhead, it is worth nothing. The oil, gas, and natural gas liquids need to be separated and transported to a market hub where they can be sold. The separation and transportation cost is then inherently clipped off the price before the royalty is paid. We’ve heard talk that some geologically and/or geographically advantaged landowners have negotiated that they are paid WTI for the oil, Henry Hub for the natural gas, and Mont Belvieu for the natural gas liquids (NGLs) at the wellhead; companies are signing these things. That in effect means the royalty is more towards thirty percent. That is one helluva haircut straight off the top, but the very highest quality, lowest entropy energy sources can carry that number. Wind and solar can’t, they consume tax revenue, fossil fuels generate tax revenue.

We close with our best guess as to the source of the continued popularity of wind and solar; they’re associated with the civil rights movement and the environmental movement. It’s beautiful PR, the trouble is the physics lead to exactly the opposite – a loss of civil rights and destruction of the environment because they can’t produce any applied energy for us to do anything about anything. Perhaps we should extend a little grace to our imperfect forbearers and forgive their imperfections with regards to civil rights and the environment, but at the same time concede they figured out the energy thing. The arc of history is long, but it has lower entropy on its side, provided we’re wise enough and humble enough to stay the course.

A low entropy day at the pub sure beats a high entropy day of water carrying.

A Day at the Pub | Kings Road, Chelsea, London, 1967 | David Hurn | Magnum

“♡ Like” this piece to remain low entropy. – TC

In 1905 Albert Einstein published four scientific papers that have no peer in terms of quality, quantity and brevity of delivery. They were all published in German in the Annalen der Physik, and so profound were they that a special nom de plume was given to them; the annus mirabilis papers. The scientific world was abuzz at the time with trying to discern what the fundamental constituents of light and matter were, and Einstein served up four stunners on the subject.

The first paper was on something called the photoelectric effect. When light of a minimum frequency hits certain materials it is able to knock an electron loose and cause a flow of current. Einstein proposed that light was quantized as photons and these photons had a primary energy content that was directly proportional to their frequency. Since Newton it had been thought by most that light was a wave but turns out light has a particle aspect as well and today’s solar panels operate directly on this phenomenon.

The second paper was on Brownian motion, which showed that matter existed as atoms that bounced off one another like some possessed billiard balls wielding the electromagnetic forces of Maxwell’s Equations and combining in ways that chemists continue to flush out to this day. The concept that the world was made of atoms was gaining traction at the time, but some would say Einstein’s Brownian motion paper in 1905 was the coup de grace. The atomic hypothesis is of such importance that the greatest physics textbook of all time addresses it in Volume I, Chapter I as follows:

If, in some cataclysm, all of scientific knowledge were to be destroyed, and only one sentence passed on to the next generations of creatures, what statement would contain the most information in the fewest words? I believe it is the atomic hypothesis (or the atomic fact, or whatever you wish to call it) that all things are made of atoms—little particles that move around in perpetual motion, attracting each other when they are a little distance apart, but repelling upon being squeezed into one another. – Dick Feynman, The Feynman Lectures on Physics

The Feynman Lectures on Physics Volume I | Thermocon

The third paper was the beginning of the theory of special relativity. In 1864 James Clerk Maxwell published a theory of electromagnetism that implied that the speed of light in a vacuum was constant regardless of the observer. This contradicted directly the theory of relativity in use at the time that had been laid down by Galileo in 1632. In 1687 Sir Issac Newton published the Principia which explained Newton’s Three Laws of Motion and his Law of Universal Gravitation, an astounding mental achievement, especially for the time, and it rested on the foundation of Galilean relativity. In 1887 the Michelson-Morley experiment famously showed that indeed the speed of light was constant in a vacuum. So, all Einstein did was replace Galileo’s relativity with Einstein’s special relativity and Newton’s mechanics with Einstein’s mechanics. Not bad as rosters of accomplishments go.

The fourth paper Einstein published in 1905 was the one that yielded arguably the most famous physical concept of all time, namely that mass and energy are two different aspects of the same thing, and without doubt led to the most famous equation of all time.

Not bad for a year’s work; explain the photoelectric effect that had been a mystery since 1839, show that the world is made of atoms, completely revise the laws of mechanics and demonstrate that energy and mass are two aspects of the same thing. That’s enough to make one want to light up a smoke and crack open a roadie…annus mirabilis papers indeed.

It is worth mentioning that engineers with some modicum of mathematical aptitude can follow the math in the four papers mentioned above. In 1915 however, Einstein published his General Theory of Relativity, and it was truly a tour de force…gravity according to Einstein. It is rare to find the engineer with the intellectual horsepower to follow this theory and unfortunately, we here at Thermocon are not among them. Nor would it appear that the Nobel Prize committee of the time could either. However, in 1919 Sir Arthur Eddington measured the deflection of light by the Sun during a total solar eclipse and it agreed with Einstein, not Newton. So, by 1921 the Nobel Prize committee had figured out this guy named Einstein deserved a Nobel Prize, but they were not quite sure what for. His famous E = mc² would not be proven until 1938, special relativity seemed a little odd, general relativity totally baffling, and sure, the world was probably made of atoms, but we’ve got this harmless little lark over here called the photoelectric effect, let’s go ahead and award him a Nobel Prize for that. It would prove to be a well-deserved award, albeit for a discovery which would have a bleak energy future leading many down the road to nowhere.

Every second of every day the Sun baths the Earth in life giving photons imparting a primary solar energy flux of 1.36 kW per square meter at the top of the atmosphere when the Earth is viewed as a disk from the Sun. If we’ve done the math right that works out to a constant heat flux of 173 million GW of primary energy from the Sun. According to the 2025 Statistical Review of World Energy human energy consumption in 2025 was 592 exajoules. That works out to a constant primary energy heat flux of 18,800 GW. Dividing the two yields 9,200. This matches well with the often tossed around figure that every day the Sun gives us ten thousand times as much energy as we need to power human civilization. If we just figure out how to harness that energy we can then dance through the tulips and daffodils and enjoy our newfound Shangri La as we play with the duckies and fuzzy bunnies.

Pollinators | These Habitats Are Essential to Life on Earth | Thermocon

Not so grasshopper, we’ve made at least three boneheaded mistakes, the first being that only about half the energy in the Sun reaches the surface of the Earth. The second is that human energy needs fluctuate, so maybe our peak requirements are two to three times higher than our average. Depending on the factor used then the Sun only has our energy requirements covered by around 2,000 times. One may think ok, that’s not bad, we can still get there from here, but the trouble is we can’t. We haven’t accounted for our third and by far most costly mistake, namely not accounting for the 2^nd Law, Murphy’s Law, other general haircuts, and finally the fact we must manufacture a machine of some type in the first place to drive that primary energy to applied energy. Then we may even need to manufacture another machine to shift that applied energy in space and time so we can accomplish some sort of desired task at hand. Sunlight is a very high entropy, low quality, energy source, it’s very diffuse and very close to random heat.

To power the modern world, solar energy requires a subsidy. If the exchange of money is just an overlay for the exchange of applied energy, a concept we got from the great Doomberg Substack, the subsidy is a cover for the fact that the imbedded applied energy in the capital expenditure is just too high. In the case of solar energy, the tax incentive used almost exclusively is the Investment Tax Credit (ITC). Using the solar energy generated in the United States, in MW-hrs, as published by the Statistical Review of World Energy (2025 version) and the ITC data as published by the Congressional Research Service Report IF10479 we get the average subsidy for solar energy of $33.62 from 2011 thru 2024. That number, like the rent, is just too damn high.

In our last piece called For Whom the Wind Blows, we published a similar calculation for the wind energy subsidy and we arrived at an estimate of $10.65 per MW-hr. This time around we’ve included the annual average price of natural gas at Henry Hub converted to power at a 7,000 BTU/kW-hr heat rate as a way to wrap some physical intuition around the numbers. In the case of solar, the subsidy is greater than the entire cost of natural gas used at an easily achievable level of efficiency. This is a bit alarming.

It is a historical fact that medieval humans were able to get enough applied energy grouped together in one spot at a given time to manufacture a windmill. In this case, the amount of applied energy required to manufacture the machine was less than the amount of applied energy the machine could generate over its lifetime to perform standard of living increasing tasks as well as provide for its own maintenance, also known as beating back the relentless forces of entropy. However, the entropy of wind is too high to power modern society. We have already driven the entropy of our society to well below that which wind can provide. Therefore, wind energy requires a parasitic subsidy of roughly ten dollars per megawatt hour in order to play in our modern low entropy energy mix.

Solar energy is even worse, to the point that we will postulate that medieval humans would not have been able to get enough applied energy grouped together in one spot at one time to manufacture a solar panel. Its entropy is too low; it is too highly ordered. This subsidy level for solar photovoltaic energy is indicative of a technology that is fully parasitic and is a net drain of applied energy upon society. We’re afraid that we have moronically determined the civilization destroying level of energy subsidy and it’s around ten to thirty dollars per megawatt hour.

We will concede that the Sun is very seductive, and for some reason even those seasoned in thermodynamics are not immune. From time to time, we here at Thermocon have gone down rabbit holes chasing the Sun’s sirens song. So, it’s worth reminding that anytime you find yourself being seduced by the potential of the raw power emanating from the Sun, take your dominant hand, make a fist with it and punch yourself in the face as you’ve experienced a momentary lapse of reason in which your logic has dispensed with the 2^nd Law. Wind turbines are a well disguised reduced standard of living, solar panels are flat out death.

It becomes interesting to ask the question why the constant drumbeat about how the costs of solar photovoltaics are coming down, it’s the cheapest source of electricity, all that type nonsense. The answer is that it simply isn’t true, solar photovoltaics are the most expensive source of electricity as evidenced by the data, years of data no less. The cost of solar energy was, is, and remains beyond the pale. But this exercise in stupidity isn’t the worst of it, there is a larger strategic issue at play here. This has all been made possible by cheap Chinese coal. Coal is a very low entropy, high quality, energy source and it can be burned cleanly if you’re willing to post the added capital expenditure and operations & maintenance budget. If not, all that can be skipped if it is practiced in an unbridled capitalistic lowest cost manner, which presupposes you’re cool with choking on some fumes and dumping ash in the river.

Returning to the physical concept, by taking that low entropy coal and driving it to high entropy, also known as burning it, one can drive the entropy of silicon and aluminum to a low level that we call a solar panel. The electricity generated by solar photovoltaics is not coming from the Sun, it’s coming from Chinese coal. The subsidy is then more like a self-tariff. All the solar panels are made in China, so the money in effect flows through to the Chinese solar panel suppliers in the form of a higher price. We are paying China to use their low entropy energy to manufacture a high entropy harvesting energy device that we then let folks plug into our grid and further hollow out our high quality, low entropy base. It’s hard to overstate just how thoroughly we are being pantsed here. Or perhaps we aren’t being pantsed at all and are just scoring energy own goals but, either way the net effect is the same…reduced standard of living and less ability to defend ourselves from those wielding low entropy energy sources.

We’ve discussed the concept of Energy’s Ladder in a previous piece. The key takeaway is that primary energy is a requirement, but it is not sufficient. A machine is required to force that primary energy through a cycle to yield Gibbs Free Energy out the other side, also known as taking the 2^nd Law haircut. Solar photovoltaic panels thermodynamically bump up against something called the Shockley-Queisser limit. Physically, many of the photons that make their way through the Earth’s atmosphere no longer have a sufficiently high amount of primary energy to produce any Gibbs Free Energy. They’re great for keeping the Earth warm but not for getting anything done. The Shockley-Queisser is basically one third, a nice round easily retained number. So, for every 1,000 BTU in solar radiation as primary energy only 333 BTU are available to accomplish something. This is even worse than wind which, with the Betz limit, clocks in at 593 BTU theoretically available and methane which is far superior to at 918 BTU.

We should note that this analysis may be somewhat unfair to solar in that with an infinite number of poles, the theoretical limit on efficiency is more like 86% provided we’re understanding things correctly, we’re not Einstein’s around here after all. The Gibbs Free Energy of methane is based on the concept of forcing it through the Carnot Cycle with an infinitely large heat exchanger, so these types of infinite theoretical concepts are not unique to solar. That said, the level of subsidy indicates that solar is demonstrably inferior to wind and that is commensurate with the 333 BTU of Gibbs Free Energy estimate, so we’ll roll with that for now.

In the case that money has a thermodynamic character, we strongly suspect that anything from primary energy on through to dispatchable power cannot be subsidized as they are the basis of literally everything else. It also means that any energy business based on solar panels or wind turbines will by definition end up in bankruptcy. Their entropy is too high, so they consume applied energy, and if money is really applied energy, they simply consume it until it’s gone.

Our view is that those who advocate the concept of money being an overlay for the exchange of applied energy in the form of services and capital expenditure are correct. Alternatively, if money has no relation to thermodynamics and we can just print as much as we like, then the preceding analysis is moot in its entirety, just be mindful that people die in the cold, and the cold mostly comes at night…as the Sun also sets.

I Have Become Death, The Destroyer of Worlds...Or At Least Arable Farmland | Freepik.com

“♡ Like” this piece as the Sun also sets. – TC

Around the year 5,000 B.C. Norseman from what would become modern day Norway, Sweden and Finland began traveling by boat around the confines of their overgrown lake we now call the Baltic Sea. They were using a new source of applied energy, namely wind harnessed via the sail. It provided the benefit of not requiring a “rowing class” of passengers aboard ship, some of whom may have been there willingly, some less so. They had yet to discern how to sail into the wind but suffice to say they could sail downwind, harnessing the primary energy in the wind to yield a defined force in a defined direction via a machine called a sail. They had discovered a small edge in the energy game, and by the year 700 A.D., after only a few thousand years of study, they had begun building their longships with a keel and had discerned how to sail up wind.

Viking Longship | Wikipedia

Once able to move North, South, East or West as long as some wind was blowing, they would use this new energy edge to introduce the rest of Northern Europe to the wisdom of keeping a sharp eye out for that long blond hair coming out of the North. The I Got Dibs version of foreign policy that was in vogue at the time benefited greatly from a primary energy source that could be harnessed by a machine to yield a defined force in a defined direction. In 874 A.D. the Vikings would use that force to sail west into the wind and settle Iceland. Then 122 years later in 986 A.D. they would banish an ornery man named Erik the Red who would utilize the power of the sail to go on and sail further west to settle Greenland. The Greenlanders would explore Newfoundland but never establish a settlement there, we suspect that supply chains may have caught up with them – they needed a bigger boat.

The medieval warm period would come to a close around the year 1250 and the Greenlanders would hold out for another couple centuries making it almost an even 500 years of settlement. Ultimately, they would cede Greenland back to the Inuit, who had been there for a few thousand years before and would continue on afterwords. The cold was able to do what could not be done on the battlefield…run off the Vikings.

Concomitantly, further south the Egyptians were also mastering the sail, and oddly enough around the same time, say 5,000 B.C., to ply their gift from Mother Nature, the Nile River, and ultimately the eastern portion of their own overgrown lake we today call the Mediterranean Sea. The Carthaginians would take an early lead in sailing expertise and become masters of the Mediterranean from Sicily to the west, and the Romans and Greeks would have separate spheres of influence on the north side. This part of the world would have to wait a bit longer than the Vikings to discern how to sail into the wind. That said they all incorporated the new found source of power by trying to invade one another but mostly coming away with their noses bloodied.

That began to change around the year 250 B.C. when the Romans captured a Carthaginian ship and by incorporating the learnings it provided, they were able to combine their seasoned ability to conquer things with the superior utilization of applied energy from wind obtained via the sail. The peak of the Roman Empire would soon follow, and though the Roman Empire would ultimately fall before sailing upwind became a thing in this part of the world, the power of the wind certainly had been harvested to military advantage. Once wind had been utilized for the inherent joy in changing the foreign policy of others, folks to the East would begin harnessing the power of the wind to do more mundane tasks.

Ancient Windmills of Nashtifan, Iran | Hadidehghanpour | Wikipedia

Beginning in the 9^th century from the Persia on through to Mesopotamia and the Levant, rudimentary but fully functional wind turbines would be constructed to accomplish the time-honored task of moving water uphill. This was an ancient example of using applied energy to greatly enhance the standards of living at the time, especially for the fairer sex. Without proper supervision even modern males will wear the same pair of jeans for a week, so we figure it’s a safe assumption that the ancient version of this was well in force at the time, and the responsibility for basic hygiene and manners in general fell disproportionately to the ladies.

In the 12^th century wind turbines began showing up in medieval Europe to pump water and accomplish another mundane task, the milling of grain, thus the term windmill. Previously humans or oxen were used to turn the mill, or grain was milled by hand. Holland would be a centerpiece of this development as it allowed them to take back some of the land from the sea and to this day many have a nostalgic view of these marvelous medieval machines.

Kinderdijk Windmills | Williard84 | Wikipedia

Then come the late 15^th century, boats would give way to full on ships powered by the sail, and in August of 1492, Christpher Columbus set sail for the East Indies, by heading West from Spain. Unbeknownst to them their future mastery of this new source of primary energy required them to waste a tremendous portion of it due to the second law of thermodynamics, however had they even known about thermodynamics at that time they couldn’t have cared less as not everyone had pants, efficiency would become a thing a little bit later. They had managed to harness a very high entropy source of primary energy that was, and remains, very close to random heat to yield a defined force in a defined direction. Given the low standards of living of the time, however, they could force that high entropy primary energy source through a thermodynamic cycle using a machine, such as a sail or windmill, to yield at least some applied energy out the other side that they could materially benefit from.

As late as the 1970s, the American Midwest was dotted with operating windmills pumping water from wells down on the river bottom up to cisterns which gravity fed the house and all the livestock from further uphill. Even with large cisterns the high entropy of the primary energy imbedded in the wind in many cases proved insufficient to reliably provide water to the livestock and a single-family home. In that event, call a water truck from town to make a delivery to the cistern. This is a practical example, if there ever was one, on the difference between primary energy and applied energy at a time and location of our choosing. To accomplish anything worth doing, primary energy is a requirement, but it is not sufficient, one must have a machine to force that primary energy up Energy’s Ladder. Eventually, due to the rural electrification program, and the fact that each state has two Senators, many of these windmills were replaced with a power drop from the road. We here at Thermocon are personally familiar with a 200-foot power drop that was installed in the late 1970s. The farmer would replace the windmill powered pump with an electric pump; Uncle Sam would take care of the power drop.

The Vaunted Flint & Walling Model No 9 | Mid-America Windmill Museum

Just as steam turbines are theoretically approximated by the Steam Ranking Cycle, gasoline engines by the Otto Cycle, diesel engines by the Diesel Cycle, and gas turbines by the Brayton Cycle; windmills are also theoretically approximated by a thermodynamic cycle, in this case the Betz Cycle. Physically what the Betz Cycle represents is the fact that if all the energy in the flowing wind were extracted by the wind turbine, the wind would come to a full stop and not get out of the way for the wind coming behind it. Therefore, as laid down by Betz, an ideal wind turbine will extract 16/27ths or 59.3% of the energy in flowing wind.

This is a great illustration of the second law of thermodynamics at work. Every 1,000 BTU of wind energy has only 593 BTU of Gibbs Free Energy embedded in it. Contrast this to the methane molecule that for every 1,000 BTU of chemical energy has 918 BTU of Gibbs Free Energy embedded in it. The theoretical haircut of wind energy is four times that of methane straight out of the gate. This is but the first rung on Energy’s Ladder, with the Murphy’s Law haircut, the Dispatchability haircut, the Rube Goldberg haircut and the Homer haircut all awaiting wind on the journey up Energy’s Ladder to yield intelligently applied energy. And then we’re still not done, we have to use some of that applied energy to make the wind turbine in the first place. As evidenced by medieval humans, there is actually some hope for wind energy yielding net applied energy to accomplish tasks beyond manufacturing the wind turbine in the first place, but it pales in comparison to modern low entropy energy sources.

In order to power the modern world, wind energy requires a subsidy. If the exchange of money is just an overlay for the exchange of applied energy as others have surmised, the subsidy is a cover for the fact that the imbedded applied energy in the capital expenditure is too high. This ultimately can disguise a technology that is fully parasitic and it is the calling card of a primary energy source where the entropy is so high that it cannot correct itself to the low entropy electrical energy flow required to power the modern world. It’s worth pausing for a moment to consider just how high that subsidy of applied energy is.

In the case of wind energy, the Production Tax Credit (PTC) is the primary form of incentive used to encourage development. Using the wind energy generated in the United States, in MW⦁hrs, as published by the Statistical Review of World Energy (2025 version) and the PTC data as published by the Congressional Research Service Report R43453 we get the average subsidy for wind energy being $10.65 per MW-hr from 2008 thru 2023. We would note that during this period some wind energy projects elected to use the Investment Tax Credit (ITC) so the subsidy estimate graphed below is a little bit light, but we believe it captures the vast majority.

Wind Subsidies | Thermocon

In order to wrap some physical intuition around the size of this subsidy there are a couple additional lines in the graphic. The blue line represents the PTC as introduced in 1993 as $15 per MW-hr indexed for inflation and set to sunset in 1999. As the time honored saying that there’s nothing quite so permanent as a temporary government program goes, the PTC has been renewed more times than one can count since its intended expiration in 1999. There is a significant delta between the theoretical PTC in the legislation and the realized PTC in practice. The realized PTC is lower because the PTC rolls off after a project has been in production for 10 years, we suspect that accounts for the vast majority of the difference. Another line on the graphic is natural gas at $3 per MMBTU and a heat rate of 7,000 BTU/kW-hr as used by industry in the calculation of the spark spread. It shows that the wind energy subsidy is about half the cost of the natural gas needed to fuel a gas turbine, so $10 per MW-hr, or one (1) cent per kW-hr if those units are preferred, is a lot.

One (1) cent per kW-hr is of order of what it takes to maintain an industrial size natural gas engine burning clean natural gas. If you’re going to burn landfill gas or biogas the O&M cost roughly doubles to more in the neighborhood of two (2) cents per kW-hr. If money is just an overlay for the exchange of applied energy as others have surmised, the wind subsidy is of order of the amount required to beat back the relentless forces of entropy when it comes to maintaining a natural gas engine generator. Physically the wind requires being spotted this amount of applied energy to account for the fact that its entropy is too high to power the modern world and should give pause to those for whom the wind blows.

“♡ Like” this piece to ensure you’re not being followed. – TC

On May 4^th, 2005 the United States Postal Service held a First Day of Issuance Ceremony at Yale University’s Henry R. Luce Hall to announce their new American Scientists series. The four scientists that had a commemorative stamp created in their honor were Yale’s own Josiah Willard Gibbs, geneticist Barbara McClintock of the Cold Spring Harbor Laboratory, mathematician John von Neumann of Princeton, and physicist Richard Feynman of Caltech. The intellectual horsepower of this group is hard to overstate. McClintock won the Nobel Prize, unshared, in 1983. Feynman shared the Nobel Prize with two others in 1965 and von Neumann, it can be argued, was too intelligent for the Nobel Prize but they didn’t have a higher one to award.

Even given the pedigree of McClintock, von Neumann and Feynman, there was a reason the ceremony was held at Yale. Yale was the first university in the United States to offer a PhD, and in 1863, Yale awarded Josiah Willard Gibbs the first PhD in engineering ever granted in this country. It was only the fifth PhD of any kind in the United States at that point. Suffice to say Americans on the doing side of things outnumbered those on the thinking side of things at that time, but when it came to the thinking side of things, Gibbs would have very few peers. Following graduation Gibbs spent three years as a tutor at Yale and then spent three years in Europe, taking in the continent which was a hotbed of theoretical thermodynamics at the time. Most of us would be looking for a hotbed of anything but theoretical thermodynamics, however, Gibbs came from a long line of academics on both sides of his family, and Josiah Willard Gibbs, Sr was a professor of sacred literature at Yale.

Upon return to New Haven, Gibbs would continue to apply his engineering knowledge to the design of practical items, such as an improved governor for Watt’s steam engine, and improved gear design among other things. In 1871 Yale appointed Gibbs Professor of Mathematical Physics and he would remain there for the rest of his life, producing a series of papers on thermodynamics from 1873 – 1876 that would be standard bearers of the field.

Josiah Willard Gibbs Commemorative Stamp | National Postal Museum | Copyright United States Postal Service. All rights reserved | Designed by Victor Stabin

Two other thermodynamic legends, James Clerk Maxwell and Ludwig Boltzman, together with Gibbs flushed out the principals of statistical mechanics and in fact Gibbs literally wrote the book on the subject. From Wikipedia:

According to Henri Poincaré, writing in 1904, even though Maxwell and Boltzmann had previously explained the irreversibility of macroscopic physical processes in probabilistic terms, "the one who has seen it most clearly, in a book too little read because it is a little difficult to read, is Gibbs, in his Elementary Principles of Statistical Mechanics".

Even Al Einstein, after re-discovering some of Gibbs ideas around the year 1900 was reputed to have remarked something to the effect that if he had known about Gibbs work, he wouldn’t have bothered with a few of his thermodynamic papers. It turned out that Gibbs had been there and done that, and one of the main things he had been there and done was lay down the logic of something that came to be called the Gibbs Free Energy. It is the maximum amount of theoretical work that can be extracted from a given amount of primary energy, or power integrated over time to put it in a more intuitive form. Gibbs Free Energy has special status in thermodynamics in that if you know it, you have defined the boundaries of the system. It’s generally wise to avoid laying down equations when focusing on the written word but an exception is warranted here.

Gibbs Free Energy

It is worth pausing for a moment to consider what we are really after out of primary energy. What we are after is power, the ability to perform defined, non-random work of some type at a time and location of our choosing to produce something of value. In the great historic past this something was almost exclusively food, water, shelter, heat and…pants. The trappings of the good life are available to us now, thanks to the intelligent application of energy. The time rate of change of the Gibbs Free Energy is the theoretical maximum power that can be produced by a system and the equation above simply states that it is the primary energy in the form of heat minus the 2^nd Law haircut. Gibbs Free Energy represents the ability to do something intentional, nothing happens unless there is a downhill flow of Gibbs Free Energy, chemical reactions, nuclear reactions, imparting a non-random directed physical force, you name it, nothing.

Haircuts abound in thermodynamics, every time you turn around it seems, you’re taking a haircut. Early revolutions in technology were in fact largely revolutions in efficiency, also known as the minimization of haircuts. From Newcomen to Watt and on to Otto and Diesel, the increase in thermal efficiency was from something starting around one percent on to the mid-twenties to low thirties. A three or four to one haircut sure trumps a hundred to one haircut, and we have pursued this ethos with our modern obsession with efficiency, and while admirable, we may be taking things a bit too far, as there is also imbedded energy in the capital expenditure to achieve these efficiency improvements. It may prove instructive to take a little deeper look at the different forms of energy involved.

When viewed from this lens, primary energy is kind of a funny thing – you can’t do anything without it, but you can’t do anything with it either. Primary energy is a requirement, but it is not sufficient. It needs to be shepherded up something we’ll call Energy’s Ladder. To do this, a machine is required that can force that primary energy through a thermodynamic cycle to yield Gibbs Free Energy out the other side, thus taking the Second Law haircut along the way. Nothing ever goes ideally, so next comes Murphy’s Law haircut, something that we’re all likely a little too familiar with, but once that’s out of the way we have what we’re after, namely power, but with one big caveat…it needs to be at a time and location of our choosing.

If you can get your hands on some power and do something remotely intelligent with it, a high standard of living is not far away. As an aside, financial markets track one aspect of this, namely the difference in price between power in $/MW•hr and primary energy in natural gas in $/MMBtu with an appropriate heat rate applied, and they call it the Spark Spread. There is a similar calculation for coal called the Dark Spread. In either case we are beginning to connect thermodynamics and economics.

Energy’s Ladder | ThermoCon

Once we have power, that power needs to be applied intelligently. If it is produced at a time or a location where it cannot be used then it must be returned down Energy’s Ladder and stored as primary energy, the only proven version of which at this time is pumping water uphill coupled to a nuclear fission power plant. Power is extraordinarily hard to store, an example of pure power being stored would be a large block of spinning steel, such as a steam turbine, gas turbine, or a flywheel. Electricity is not quite pure power, but electric motor efficiencies are so high that it is close enough to just assume flowing electricity and power are one in the same. Once the demand for that flowing electricity stops a problem quickly emerges…start calculating the size of a capacitor required to store a reasonable amount of electric charge and things start getting to be truly massive, on order of the size of the Earth, in that range. Due to the high interest in non-dispatchable energy, other ideas of using spurious electricity to separate carbon dioxide from air and produce hydrogen from the electrolysis of water followed by sending those molecules through well understood synthetic fuels processes such as Fisher-Tropsch, have been proposed. While the production of fuels from electricity is easily stated, to say that haircuts abound when pursuing this strategy is a colossal understatement.

Retreating back to more practical matters, once we have power at a time and location of our choosing, there are a couple additional haircut to absorb, and we’ll call the first one the Rube Goldberg Haircut. This is a field we are not all that familiar with, and so therefore we will now proceed to opine widely on the subject. The general thought is once you have power, completing the objective of the day involves kinesiology related inefficiencies. Photos of old factories with belt drives and rope drives all over the place come to mind, and it is no wonder the modern labor movement began, looks to be a lot of ways to lose an appendage, or two.

Mechanical Transmission of Power | Rube Goldberg Haircut | The Oil Drum

The human hand, with its opposable thumbs, is a very efficient device, with perhaps 50% Rube Goldberg efficiency. Our understanding, albeit limited, is that modern air lines, hydraulic lines and of course electrical cables and their associated air motors, hydraulic motors and electrical motors can distribute power pretty effectively, but not as effectively as the human hand. Another example would be a 4,000-pound truck routinely used to transport a 200-pound person; these inefficiencies abound in a high standard of living society. So, this Rube Goldberg effect is not a small haircut, it’s of the order of the Second Law and Murphy’s Law, a factor of two, something like that.

To get from primary energy to power, with modern combined cycle gas turbine power plants, a thermal efficiency of 50% is easily attainable. Not to be outdone, the largest diesel engines ever made, in-line 14 cylinder units with a bore of over three feet and a stroke in the neighborhood of eight feet, operating at 102 rpm, producing over 100,000 hp while burning asphalt, can now surpass 50% efficiency, a modern marvel if there ever was one. Peak performance is roughly a haircut of divide by two. Adding in the Rube Goldberg haircut and we’re at a factor of four assuming world class performance.

Alas, we are still not done with the haircuts. Once we push primary energy on through to applied energy, we must still apply that energy intelligently. We’ll call the supposedly last haircut on the way to intelligently applied energy the Homer Haircut in homage to Homer Simpson. Anyone who has purveyed the results of their Saturday afternoon home improvement projects on a Sunday morning can attest to the Homer haircut being a real thing.

The actual last haircut is the most difficult of all to fathom as it is recursive in nature. It takes intelligently applied energy to do two things, namely produce the source of primary energy, such as coal, oil, gas, or uranium and secondly produce the machines needed to turn that primary energy into dispatchable power. With hydroelectric, geothermal, wind and solar there is only a need to do one of these things, namely build the machine; the source of primary energy is free. When adding in this capital related haircut our ratio of four to one turns into something like a factor of eight, again assuming we’re world class, a decent number of folks say it’s more like a factor of ten.

We would highly recommend attending an energy exhibit of some type to get a look at some of the marvelous machines that power modern life. The Society of Automotive Engineers (SAE) Congress in Detroit is a good one, and the Offshore Technology Conference (OTC) down in Houston is another…Lee Greenwood anyone?…but there are many others. If you come across a cut-away version of an engine or a gas turbine, stop and ask yourself how much primary energy (MMBtu), Gibbs Free Energy, Power (MW•hrs) or Intelligently Applied Energy (MW•hrs) is imbedded in that thing. Who knows, there’s no way to measure it from first principles and the calculation can quickly become a reflection of the preferred outcome of the calculator. In this manner there is a net present value type calculation involved in the thermodynamics of energy and although money is currently the best way to measure it, it has nothing to do with money; it is simply the physics of the situation. There is some hope of getting a reasonable estimate as others have postulated that money is in fact just an overlay for humans to exchange intelligently applied energy, and there is a field that studies that subject, called thermoeconomics, which is the inspiration for the name of this substack, ThermoCon. Money should in theory be relatable to MMBtu or MW•hrs if it is unencumbered by subsidies or money printing, so perhaps reasonable estimates can be obtained.

We would be remiss to close without pursuing a little deeper look at entropy. Coal, oil and gas are high quality, low entropy fuels and nuclear fission of the uranium atom is off the charts, having an entropic haircut that essentially rounds to zero relative to everything else. We suspect that the extraordinarily low entropy of uranium fission is the reason the only unsubsidized and unmandated commercially viable version of energy storage currently in use to our knowledge is water pumped uphill by uranium fission. The other two commercially viable sources of power, namely geothermal in Iceland, California and a few other places and hydroelectric dams have moderate entropy levels, free primary energy sources and they are dispatchable. High entropy fuels such as wind and solar have a much larger second law haircut and as a result they require a large subsidy, but at least they don’t require the building of two machines such as coal, oil, gas and nuclear…or do they?

In lieu of building a second machine, such as battery, pumped water or other storage device, wind and solar are allowed to connect directly to the grid and in effect transport their non-dispatchable high entropy haircut to everyone else connected to the grid. This manifests itself in the form of higher prices, in effect an additional hidden subsidy, or better termed additional required applied energy. That high entropy primary energy permeates society in ways that are not always readily obvious, and are fairly malevolent at first but they are increasingly damaging and dangerous as they approach 25% of electrical supply.

The point of all this rambling up, down and around Energy’s Ladder, is that even if your primary energy sources are free, by the time you build all the things necessary to reach applied energy status, there can be nothing left. It is hard to overstate the importance of this point, you can increase the size of your primary energy base, but if those sources are high entropy and intermittent to boot you can actually reduce the amount of applied energy and thus standard of living available to your citizenry. Despite their being presented as clean and an example of humans learning to live in harmony with nature, high entropy energy sources are parasitic, in effect increasing the amount of high quality, low entropy energy required by society to beat back the relentless forces of the second law of thermodynamics.

While we’re on the subject of the road to hell being paved with good intentions, in 1990 a film debuted in the great dystopian tradition of the late 1970s and early 1980s…it was called Jacob’s Ladder. If that movie left you with the impression that you just watched something extremely profound but weren’t entirely sure what that was…you are not alone. We suspect that future generations will look back on this period of energy madness and think…it was The Ladder man, they did it to themselves…

“♡ Like” this piece to ensure you’re not being followed, Skanky is out there. – TC

“The substitution of the internal combustion engine for the horse marked a very gloomy milestone in the progress of mankind.” – Winston Churchill

In 1791 an Englishman named John Barber received the first patent for a gas turbine. It contained all the essential concepts of today’s gas turbines, specifically a compressor to compress air, a combustion chamber to inject and burn the fuel in said air, and an impulse wheel to extract work, in theory enough to power the compressor and have some left over for useful work of some type. Like many creations of the mind, the technology did not yet exist at the time to physically build this thing and it would languish in the minds of inventors while the diligent hard work of others produced the necessary skills and tools to bring it to life. At the time of patent issuance, Barber was 57 years old, he would have needed to live to age 169 to see the first rudimentary version of his invention come to life in 1903, and age 205 for the first commercially viable application in 1939.

By 1791 the Boulton-Watt Steam Engine had largely conquered the power market, and technologically Barber’s gas turbine was nothing more than a pipe dream at this point, but the concept reflected much keen thought. The foremost of those thoughts were using air as the working fluid as opposed to steam, avoiding the need for a boiler, ejecting the combustion byproducts to the surrounding air to avoid the need for a condenser and compressing the air beforehand. By adding the heat directly to the working fluid and eliminating the need for heat exchangers on the front and back end, being large and bulky as they are, one could envision a simpler, cheaper, and more compact device for power production, and envision these things the inventors and tinkerers of the time certainly did.

French engineer Philippe LeBon D’Humberstein first theorized the compression of air prior to combustion in a two-stroke engine in 1801. English inventor and mining engineer Richard Trevithick produced the first successful pressurized steam engine in 1800 and American Oliver Evans enthusiastically followed shortly thereafter. They met with more than their fair share of boiler explosions as James Watt had feared. It turned out that compressing things before heat addition was no joke technologically, especially considering that the modern steelmaking process was not flushed out until the 1850s, and up until then things were still being made of pig iron.

Given the theoretical drawbacks, but the practical benefits, various inventors pointed their energy and ingenuity towards producing atmospheric pressure internal combustion engines…what proved to be short on efficiency was long on remaining alive. These efforts culminated in Belgian engineer Jean-Joseph Etienne Lenoir’s two-stroke atmospheric engine of 1860. It is widely considered the first commercial internal combustion engine and a few hundred units were manufactured under license, some of which ran for a good number of years. Considering the first recorded atmospheric steam engine, the Newcomen, was installed in 1712 near Dudley Castle, Staffordshire, it had taken a mere 148 years to figure out how to dispense with the heat exchangers.

A Few HP Anyone? | The Lenoir Engine

French engineer Alphonse Eugène Beau de Rochas was the first to patent the four-stroke internal combustion engine in 1862. German engineer Nicolaus Otto and mechanic Michael Zons actually built a four-stroke prototype in 1862 based on a modified Lenoir engine. It self-destructed shortly into its maiden run, thankfully they both survived. Proceeding with a new appreciation for the merits of the atmospheric engine, Otto would revert to that design mantra and set up the first company dedicated to the production of internal combustion engines, NA Otto Cie in Cologne, Germany, in 1864. He would later perfect the four-stroke internal combustion engine, the key attribute being in-cylinder compression of the fuel air mixture, prior to combustion, without blowing up, and in 1876 would begin mass manufacturing as Deutz Gasmotoren Fabrik. The theoretical thermodynamic cycle that approximates its operation is to this day referred to the Otto Cycle, not the de Rochas Cycle, so it would appear historians valued building the thing over thinking it up in the first place, a practice we believe certainly has merit. The production of the atmospheric engine would be discontinued in 1882, and much like previous progress on the steam side, the driving force would be a step change increase in efficiency from the low single digits, as well the units themselves being a whole lot smaller due to…you guessed it…no heat exchangers.

In the same spirit as the Watt Engine 107 years before, the Otto Engine was really a step change for the better in the human condition, and as one would imagine, the Deutz Gamoteoren Fabrik would attract a number of talented employees as well as competition. Two of Otto’s employees, manager Gottleib Diamler and engineer Wilhelm Maybach wanted to take the show on the road if you will, but Otto preferred to stick with stationary engines. In a tradition as old as time eventually the students outshined the master and in 1882 Diamler and Maybach struck out on their own, further south in Stuttgart, to put internal combustion engines in anything that moved; boats, trains, and automobiles. Considering the automobile had yet to be invented, it was truly a maverick move.

They ended up settling on motorizing a bicycle with their innovative grandfather clock engine in 1885, which operated at 600 rpm versus the more standard 120 rpm of the Otto, thus sweating the capex a little more by increasing the number of power strokes per unit time. They also got sued for patent infringement by Otto. An attorney managed to dig up the de Rochas patent from 1862, which no one had ever heard of, and it resulted in a German court nullifying Otto’s patent which would have run until 1891. It was a watershed moment; such was the thermodynamic and capex superiority that everybody and their dog started manufacturing four-stroke Otto engines.

The Diamler Grandfather Clock Engine | 600 rpm > 120 rpm | Wikimedia Commons

The two-stroke engine was not to be relegated to the dustbin of history just yet as a little farther north in Mannheim, Carl Benz in 1879 finished building the first reliable two-stroke engine with in-cylinder compression and was granted a patent in 1880. It had taken 78 years to actually produce one since D’Humberstein first theorized its possibility in 1801. Benz was inventing in the shadow of Otto’s patent and that was likely the impetus for the two-stroke route, however, the idea of the two-stroke engine has always had a sirens call, namely spreading twice as many power strokes over a reduced amount of capital expenditure; lighter, faster, cheaper anyone? It is a testament to the robustness of the four-stroke cycle concept that it would persist and even dominate to this day despite having half the number of power strokes that could theoretically be incorporated as well as more parts and generally more complexity.

The Benz Engine | LSDSL – Wikipedia

Carl Benz chose to put his engine on what today appears to be an overgrown tricycle but nonetheless has been credited by history as the first generally functional automobile. Diamler, Benz and what came to be a laundry list of others with names that persist as brands to this day then began putting internal combustion engines on four wheeled carriages that would later become vehicles. The modern automobile industry had begun in earnest. Diamler and Benz would be rivals of some note, but the two companies would eventually merge to form Diamler-Benz AG. While Diamler’s name would come first in the name of the merged company, Carl Benz would get the last laugh. He had a daughter named Mercedes, and thus the brand we recognize today carries the moniker, Mercedes Benz. They would go down in history as having created the motive power market at the individual level, and the enthusiasm it was met with is hard to overstate. Shade tree mechanics and inventors proliferated on into the 20^th century, tinkering almost exclusively with engines based on the Otto cycle – but there are a couple additional cycles we would be remiss for not mentioning.

In 1890 Rudolf Diesel spent several months in a hospital recovering from a near death experience that occurred while researching the concept of compression ignition. Undaunted, but perhaps having a new appreciation for the value of paperwork, two years later he received a patent for his vaunted engine. The only trouble was as patented the device would not work. He was on to something though, and despite his thermodynamic blunder the first time around, after an uhm…do-over moment, in 1895 he received a patent for a compression ignition engine that would actually work. And work it did. In 1896 Maschinenfabrik Augsburg, today known as MAN SE, built the first successful diesel engine and it clocked in at 26% thermal efficiency on its maiden run, a truly astounding figure for the time. From that moment forward, virtually any armament or heavy-duty application, on land or sea, would be better off being powered by a diesel engine, and MAN SE continues to be a premiere Diesel engine manufacturer. Aircraft were, and largely remain, a different matter but then again, they hadn’t been invented yet.

The Diesel Engine | Wikimedia Commons

The great aircraft of today are powered by gas turbines, which are theoretically approximated by the Brayton Cycle. With folks compressing fuel gas mixtures into constant volumes, lighting them off and then blowing the top off of things, Brayton’s key idea of constant pressure heat addition had significant merit, especially for those concerned about keeping their hearing, or at the very least their heads, about them.

For the greatest thermodynamic efficiency, it is best to add heat at constant volume to as small a volume as possible, resulting in the greatest increase in pressure for a given amount of fuel, and thus the greatest expansion ratio that follows. Efficiency-wise compression ratio is king in any heat engine, but there is another aspect to efficiency and that is extracting all the value one can from the capital expenditure. More work can be extracted from a given amount of steel with constant pressure heat addition. If one has to install enough steel to eat the quick bang of the Otto engine, just as well have the slow burn of the Brayton cycle, or better yet for practical reasons, the Diesel cycle which falls somewhere in between.

The constant pressure heat addition internal combustion engine was patented by American George Brayton in 1872. It involved using one cylinder to compress the air and then a reservoir for fuel addition exiting in another cylinder for work extraction. It does owe a little intellectual homage to John Barber’s 1791 gas turbine patent, the key difference being Brayton’s idea was physically viable, as opposed to just a sound thermodynamic concept. In 1878 Brayton’s Ready Motor debuted and was widely considered a safe and practical prime mover. Long term, it was just too heavy relative to Otto and Diesel engines once steel technology and practical design acumen had progressed to the point where all this could be done safely in one cylinder. It would take the development of turbine technology to extract the true value of the Brayton cycle, namely poorer inherent thermodynamic efficiency but greater capital efficiency with an unmatched ability to scale, and notably lighter weight. The first commercial gas turbine was installed by Brown, Boveri & Cie in 1939 at a power plant in Neuchâtel, Switzerland. It produced 4 MW at a 17% thermal efficiency and was in standby service until 2002 clocking in at 7,283 operating hours over 1,908 starts during a 62-year service life, certainly a solid performance for a first of a kind unit by any measure.

1939 Gas Turbine Neuchâtel, Switzerland | Brown, Boveri & Cie | Wikimedia Commons

Once again, all this meandering through thermodynamic history brings us to the objective of the day, establishing another fiducial point, that can be solved definitively. With this established, comparisons can be made between other options to produce power, and with a little luck, intelligent discernments can be made. Even though coal powered the evolution of modern life, we’ll use methane, as it is a defined molecule with properties that have been measured by scientists, and burning coal in a gas turbine would result in a decidedly non-optimal overhaul interval.

In terms of scale, we’ll stick with our 1 GW plant, comprised of a gas turbine operating at a compression ratio of twenty and twice as much theoretical air as required. The reason for the excess air is to keep the flame temperature in our imaginary gas turbine to less than 3,000⁰F, above which one can start to melt turbine blades. So, what’s it mean in a practical sense? Let’s run this through the Thermolator^TM and await developments.

Temperature Entropy Diagram of the Brayton Cycle and Steam Rankine Cycle | Thermocon

Our theoretical plant burns 218,000 MMBTU per day of methane, or $654,000 per day on a monetary basis producing revenue of $1,200,000 per day at a wholesale price for power of $50/ MW•hr. The compressor end compresses our 200% theoretical air up to 290 psig at 765⁰F, we inject methane from the pipeline which brings our temperature down to 716⁰F and then we initiate combustion resulting in a flame temperature of ~2,900⁰F followed by power extraction via expansion down to atmospheric pressure and a temperature of ~1,200⁰F. It becomes immediately apparent that internal combustion has an inherent efficiency advantage over the furnace powered Steam Rankine Cycle, namely that power extraction begins at a couple thousand degrees Fahrenheit higher.

There is one significant downside of internal combustion however, and that is air compression on the front end. Our theoretical gas turbine produces 1,774 MW on the back end and our theoretical compressor on the front end consumes 774 MW leading to an overall plant production of 1,000 MW with a thermal efficiency of 37.2%. Contrast that with our theoretical steam turbine that produced 1,016 MW coupled with a pump that only consumed 16 MW at a 36.5% thermal efficiency. There are a couple other minor relative downsides to the gas turbine, one being fuel flexibility. In contrast to the Steam Rankine Cycle, which can literally burn anything, gas turbines pretty well need to stick to natural gas, kerosene or diesel. Lastly regarding scale, steam turbines exist at up to 1,500 MW, whereas gas turbines with a power output of 1,000 MW are not available on the market, you could buy one, but it’d be special order and most likely a first of a kind engineering disaster. Gas turbines with a power rating of 500 MW are widely marketed however, so instead folks just buy two.

In completing our cursory review of the temperature entropy diagram of the Brayton Cycle, just as with the Steam Rankine Cycle, power extraction occurs from left to right with the turbine taking a haircut from the compressor and heat flows from top to bottom exiting in the 3 million standard cubic feet per minute of exhaust gas. This is the only material flow that is greater than that of the commensurate steam turbine which has an exhaust gas flow of roughly 2 million standard cubic feet per minute. All other material flows are infinitely less with the gas turbine. The 458,000 barrels per day of water/steam circulating through the process, the 11 million barrels per day of cooling water, neither are required. Lastly it seems pretty obvious that one could use the exhaust from the gas turbine to power the steam turbine and indeed this is the Combined Cycle Gas Turbine (CCGT) that we are all familiar with and we can run the numbers in a future piece.

In closing, if you grew up anytime since the end of World War II, there is no mystery in what the key to freedom was…it was having some wheels, and those wheels were invariably powered by the internal combustion engine. It would allow you to seek out better education, better pay, better everything, and in a non-trivial number of cases…reproduce. So, in summary, we would disagree with Churchill’s great quote at the start of this piece, in our view the internal combustion engine is the single greatest freedom generating device of all time.

“♡ Like” this piece to ensure you’re not being followed. – TC

In Strasbourg, Germany in 1440, Johannes Gutenberg perfected the moveable type printing press. It was arguably the most important innovation in the second millennium, and an indispensable contributor to The Renaissance. In August of 1492, Christpher Columbus set sail for the East Indies, by heading West from Spain. On Halloween, 1517, Martin Luther published his Ninety-Five Thesis in Wittenberg, Germany. Europeans had begun to question the traditions that governed their lives, and indeed the Scientific Revolution and the Age of Enlightenment were soon to follow, but at the time, not everyone had pants.

Contemporaneously, the energetic equivalent of The Renaissance and The Enlightenment was developing across the English Channel, and it would unleash prosperity the likes of which the world had never seen. It was the discovery and use of a thermodynamically superior fuel, coal, and it began to have an effect much earlier than traditional history suggests. The enlightenment of the human condition spreading throughout Europe at the time likely played a role but given the lag between effective use of coal and the discovery of the theoretical underpinnings of thermodynamics, they may have just been running short of trees.

One aspect of coal’s thermodynamic superiority relative to wood originates from its higher energy density which enables it to produce a hotter flame, and that proved to be of great help in manufacturing many enlightening devices, such as high-quality cannon. It also allowed the English to conserve wood for much higher value uses such as housing and shipbuilding, and reserve more of their intellect for mastery of wind power via the sail. They were ultimately able to use the power derived from a higher quality energy source to establish The British Empire, upon which the sun never set. The harnessing of this power also allowed them to enlighten a great many people, many of the descendants of whom somewhat resent that enlightening to this day.

Prepare To Be Enlightened | Dreamstime

In a timeframe measured in hundreds of thousands of years from the present, humans had mastered fire. In the last ten thousand years or so, humans invented the wheel. In 1769, James Watt patented his new and improved steam engine that in essence harnessed fire to turn the wheel…and it changed everything. A couple of his key innovations were an external condenser, and a rotary shaft output as opposed to the linear output in use at the time. The external condenser roughly doubled or tripled the efficiency of the previous Newcomen design that had ruled the marketplace for 50 years at the power level of a commercial weed eater. The Watt engine was indeed a significant revolution in thermal efficiency, noting at the time we were still only talking low single digit percentage levels, but now things were up to a power level of a full-on lawnmower. It was also a revolution in practicality, with roughly double the power density of the Newcomen engine on a weight basis, triple on a space basis, and that matters, a lot.

There was one final innovation necessary for the implementation of the vaunted Steam Rankine Cycle, and that was pressure. The Watt engine ran on perhaps 5 psig steam, an amount that seems laughable today but at the time generated a life changing amount of power. Watt and others were aware of the benefits of pumping water to a high pressure prior to making steam but chose to give it a wide berth due to safety concerns. That said, once you add the pump, you have the Steam Rankine Cycle. Thermal efficiencies of anywhere from 20% to 30% are readily attained depending to a first approximation on how high one elects to go with the pressure.

We’ve Got Everything But the Pump Jim! | Science Museum London

For those of us formally trained in engineering, it is somewhat humbling to look back on this achievement. In 1769, the First Law of Thermodynamics hadn’t been discovered, nor had the Second Law, yet the inventors of the day were hard at work solving the problem of pumping water out of coal mines. It had quickly become self-evident that coal was such a superior fuel that it was worth inventing things in order to get more of it out of the ground.

A formal understanding of the basic principles of thermodynamics began over 50 years later in 1824 when French engineer Sadi Carnot self-published “Reflections on the Motive Power of Fire and on Machines Fitted to Develop that Power.” In it he promulgated an early version of the second law and the Clausius–Clapeyron relation. Some excerpts from that publication as provided by Wikipedia:

The motive power of heat is independent of the agents employed to realize it; its quantity is fixed solely by the temperatures of the bodies between which is effected, finally, the transfer of caloric.

In the fall of caloric, motive power undoubtedly increases with the difference of temperature between the warm and cold bodies, but we do not know whether it is proportional to this difference.

Unfortunately for Carnot and the development of thermodynamics, he died shortly thereafter in 1832 at the age of 36, and his self-published manuscript had not made the rounds yet. His younger brother Hippolyte later published some of Carnot’s notes, a particularly poignant one of which was from the Spring of 1832 after Carnot had rejected the theory of caloric. Again, from Wikipedia:

Heat is simply motive power, or rather motion that has changed form. It is a movement among the particles of bodies. Wherever there is destruction of motive power there is, at the same time, production of heat in quantity exactly proportional to the quantity of motive power destroyed. Reciprocally, wherever there is destruction of heat there is production of motive power.

So, Carnot had it; the second law, the mechanical equivalent of heat and hints at the first law, it’s all there, but due to his untimely death, the world would have to wait for others to discern all this on their own. Upon later review of Carnot’s work, Lord Kelvin is purported to have said "nothing in the whole range of Natural Philosophy is more remarkable than the establishment of general laws by such a process of reasoning." In 1845 James Joule published The Mechanical Equivalent of Heat, and in 1850 the full statement of the first law came from Rudoph Clausius and William Rankine, indeed, that Rankine.

It took significantly more time to flush out the rest, the third law of thermodynamics was discovered circa 1910, and something called the zeroth law was discovered in the 1930s. This rounded out the four laws of thermodynamics and brought about an interesting observation. The second law was discovered first, but good thing it had not been named yet, because the first law would need to be discovered so its primacy could be realized before the numbering and naming of things began. However, when the zeroth law came about in the 1930s, folks realized that it had theoretical primacy above all the rest and should have been discovered first, but one through three were already taken, therefore they decided to go with zero. Thankfully there is no negative one law of thermodynamics. Science, engineering, and other technical endeavors are often portrayed as if they are a well-oiled logical machine purveyed by those so intellectually adroit that the truth can be dispensed in one sitting if you are willing to come learn patiently by the side of the master…not so grasshopper, there’s actually a good bit of stumbling around involved.

In order to try and wrap some physical intuition around this subject, the first law being conservation of energy can be thought of as you don’t get something for nothing and the second law means you don’t even break even, not by a long shot. These two facts, along with some further physical intuition about how the Steam Rankine Cycle works, can provide a fundamental understanding without having to sweat the math too much. Air is drawn or blown into the furnace to burn the fuel and is exhausted to atmosphere via natural draft. Water which has been pumped to high pressure then absorbs this heat in a series of heat exchangers; the boiler, superheater, feedwater heaters and economizers. The superheated steam is then exhausted through a steam turbine to generate useful work. This is followed by another heat exchanger, the condenser, that in combination with the pump maintains a backpressure on the turbine that is below atmospheric pressure. The water in the condenser is cooled by cooling water which is cooled by air being pulled through the cooling towers or ideally by a large body of water nearby. In this way the chemical energy in the fuel is pushed through a thermodynamic cycle, from hot to cold, extracting useful work along the way. It is also produced where and when it’s needed, which is crucial, the only thing better would be if it were mobile.

All this meandering through thermodynamic history brings us to the objective of the day, establishing a fiducial point, one that can be solved definitively. With this established, comparisons can be made between other options to produce power, and with a little luck, perhaps intelligent discernments can be made. Even though coal powered the evolution of modern life, we’ll use methane here, as it is a defined molecule with properties that have been measured by scientists. It also trades in a mature market where a price for a million BTU (MMBTU) of methane can be obtained at various locations around the world on a nearly instantaneous basis, and in the US the forward curve has been and continues to be ~$3/MMBTU as far as the eye can see.

In terms of scale, a 1 GW plant should suffice, operating at a steam pressure of 1,800 psia and a condenser pressure of 1.8 psia. The resulting compression ratio is around a thousand, yes you read that right, one thousand. When comparing this to spark ignition engines, diesel engines and gas turbines, compression ratios of ten, twenty, and thirty respectively would be considered high and illustrate just how high the compression ratio of the Steam Rankine Cycle is. So, what’s it mean in a practical sense? Let’s run this through the Thermolator and await developments.

Our theoretical plant burns 224,000 MMBTU per day of methane, or $672,000 per day on a monetary basis. When burned in a furnace with 125% the amount of theoretical air required, the adiabatic flame temperature of methane is 3,170 °F. The large difference in the temperature of the combustion products (3,170 °F) and the temperature of the steam produced (1,100 °F) is a tremendous source of inefficiency. But it doesn’t end there, when water boils below its critical point, it absorbs a tremendous amount of energy at a uniform temperature, which in the case of our theoretical boiler is 621 °F, again well below the temperature of the combustion products. This is all great for heat transfer, but awful hard on efficiency, and a perfect illustration of the 2^nd Law at work.

Temperature Entropy Diagram of the Steam Rankine Cycle | Thermolator

Our theoretical steam turbine produces 1,016 MW and our theoretical pump consumes 16 MW, leading to an overall plant production of 1 GW with a thermal efficiency of 36.5%. At a wholesale price for power of $50/MW•hr it generates $1,200,000 per day in revenue against the $672,000 per day in methane consumed. The work produced is approximated by the shaded area encircled by the steam/water in the temperature entropy diagram. Physically this is turned into power via the 458,000 barrels per day of water/steam circulating through the process, particularly the furnace and then the turbine. Heat from the primary energy of the fuel flows from top to bottom, exiting in the 11 million barrels per day of cooling water required, and useful work flows from left to right with the turbine taking a 1.6% haircut to power the pump. Basis a visual inspection it is fairly apparent that the low energy requirement of the pump absolutely saves the Steam Rankine Cycle.

An additional fact that becomes apparent is that a 1 GW generator is a massive machine, although not so massive that you can’t buy one if you’ve got a couple billion dollars lying around, but that said the material flows are huge. For purposes of comparison, the three largest oil producers in the world, the United States, Saudi Arabia and Russia each produce somewhere around the 11 million barrels per day of oil that our theoretical plant requires in cooling water. Furthermore, the United States has around 1,300 GW of generation capacity to provide for peak electricity demand so in total our material flows are three orders of magnitude higher than our theoretical plant. It is also worth mentioning that the 36.5% thermal efficiency provided by our simulation is unreasonably high for a simple Steam Rankine Cycle, it is achievable but with several more superheaters and feedwater heaters not shown on the diagram.

To sum it all up, the Steam Rankine Cyle is a horribly inefficient cycle, and water is a terrible working fluid, but thankfully our ancestors said perfect is the enemy of good enough, but then again, they didn’t all have pants.

The Truth Is Out There | Dreamstime

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