A. An Urgent Need for Alternative Energy.

    The whole world is suffering from the petroleum energy crisis and most experts in energy and financial industries are predicting a worse short- and medium-term future, such as the price for oil soaring to $200-250 USD per barrel in the next year or so.  The causes of such energy crisis may be directly and/or indirectly attributed to
    (i) historic low-level of world petroleum resource reserve vs. production ratio,
    (ii) the devaluing of USD currency,
    (iii) Organization of the Petroleum Exporting Countries¡¯

reluctance to raise production quota,
    (iv) geopolitical conflict risk,
    (v) strong market demand from Asia economy, 
    (vi) profit-driven energy financial speculation,
    (vii) slow progress in alternative energy, etc., and the arguments will go on and on.

    People have been researching and developing alternative energy for a long time but the situation has never been so urgent as now.  We know that there are over two dozen of new or renewable energy resources gradually being brought to the market, but the key question is what choices of alternative energy are available right now to solve or ease the increasing energy crisis that involve abundant and distributive resources, massive production, cost-effectiveness, and are environmentally acceptable?

    It is clear that wind energy, solar energy, hydrogen energy, nuclear energy, hydropower energy, geothermal energy, corn-wheat-based ethanol fuels and biodiesel are emerging and more and more available nowadays, and it is also well known that the so-called clean coal fuel, whether it comes from the direct coal liquefaction or indirect coal gasification, is quite promising except for its high cost, severe environmental pollution, and competing against electricity-generating coal usage.  So far, none of them meets the requirements as stated above.
 
    B. HyOil Project as Mission Carrier for Clean Development Mechanism (CDM)

    Since 1988, China New Energy Industrialization Institute¡¯s team headed by Professor Shangchun Xiong has been conducting research and development in the laboratory and in-situ coal-based oil transformation facilities in China for simulating the petroleum-like fuel generation reactions and workflows, and improving the so-called Fischer-Tropsch reaction process in hydrogenized coal liquefaction.  We knew the primary objective of Clean Development Mechanism was to reduce the carbon dioxide and sulfur dioxide emitted by hundreds of thousand of coal-burning electric power stations and hundreds of millions of automobiles around the world. We admired the conceptually-correct FutureGen project in the USA and zero-emission underground coal gasification project in Australia and other countries, and were aware of the carbon credit measures and trading that emerged in last decade.  What HyOil has accomplished, among other things, has been to adopt more advanced atomic economization hydrogen technology and creative approaches in order to provide massive clean fuel for automobiles, and low carbon and sulfur emission mazut (remaining from HyOil after extraction of gasoline, diesel, and kerosene constituents) to replace coal burning in most electric power stations, serving most for the mission of CDM.  The HyOil project, and a series of HyOil products, after successful pilot tests across China for years, are now in a massive industrialization stage.

    Recently, there have been several interview reports and publications on the HyOil project progress and its application such as HyOil articles in China based Popular Science Newspaper (March 18, 2008, May 29, 2008) and in Hong Kong based Takungpao Newspaper (June 4, 2008). As a continuation of the HyOil project and expansion on new energy research, development, application, education and training, the China New Energy University, with over 20 departments and graduate schools and Professor Shangchun Xiong as chief founder and organizer, is speeding up its preparation.

Figure 1: HyOil Project special report headline in HK Takungpao Newspaper

    C. HyOil, the Hybrid Energy of Hydrogen and Clean Coal Technologies.

    The Chinese saying for people¡¯s seven daily necessities ranks energy (referred to as burnable biomass, in particular wood and grass) at the top which accurately describes the energy relied upon by human beings for thousands, or tens of thousands, of years in history.  Fossil fuel, often referred to as coal and petroleum which are transformed from the ancient biomass through geological processes, became the mainstream energy after the so-called Industrial Resolution in 1800s.  People are now so used to relying on coal that is mostly used for generating electricity, and petroleum that is mostly used for vehicle fuel.  Ironically, in the current energy crisis, human beings have to turn again to biomass (corn, wheat, sweet potato, sugar cane, sweet sorghum, etc.) based ethanol and biodiesel as an important alternative energy source.
       
    The main sources for HyOil come from ancient biomass substances so far not fully utilized in the world such as peat, lignite, low-grade coal, oil sand, oil shale, medium-grade coal usually for electricity generating with reserves that are hundreds or thousands of times more than petroleum reserves.  They are the organic materials in the early stages of petroleumization, with a petroleum-similar constituent, but different levels of carbon, hydrogen, and the compounds which are useful for generating modern fuel.  Sources for HyOil may also come from modern biomass, in particular non-agro-food materials as well as biodegradable wastes. During the HyOil project experiment, Professor Xiong and his team conducted thousands of laboratory and in-situ experiments and tests, using a variety of peat, lignite, coal, oil shale, in the hydrogenized reactions, which resulted in HyOil and extracted gasoline, diesel, and kerosene fuel, as illustrated in the figure.

     
    Figure 2. Professor Xiong¡¯s Laboratory and HyOil series of fuel products

    High efficient hydrogen generation, storing, and atomic economization have been the key challenge in hydrogen energy research and development. China New Energy Industrialization Institute headed by Professor Shangchun Xiong has made tremendous progress in this domain and its application to HyOil project.  The institute conducted independent researches and developed heat-chemical water decomposition which is carried out in complicated reactions and propriety facilities.  During the reactions, heat energy is almost all transferred into chemical energy; that is, there is a transformation from heat energy to hydrogen energy.
In contrast, traditional methods such as brine electrolysis method need to rely on multiple transformations such as heat energy being first transferred as mechanical energy, and then electric energy, and then hydrogen energy.  As a result, this new method of hydrogen generating is very cost effective.  Traditional hydrogen storing methods include:

    1. Hydrogen storing by alloy (the temperate aspect of such hydrogen storing and release does not fit in large scale hydrogen energy storing and transportation).
    2. Hydrogen storing by compression (occupies a large space and the container itself is often too heavy).
    3. Hydrogen storing by liquefaction (often costs too much, equivalent to consuming up to one third of liquefaction hydrogen, storing temperature as minus 250 degrees Celsius which evaporates easily and thus creates losses).

    HyOil¡¯s propriety technology for hydrogen storing is characteristic of the following:

    1. Uses super material (unlimited lifetime and can be produced in large scale) with extreme high surface area ratio for hydrogen adsorption (up to 10,000 times).
    2. Hydrogen adsorption and release in temperate conditions.
    3. Can be stored on a large or industrial scale, thus lowering the cost.

    The hydrogen adsorption on super material surface is a kind of physical balance. When the temperature is set at a constant, increasing pressure leads to hydrogen adsorption, and decreasing pressure leads to hydrogen release, and thus resulting in high efficient hydrogen massive production and storing.

    Hydrogenization technique has been widely used in petroleum refining and petrochemical factories, and usually it requires high temperature and high pressure condition, complicated catalysis, and reaction facilities often accompanied with severe environmental pollution.  Thus, it is one of main reasons for expensive production in energy industry.  Professor Shangchun Xiong and his team applied the principle of atomic economization, conducted hundreds of experiments and developed a proprietary Atomic Economization Hydrogen  (¡°AEH¡±) technique, leading to simplified but highly-efficient hydrogenization conditions and facilities.  Moreover, the application of AEH allows the carbon atoms in the raw materials to fully interact with hydrogen atoms in the appropriate temperate reactions, leading to hydrocarbon compounds or the main fuel constituents and minimizing the formation and release of carbon dioxide and other waste water or gas.  Therefore, HyOil¡¯s hydrogenization reactions are often referred to as green-energy hydrogenization systems.

    During the last ten years, the HyOil project team enriched all aspects of the HyOil technology, including independent research and invention, theoretical framework and application models, raw material selection, production workflow, and proprietary facility design and manufacturing. The technical highlights of the HyOil production process are as follows:

    1. The essence of HyOil is to use biomass deposit on the earth¡¯s surface layer as raw material, and apply the hydrogenized physico-chemical process which simulates and shortens the petroleum-like generation process, and leads to synthesis fuels alternatives to petroleum-extracted diesel, gasoline and kerosene.
    2. The raw materials for HyOil include peat, lignite, low-grade and medium-grade coal, industrial methanol, water steam, oil shale, plant stalks, and oily waste from plants.
    3. The key catalysis series used in HyOil workflow are iron-palladium-mo-aluminum-silicon constituents.
    4. The activation process is the rotary cutting in magnetic field.
    5. Natural zeolite (and solid acid) is used as a hydrogenizing and dissolving system.
    6. High frequency radioactive wave coupling is used for speeding up and refining the fuel products such as gasoline, diesel, and kerosene.
    7. The reaction chamber temperature is around 340 degrees celcius, and chamber pressure is around 0.6 MPa, in contrast 900 degrees celcius and tens MPa high.
    8. Temperature and pressure conditions in conventional coal liquefaction.
    9. No need of strong acid or strong alkali reaction, so it is called green reaction system.
    10. Scale down the working system to as small as 300,000 tonnage/year capability in order to make the system available and profitable for general usage across China and abroad.

    HyOil industrialization is currently promoting several production model bases to nationwide acceptance in China. The design and equipment manufacture of the HyOil system follow five principles:

    1. Technology and process flow integration;
    2. Scale down the equipment and asset investment;
    3. The chemical processes in HyOil  are safe to operate and no harm to the environment.
    4. Reaching international standard of zero-emission;
    5. Atomic economization in the hydrogenised reactions.

    Currently, HyOil products includes:

    1. HyOil gasoline with a high octane index which is used for blending with conventional gasoline (meets the requirements of GB17930-1999).
    2. HyOil diesel with a low condensation point and low cetane number value which is used for blending with conventional diesel (meets the requirements of GB252-2000).
    3. HyOil kerosene) with a condensation point below minus 60 degrees Celsius which is used for blending with jet fuel (meets the requirements of GB6537-2-6).
    4. HyOil mazut can be used to substitute for petroleum based mazut which is often used for boilers in ships, electric power stations, locomotives, steel factories, etc. (mazut meets the requirements of SY1901-77(88) and Q/Sh Sh023.02 1994).

    D. Comparison between HyOil and Conventional Coal liquefaction.

    Coal liquefaction is the high end of value chain in coal industry, and HyOil is the pearl in coal-direct liquefaction technology and production.  If there is a concern in getting heat energy from a coal-burning boiler as the basic level (standard coal-value) of the coal industry value-chain, (i) coal-burning electric power generation usually doubles the standard coal value, (ii) coal-based methanol generation increases about four times the standard coal value, and (iii) coal-based liquefaction further increases the standard coal-value from eight times to 15 times.
In the category of coal-liquefaction technologies and facilities, (i) indirect coal-liquefaction costs more and thus usually increases up to eight times the standard coal-value, (ii) conventional direct coal liquefaction usually increases up to ten times of the standard coal value.

    However, HyOil, the leading-edge direct coal liquefaction mixed with the latest hydrogen technology, (i) can increase the standard coal-value up to fifteen times as a result of the low-cost of hydrogen, coal and other resources, (ii) increase the content of gasoline, (iii) decrease emissions of carbon dioxide which leads to carbon credit trading, and (iv) scale-down production facilities for a faster investment return.

    According to data published in HyOil articles and practical results from HyOil production model bases in China, note the following table which compares the 12 aspects of techniques and facilities between HyOil and conventional coal-liquefaction.  As a result, many attacks and concerns for  coal-liquefaction as an emerging industry are gradually dismissed due to the success of HyOil.

   E. HyOil Implication: Five-fold Social and Economic Benefits.

   There are enormous social and economic benefits which will be derived from HyOil¡¯s success and implication:

   1. Over the last century, society has experienced a peak period utilizing petroleum as its main fuel and it is now stuck in the transition between traditional energy and new energy supplies.  Thus, the success of HyOil is significant for the world in its universal applicability as indicated:

   • The reserve for HyOil raw materials is hundreds of times more than petroleum reserves, and are widely distributed and cost much less to obtain, ranging from peat, lignite and low-grade coal to abundant oil shale.

   • HyOil generation systems are advanced and economical in cost; according to current calculations, the cost for generating HyOil is equivalent to $25 40 (USD) per barrel of petroleum.

   • The HyOil system combines the latest hydrogen technology and green hydrogenization reactions, yielding very low level of carbon and sulfur dioxides.

   HyOil, as a hybrid energy, will extend the peak period of fossil energy in the world for several hundreds of years, thus easing the geopolitical energy conflicts in several regions of the world and meeting the objective of tackling the global climate change as promoted by international organizations.  Moreover, the wide availability of HyOil raw materials and economical facilities will be an extra benefit for many third-world or developing countries.  It is expected that the HyOil project promoted to the world will be supported by international energy organizations including the United Nations, the World Bank, etc.

   2. According to public data, the United States and China are the numbers 1 and 2 petroleum consuming countries in the world, in addition to the thousands of coal-burning electric power plants in the United States and China (each accounts for half of the national electricity generation) which emit enormous amounts of carbon and sulfur dioxides, equaling more than one third of the total carbon and sulfur dioxide emissions worldwide. 

   Admiral Bill Owen, the former Vice-Chairman of United States Joint Chiefs of Staff, recently proposed a clean coal fund of $100 (USD) by the United States and China, and he asserted that such a fund would change the important role of petroleum in international politics and security, along with competing clean coal would cause oil prices to reduce 30 percent.  In June 2008, the United States and China governments jointly signed the ¡°Ten Year Energy and Environment Cooperation Framework¡± agreement, which may become the platform for the United States and China to jointly sponsor the HyOil project and application, i.e., using HyOil mazut to replace coal burning in thousands of electrical plants in the United States and China, thus leading to a dramatic reduction in carbon and sulfur dioxide emissions.

   3. HyOil as a hybrid energy with abundant and distributive resources, and scalable generation facilities will improve the regional economic development balance and infrastructure in energy, transportation, logistics, and urbanization especially across China; thus, it provides a macro-economic leverage for China regional policies such as ¡°Central China Zone Arising¡±, ¡°West China Great Development¡±, and ¡±Revitalization of Northeast China¡±.

   4. The HyOil project and achievement are now entering a nation-class evaluation process organized by multiple ministries and commissions.  The success of HyOil will reactivate and guide the sector of coal-based oil transformation in China, i.e., transforming from an early stage of adopting Germany and South Africa related technologies as well as those costly and polluted small coal-oil factories to a rational, regional joint-development of coal-electricity-fuel-chemical sectors.

   5. HyOil will provide a new lifeline for thousands of private gas stations in China. According to public data, there are more than eighty thousands of private oil companies in China, with over a million employees, over 100 million tonnages of refined products in annual sale, over 30 million tonnages of storing capacity, and more than 400 thousands of gas stations. However, these private gas stations have been suffering from both the oil supply and little-profit-margin oil price setting by those few state-owned petroleum groups. As a result, most of private gas stations are not making profit, and many of them are in bankruptcy state, or ready for sale to foreign oil companies. Unlike petroleum resource being dominated by those few state-owned petroleum groups, the resources and production capability of HyOil are no longer controlled by them, Therefore, the HyOil business will be one of driving force for China¡¯s private oil companies and private sector economy.

   F. HyOil Commercialization: Production Bases, Investment Fund, Carbon Credit, and International Production Licensing.

   Currently, seven categories of HyOil production bases are planned:

   1. HyOil production model bases which are to be controlled by China New Energy Industrialization Institute, expanding from an annual 100,000 tons to 1,000,000 tons in several provinces across China.

   2. There are four major coal-based oil transformation projects already approved by China State Reform and Development Commission, and their original plans are to import foreign technologies and production lines.  Up to now, their projects have been in construction and test modes, or otherwise delaying for technical reasons.  The best solution is to adopt either partial or full HyOil technologies and proprietary facilities, and some such negotiations are underway.

   3. There are more than a dozen central government and local government state-owned enterprises with strong financial and abundant coal resources starting to negotiate with China New Energy Industrialization Institute, and trying to get approval from city, province, and state levels for investing in HyOil production bases with total annual production capabilities of over 10,000,000 tons.

   4. Hundreds of coal-burning electric power plants across China are eager to adopt HyOil technology to retrofit the sector, i.e., to produce HyOil mazut as a substitute for coal burning in the power plants.  Their primary objectives are to reduce the emission of carbon and sulfur dioxides.

   5. Quite a few private enterprises with strong financial and coal resources, are taking advantage of regional beneficiary policies for boosting local economic development, and negotiating with the HyOil institute for small and medium scales of HyOil production bases, usually for production capability under 1,000,000 tons per year.

   6. There are quite a few countries bordering China which lack of petroleum resources, but are abundant in coal resources which are willing to conduct a series of HyOil joint ventures.  Currently, five of them are starting project negotiations.

   7. China New Energy Industrialization Institute is speeding up the registration of HyOil proprietary intellectual properties and patent application in China and abroad.  On the basis of that, the institute will use the bilateral energy and environment cooperation framework between China and other countries to approve a few international HyOil production licenses.

   In order to ensure the sustainable development of HyOil industrialization, it has been decided to launch the HyOil Investment Fund in the second half of 2008.  The main operation offices of HyOil Investment Fund will be in Hong Kong, China, and New York in the United States.  The Fund will offer:
 
   1. HyOil production base equity investment.
   2. HyOil China project bond.
   3. HyOil international project bond.
   4. HyOil carbon credit trading bond.
   5. HyOil product market equity investment.

   Dr. Quincy Chen and Dr. Edwin Ruh of StanHarvard Institute will be authorized to design and manage the HyOil Investment Fund.

   The carbon credit associated with HyOil can be described as follows:

   1. HyOil Carbon Credit Type I:  Some non-agro-food biomass planting such as super hybrid sweet sorghum which can be used as a raw material for HyOil production.

   2. HyOil Carbon Credit Type II: The production facilities for HyOil, compared with a conventional petroleum refinery, will reduce a great amount of carbon and sulfur dioxide emissions.

   3. HyOil Carbon Credit Type III: The HyOil mazut which is used to replace coal burning in electric power plants, thus reducing carbon and sulfur dioxide emissions.

   From a perspective view, the advanced hydrogen technology which is applied to the HyOil project and products will be further improved and developed.  And then, according to the demand for new energy, fuel, and power from evolving human society, HyOil project will be able to offer much more from the current coal-based, oil-shale-based, and biomass-based HyOil to water-based, rare-earth-based, and industrial-waste-gas-based HyEnergy, HyFuel, and HyPower in an attempt to solve, or at least ease, the current energy crisis in the world.