Wind's Our Future, but Natural Gas Is Now 43 comments
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The attacks on T. Boone Pickens' plans -- everything from his integrity and self-interest to his quixotic nature -- as Jim Cramer says, "just makes no sense whatsoever. They hold no water at all.
They are just wrong and misguided. The people against him, the ones that call him a dreamer, are the ones who have done no homework and are deeply cynical. And if they don't keep their mouths shut, we will forever be addicted to foreign oil."
While much of what Pickens has been saying is that wind power can be substituted for a lot of other power sources, the fundamentals of his plan involves getting autos to start using natural gas.
Putting aside his personal interests and according to Cramer, Pickens cares about the impact on the environment, but only so far as he has been the most influential investor in alternative energy for years and thinks it can be profitable -- Pickens' true motivation is that the technology for what he believes should happen is unfolding and available right now.
Let's review the quintessential elements of Pickens' plan. First, wind power, which is clean and efficient and able to be integrated to the grid much more easily than the critics say -- ask Quanta (PWR), which does it -- and can be used in far more places than just Texas.
We are, according to Jim Cramer, "... blessed with windy areas that have no use otherwise, and you can build cheap towers, turbines and blades without much opposition."
When it comes to wind power, we have the technology, we have the raw ingredients, we have the abilities, we could take wind to 20% of our power by 2030, as the Department of Energy says, but we could cut 10 years from that with generous subsidies, which might happen under an Obama presidency.
It is natural gas, though, that is the great conundrum, the great game-changer that few politicians and most pundits just don't get at all. Every natural gas, oil engineer and executive in the world knows that we have had 100 years' worth of natural gas underground in this country domestically -- not off the coasts, but within our borders.
Dry Natural Gas Proved Reserves by Area - As of 2006
click to enlarge
Source: EIA - Office of Oil and Gas
Check out the Dry Natural Gas Proved Reserves in the USA by the billions of cubic feet. The dark blue area are the areas with the richest and most abundant proven reserves followed by the aqua blue areas which are now, two years later, showing signs of even more prolific amounts of gas.
It gets easier to get at every day, which is why you keep hearing about all of these "shales" that have gigantic finds -- just go look at Devon's (DVN) numbers which came out Wednesday if you don't believe me.
Look at the drilling! Look at the drilling that Chesapeake (CHK) is doing. I believe 100 years of nat gas -- which is two-thirds cleaner than oil including on the CO2 side, which is the most toxic pollutant -- is conservative.
So when you look at this fuel, you realize it should be used instead of gasoline as soon as possible. It is abundant, cheap, there are pipelines everywhere, it doesn't need to be refined, and it burns clean. What's lacking? Filling stations and cars. But not the technology for either, just the infrastructure.
As Cramer likes to rant, "Wind and natural gas are the ways of the future, with nat gas the important bridge fuel for the next 20 years. We are so much closer to energy independence with cleaner energy than we have any time ever, but nobody cares, except the visionaries of this business: Boone Pickens and Aubrey McClendon" (CEO of CHK).
The future is here. It is investable and here. We can buy the natural gas companies that are drilling big-time like Devon, Cabot Oil & Gas (COG) and Chesapeake -- and the company that makes the rigs that will make more drilling possible: National Oilwell Varco (NOV) whose price is now quite attractive.
Jim Cramer sums it up by saying, "This is the single best theme in the market I know. It is why I stick with natural gas even as they have plummeted severely. I stick with it because I believe that under a new, more intelligent administration, this will all become obvious and the stocks will reflect this long-term thesis."
I couldn't agree more and there are many more, much smarter people than me who enthusiastically agree. All it takes is some vision and some uncommon sense.
Disclosure: Long DVN and NOV.
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This article has 43 comments:
Instead of taxing peoples incomes, we need to tax carbon, packaging and consumption. Tax what you don't want to happen. Then let real economics take over. The real way to lower imports is to keep the cost of gasoline high - through (carbon) taxes if necc. Fat chance of that happening, though! Politicians have little of the bravery that would be required to overhaul the tax system.
With a hefty carbon tax in place, we would not have to argue the merits of wind/solar/nat gas/oil/coal sequestration etc... - Just let real innovation take over. The only innovation in the current system is in the halls of Wall Street. We all know where that eventually takes us.
--Tom
But regardless of the direction NG goes --- directly in the car or to the power plant to charge your car --- I am still bullish on gas. It is the logical choice to wean us off foreign oil. Wind and solar, that's all great. It will get there in a decade or two. But it will still account for only a modest proportion of our total energy needs for the foreseeable future.
I think Obama should pick T. Boone as his VP!
world.honda.com/news/2...
These could charge your car too. Good for the northern states.
T. Boone just wants to make money - but with current incentives and tax breaks, all the money that he will make from wind will come directly from taxpayers - which he does not make clear on his site, and which is dishonest.
The "carbon tax is pure socialism and pure pork.
I believe it is impossible to appreciate the reality of at best a dire situation without reading Naomi Klein’s, “The Shock Doctrine…Disaster Capitalism.” The tenet of “no crony” left behind is meritorious!
No, I do not work for the publisher!!!!!!
I said get rid of or lower income taxes! That is an increase how? Income taxes are an accident of WW I. They really don't make sense. I should be able to keep all the money I make, and invest it all if I desire. Tax consumption.
I think in the end it will be mainly solar and nuclear. Solar is much more predictable than wind, and there are simpler methods for banking the power thermally in utility-scale projects. Solar-NG hybrid plants could have a common power-generating infrastructure fueled by the sun during the day, and by NG at night or on cloudy days. Nuclear can replace coal for baseload. As Paris says, "Energy problem solved!".
However, I have a problem with the basis of the energy 'crisis' and I have a concern with one of our energy solutions.
First, I firmly believe the energy 'crisis' is a 'wag the dog'. In my opinion, the wild fluctuations in the oil futures market are not based on standard trading principles. In actuality, the oil market looks much more like a bunch of old women buying and trading Bingo cards on a Saturday night than a valid market. And, most of that fluctuation can be traced to speculation and hedging.
Now, why would the market speculators and hedge funds jump so hard on oil? Maybe, just maybe it's because T Boone Pickens and Goldman Sachs started their chicken little 'The sky is falling' dance about six months ago. Peak oil --$150 to $300 a barrel oil -- any of that sound familiar? OPEC has got to love T Boone Pickens! He's put a huge amount of money in their pocket. Then he shows up on in a self paid and self promoting national advertising campaign saying we have to quit sending money to them. What?
Again, I believe we need alternatives and energy independence. I just don't like the underhanded, selfserving manner it's been pushed on us or the tremendous, instantanious burden it has placed on individuals, families and corporations. If we don't want industry in this country and we want huge unemployment, than we are moving in the right direction. In addition to the market manipulators, due to unwavering greed, Wall Street is slowly killing industry in this country, which is the basis for the markets entire existance. Good move morons. Between the market manipulators who have crammed it up us and broken it off and Wall Street killing the vehicle of it's existance, we won't have much in this country for the next generation.
Now for wind power. I have yet to see a study on the environmental impact of large wind farms. I'm not talking about birds kills and other relatively minor events. I'm talking about potentially major weather changes. No form of energy is free and as we have seen in the past, projects with the best intention can cause major problems down the road. Living in the mid west, east of the proposed wind farm corridor, I'd like to know what weather effects it will have here around the Great lakes. Will it effect rain and snow, reducing it or moving it elsewhere?
Yeah, yeah, what a crack pot, right. Ok wiseguy, ask the forestry department about the effect of controlling forest fires for 50 years and the effect it had on the Yellowstone wild fire.
Of course, the new report by the American Clean Skies Foundation says that the EIA's estimates are too low and puts the ultimate reserves at 2,247,000 bcf. Great, we are back to our "100 Years".
But even if you believe in the higher reserves number, the "100-Year" value is based on current consumption levels of natural gas. If you intend to displace petroleum with natural gas, the "100-Years" drops to "39 Years". If you intend to displace petroleum and coal with natural gas, this drops to "28 Years". Refer to eia.doe.gov/aer/pecss_....
28 Years is still a long time, but I would curb the enthusiasm a little.
From an investing perspective, I prefer natural gas companies in Europe. The fundamental supply/demand equation is the same PLUS their primary supplier likes to arbitrarily triple prices every time there's a political disagreement.
None of the alternatives to oil come without changing the paradigm.
It will cost tons of money, create US jobs, shift the economy, improve the environment and make the country stronger - priceless.
Thing is, we need a comprehensive plan (for better or worse a democratic plan - remember it is the best system we have, so far, no?). Otherwise it will be up to Big Boy individuals (Pickens, Gore et al) who will make the plans for us. Just like Morgan, Frick, Edison, Ford and others did ....
Let's Go 21st Century!
'Intermittent' Wind is really only a local or temporary phenomenon, not so much a national or annual one, especially in a country as large as the USA. For those who don't understand, think of it like this, ONE wind turbine might be idle on any ONE day... but 1000, spread over thousands of square miles, from year to year, will produce roughly the same power annually over time.
For those inclined to simply bark without thinking, try doing the math first... You have to think of it as what it is... a valuable contributor to overall production of kwh's, part of the load balancing act while also producing large amounts of total grid-power over time.
It's why we have base-load coal and Nuclear feeding the same grid as peaker gas Turbines...
Wind is a hands down winner in the quest for sustainable energy.
As to hydrocarbon-to-spark replacement, which is the real issue, Wind adds large amounts of basically carbon-free and hydrocarbon-miniscule Total Energy, at extremely favorable (15:1 typical) EROEI, and in a sustainable fashion... Wind never depletes, you don't need to transport it, refine it, or burn it.
As to the economics, wind power is strongly accretive to the host nation's capital accounts, especially if the actual turbine engineering, production, and maintanence is domestic sourced. Germany and Denmark are world leaders in Wind, and it helps their economies huge.
Hydrogen potential from NG or wind farm distribution models must also be incorporated as an investment strategy in order to reach the full potential of a sustainable and renewable fuel vehicle. As much as NG is expendable, then so to is the wind.
Wind Power conversion in the form of a hydrogen fuel cell storage and power module is shown in this illustration from the following link.
hydrogenics.com/onsite...
I mean think about all the energy lost to gather the energy....transmist the energy...and then use energy to break the molecules apart. How much power actually gets stored? like 10-25% of the initial amount of the source? This doesn't seem very efficient at all....battery technology today is MUCH more efficient than that. basically limited to the 35-40% loss of the transmission, and a little to charge the batteries.
NG may have large reserves.....and the E&P companies are proving up large reserves of shale gas. But what is the EROEI on shale gas? Are the flow rates comparable to conventional gas? Do we have enough rigs to drill to maintain growth?
We know from oil that there is a lot of shale out there....but the EROEI is low.....and the cost of infastructure is high......and to do any meaningful addition of FLOW rates to the existing production is difficult.
I feel this is the same for shale gas...although I do own the shale E&P companies for investment.
efficiency and flow rates.......
infastructure is there.
Control pollution at the power plants......add whatever you want to generate the power. its much more resiliant than NG cars.
You can add coal power plants, NG, Nuclear, wind solar, etc.
Like any systems approach, it won't go anywhere unless some influential architects can sell it to the public possibly by doing a pilot first or by filling in needed market niches such that eventually the entire puzzle is done.
Americans have a hard time cooperating in a team fashion as we are very individualistic. I would not be surprised if some Asian entrepreneurs take the lead here and pick the low lying fruit.
In Minnesota for example, we have an Indian company that set up a plant near Pipestone where they are building wind turbines.
> jack
Electricity however has several input choices some renewable, NG is limited. Wind is now, NG in the future and only temporary for 100 years. Of course Picken's doesn't care what happens in 30 years or thereafter. He is dead then. As goes the President.
"Heating Bills Won't Spike As Predicted
Natural Gas Price Drop Means No 50% Increase
Copyright © 2008 Albuquerque Journal
By John Fleck
Journal Staff Writer
At last, some good news when it comes to energy costs. Or at least better news than just a month ago.
Plunging natural gas prices have made the prospect of winter heating bills less alarming, according to officials with New Mexico's largest utility company.
Current estimates of natural gas costs are still 10 percent above last year, but the dramatic' increases forecast in July are gone.
Officials with Public Service Company of New Mexico issued a stark warning in July that customers could see their natural gas bills rise more than 50 percent this winter compared with last winter. But now they are more optimistic after a three-week slide in natural gas prices.
Natural gas futures on the New York Mercantile Exchange were trading Thursday down 37 percent from their July peak.
Garry Murray, PNM's manager of gas supply and system planning, called the price drop "a significant reversal" after natural gas prices set records in spring and summer.
For now, natural gas prices remain high. The latest estimates posted by PNM for August and September gas costs - $31 to $32 per month for an average customer - are 60 to 75 percent higher than last year at this time.
Murray said it is too early to make firm estimates on natural gas costs for this winter. But preliminary estimates put prices during the December-to-February heating season about 10 percent above last year's prices, Murray said Thursday. The average PNM household customer paid about $130 for natural gas heating last January, the coldest month last winter. About $100 of that is related to fuel costs, and a preliminary calculation suggests this year's bills could average about $10 more.
That is far less than the cost picture just a month ago, whan prices on the futures market suggested an average customer might pay as much as $70 more per month.
Under state regulationst PNM is not allowed to make a profit on the price of natural gas, passing that cost directly to its 500,000 customers.
Natural gas prices have been on the same sort of roller coaster this year as petroleum, rising dramatically until early July and plummeting in the past month. The situation was particularly unusual in the natural gas market, where prices usually peak during the winter heating season, then drop in the spring and summer. This year, they continued rising all spring.
According to the federal Energy Information Administration, one reason for the price drop is increasing supplies, especially from natural gas fields in Texas.
Production for the first five months of this year was up 8.7 percent compared with the same period in 2007, according to EIA. Natural gas producers are adopting new technologies to get more natural gas out of the ground to meet rising demand, according to the EIA. Despite that increase, however, the EIA still forecasts natural gas costs this winter nationwide to be higher than last winter.
Albuquerque Journal Friday August 8, 2008"
And why wouldn't you want to employ this logic ASAP/AMAP/IEWP???
Boone's got it half right: replace NG power generation with wind (and solar).
What's wrong is then burning NG in vehicles and throwing away 70% of that energy as waste heat. Now if he could recover that waste heat and make it useful electricy for a hybrid, great.
At that point I'd suggest burning biofuels and still leave all the NG in the ground - as stored-already.
So it goes.........
I just want to live to see the day I can sit back and watch the windmills on the right of way go by at 200mph, while I take a trip to N.Y.. I'll even allow a few cars for Oranges and seafood to tag along so they and I, arrive fresh and cheap at our destination. I'll even take my shoes off to honor a bygone but not missed era of air travel, thinking I'd like to see Haji Baba run this sucker into a building.
Windmills along the "rite of way" is the right way--it's called "point of use"
www.prosefights.org/pn...
Unconventional?
Hey, I'm exctly 45 days younger than Saddam Hussein.
Give us senior some slack.
The feds have illegally confiscated $11,018 from our senior citizens credit union savings account.
home.comcast.net/~bpayne37/index.htm
regards
www.prosefights.org/pn...
As for his plan for electirc generation I'm surprised we haven't developed wind as a power source years ago. As a former Kansan I can assure you that the wind NEVER stops blowing there or in Oklahoma, Texas, South Dakota or Nebraska. 20 MPH wind is a calm day! If you have never lived in the midwest you probably won't relate so just trust me. There is plenty of vacant land available for wind power and lease royaltys will help keep those lands in US family's hands and out of the hands of foreigners. As for tornadoes, yes they are a reality but your chances of actually being hit by one are very low. The areas where these windmills are located are fairly remote so libality insurance may not be that big a problem. I don't know the initial investment required for these windmills or the payback period but I'm sure T. Boone is making money.
"'Intermittent' Wind is really only a local or temporary phenomenon, not so much a national or annual one, especially in a country as large as the USA. For those who don't understand, think of it like this, ONE wind turbine might be idle on any ONE day... but 1000, spread over thousands of square miles, from year to year, will produce roughly the same power annually over time."
Umm says who? What you seem to be saying is that if you have thousands of windmills spread all over the place, somehow you can magically guarantee that they will all spin sooner or later or independently or whatever. So you are saying that somehow you can control the weather so that you can GUARANTEE that somewhere the turbines will always be spinning. Right. Good one... What is a 100% fact is that if you put 1,000 wind turbines "all over the place" that on any given day they may all spin -- OR -- they may be all idol simultaneously. You, or as far as I know, not anyone can control the weather, so why do you make binary comments as if you do?
You can't guarantee anything and therefore you can't actually "do the math" to what your energy output and economic returns will be. You can give an educated guess but nothing more than that as you seem to allude with your "air-tight" math regarding output. Perhaps you've heard the term "projection"?
Complete nonsense...
Thanks for admitting I was right. I'm sorry that somebody else had to rain on your parade and inform you in front of God an everybody that half of what you say is made up is nonsensical. And how do we know this? Because you backstop your position with the age old "statistics".
Maybe you can explain why quant funds that a one chance in 5,000 year Black Swan event suddenly had three in one week. Oops. And then after that, perhaps you will lay out your position on how your windmills all over the place will spin in aggregate, individually, continually, sporadically, intermittently and then average to whatever the outcome you want it to be -- will be. Please think about that.
Statistics. Good stuff for marching "scientists" and their lemmings right off a cliff...
On Aug 09 06:28 PM Objectivity wrote:
> Poor alpha24-7... straining away, and no still no dump.
>
> The central limit theorem and integrals are probably something you
> never heard of, right?
>
> Add statistics & probability and calculus to the subjects you need
> to study (Look elsewhere for the advice you obviously need for mechanics
> and classical physics)
>
> On the other hand, forget it. The world needs ditch-diggers too.
from what I see here many are on the right track. Love or hate Boone he will put up a grip of cash and he so far is the only whale willing to do it that I am aware of. Yup, he will profit but that is a later story. To focus and keep all eyes on this ball is most important. The latest witnessed by this author's eyes... a solar panel designed into the roof of a Prius driving down the road in front of me. So you have solar and the all wonderful electric car now on the street. The Nat gas play.. I like the gen plants to creat electricity to recharge as opposed to running on NG. Case in point the new Lexus. Power house of a car and efficient to the inth degree. I drove a NG car and power was waining.. in my opinion.
Now then the corridor for wind and how that plays into pattern changes? There will always be wind.. how much and where is going to be a goliath of research. Sure there is the pan handle corridor. (up through Texas into Oklahome etc...) How will the additional generation towers effect the environment and topography in that area. How many are we really taking about? USFS will have some data . Adiabatic diyurnals ( day to day over cycles) wind patterns will reveal useful information as to maybe where the best placement might be and what it means to the land. Remember light hands on the land? Forest service theory. Arch sights too. How about NIMBY groups through that channel or maybe those groups who would like a royalty for the use of their crop lands.
It is going to be tough to convert engines on trains a.k.a. CSX GWR BNI and the likes to anything but diesel which get great fuel milage vs. the alternatives. Is there an efficient alternative to those.. steam..again? I say drill off shore. I say get us off our dependence on foreign oil. How about Iran and many many leased VLCC from many Ocean tgransports just waiting for the moment to pounce and bring that sour crude to our ports into our markets. Remember the first time it happened? You may have heard this " never forget". Many may be too young but it happened.
I say become the country we all seek to be. Get the USA off dependency of energy. Most of all I say is there are many ways to go green even with the continued use of oil. Regen plants on diesels which burn over 65% particulates before exiting the exhaust pipe. That is one of many examples.
Cannot forget fertilizer/compost resevoir salvaged NG.. think WMI. How about switch grass/cellulose fed waste produced by sugar cane crops ethanol. how about ADM. No vegetable produced ethanol. Feed the people...and not to each other. Gov't says 20% by 2012? I think by 2015 we could be closer to 50% household to household with a total buy-in. The caveat is the gov't will also have to consider incentives never before seen.
Ok.. I am off my podium now anyone care to take this ball one step farther? I know I left things out.. these just came to mind.
Look at Louisiana. Offshore oil drilling in the Gulf of Mexico is a $70 billion shot in the arm for Louisiana's economy, employing more than 325,000 people in good paying jobs. When Katrina hit the Louisiana coast, it shoved big off shore oil platforms right up onto the beach. Was there a big oil spill to compound the tragedy of Katrina? No.
Look at Texas. In the last 12 months, employers in Texas have created 245,000 jobs. The Texas unemployment rate is 4.4 percent. The national jobless figure is 5.6 percent; California's is 6.9 percent. Texas does offshore drilling and onshore drilling. They allow drilling wherever the oil is. The state government will run a $10 billion surplus this year.
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