Sunday, January 25, 2015

2015 and Norway Goes for Wind Energy


Recently there came an announcement that Norway would install 1 GW (about $US 2.5 billion worth) of wind turbines just from one provider (Vestas - http://renewables.seenews.com/news/norways-statkraft-picks-vestas-for-1-gw-wind-turbine-order-459069). This uses up a lot of the 2013 decision to  to deploy about $3 billion worth of turbines in a separate set of projects. So Norway is going to seriously up their existing 704 MW worth of installed capacity - but then so are a lot of countries. Cool, but what’s so novel about this?

Norway is country whose electricity is essentially all renewable energy sourced already. It is a sparsely populated nordic country that seems to have a lot in common with the “How to Train Your Dragon” movie - “snowy 9 months of the year and hail the other three” as well as “twelve days both of hopeless, and a few degrees south of freezing to death. It’s located on the meridian of misery” where there actually is a small probability of sunshine” - http://www.schoolofdragons.com/how-to-train-your-dragon/areas/isle-of-berk. But thanks to the remnants of the Gulf Stream, it is actually warmer than it longitude (56 degrees to north of the Arctic Circle) would otherwise indicate. There are lots of hills and mountains located near the coast, which is of the North Sea/North Atlantic/southern Arctic Ocean. Those are some of the nastiest waters on the face of the earth - huge waves, near constant gales and worse for weeks on end. There is almost no such thing as forest fires - its is just too darn wet - either from snow, rain or melting glaciers/snowpack. It has 937 hydroelectric stations that supply 99% of the domestic electricity supplies, and depending on the rain/snowfall, lots of electricity to export.

It’s 29 GW of hydroelectric potential delivered an average of 16 GW in 2008, a typical year. The country exported 3 GW of electricity for that. It uses “deferred hydro” as an energy storage arrangement with Denmark - when there is excess wind, some Danish electricity flows into the Norwegian grid, and the flow of water through some dams is curtailed. When it’s not so windy, the stored water is used to generate extra electricity. In contrast to “pumped hydro” energy storage (about 80% efficient), deferred hydro is as close to 100% efficient as can be had. Norway and Denmark are interconnected with underwater HVDC lines (“Cross Skagerrak”) with a 1.7 GW capacity in four transmission lines. In effect, Norway (and to a lesser extent, Sweden) are the “batteries” for the Danish wind industry. There are similar HVDC lines being arranged for Scotland, England, Germany and the Netherlands (http://en.wikipedia.org/wiki/NORD.LINK). This is especially important for Denmark because thanks to the Anholt offshore wind farm, they now produce over 40% of their electricity from wind turbines. And at such a high wind energy penetration, batteries are needed….

So Norway has no domestic need for the electricity made from these wind turbines. Apparently, this new wind based electricity is all about exports of electricity for money. But Norway is already such a massive ”over-exporter” thanks to natural gas and oil that its Sovereign Wealth Fund (thanks largely to government ownership of the main oil company, Statoil) now has roughly $US 850 billion in its kitty. Do they really need more? Oh well, at least getting money for the turbines should not be a problem….. http://en.wikipedia.org/wiki/Government_Pension_Fund_of_Norway

Actually, the latest ebb and flow of world oil prices as well as the methane that is priced in Europe based on oil prices has a lot to do with it. And so does the depletion of the once massive North Sea oil and gas fields (see http://www.indexmundi.com/energy.aspx?country=no&product=oil&graph=production). After peaking in 200 at around 3.2 million barrels/day (mbd), that has now dropped to less than half of that. The new oil fields being found are smaller and even more costly and difficult to tap, and at $50/bbl, they no longer make economic sense to do. Meanwhile, methane production (both from standalone fields, depleted oil fields and gas-only fields) has also peaked last year at 4.5 trillion cubic feet/yr (http://www.eia.gov/countries/country-data.cfm?fips=no#ng - about 1/6 of what the USA makes, with just 5.2 million people).

So, for them, the future appears to be heading in the direction of wind energy. Plus, a couple of years ago - they got quite the climate scare - rain and snow rates dropped drastically for close to a year as did electricity output (increasing weather unpredictability is an effect of Global Warming). But it was still plenty cold, and most residential and commercial heat is supplied by - electricity. Methane is either for chemicals manufacture or for export (sort of like “why eat your seed corn?”), so making sure there is enough electricity - precipitation or no precipitation - is important. And as their fossil fuel money ball depletes despite heroic efforts to milk the North Sea some more, well, at least there is the wind to fall back on.

Perhaps there is a lesson there for the Governor of NY - who supposedly is searching wherever the realm he resides in  for new supplies of energy now that the fracking dream in NY (which never really existed except as some weird fantasy, anyway) and also the nuclear nightmare (at least there are no more new ones planned, though there are still six “oldie moldy” ones cooking away and getting older and more worn out every day. If Norway, which could easily convert methane into electricity and export that elsewhere as well as make up for any shortfalls in hydropower can opt for wind, why can’t NY? Why search the seas for the Great White Whale like a modern version of that demented Captain Ahab, when placing turbines offshore of Long Island will actually bring whales to NY’s waters (once the construction is done, nice fishing and foraging around offshore wind turbine foundations). Is that too much to ask for?



Wednesday, January 7, 2015

The Strange Energy World of January 2015



The Gamesa G-114 - Windpower Monthly’s wind turbine of the year that was. This is a Low Wind Speed Turbine that is best able to harvest low and medium speed winds and still deliver electricity at quite affordable prices. At 5.1 square meters of swept rotor area per kw of generator capacity, this is more than twice the specific power (m^2/kw of capacity) value that most turbines had just 5 years ago. Turbine owners are installing units like these in medium and fast wind locations (as well as in slower wind zones) and getting net delivered power outputs often averaging more than 40% of the turbine rating (and sometimes over 50%), and this really puts a lot of worry in those pushing methane as the hottest thing since sliced bread with respect to making electricity. And this despite the fact that the methane usage promoters have NO idea what the price of methane - and the cost of the electricity made from that methane - will be a few years from now, let alone 10 to 20 years from now. Geez, what COULD go wrong with such a scheme? As for the price of the electricity from that G114 - perfectly predictable once the financing terms and location are locked down for at least the next 25 years…

Yes, it is a really strange place that we find ourselves in. Evidently we have a slight oversupply in the world oil market - a result of defacto economic recession in Europe and China and the gradual accommodation of much of the world to six years of $100/bbl oil plus a slight increase in the supply, only made possible by the high $100/bbl pricing. At such high prices, getting frugal with gasoline, jet fuel and diesel - such as high fuel efficiency for cars and replacing diesel powered generators (popular in places like India and China) with wind sourced electricity - has the effect of reducing the demand for petroleum products. And there is a special twist to Saudi Arabia’s ability to act as the buffer which so far most of the journalism in the world has failed to catch on to. As a result, there is now a very temporary slight glut in the world oil market - just like has occurred in the domestic North American methane market - and spot prices are at $50/bbl. This happens to be below the cost of production for AT LEAST 10% of the crude oil now produced in the world (around 9 million bbls/day), and any further activities aimed at developing such oil are going to be stopped really fast. But a lot of that 10% happens to be in the US and Canada, where really crappy, expensive to get oil has been miraculously made in large amounts - but only as long as prices are high. At $50/bbl, those efforts are massive money losers, and those financing them are in for a rude surprise, as the bonds used to finance these efforts can’t be repaid. That’s going to be a “Houston, we have a problem” moment, at least until prices resume their inevitable rise to the heights of “until people can’t afford to buy it any more” arrives. When depletion (around 5 million bbls/day for each year) starts to catch up, that oil market will self-correct but that could be a few months from now. 

Meanwhile, there is the electricity side of the energy equation (energy is a bit of a three sided coin with its transportation, heat and electricity aspects). In the country with a huge electricity market and one of the best wind resources that is far in excess of what its population can consume (USA rules!), a group of renegades looking fondly backwards in time (Republicans who apparently hate science and empirically provable facts, as well as the Scientific Method) have done all that they can to stop the nascent wind turbine industry dead in its tracks. And did we mention that the GOP also stands for “Grand Oil Party”, and that the ugly (from a financial standpoint) stepchild of oil, the methane business, is ALSO getting lots of help from the Republicans? After all, the methane part of the oil biz has lost a LOT of money in recent years, and now that oil is going for $50/bbl in bulk markets (which is a lot lower at the wellhead), the oil sector can no longer subsidize this ugly stepchild (ugly only in the sense that it has lost over $150 billion since 2009 in the US from most of the wells using fracking to extract it). Part of the reason for the methane glut is the large amount of fracking for oil activity of late - especially for all the fields except the Bakken (which has minimal gas production per barrel of oil made). The oil/gas fields in the Texas Permian fields are especially notable - those produce a mix that is about half methane/half crude oil. If methane prices were higher (such as $10/MBtu), they would not be such money losers and they might even be money makers, but alas, with too much supply and not enough demand, putting more methane on the market just depresses prices and increases the losses… Oops…

Electricity was supposed to be a way that vast amounts of methane could be consumed and where greater profits should have been possible to collect (methane for heat tends to be a very regulated arrangement in most parts of the U.S.) from methane production. But with the oil rush and all the by-product methane made from that oil (about 33% of all methane marketed in this country now comes from oil wells as a by-product of those operations - see http://www.eia.gov/todayinenergy/detail.cfm?id=18951), the more oil that was produced means that more methane was made. During the last 4 years almost all wells that have been fracked were done so for oil production, though the methane did have some additional “spare change” value. And so, electricity remains really cheap, made so by having methane sold for below the cost of production often used to generate that electricity. Unfortunately, this cannot go on forever, especially when one of the items subsidizing methane production (oil from wells producing both oil and methane) is itself also now a money loser.

From an economic standpoint, this oil and gas bubble did employ a lot of people and also funded a lot of industrial activity. Unfortunately, when the merry-go-round stops, a lot of oilfield workers and workers and companies dependent on oil drilling as well as on making the tools of the trade (lots of specialized, often made in USA stuff) will no longer be employed. It looks like certain “red states” are in for a hard landing as the money the rest of America was funneling to them for their expensive (but made in USA) oil will only be coming in at half the rate (price dropped in half), and then that money will drop as depletion lowers the production rate. And without new drilling and fracking, the oil and gas production rates will drop really fast - often by half in the space of a year.

Of course, a lot of these newly unemployed could be put back to work, but just not in oil and methane production or oil related activities. It turns out that Texas, Oklahoma, Wyoming, Colorado and North Dakota have amazing wind resources. And unlike tight sands and tight shale oil and gas, the wind resource of these places is unlikely to ever deplete. If only the Republican controlled House and Senate could see the light, as economic recessions/depressions (only in those states - other oil consuming but not producing states will likely benefit from cheaper prices) will only get worse if nothing is done to stimulate economic demand. And stimulating the wind biz in these state (and the country in general IS and economic stimulant, and a very good one, too.

But this puts the new Republican controlled House and Senate in a mighty bind. They are essentially handmaidens (or concubines, or “consorts”, or married, or all of the above) to the completely intertwined oil/methane industry and their facilitators/benefactors in the finance industry. Ultimately, the oil business is subservient to the finance sector, notably since the determination of oil pricing is extremely opaque with complicated commodities trading, derivatives bets, futures options pricing and the fact that oil is often used in lieu of gold and other currencies. It is the finance sector that handles bond sales and then slices and dices those into Collateralized Debt Obligations (CDO's), which then get peddled by sophisticated "boiler -room" type financial operations. The recycling of the excess dollars accrued to oil exporters is also big business - without that recycling, many major economies in the world would cease being relevant. There is also a LOT of money tied up in oil ASSETS - proven oil and gas fields, pipeline and transport ships, oil and gas inventories, refineries and then the petrochemical complexes using oil and natural gas feedstocks. And there is the $500+ billion in junk bonds that were used to finance the recent fracking boom in the US - those will lose a lot (or all) of their value if the payments on the bonds cannot be made. And then there is a lot of money tied up with respect to insurance on those bonds, as well as bets that those bonds will lose value. The bets on those bonds may soon exceed the nominal value of those junk bonds….

The financiers want their money as agreed to by the fracking well drillers. But there will be no more loans to them or bonds offered from them that will get buyers, so the fracking business is essentially the equivalent of “the walking dead”. Without new bond sales, they cannot drill and “stimulate” more wells. But without new wells, their oil and methane flows will start dropping at very noticeable rates. Without constantly drilling (which needs financing, even more difficult because the secret of how much money is generally being lost in this business is getting out and into public view), the huge supply chain (fracking sand, chemicals, expertise, pipe, rental equipment, trucks to haul stuff, etc) goes ”poof”. And with all those angry and unemployed oil workers trickling back to Texas, Oklahoma and Louisiana, well, their Republican congress critters will hear about that real soon. For those critters to get reelected, there will be a need to stimulate the economic prospects of those workers and the businesses in the supply chain. Well, there is always the wind biz, and these soon to be panicking southern conservative House members could get mighty tempted to go off the oil and methane reservation. After all, in politics, it’s “What have you done for me lately” that tends to rule. In the meantime, all the money sloshing around that was going to go into fracking has to go somewhere or it, too will evaporate/get dissipated. And at least in the wind biz, investors rarely lose money - they may not make huge rentier profits, but some profits are better than none. Even if they are wind sourced instead of oil sourced….

Now, some may hope that the State Department, big oil companies, big banks and/or major hedge fundies (religious fundies, meet the Hedge fundies…) might be able to talk Saudi Arabia into going back to its “swing producer mode” - when oil prices drop, they cut back on production, keeping prices high, and when prices get too high, they increase production), but that may be a thing of the past. Their oil minister has said that they won’t reduce their production unless all other producers do so in lock step - and that is not likely to happen. But it could well be that the Saudi’s are contractually obligated NOT to reduce production rates because those rates and the oil quantity has already been sold, or close to it via a “pre-pay” scheme. See http://www.eurotrib.com/story/2015/1/1/195652/1093. So, it will fall to others to lower oil output in order to once again match supply and demand at some price that allows all who make that oil to make some profit, and allow a lot of that oil production to be hugely profitable, too. Because the cost of production of most oil has been unrelated to the price obtained for it for some time….

In the meantime, a sector not rife with such bizzaro pricing as oil and methane is dying off once again in the U.S. Essentially no new projects will be announced until the Production Tax Credit or an improvement on it gets announced. This deployment of wind turbines could employ a lot of people who will be rendered as unemployed in the next few months, because the wind resources in much of Montana, Wyoming, Colorado, Texas and the Dakotas is nothing less than awesome. And unlike the oil and gas fields, depletion is not an issue. Of course, this will not happen right away, but the hurt train is definitely coming to the oil patch, fast. Of course, the rest of the country could also benefit, though the 50 or so red state congress critters seem to have no care about that aspect of the wind business. In fact, that is one of the reasons they have opposed wind energy so much, despite residing on the proverbial goldmine of wind. 

And with the now full scale commercialization of LWST around the world, the only excuse not to do this is in the USA is just plain whoring to the oil and gas industry and all around general meanness. Since the oil and gas biz will soon be running short on money, the loyalty of these legislators is in doubt. And the bankers really have no loyalty - they just want to get out of the bursting cracker bubble without losing too much. And it would be nice to see some of this potential realized ….. the new 2015 US wind maps for LWST on tall towers website also has this very interesting graph:





For example, using LWST and 110 meter tall towers, an area of 4 million square kilometers is deemed “commercial” with an estimated 30% net output or better in the continental USA. At 1 x 2 MW turbine per km^2, that is 8,000 GW of capacity, and 2400 GW on a delivered basis. The US now needs 450 GW of electricity (average delivered basis), so the 2400 GW is 5.3 times what we now use. Of course, these maps are based on 5 MW of capacity per km^2, so this gives us 13 times our needs. And if the tower height is increased to 140 meters for those areas that need it (especially the southeast states), that’s 16 times our electricity needs. And if that is not enough, we also have a pretty awesome offshore resource in the Atlantic and Great Lakes (shallow water) and deepwater (Pacific and some of the Great lakes). In short, we have enough to power up our country with heat and electricity many times over using very affordable wind turbine based electricity, even accounting for energy storage losses (pumped hydro). 

But so what? None of that happens until the red state Republicans either get tossed into irrelevancy in the 2016 elections and/or they dump their current oil and gas sponsors/owners when the oil and gas people turn up way less than broke and not a lot of money to spare. Which one do you think will happen first…..?

Monday, December 22, 2014

NY Dumps Fracking (for now) - What’s Next?


From http://www.invenergyllc.com/portals/0/Marsh%20Hill%20Dec'13.JPG - a picture of a a GE 1.6 MW x 103 meter rotor diameter turbine in the Marsh Hill array, NY’s newest, located near Hornell, NY.

The recent decisions to not allow fracking for methane in NY State means that NY is either dependent on others for methane OR it must come up with alternative arrangements to make electricity without methane OR it must do without the electricity and heat made from burning mass quantities of methane (about $5 billion worth per year at present prices, or $20 billion/year based on 2007-2008 methane prices). Of course, wind turbines for electricity and wind sourced electricity to power ground sourced heat pumps ARE an affordable way that could generate more electricity and heat than NY State residences, businesses and governmental entities consume, and to keep most of the money now exported to import methane in state, too. Of course, NY State could also waffle, try and do all of the above and succeed at doing nothing much at all, though thanks to the Governor’s recent decision at least the fantasy of in-state methane extraction from the Marcellus and Utica shales has finally gotten the wooden stake treatment that is supposedly fatal to vampires and other similar parasitic schemers and schemes….

But to do a renewable energy approach that doesn’t cost a prohibitive amount in NY State, you would need to install mass quantities of those commercial scale wind turbines in conjunction with literally millions of heat pump systems (mostly ground sourced ones) ASAP. And the economic benefits associated with this are maximized when as many of the parts that go into the turbines and the final assembly of the key components (nacelles, blades and towers) are made in state, such as now takes place in Quebec and Ontario. Out of the ~ 70,000 jobs in the wind business in the US, less that 300 are “in-state”. Ditto for the heat pumps. Nevertheless, wind is the low cost way to potentially supply NY with ~ 75% of its electricity (the rest is with hydropower and biomass) - significantly lower cost (by a factor of 6 to 10) than photovoltaics - and ultimately most of its residential and commercial heating. And so far, no politician in NY of note is advocating that we pay MORE for electricity (and which is really cheap at bulk (NYISO) prices, for now). An idea of the present cost of wind based electricity can be seen in a recent Quebec Hydro announcement  for 450 MW of wind energy projects where the bid price was 6.52/kw-hr for 20 years, which is a subsidy-free price and includes the developer profits (http://canwea.ca/results-of-the-request-for-proposals-for-450-mw-of-wind-energy/#more-3110)

It is no surprise to most in NY that Gov. Andrew Cuomo - who is considered by many to be a ruthless, calculating politician - is also a pretty skillful practitioner of the political arts in NY State. He did not come to his present position of power by being ”Mr. Nice Guy” or by generally pursuing unpopular things, at least obviously. And it is generally assumed that he can read the way the political winds are blowing on a lot of important items. He is not what one would call “populist” or “progressive” - he seems fine with the present mal-distribution of income and wealth, and if you have the money, you can get his attention without much difficulty…. And he virtually NEVER does spontaneous interviews - the public meetings he does seem to be as staged as those in North Korea - but just done with more tact and style. He also does not use email much, as that leaves a record, and can be “messy”. The Gov. does not like “messy” (or email documentation) associated with his administration…

Based on all that he has ever said and closely associated with (mostly big money types on Wall Street), most  people have assumed that he is intensely favorable to fracking for natural gas, certainly out-of-state, quite possibly in-state, notably via his line from the only 2014 debate “I am not a scientist” - a favorite phrase of Republicans and Climate Warming denialists. But at a press conference in Albany on Wednesday, December 17, 2014, he made the POLITICAL decision to let the science of fracking and its potential health, environmental and economic consequences do the talking. Ever since his election in 2010, he has pushed the fracking for methane campaign in NY State, but he always left himself a political out. In the four years since, fracking has become increasingly UNPOPULAR to the point where it is politically toxic, and this in spite of an industry led propaganda barrage (= “advertising”) upon NY’ers. The opposition to fracking has been an amazing story of (to date) a populist uprising, conducted on a shoe-string budget and a single focus - “NO to fracking in NY State”. That’s it - essentially no alternative - just no to fracking for a large number of persuasive and strong arguments that increasing numbers of NY voters find as the reasonable way to view this technology and form of stilted economic development. And that kind of trashes the hopes of the oil and gas drillers in NY State:


And maybe it’s catching, because on the next day Quebec’s Premier also canned fracking for that province. Cool! http://www.desmog.ca/2014/12/17/fracking-band-quebec-and-new-york-should-give-bc-christy-clark-pause

So, Cuomo chose to take a pass on fracking, a sign of a skillful politician who can read polls (and primary election results). There was little to gain by allowing fracking to be unleashed upon much of rural NY State, and a lot to lose, so what bother? Besides, the fracking pushers have already blown their election money (many tens of millions of dollars) on Cuomo via campaign contributions, and they have no alternative - where else can they go in this state? Maybe they can hibernate and get lucky in the future - but probably not. And so, thanks to a lot of political heat, Cuomo allowed the science to take the blame. He did not have to - this was a very calculated decision on his part. But, if you are a politician above all else, and one with few beliefs that can be considered populist or progressive, well, such decisions are an example of “ya gotta do what ya gotta do…” - a very practical NY philosophy, if there ever was one. And in the process he took the business case for fracking for methane in NY and dumped it in the proverbial trashcan along with the avid supporters of his who were pushing this approach. But, politics in this state is like Hockey “on the boards” - sometimes its stark and brutal, and it changes rather rapidly. “What have you done for me lately?” cuts many ways, and on December 17, it cut really bad on the many hopeful millionaires who dreamed of riches extractable from the Marcellus and Utica Shale zones in NY State.

Of course, part of the pushing on Cuomo to dump fracking in NY State was the dismal economics of this business. At best, the methane content and the thickness of the shale layers in the small part of NY State where it might be possible just are not that great, especially compared to those in isolated spots in Pennsylvania (south of Corning, NY and near/south of Pittsburgh). The bulk of the Marcellus shale in both NY and Pennsylvania would need prices well in excess of $10/MBtu (and often a lot more) - it is only in the ”sweet spot region” where the economics almost make sense. Almost all money used to finance new drilling in ”tight soils” such as the Marcellus in Pennsylvania and West Virginia, or the Utica Shale in eastern Ohio has been done via “junk bonds”. Most drilling these days is done for oil or a mix of oil and methane - methane only wells are generally money losers at present prices (with some exceptions). Banks will generally not lend money for risky drilling, though they will arrange for bonds (collecting hefty fees in the process, of course) to be sold as long as they can be sold off to others rapidly, or else in ”packages” called CLO’s (Collateralized Loan Obligations) - remember those from the “sub-prime” housing crisis of The Great Recession? There is in excess of $500 billion worth of oil and gas based junk bonds that have recently been issued since 2009, and they only have value if those who ultimately are responsible for them can make their payments on time. And due to the recent ”market discipline” efforts of Saudi Arabia, which has temporarily collapsed the price of oil from over $105/bbl to near $55/bbl in the matter of a couple of months, a lot of those bonds may go into default. If the issuers of those bonds (who spent the money on drilling wells and leasing land) cannot make their required payments (and a lot of them cannot), then the value of those bonds will drop considerably. Other financial “sharks” are smelling “blood in the water” and are now betting that those bonds will continue to fall in value (shorting the bonds). More shades of the Great Recession… Other “players” have bet that these would not fall in value - in effect, they issued insurance (allowed the bondholder to hedge their investment), and they could be out hundreds of billions of dollars in the very near future. Oh what fun…..



Anyway, this can happen in Casinos - the House can actually get skunked. It’s supposed to be a cold day in Hell if this happens - especially if there is competent management in place at the Casino, but apparently no such luck in the case of Wall Street…In this case, it appears Citibank is on the wrong side of a lot of those hedges, while Bank of America is on the (for now) correct (winning) side of these bets. This may be a huge factor in why the Dodd-Frank legislation was recently amended - and this alteration was specifically written by Citi! Gee whiz, is that not precious? And now we have the US taxpayer able to backstop the House (Citi and JP Morgan, among others).

Odds are, the crisis will soon pass, but this will mean that nobody will be issuing junk bonds for fracking for some time. No junk bonds means no financing for this expensive form of oil exploration that only makes sense in the US and Canada at the present time. And for an industry that has been generally spending more money on drilling, leases and related items than it was pulling in via sales of oil, condensates and methane, this means that they either put up cash or they quit drilling. And they have to hope that oil and methane prices rise and rise pretty fast so that they can at least repay most of their bonds as their existing wells deplete rapidly. Most wells drilled these days are for the oil or ”lites” (ethane, propane, butane), while the methane is a nice adder for profits. This “associated gas” accounts for a very significant percentage of the methane the US now produces - around 28% of all marketed methane. Gas depletion rates average 23%/yr to 49%/yr, which means that a quarter to half of current production must be replaced search year just to maintain production rates at present levels.



Since the depletion rate for gas shale runs from 23%/yr to 49%/yr, this means that the entire supply of a fracking field has to be replaced every 2 to 4 years just to maintain production levels at their present levels. And with depletion rates even higher for oil fields well, the “oil glut” is an even more rapidly self-correcting system than is the methane from tracking system. And since 28% of US methane supplies (total now averaging 70.8 billion cubic feet per day, or bcfd) come from wells that were drilled for their oil (the methane is just a bit of extra profit), the self-correction will happen in a remarkably quick period of time… Methane revenues are between 93.7% (Marcellus) to 5.7% (Bakken) of total hydrocarbon sales, but that extra bit can be important, especially in light of the drastic drop in the world oil price.

It takes around 18 months to get a wind project installed and operating, and between 1 to several years of “pre-study”. NY has a large supply of already evaluated potential wind farm locations. But it needs to get moving if we want to avoid the blowback/aftershocks from the wild oil price fluctuations. And even though oil is no longer used for electricity production to any serious extent, it is related to electricity prices in a new way. This is because when oil drilling slows down (and drilling and fracking will not happen unless financing is available, which is generally not the case anymore), associated methane production will also slow down. And once the methane glut is over, here comes the hangover - another methane price spike as the supply of methane shrinks while demand stays essentially constant. Unless that demand for methane shrinks, it’s going to be “Fun, wow…” time once again…

The Governor supposedly closed his meeting with a question of sorts - wondering what will fill the gap. If the last four years are any indication, it would not be wise to leave this decision up to the Gov and his lobbyist buddies. Just as with tracking, the public will need to weigh in on this in a big way, and do the deciding for him. The big question is whether this can be done, and if it will be done. Because sometimes it's just easier to say "NO" than to weigh through what can be a complicated advocacy program that has powerful enemies. The methane industry in the US despises the wind business, and the people in the methane business are not known for being nice or playing nice, either. Odds are, if they can't get their way, then Cuomo and competitors to the use of methane to make electricity will need (in their view) to be taught a lesson. And sometimes revenge just feels good, especially if initiated by those who really don't care about if most people in the state have to pay for this revenge, in numerous ways.

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