Tuesday, March 18, 2014

Oil Surges $1.50/Bbl Today; Wind Farms Not Getting Any Less Expensive -- And A Good News Story For The Coal Industry

Again, Yahoo!Finance has the wrong "oil price" at the top of the page. Quietly without much fanfare, and I completely missed it, oil surged almost a $1.50/barrel today, back to almost $100/bbl again. So much for price manipulation by President Obama's release of oil from the Strategic Petroleum Reserve. From Yahoo!In-Play, at close: Apr crude oil rose $1.64 to $99.69/barrel. This surge had nothing to do with the strength of the dollar; it remained stable today. MarketWatch is reporting:
Oil futures gained nearly 2% on Tuesday, with some analysts attributing the price strength to news on the expansion of a key U.S. pipeline, as traders looked to the week’s supply reports and the conclusion of the Federal Reserve’s policy meeting to help gauge oil’s next move. 
Some analysts attributed oil’s gains to a report that a pipeline expansion that would help draw down supplies at the Cushing, Okla. oil delivery hub would be completed sooner than previously expected.
“The oil trade is fixated on it,” said Phil Flynn, senior market analyst at Price Futures Group.
Enterprise Products Partners said it would more than double the capacity of the Seaway pipeline, with the expansion of the pipeline in service in late May or early June, Bloomberg News reported Tuesday, citing comments made by a senior vice president at an analyst day presentation in Houston.
Free Electricity For Native Americans
It will only cost them a billion dollars.

The Rapid City Journal is reporting:
Tribal leaders hope that the wind farm will not only provide free electricity to the reservation's 2,000 residents but generate significant profits from the sale of electricity off the reservation.
They're talking about a federal grant that would bring a billion-dollar wind farm to the Crow Creek tribe, based in central South Dakota. But it's not a slam dunk:
While the federal grant money would pay for land, wind and ecological studies on the proposed site, he estimated the tribe would need about $800 million to a billion dollars to bring a 400,000 megawatt wind farm to fruition.
However, Nagourney said he was confident the tribe could attract investors, based on the proposed site's close proximity to transmission lines and early studies of its energy potential.

If the tribe is able to attract enough private investment, Nagourney estimated construction on the first phase of the project, a 100 megawatt wind farm, could begin in early 2016 and be completed by the end of the year.
I assume a $10,000 donation from The Rapid City Journal to jump start the one billion dollars that would be needed would be a good start. 

Somehow the numbers don't make sense. The article says the federal grant totals $3.2 million spread among 21 Native American tribes across the United States.  Even if all $3.2 million went to the Crow Creek tribe in South Dakota, that's hardly a drop in the bucket for a billion-dollar project. Either I'm missing something or the numbers reported are incorrect.

By the way, back on February 7, 2013, the blog noted:
As a rule of thumb, Don uses $2 million / megawatt as the cost to "build" a wind farm. That agrees with other sources. 
So, this newest story, the one about the Crow Creek tribe, does that rule of thumb still hold?
The proposed wind farm is on 7,000 acres of tribal-owned land about 12 miles north of Fort Thompson, the reservation's biggest town. The tribe estimates the site could produce 100 to 400 megawatts of power, which could power 100,000 to 400,000 homes.
What does that work out to?
  • $1 billion / 400 MW = $2.5 million / megawatt
Wow, wind farms aren't getting any less expensive. This could cost taxpayers/investors as much as $2.5 million/MW based on figures from the story. Again, reporters are not asking the right questions.

By the way, this will end up being a good news story for the lignite miners in North Dakota. Wind is sporadically available; wind turbine farms need 100% back-up; coal-powered electric plants will provide the back-up; and because one cannot simply start and stop a coal-fired plant, the coal will have to burn at least at a low level 100% of the time. 


With the first military deaths associated with events in the Crimean/Ukraine, there is a very good chance we could see civil war in the Ukraine. Just saying.

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