Random Notes on Wind Energy Costs

It was my understanding a wind farm comes in at about $1 million to $1.5 million / megawatt.

The Bison Wind Energy Center, just completed, in North Dakota: $500 million / 160 megawatts = $3,000,000/megawatt (the way the story is written, there exists some doubt, in my mind, that the numbers are entirely complete, but be that as it may: $300,000/MW). Corrected: see the comment from the second reader below.  Huge thanks to an alert reader.  The project is for 160 megawatts; cost is projected at $500 million. Cost per MW: about $3 million.

Off-shore, wind is, they say, more expensive. How much more expensive?

Cape Wind, off Massachusetts: $2.6 billion / 454 MW = $6 million/MW.

The London Array, phase I: 2.2 billion euros/630 MW (1 euro = $1.30); therefore, $2.86 billion/630 MW = $4.5 million/MW 

So, this is is what we have:

• North Dakota: $3 million/MW.
• On-shore average, wiki: $1 million/MW
• Off-shore, London (England): $4.5 million/MW
• Off-shore, Massachusetts: $6 million/MW

Disclaimer: I often make simple arithmetic errors.  

Solar Farms

Examples for cost comparisons:

Announced June 3, 2013: Universal Bioenergy Inc. announced that its subsidiary, NDR Energy Group, has signed ... with JSG Solar Inc., to build a solar power farm in eastern North Carolina, USA. The estimated cost to build the facility is $167 million. The project is projected to generate an estimated $301 million in revenues over 25 years. 

The solar facility would be built on approximately 425 acres of land and generate 80-100MW (megawatts) of electricity for sale to electric public utilities in the North Carolina service area. The estimated annual electricity production is 143.9 million kilowatt hours (kWh). 

• one section of farmland; not dual-use
• $167 million/100 MW = $1.67 million/MW 
• $167 million / 25 years = $7 million/year
• at 5% borrowing rate, $8 million/year in the early years just for interest payments
• $300 - $170 = $130 million over 25 years = $5 million in revenue/year
• reminder: profits = revenue - costs (simplified)

Kinder Morgan Cancels Plans For $2 Billion Freedom Pipeline, Permian To California

WSJ's take on this story.

Rigzone is reporting:

Kinder Morgan Energy Partners LP said Friday it has cancelled plans for the $2 billion Freedom pipeline, a conduit that would have brought a direct stream of West Texas crude to refiners on the U.S. West Coast.

The cancellation underscores the growing difficulty pipeline companies are having in selling new large-scale projects as oil producers and refiners increasingly rely on railroads to ship crude around. Once seen as temporary necessities to deliver oil from emerging oil-producing regions in Alberta, Texas and North Dakota, railcars have become a permanent fixture of the North American energy landscape because they allow refiners more diversity of supply.

This trend means that pipeline giants like Kinder Morgan will have to focus on smaller pipeline projects and branch out into other transportation segments.

I remember a couple years back, someone sending me a comment telling me that CBR was a temporary phenomenon. See also the WSJ story, May 24, 2013.

Kinder Morgan Energy Partners first pitched the 277,000 barrel-a-day pipeline in April, hoping to woo West Coast refiners dependent on more expensive oil shipped in from Russia, Ecuador and about a dozen other countries. Refiners in the fuel-hungry California market are eager to buy the same cheaper domestic crude that is already benefiting their competitors in the Midwest and Gulf Coast.

But Valero Energy Corp., Tesoro Corp. and others operating on the West Coast turned Kinder Morgan's proposal down, saying railcars gave them more flexibility. Bringing west Texas crude oil via Freedom and its $5-a-barrel tariff would not be much cheaper than shipping crude oil via rail from the Bakken oil field in North Dakota but would tie refiners down to long-term pipeline contracts.

I personally think it's a hoot -- CBR -- day in, day out, trains rolling down the track, burning fossil fuel and spewing CO2. Flexible, scalable, and manpower intensive. All those SUV's at RRX's, idling, waiting for the 110-car unit trains to pass. What's not to love.

And this is the irony: it's not even the activist environmentalists pushing their agenda any more; it's the big bad oil companies that have decided that "the track is back." 

For investors: check out Genesse & Wyoming. Another great opportunity. It's p/e is only 43.

Disclaimer: this is not an investment site. Do not make any decisions based on anything you read here or think you read here.  

Something tells me Jim Croce is smiling:

Railroad Son, Jim Croce
In his dreams, riding the rails to California; looks like it's no longer a dream. "The track is back." The song kinda reminds me of that other singer...John Denver.

Take Me Home, John Denver

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To The Granddaughters

John Denver's "Take Me Home" used to bring tears. There are many, many songs I associate with one of the most remarkable summers of my life, and "Country Roads, Take Me Home" was one of the best.

Texas Is #1 In Production; But North Dakota Is #1 In Year-Over-Year Percentage Increase

Carpe Diem is reporting:

1. Two states – North Dakota and New Mexico – established new all-time monthly oil production levels in March, with annual increases of 35.7% and 23.5% respectively.

2. Texas crude oil output in March – at 2.369 million barrels per day – was the highest in slightly more than 27 years, going back to February 1986, and increased by more than 30.5% over last March.  As I reported yesterday, the Lone Star State produced one-third of all US crude oil output in March, the highest share ever.

3. Oil production during the month of March in Oklahoma was the highest in more than 20 years, and oil output in Wyoming was the highest in almost 13 years.

4. For the country, the US produced more crude oil in March than in any month since October 1992, more than 20 years ago.

Sequentially, month-over-month, it will get increasingly difficult to set new records, but year-over-year records should continue to be broken for another year or so.

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A Note To The Granddaughters

The house is very, very quiet. Everybody went to the movies to celebrate the older granddaughter's birthday. Her birthday is later this summer but she won't be around then, moving to a new city. So, she gets her sleepover tonight and her younger sister, whose birthday is also later this summer, gets her sleepover next week.

Meanwhile, I'm sitting outside in the backyard, typing on the laptop (the keyboard lights up), under a cloudless night sky. I'm looking for the evening star but may not see it due to light pollution. A bit warm still but absolutely no bugs (no mosquitoes, in other words) which really, really surprises me. No sports on television as far as I know. Even The Oil Drum is very, very quiet. Contributors there suggest that it's time to move on from the subject of "peak oil."

I've told this story before. While going to graduate school in southern California back in the early 70's I experienced the oil embargo. I started riding the bus but my roommate never stopped driving his car. The embargo ended and sometime between then and now, I realized that there would never be a "true" shortage of energy in my lifetime. Any shortage will be artificial and man-made.  It was a huge revelation.

Right now it certainly appears we could have a have a relative glut of oil/gasoline over the new few years. Supply is getting ahead of demand, and demand won't start being a problem until the Chinese move to a new demand level.

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I saw Jerry Jeff some years ago in the oldest dance hall still in existence in Texas. In college, I always thought the Nitty Gritty Dirt Band was the originator of this song. Wrong. 

This is another song that begs the question: do men/women write these songs, or are some songs delivered by angels?

Mr Bojangles, Jerry Jeff Walker

North Dakota Recognized For Permanent Economic Growth: The Silver Shovel Award

Updates

January 10, 2015: North Dakota did not make the cut for the Silver Shovel Award in 2014.

June 11, 2013: the same story, but at MSN Money.

June 7, 2013: North Dakota GDP growth tops in US; exceeds GDP growth of China.

June 6, 2013: North Dakota's economy -- #1 in US -- third consecutive year

Original Post

I posted this link/story earlier today, but for reasons that will become obvious later, I am posting it again, and expanding upon it.

First, the link/story in The Dickinson Press:

For the first time ever, North Dakota is being recognized by Area Development Magazine for its permanent economic growth.

Released Wednesday, North Dakota was one of 15 states to be honored with the Silver Shovel Award given by the site selection and facility planning quarterly. Four other states — Texas, Georgia, Alabama and Kansas — received Golden Shovel awards for being the top in their population category.

Each state had to pick 10 projects that represented permanent economic growth for the state, Editor Geraldine Gambale said from her Long Island, N.Y., office.

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I wasn't able to find the list of ten projects that North Dakota submitted, but here is my list, hoping that readers will let me know of major projects I missed. I'm not sure how to manage the oil-related projects; I will sort that out as we go along.

ONEOK: Bakken Natural Gas Liquids Pipeline and Stateline I and II and Garden Creek I, II and III natural gas processing plants

The Minn-Dak beet processing plant in Wahpeton

The Ultra Green Packaging factory in Devils Lake

Expansion of BNSF facilities in Minot; marketing headquarters in Bismarck

North Dakota State Bank: unique in the US

Port of North Dakota

#1 producer of several agricultural products; among top 5 for several other products

United Pulse Trading expansion in Minot

WAWS bringing potable water to numerous western communities

Proposed fertilizer plants in Jamestown ($1.2 billion); Grand Forks ($1.5 billion)

Two dozen crude-by-rail terminals established in less than five years

Numerous major pipeline projects: oil and natural gas

Bobcat expansion/re-emergence in Bismarck

North Dakota ranks third in percent of electricity production from wind energy (Iowa #1, South Dakota #2)

North Dakota ranks #1 in barley production, key to beer production (this alone should qualify us for the Golden Shovel award next year)

UND's Department of Aviation: largest collegiate training fleet

Great Plains Synfuels Plant uses thirteen percent of North Dakota’s yearly coal production to produce synthetic natural gas. This is the only commercial-scale coal gasification plant in the U.S., producing 54 billion cubic feet per year, most of which is piped to eastern states

Construction has begun on first new refinery in the United States since 1976 in the Dickinson area; two more planned

It's Raining In The Bismarck Area And Setting Records; Flooding Is Predicted

The Bismarck Tribune is reporting:

Bismarck continued to add to its record rainfall total for May as rain persisted Friday. As of 5 p.m. Thursday, Bismarck recorded 7.24 inches of rain for the month of May, eclipsing the record of 7.04 inches set in 1927. Bismarck received measurable rain May 16-21, none May 22, 23, 24 or 28 and measurable rain the rest of the month.

For Bismarck, five of the top 17 years for rainfall have come since the year 2000. The ninth wettest year in terms of rain came in 2011 — 23.22 inches. The 10th wettest was in 2010 with 23.18 inches. The 11th wettest was 2009 with 23.12 inches. The 12th wettest was in 2000 with 23 inches. The 17th wettest year was in 2001 with 21.34 inches of rain.