Energy – Page 15 – Outrun Change

Update on Thunder Spirit wind farm. Project sold to MDU.

Birds that are at risk of finding out why turbines are called slice-and-dicers. Pictures courtesy of DollarPhotoClub.com. — Birds that are at risk of finding out why turbines should be called slice-and-dicers. Pictures courtesy of DollarPhotoClub.com.

The Million Dollar Way quotes a press release from Montana-Dakota Utility without a link. MDU has purchased the Thunder Spirit wind farm project from Allete Clean Energy. MDU currently has a commitment to buy all the electricity from the project on a 25 year contract. Now MDU owns the wind farm.

Project consists of 43 towers with rated capacity of 107.5 mW. Cost is reported in the press release to be $220M.

At cost of $220M for 107.5 mW, that works out to $2.05M/mW.

Keep in mind in the upper plains the average capacity of wind farms is about 34%. See EIA graph here. Peak is about 43% in fall and low is about 21% in the late summer for about 2 months. The upper plains have a flatter capacity curve than other regions. Looks like about 40% can be achieved for half of a year.

Theoretical output (also called nameplate) is 107.5 mW. Average output will likely be 36.6 mW (107.5 x 34%).

So the actual cost for each mW of actual average output would be: Continue reading “Update on Thunder Spirit wind farm. Project sold to MDU.”

More on low oil prices with particular focus on Saudi Arabia

How fast do you suppose those drillers that scaled back could scale up? Out of focus photo by James Ulvog.

Had been planning to hold this article for a few days because of other posts I’d like to run first. Guess I’d better run it now. At the rate things are deteriorating in the Middle East, need to post it quickly before war headlines make it completely out of date.

12/30 – The Guardian – Recession, retrenchment, revolution? Impact of low crude prices on oil powers. Article walks through what low oil prices may be doing to each country.

A graph shows one factor that is fascinating to me, specifically the price needed to balance the national budget in various countries. Here are the prices a few countries need: Continue reading “More on low oil prices with particular focus on Saudi Arabia”

More on the high cost of low capacity from wind power

Photo by James Ulvog. — Out of focus photo by James Ulvog.

One of several catastrophic obstacles to relying on wind power to generate a large portion of our electricity is that wind turbines only generate electricity when the wind is blowing. That makes wind power quite unreliable.

Diving further into that issue shows that the wind blows more in some months more than others and this variable capacity further varies by region.

Why is this an issue? Electricity must be generated at the instant it is needed (allowing for the time it takes for electricity to get from the generating source to your house). It cannot be stored.

Variability over the course of a year

Check out the following graph from the Energy Information Administration:

That graph, which can be found here, is in the public domain since it is government information. It shows that on average across the country during the course of a year wind facilities have an average capacity of about 32%.

Continue reading “More on the high cost of low capacity from wind power”

Cost to construct energy facilities

I am trying to collect reference points for the cost to construct different types of facilities. Here are a few data points I’ve noticed lately and some data points I’ve mentioned before.

Remember to discount all the construction costs below by the 15% to 30% capacity rate. That means backup natural gas or coal plants are needed for the 70% or 85% of the minutes each day the facilities aren’t producing.

Offshore oil

I haven’t paid attention to offshore drilling so I’m not familiar with production levels or costs. Here is one data point I just saw:

11/25/15 – Wall Street Journal – Italy’s Eni Plans to Pump Arctic Oil, After Others Abandon the Field – An Italian oil company, Eni SpA, will continue its work 300 miles north of the Arctic Circle. Their Goliat platform will start pumping in 2015.

Goal is to produce 100,000 bopd. Cost is estimated at $6 billion. Field is expected to be productive for 15 years.

For context, you could probably drill 1,000 wells in North Dakota for $6B.

Solar

3/17/15 – Million Dollar Way – Here we go again – solar project in the dead of winter in a northern latitude state. – Standing Rock Reservation will construct 636kW solar project for $2M, of which $1M will be from federal government. Continue reading “Cost to construct energy facilities”

Flat output from U.S. shale in last 12 months is not quite what OPEC had in mind

Pumpjacks about ready to come online in North Dakota. Photo in October 2015 by James Ulvog. Not what OPEC planned. — Pumpjacks in North Dakota about ready to start pumping. Photo in October 2015 by James Ulvog. Not what OPEC planned.

Production in the Bakken field of North Dakota dropped 4,140 bopd from October 2014 to October 2014. Going from average output of 1,118,070 bopd a year ago to 1,113,930 in 10/14 is a drop of 0.37%, or about one-third of one percent.

Overall production in North Dakota dropped 14,565 bopd, or 1.23% in the same time.

I don’t think flat production is what OPEC, I mean Saudi Arabia, had in mind when they went for maximum production.

Continue reading “Flat output from U.S. shale in last 12 months is not quite what OPEC had in mind”

Two wind farm projects approved in North Dakota

Two slice-and-dice operations have received permission to move forward.

Continue reading “Two wind farm projects approved in North Dakota”

Minor followup on media discussion of Bakken

Actual productive effort in North Dakota. Photo by James Ulvog. — Actual productive effort in North Dakota. No spin here. Fuzzy photo by James Ulvog.

Two minor followups, first on the evening soap opera ‘Blood & Oil’ and then a documentary about Williston. Mentioned both of these previously.

In addition to getting the production run cut from 13 to 10 episodes, the drama “Blood & Oil” took a two-week vacation on the schedule during November. I was wondering if the show was even going to finish out the run of 10 episodes.

Well, according to Wikipedia the show finally made it through airing all of the reduced run. Ratings and share has stabilized in the basement with the number of viewers trending down.

Continue reading “Minor followup on media discussion of Bakken”

More news on the impact of low oil prices, Saudi Arabia edition

The foreign reserves in Saudi Arabia look something like this in 2015. Image courtesy of DollarPhotoClub.com — The foreign reserves in Saudi Arabia looked something like this in 2015. Likely to continue for several more years. Image courtesy of DollarPhotoClub.com

It is rare I can find two articles in one newspaper edition that tell a story so well when you put them together. Check check out the Wall Street Journal on December 24:

OPEC Report Suggests Oil-Price Rebound, Supply Cut / Prices to rise to the $70 a barrel in 2020, $95 a barrel in 2040, cartel predicts.

The subtitle tells the story: OPEC expects prices to rise very slowly climbing only $14 over the next seven years and another $25 over the following 20 years. That would suggest the following:

$37 – Brent crude on Wednesday
$70 – 2020
$95 – 2040

Their forecast of worldwide demand:

92.8M bopd – now
97.4M bopd – 2020

Some other of their forecasts. Oil supply from Canada and US:

17.3M bopd – 2014
19.8M bopd – 2020

Um, that is not much of a slowdown.

Shale oil from US:

4.4M bopd – 2016
5.2M bopd – 2020

Umm, that is not even close to what OPEC had in mind.

Keep in mind that extremely bleak long-term forecast for oil prices.

Possible impact on Saudi national budget

Saudi Budget Expected to be Squeezed by Low Oil Prices / Kingdom may be forced to slash spending, cut benefits for public. Very low prices are likely to force the government to cut the extensive benefits poured out to its citizens. Heavy subsidies provide artificially low-priced energy and food. Continue reading “More news on the impact of low oil prices, Saudi Arabia edition”

Government intervention can stop an industry or make the good times roll

Old joke: You don't want to know how either sausage or legislation is made. Today we see an illustration of the outcome. Image courtesy of DollarPhotoClub.com — Old joke: You don’t want to know how either sausage or legislation is made. Today we see an illustration of the outcome. Image courtesy of DollarPhotoClub.com

There was lots of news yesterday about the House passing a budget that covers all federal operations for the 2016 fiscal year.

I will leave the heated political observations to others. They seem to all be having fun.

What I’ll focus on is several ways that the sausage-making legislative compromises affected some of the wide open frontiers I’m watching.

Export ban on crude oil

Continue reading “Government intervention can stop an industry or make the good times roll”

Update on oversupply of oil – 12/16

[youtube:https://www.youtube.com/watch?v=6JJDXcu9KNM]

Lots of news lately on what is going on with crude oil. Here are a few articles of particular value for me: zombies appearing in the oil patch, low prices are due to worldwide oversupply and thus will likely continue a while, increased production and thus competition by producers will likely keep prices low.

12/10 – Reuters – Zombies appear in US oil fields as crude plums new lows – Here is a phrase that will make OPEC happy: zombies, in the context of the energy industry. That refers to a drilling company with such poor income that it is using all its cash to cover interest payments. That leaves no cash for drilling new wells.

Continue reading “Update on oversupply of oil – 12/16”

Can we rely on wind and solar? Do you want a one word, three sentence, or four minute answer?

Operational condition of wind turbines in California for 86% of the time in first quarter of 2015. Image courtesy of DollarPhotoClub.com — Operational status of wind turbines in California for 86% of the time in first quarter of 2015. Image courtesy of DollarPhotoClub.com

Take your pick. I have the answer in a word, paragraph, or 4 minute video.

Alex Epstein at Prager University provides us the answer on 10/20/15: Can We Rely on Wind and Solar Energy.

Short answer is no.

Medium answer is wind and solar are weak and unreliable. Technical terms are dilute and intermittent. That makes them both extremely unreliable and extremely expensive. Oh, that also means that backup power must be available, which will obviously be fossil fuels.

For the four and a half minute answer, check out:

[youtube=https://youtu.be/ObvdSmPbdLg]

More signs the North Dakota infrastructure is catching up

If you let an economy function, market forces will create pressures to smooth things out. The forces of supply and demand have an amazing ability to balance a temporarily unbalanced marketplace. Several recent articles illustrate this concept in North Dakota.

11/17 – Amy Dalrymple at Dickinson Press – Pipelines now outpacing trucks for gathering Bakken oil – After oil is pulled on the ground it needs to be moved from the well pad to either a rail-loading terminal where it leaves the state by rail or it gets moved to a major transmission pipeline where it leaves the state by pipe.

The oil is initially moved by either trucks or underground pipes.

The number of small gathering pipelines to carry oil away from the wells is finally large enough that more oil is moved by gathering pipelines than by trucks.

Continue reading “More signs the North Dakota infrastructure is catching up”

What might North Dakota oil production have looked like without the drop in crude oil prices?

How many rigs do you see? There are 2 clear rigs in addition to the obvious one. High magnification suggests there are at least another half dozen on the horizon. Photo by James Ulvog in October 2014. — How many drilling rigs do you see? There are 2 rigs for sure in addition to the obvious one. Looking under high zoom suggests there may be another half-dozen on the horizon. Rig towers are much wider than power poles and shorter than the radio tower. Photo by James Ulvog in October 2014.

Just as a matter of pure speculation, I wonder what production of crude oil might be if OPEC, I mean Saudi Arabia, had not opened the production spigots in late 2014?

What might the output be if growth continued at the rate of the last few years?

I tried graphing the production trend assuming the growth in output continued at the average rate of the last two years.

First the graph showing my guess, then my assumptions:

Now my assumptions.

Continue reading “What might North Dakota oil production have looked like without the drop in crude oil prices?”

Near-term forecast for Bakken production

Amy Dalrymple reports comments by Mr. Lynn Helms on what might happen in the Bakken oil patch over the next six months. Her article is at Dickinson Press on 12/9: Low oil prices for some drillers to sell; but new operators the opportunity.

First point in the article, which drives the headline, is a number of operators have sold 710 wells to operators moving into the state. Obviously the prices are based on what crude is going for now, which means these are long-term bets that prices will be substantially higher in a few years. If those bets are correct, the new players will score big. In the meantime cash-pressed operators are selling off peripheral assets so they can stay alive to focus on core assets.

General directions for 2016

Continue reading “Near-term forecast for Bakken production”

North Dakota oil production increases half a percent in October ‘15

Average daily production in the state increased from 1,162,159 average bopd in September to 1,168,950 bopd in October. That is an increase of 6,791 bopd, or 0.58%, just over half a percent.

Fracklog dropped from previously reported 1,091 to 975. That is still a huge amount of oil sitting on the shelf, just waiting for a frackjob to start producing.

Not quite what OPEC, I mean the Saudis, had planned when they adopted their plan to take out US shale.

Average price of sweet crude in the state is $27.00 now, was $32.16 in November, and $34.37 in September. That info from the Director’s Cut. That is really low.

That is perhaps what OPEC, err, the Saudis, were thinking.

Here are my regular basic production graphs. Won’t have the others this month.

Still looks sort of like a plateau.

Here is the long-term view:

Continue reading “North Dakota oil production increases half a percent in October ‘15”