Peak Oil & Wind Power

in NY for 2011-2031
By David Bradley and Derek Bateman
March 2011
Tantalum73@verizon.net and bateman@ecc.edu

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 Apocalyptic Horsemen?
• Peak Oil implies rapid future oil price increases

• Can lead to severe price based rationing,

– price spikes,
– no oil access and
– subsequent “problems”

• Global Warming cause by (mostly) CO2 pollution

from fossil fuel burning

• Combined, they make for a wicked duo

• Were not the original four Horsemen enough?

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 Oh oh!
• The United States is presently environmentally &
economically unsustainable, energy-wise

• Particularly regarding Peak Oil and Global Climate

Change

• Won’t be able to fix this without a significant green

energy and green jobs effort

• This requires getting energy pricing right

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 Peak Oil
• Where production rate is at or near a maximum level
• Can’t be increased even if prices rise significantly
• Leads to “Demand Destruction”/big price rises
• Occurs when 50% of “Ultimately Recoverable
Resource” (URR) has been produced

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 Peak Oil is:
• A liquid fuels problem
• Transportation problem

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 Hubert Linearization
• We are at 50% of URR
(URR = Ultimately Recoverable Reserves)

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 Global Climate Change
• CO2 pollution = CO2 generated by
burning fossil fuels

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 Global Climate Change
• CO2 into atmosphere is greater than the
ocean and land can absorb

• Heat from sun retained is greater than the

heat radiated into space

• Net result melting ice and warming planet

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 What it is
• Global warming is a long-term problem
of: climate, weather, rainfall, ocean
level/acidification

• Peak Oil is a short-term problem of

– Economic, food, transportation, etc…

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 UK’s Stern Report
• Addressing Peak Oil will require a 20
“WWII style” mobilization
– It could cost 3% - 4% to prepare for Peak
Oil
– Or a loss of 10% to 12% of GDP if we wait
until the threat hits

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 Peak Oil Challenge
• What happens when gasoline/diesel
gets above $5.00 to $20.00 a gallon?
• Transportation gets expensive
• Distance becomes a larger expense
• Food prices rise
• “Global economy” forced to get more
local
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 Peak Oil Economic Effect
• Acts as a regressive “sales tax”
• Less disposable income for most of us
• Less demand for other things
• Exports money from US go to oil
imports
• Less tax revenue for governments
– Education, health etc…
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 Export Land Model - 1
It is the export rate of oil that tends to set world oil prices

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Export Land Model - 2

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The problem in your side mirror is closer than
you might think!

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Peak Oil related - both are problems that need to be dealt with
 Export Land Model - 3
• At present (2011) 41 mbd exported
- 50% of all production
• In 2016 < 30 mbd exported
- 40% of all production
• More oil customers, less oil
- do the math…..

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 ELM Predictions

• Peak production now means higher prices

• Higher prices do not give greater production

• Higher prices will not stop decline in exported

oil rates/quantity available to be bought

• Less supply and more consumers will mean

“demand destruction” even higher prices
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 Oil is:
• Oil is 45% of US CO2 pollution source
• Oil is $1 billion/day import habit
• Oil imports are major drag on our economy
• Stopping oil imports = major economic
growth opportunity
– Means replacing all oil imports ASAP
– Means eventually replacing all oil use
– U.S. supplies are still depleting
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 China & India & Coal
• China and India will set coal prices
- Coal production is peaking in China, too
• India is a major coal importer
• US coal that can be exported will have a
“world” price, and will no longer be cheap
• 2008 - US spot coal -> $150/ton

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 Feed-In Tariffs (FITs)
• Prices = production cost plus reasonable profit

• Different prices for different sources

• Stable prices until capital investment paid off

• Cost for capital > usually 75% of total operating cost

• Can be subsidy free; no need for “carbon prices”

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 Merit Order Effect (MOE)
• Wind can lower prices in a mixed
renewable/polluting energy marginal
price system (NYISO)
• More wind tends to give lower average
prices
• Does “haircut” on windfall profits of
“paid off” polluting energy facilities
(coal, nukes); savings go to consumers
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 FITs Work!
• Cheaper than subsidy/quota system
• No subsidies needed
• Priority access is all that is needed as
polluting energy replacement
mechanism
• Low risk = lower cost financing
• 50% wind, 75% PV, 95% biogass
• Best system yet found for stimulating
job growth/technology for renewables 22
New York State of Mind

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Sheldon Wind Farm, Wyoming County, NY
 New York Renewable
Electricity Pricing
• Existing hydro - lowest production cost
• Commercial on-shore wind
• Biogas landfill gas
• Biomass biogas without co-generation
• Hydrokinetic, wave and tidal generation
• Off-shore wind turbines
• Small scale wind turbines
• Solar PV - highest production cost 24
 Electricity Requirements
• 16 GW existing (3 GW present)
• 10 GW natural gas replacement (heat)
• 4 GW “electro-fuels”
• 2 GW electric/plug-in hybrid cars
• 2 GW energy storage (pumped hydro)
• Total = 32 GW average usage (34 GW
required to deliver 32 GW)
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 Electricity Sources
• 18 GW on-shore wind = 54 GW Capacity
• 9 GW off-shore = 22.5 GW capacity
• 3 GW hydro
• 2 GW tidal
• 2 GW biomass

• LOTS OF JOBS!
• (4 million job-years manufacturing and installation plus
multiplier effects, average total jobs (20 yrs) ~ 1 million) 26
 Electricity Capital Costs
• On-shore 54 GW = $135 billion
• Off-shore 22.5 GW = $90 billion
• Tidal 2 GW = $20 billion
• Biomass 2 GW = $4 billion
• Pumped Hydro 20 GW = $22 billion
• Total = $271 billion (over an ~20 year period)
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 Renewable Electricity Costs
• 32 GW delivered = 280,512 GWhr/year
• Capital = $271 billion
• Annual amortization costs = $21.7 billion
• O & M = $5.4 billion
• Total $27.1 billion or 9.6 cents Kwh
– Initial costs will be cheaper as the lower capital
cost technologies are Installed first
• This was the 2008 New York City/Long Island price for
generated electricity
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 Liquid Fuels Approach -
A 50% by 50% Plan
• Double gas mileage for same vehicle miles traveled
per year (vmty) - from 22 mpg to ~ 44 mpg
– Drops liquid fuel consumption by 50%
• Cut by fuel consuming car vmty by 50%
– Drops the remaining fuel consumption by 50%
• 25% of original fuel consumption rate
• Current liquid fuel consumption not possible to
supply with biofuels, nationwide OR statewide

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 New York Current Liquid Fuel
Consumption Rates
• 130 million barrels per year (mby) gasoline
• 40 mby diesel (cars, trucks, trains, heating oil)
• 30 mby kerosene (jet fuel, heating oil)

– Trucks to trains will reduce diesel usage

– Trains to electric trains will serve freight and
passenger use
– Airplane usage will drop precipitously
– More rail passenger traffic - from short haul air
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 Results of 50% x 50%:
• Gasoline usage drops to 32 mby
– Equivalent to 48 mby ethanol (EtOH)
• Diesels can be replaced with high
compression ethanol (25 to 1)
• Some diesels can be ammonia powered
– You can get greater efficiency with high
compression engines
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 Biofuels Plan - 1
• Grow 375 million bushels/year corn on 2.2
million acres/170 bushels per acre
• Needs 219,000 tons per year ammonia (NH3)
• Also makes 7.875 million tons/year
stover/corn cobs (75% of that grown)
• Use 25% of stover (2.625 m tons/yr) as fuel
for heating corn fermentation plants
• Makes 25 mby EtOH, 3.3 million tons/yr
DDGS (30 wt% protein) 32
 Biofuels - 2
• Make 12 mby EtOH from stover
• Make 10.5 mby from hydrogenating CO2
from corn fermentation
• Make 4.5 mby from hydrogenating CO2 from
stover (cellulosic ethanol)
• Needs 3.4 GW electricity to make the H2
from the H2O raw material
• NH3 needs 219 MW for its H2
• EtOH fermentation plants need 110 MW
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Estimated Capital Costs – Liquid Fuels
• EtOH fermentation from corn kernels = $1.5
billion (9 new plants)

• EtOH from stover = $2.5 billion (10 plants)

• EtOH from CO2 and H2 = $4 billion (10

plants)

• Total = $8.5 billion (including $0.5 billion NH3 plants)

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 Estimated Fuel Production
Costs
• EtOH by fermentation = $2.20/gal
• EtOH cellulosic = $4.00/gal
• EtOH via H2 = $6.00/gal
– The low-cost technologies would be
installed first
– The higher priced ones could be installed
as petroleum price rises justify

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 Summary
• Tremendous stimulus for manufacturing
• Tremendous boost for rural areas
– Fuel crops, fuel manufacturing
– Stover
– Wind turbine lease income
• Provide stable and predictable electricity prices
• Eliminates all polluting electricity sources
• Eliminates money bleed for fossil fuel imports
• Path to eliminate petroleum usage/imports

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 Conclusion
• It is possible to make New York State renewably
powered in a generation
• It can’t happen with marginal pricing for energy
(electricity and liquid fuels)
• It can’t happen when polluting energy sources
set the prices for renewables
• For electricity without sensible pricing (FITs)
renewable electricity can’t happen in NY, USA
• If we don’t get renewable electricity based, our
economy stagnates and declines 37
Merit Order Explanation 1

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Merit Order Explanation 2

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 Any Questions?

Bard 5 MW, Germany Enercon 7 MW, Belgium

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