Below are a few letters received at EnergyBiz Insider on topics that appeared in the past few weeks. They capture the essence of how many readers say they feel.
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Curbing Construction Costs - November 13, 2009
The views expressed in the article are very encouraging for the future energy sector development. But I have my own opinion. The costs of materials in energy sector are not to be treated with usual market commodities. These are specific to the sector, specific to the frame size of the machine/equipment, and specific to the location. The costs of these do not change so very easily and fast. Some materials also cannot be used after some time as the designs change too often and therefore have to be sold but against specific orders, which is often initiated quite well ahead of the requirement in case of EPC jobs.
What I can believe that the cost of the coal and oil projects are costlier in view of the environment regulations and addition of carbon capture plants costing heavily.
The best alternative is that we forget the other considerations such as environment regulations, and go for the coal plants which are well established and coal is going to last for sufficient time in future or subsidize carbon capture and other plants to reduce pollution.
Gas is sure to cost more and so also oil.
The non-conventional sector cannot be built so fast as the total requirement is quite large. At the most private entrepreneurs should be given enough incentives not only in building plants but also Government should take on the responsibility to build enough transmission system to connect these to the grid.
D.B. Arora
New Markets for Coal - November 16, 2009
Three companies exploring development of a North Dakota coal-based refinery to produce ultra clean liquid transportation fuels and electricity have now established a single company, American Lignite Energy, to evaluate the project. Partners in American Lignite Energy include Headwaters Energy Services, Great River Energy, and The North American Coal Corporation
The proposed coal-to-liquids project contemplates the development of a production facility that would produce approximately 32,000 barrels of fuel per day and utilize approximately 10 million tons of North Dakota lignite annually. Final site identification is under way. If the project were to move forward, engineering and permitting of the facility could take at least two years. Financing and construction of the facility would take at least four additional years. Peabody Energy, the world's biggest coal company, announced a partnership last July 6th with Rentech Inc., a Colorado energy company, to develop a multibillion-dollar plant that would convert coal into liquid fuel in the Illinois Basin, a 60,000-square-mile area that covers southern parts of Illinois and Indiana and Western Kentucky.
These private sector ventures notwithstanding, commercial development of a Coal-to-Liquid Facility appears best suited as a federal effort. The U.S. DOE's recent report ["Baseline Technical and Economic Assessment of a Commercial Scale Fischer-Tropsch Liquids Facility"; April 9, 2007; DOE/NETL-2007/1260] provides a conceptual design and economics [US$2006] of commercial CTL facility yielding 22,173 bbls/day of liquid naphtha [suitable for subsequent processing] and 27,819 bbls/day of diesel product. In addition, a net power output of 124 MW is generated. The overall project cost was estimated at $4.53 billion with a construction time of twenty-four months.
DOE developed a relationship between price crude oil and ROI. If WTI crude is about $50/bbl an ROI of 15 percent is expected. If crude oil price exceed $60/bbl, ROI is projected to exceed 20 percent. Private sector investors would be faced with funding first-of-its-kind plant in the U.S. over a period of five to tens years i.e. from inception to commercial operation. ROI expectations, based on the volatile oil market, pose considerable uncertainty or risk. The federal government (e.g. DOD) could fund this type of project. Use products for military use while assuming risk of oil price volatility as a part of sustaining the U.S. military's securing an assured source of fuel.
Dr. Richard W. Goodwin, P.E.
Environmental Engineering
Consultant
I found your article interesting, but I wonder how many people remember the massive coal-to-oil R&D and even large scale demonstration projects of the Nixon-Ford-Carter era? Exxon built, with ERDA/DOE and EPRI support, a major facility in Baytown, TX and converted a number of coals to syn-oil suitable for cracking into a variety of products. Others conducted a great deal of research on catalysts, filtering, and plant design, as well.
Might be worth going back to review those research reports (which I'll bet the Chinese already have!).
Dick Zeren
Stocking Up on Carbon Credits - November 20, 2009
"U.S. lawmakers are debating the merits of a cap-and-trade system, with conservatives saying it would raise the cost of energy during recessionary periods while progressives are maintaining that it is a free-market approach to solving a complex problem. Even more perplexing, though, is whether to give away most of the allowances until a trading mechanism is established or to sell most of them from the start."
Selling emissions allowances has nothing to do with reducing carbon emissions; and, everything to do with creating a new federal revenue stream. NOTE: Selling emissions allowances is not a free market mechanism; it is a tax.
Establishing a realistic "Cap", which then declines at a pre-established rate over a known time period to a predetermined endpoint, is sufficient to drive carbon emissions to the desired level. NOTE: A cap is not a free market mechanism.
Permitting "Trade" within the "Cap" allows flexibility for those emitters for whom emissions reductions are not currently technically or economically practical, or for whom accomplishing such reductions requires long lead time fabrication and construction, to comply with their reduced cap by purchasing surplus allowances from those for whom the emissions reductions are easier and/or cheaper. NOTE: A trade is a free market mechanism.
It is extremely important to note here that there is currently no single, clearly articulated goal identified for the emissions reductions we are discussing here, although it is becoming clearer that the ULTIMATE goal is zero carbon emissions. Planning in the absence of a goal borders on insanity. We must therefore consider the possibility that there is, in fact, a clear goal which is not being clearly articulated because it is politically unacceptable.
Edward A. Reid, Jr.
President
Fire to Ice, Inc.
Rail System Rallies - December 02, 2009
$3 Billion per year spread over 250 Million people is $1 per month, so it's probably less than 1 cent per product that we are over paying. Seems once you get down to pennies per purchase there are bigger fish to go after for savings.
Also, couldn't the same argument be made for the electric industry? How many utilities have program/charges on their monthly bills that are for programs/expenses that some would argue "consumers shouldn't be paying for?" Or the argument has long been made that there are still tremendous inefficiencies due to regulation in the electric industry.
Al Morgan
This is the best article on one of the most important issues in our industry.
Dave Bertagnolli
ISO New England
Respond to the editor.
