“Ah! Out with the sharp knives mates.” T. Boone Pickens has his idea of launching wind power so strongly made and out so fast that natural gas could be used for cars instead of some of the gasoline we’re using. Can it stand the test of close examination? Make no mistake; this Pickens fellow is old, smart wily and just incredibly decent. By no means or device could anyone say he’s Un American, ready to run down the little guy, or greedy beyond reproach. He’s an oil guy, the wildcatting type, ready to put his money where his best judgment and experience lies and take the risk, come what may. And he’s signed up for wind power production to maybe as much as $12 billion dollars. Guts and confidence, smarts and experience. I bet this would work. But can it?

Basically Mr. Pickens has raided the Fed’s Department of Energy feasibility scenario of 20% wind for electric power generation. That would compare to the approximate 22% of power generation coming from natural gas supplies. To pull it off Pickens will need the wind business to about double its installation rate as the Feds are offering.

What he brings to the game for we regular folks is more raided data from the Feds. The wind power may displace about 7 trillion cubic feet of natural gas annually that the electric power guys are burning. The amount of natural gas is equivalent to over 4 million barrels per day of gasoline. That’s about a third of the 12 million barrels we’re importing every day right now worth something on the order of $1.68 billion per day.

Everybody’s sitting up straight now I’ll bet. These are raw and essentially unassailable numbers. The kind of numbers that make the OPEC types cringe. If anything, Mr. Pickens is illustrating one thing very clearly – the oil producers have to realize that over time inventiveness and self-preservation are going to answer the price shock – and the disappearance of customers will be much harder to face than what the customers faced adapting to the shock.

But the plan has some problems. All those wind turbines will need manufactured installed and hooked up to the grid. To get to the 20% level that would require the wind industry to grow by better than 18 fold in a decade. Beyond that, America has been struggling to just get the grid resilient enough to handle section failures in high utilization periods such as hot summer afternoons. The power industry has installations that are not new but “dated” to “old” to “antique” and worse. Nor is the national grid, which should be fully integrated with our neighbors and friends in Canada optimized at all. A huge upgrade needs to take place at the same time.

That might be an opportunity instead.

On the recoil, in a decade about 44% of the vehicles would need to be rigged to use natural gas. Its not complex, even the Iranians can do that, but it isn’t free. The idea to sell and convert about one hundred ten or twenty million cars and things in ten years is just barely believable.

There are some “Over My Dead Body” fists soon to be shaking in the air. While the oil community might be most adaptable, the refinery guys are not going to like the idea that a third or so of the capital plant would be heavily depreciated. Many U.S refineries are inland and wouldn’t easily shift to answer world markets even if the environmentalists would get out of the way. The greenies will be aghast that this plan might push back the end of an energy-powered lifestyle, which is what they are about at the natural end of their campaign. The CO2 will go down a lot, but not be gone completely.

Up close and personal is the truth that a lot of us have natural gas piped right to the house now. Today a pump/compressor rig runs about $3,500 – but we could expect that to go down. On the other hand, we’re talking about highly flammable gas at high pressures handled by regular folks at home. I have a bad feeling about this – some of my neighbors really shouldn’t be handling anything with these potentials. If it gets away from them, well, it will be tragic to say the least, even if it’s “quick.”

The electrical generating companies are not going to idle their gas-fired plants and just walk from their investments, either. And even more of a concern is lots of them are in California, who has been so pernicious as to rely heavily on gas-fired plants at the loss of resiliency from other sources. There will be a fight.

And there are natural gas fueled turbines that can start up in just minutes to answer peak demands that really provide an important service – something that wind just isn’t suited to do.

Now lastly, the notion of a major vehicle fleet change to natural gas in part of a third or so could have a negative effect on getting far smarter electric power units and lighter weight vehicles on the market. The plan really only buys time and keeps the dependency on poor internal combustion efficiencies, a sad and pointless effort in many ways.

All that said, those knives better be heavy duty, sharp and made of the very best samuri grade steel. All of the objections noted here have existing technological answers. There could be some capital lost, but there will be in any case whichever routes we choose to follow. Some might say this is all about building a foundation under Mr. Pickens’ investment in wind power. On the other hand I am dubious that Boone would have that foremost in his mind. I think he’s looking for a way to keep the country together and believes that this plan offers a way to a better future. It’s what he knows, knows well and by any sensible analysis, must be seriously thought through.

I’m certain that wind power has a bright future, shifting out natural gas or not. He’s not running for president so the timing is excruciatingly sweet, topping both presidential candidates with something that while radical is real and possible with absolute benefits for nearly everyone.

On the other hand. . . . Remember the Jevons Paradox? That’s the observation that as technology improves energy efficiency of a resource the total use tends to increase.

Now with the knives dulled, what would innovation, creativity and thoughtful investment offer in reviewing the plan? That’s another post.


Comments

2 Comments so far

  1. Johnny Paywa on May 19, 2011 12:40 AM

    I was just having a conversation over this I am glad I came across this it cleared some of the questions I had.

  2. Charlie Pollack on September 17, 2011 10:12 AM

    Awesome post. I so good to see someone taking the time to share this information

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