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T. Boone Pickens unveils grand plan to replace gas with wind; critics scoff

Texas oilman T. Boone Pickens, saying the US' dependence on imported oil has reached the level of a national crisis, on July 7 unveiled a plan he said would cut imports by one-third within five to 10 years. The scope and scale of the plan is daunting, however, and some analysts have questioned its feasibility. ...In terms of cost alone, the "Pickens Plan" is a tall order. Pickens puts the price tag for building a series of wind farms that would stretch from North Dakota to the Texas Panhandle at $1trillion with another $200 billion for the power lines to transmit all that new wind power. From a generation point of view one obvious problem with the plan is scalability, said Art Holland, a director at Pace Global Energy Services. The average gas turbine is 600 MW to 800 MW. The average wind turbine is 2 MW. Even if the wind were blowing constantly it would take a tremendous number of wind turbines to replace an equivalent amount of gas-fired capacity.

Texas oilman T. Boone Pickens, saying the US' dependence on imported oil has reached the level of a national crisis, on July 7 unveiled a plan he said would cut imports by one-third within five to 10 years. The scope and scale of the plan is daunting, however, and some analysts have questioned its feasibility.

Pickens is proposing a shift away from natural gas-fired generation, which now produces about 22% of the nation's electricity, and toward wind power. The natural gas that would be freed up would be put to use as a transportation fuel, he argued, and reduce the nation's dependence on foreign oil by one-third.

In terms of cost alone, the "Pickens Plan" is a tall order. Pickens puts the price tag for building a series of wind farms that would stretch from North Dakota to the Texas Panhandle at $1trillion with another $200 billion for the power lines to transmit all that new wind power.

From a generation point of view one obvious problem with the plan is scalability, said Art Holland, a director at Pace Global Energy Services. The average gas turbine is 600 MW to 800 MW.

The average wind turbine is 2 MW. Even if the wind were blowing constantly it would take a tremendous number of wind turbines to replace an equivalent amount of... more [truncated due to possible copyright]  

Texas oilman T. Boone Pickens, saying the US' dependence on imported oil has reached the level of a national crisis, on July 7 unveiled a plan he said would cut imports by one-third within five to 10 years. The scope and scale of the plan is daunting, however, and some analysts have questioned its feasibility.

Pickens is proposing a shift away from natural gas-fired generation, which now produces about 22% of the nation's electricity, and toward wind power. The natural gas that would be freed up would be put to use as a transportation fuel, he argued, and reduce the nation's dependence on foreign oil by one-third.

In terms of cost alone, the "Pickens Plan" is a tall order. Pickens puts the price tag for building a series of wind farms that would stretch from North Dakota to the Texas Panhandle at $1trillion with another $200 billion for the power lines to transmit all that new wind power.

From a generation point of view one obvious problem with the plan is scalability, said Art Holland, a director at Pace Global Energy Services. The average gas turbine is 600 MW to 800 MW.

The average wind turbine is 2 MW. Even if the wind were blowing constantly it would take a tremendous number of wind turbines to replace an equivalent amount of gas-fired capacity.

That problem is compounded by wind's intermittency. Assuming that a gas-fired plant has a capacity factor of 80% and a wind turbine has a capacity factor of 40%, it would take twice as much wind capacity to replace an equivalent amount of gas-fired capacity. So, in terms of firm power supplies, it would take 2,000 MW of wind capacity to replace 1,000 MW of gas-fired capacity.

According to Pace's first quarter estimates, the most recent available, the US will need to add 140,000 MW over the next 10 years, assuming a conservative estimate of plant retirements.

Of that total, Pace expects about half, 75,000 MW, will be fired by gas, and 30,000 MW of renewable resources will be needed to meet various state renewable portfolio standards, an amount that is already "pushing [wind] developers to their limits," said Holland. To the extent that wind would replace gas-fired generation, the amount of generation from renewable resources would rise above 30,000 MW, said Holland.

Pickens, in an interview, acknowledged that the nation would still need gas-fired generation to serve peaking load and to make up for wind's intermittency. "We would have to over build to get what we want, but there is no question [wind power] works, and it's renewable," he said.

Pickens said his plan calls for the addition of 200,000 MW of new wind-powered capacity that would eventually replace the 20% share of the nation's fuel mix now provided by gasfired generation.

In fact, Pickens thinks that the nation could derive as much as 40% of its electricity from wind power. "There is a world of wind available; we can't have a resource like that that can't be used," he said. "I don't have every detail," he said, but "we can't keep paying $700 billion a year to import foreign oil."

The gas that wind power would free up would flow to transportation simply because it would be cheaper than imported oil, Pickens argued.

"I agree that we have a problem, but gas is not the solution," said Holland. Gas, in fact, is the "new oil," he said.

"We are becoming increasing dependent on imported liquefied natural gas, and we are competing with Europe and Asia" for those supplies, said Holland. He noted that Europe and Asia price LNG on the contract price of oil, so switching to gas, particularly if it involves increased imports of LNG, would not reduce the overall bill for transportation fuel.

Pickens acknowledged that increased use of natural gas would push up prices, but that would also encourage more drilling. In his July 7 presentation, Pickens said the US has "plenty of natural gas" to fulfill his plan, adding that the country has in recent years doubled its reserves because of its ability to tap previously unobtainable gas from shale formations.

He said gas reserves in the Marcellus and Haynesville shales would exceed those in the prolific Barnett Shale in Texas. "It'sdivine intervention for us to show up with these kinds of resources at such a critical time for our country," he said.

In the subsequent interview, Pickens said that as the price of natural gas as a transportation fuel rises, it would eventually be replaced by cheaper - not yet developed - alternatives. But using natural gas would give the US a "20 or 30 year bridge to the next fuel."

Pickens bases many of his estimates about the potential for wind power on a 2005 Stanford University report and a more recent - May - report from the Department of Energy that argued that 20% of the US' electric power supplies could be provided by wind power by 2030.

The DOE report was greeted with some skepticism at a June meeting of the American Wind Energy Association in Houston (GPR, 5 June, 27). At that meeting, Michael O'Sullivan, senior vice president for development at FPL Energy, said the 20% by 2030 target "just isn't going to happen."

"Renewables are not cheap," said O'Sullivan. "And wind is a flawed product in the sense that it is intermittent, and is available only 30% to 40% of the time." Wind is "an energy displacement product."

At the same meeting Vic Abate, vice president for renewable at GE Energy, a manufacturer of wind turbines, said that the 20% by 2030 target was "technically doable," but noted that for every percentage point of growth of new wind capacity globally, 40,000 additional turbines need to be manufactured.

Wind turbines are already in short supply and prices are rising, as they are for all other products that use steel and require engineering skills.

Abate also noted that installing wind turbines raises questions about land use. A two-unit, 2,600-MW nuclear facility can sit on 5,000 acres. A 300-MW wind project requires about 25,000 acres, and Pickens' 4,000-MW wind farm proposed for the Texas Panhandle would use 400,000 acres.

But from a policy standpoint Pickens' most ardent critic could be Jerry Taylor, senior fellow at the Cato Institute. "I find virtually every single statement [by Pickens] about energy policy wrong, ill-considered or fallacious," Taylor said in an interview.

The main fault with the Pickens Plan, according to Taylor, is that "foreign oil is not bad; it is good." The nation uses so much foreign oil - the US is now importing about 70% of its oil needs annually - because it is cheaper.

"But even assuming that foreign oil is a problem, why assume that natural gas is the best alternative?" Taylor asked.

Pickens "assumes he knows best how to sort out energy policy," said Taylor. But if compressed natural gas is the best option for transportation fuel, as in the Pickens Plan, then "the markets will see it."

Taylor said that over time compressed natural gas could outperform gasoline as a cheaper transportation fuel, but if wind were used to generate most of the nation's electricity it would undoubtedly result in higher retail electric rates.

The fact of the matter, said Taylor, is that wind power is twice as expensive as natural gas-fired generation "and probably more if you take out the subsidies."

The main subsidy that wind generation enjoys is the production tax credit, which is set to expire at year end.

Congress is now battling on extending the PTC, but so far has not been able to reach a compromise amenable to both Republicans and Democrats (see story, page 21).

Pickens said he favors extending the PTC, but not just for one or two years as Congress has in the past, but for 10 years.

The budgetary cost of the PTC "is nothing" compared with the $700 billion annual cost of importing our oil needs.

Pickens said he plans to fund an "aggressive" multimedia advertising and Internet education campaign that would push the need for investment in domestic renewable energy resources such as wind and use of the US' supplies of natural gas as a transportation fuel. And the web site touting the plan, www.pickensplan.com, has as many product placements as a Hollywood blockbuster, including links for the Honda Civic GX natural gas-fueled automobile, a compressed natural gas web site, and Pickens' own plans to build a 4,000-MW wind farm complex in the Texas Panhandle.

The plan "is great for Boone ... if the rationale is to make him richer at the expense of tax payers," said Taylor. The moral, he said, is "Beware of rich Texans bearing gifts."

Pickens says Taylor is "whistling in the dark" and that his arguments completely ignore the realities of geopolitics.


Source: www.platts.com

JUL 10 2008
http://www.windaction.org/posts/15886-t-boone-pickens-unveils-grand-plan-to-replace-gas-with-wind-critics-scoff
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