oil and wind energy: north dakota update dr. cole gustafson feb. 9, 2011
TRANSCRIPT
Oil and Wind Energy: North Oil and Wind Energy: North Dakota UpdateDakota Update
Dr. Cole GustafsonDr. Cole Gustafson
Feb. 9, 2011Feb. 9, 2011
North Dakota ProductionNorth Dakota Production
• July 2010 – 321,042 BOPD• July 2010 – 320,371 MCF/D• 5,051 Producing Wells
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Williston Basin Deposition - NDWilliston Basin Deposition - ND
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Relative ThicknessRelative Thickness
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ND Bakken and Three ForksND Bakken and Three Forks
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Mud MotorsMud Motors
DrillpipeNon-magnetic Drill Collar
Bent Sub
Mud MotorRotating Sub
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Road RepairRoad Repair
Paving $1,000,000 / mile Graveling $3600 /mile
Rebuild Gravel Road $300,000/mile
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Farm Windmill--AermotorFarm Windmill--Aermotor
262 ft242 ft
Overall DiameterIncl. Hub: 252 ft
Wind Generation in North Wind Generation in North DakotaDakota
Operational:Operational:– TurbinesTurbines 770770– Rated CapacityRated Capacity 1223 Mw1223 Mw
Under Construction:Under Construction:– Rated CapacityRated Capacity 76 Mw76 Mw
Planned:Planned:– Rated CapacityRated Capacity 6684 Mw6684 Mw
NameLocati
on
Power Capacity
(MW)Units
Turbine Mfr.
Developer Owner Power PurchaserYear
Online
Cedar Hills Wind Facility
19.5 13GE Energy
MDU Utilities MDU Utilities MDU Utilities 2010
Ashtabula II 67.5 45GE Energy
NextEra Energy Resources
NextEra Energy Resources
Minnkota Power Cooperative
2009
Luverne 49.5 33GE Energy
NextEra Energy Resoureces
Otter Tail Power Co.
Otter Tail Power Co.
2009
Prairie Winds Minot Wind 2
4.5 3GE Energy
Basin ElectricPrairie Winds ND 1
Basin Electric 2009
Prairie Winds ND I 115.5 77GE Energy
Basin Electric Basin Electric Basin Electric 2009
Rugby 149.1 71SuzlonIberdrola Renewables
Iberdrola Renewables
Missouri River Energy Services
2009
Wilton Wind Energy Center II
49.5 33GE Energy
NextEra Energy Resources
NextEra Energy Resources
Basin Electric 2009
Ashtabula II 52.5 35GE Energy
NextEra Energy NextEra Energy 2009
Ashtabula - NextEra 148.5 99GE Energy
NextEra Energy Resources
NextEra Energy Resources
2008
Ashtabula - Otter Tail 48 32GE Energy
NextEra Energy Resources
Otter Tail Power Co.
Otter Tail Power Co.
2008
Power Generation Capacity Power Generation Capacity in North Dakotain North Dakota
MegawattsMegawattsPercentPercent
WindWind 12231223 21 21
Hydro-ElectricHydro-Electric 515 515 9 9
Coal-FiredCoal-Fired 40714071 7070
TotalTotal 58095809 100 100
Some “Some “Back-of-the-EnvelopeBack-of-the-Envelope” Numbers…” Numbers…
Rough Cost at 39% Capacity Factor: ¢/kWhRough Cost at 39% Capacity Factor: ¢/kWh
Capital Cost Capital Cost ($2.2Million/MW, 6%, 23 yrs)($2.2Million/MW, 6%, 23 yrs):: 5.2 ¢/kWh 5.2 ¢/kWhLand Lease:Land Lease: 0.1 ¢/kWh 0.1 ¢/kWhO&M / Insurance:O&M / Insurance: 0.9 ¢/kWh 0.9 ¢/kWhProperty Taxes: Property Taxes: 0.2 ¢/kWh 0.2 ¢/kWh
Total Estimated Cost: 6.4 ¢/kWhTotal Estimated Cost: 6.4 ¢/kWhLess OffsetsLess Offsets……
– Production Tax CreditProduction Tax Creditor 30% Treasury Grantor 30% Treasury Grant
– Accelerated Depreciation Accelerated Depreciation
– Renewable Energy Credit SalesRenewable Energy Credit Sales
Net Cost After Tax -- Less
than 4¢/kWh
Local Economic Impacts - LangdonLocal Economic Impacts - Langdon
106 1.5mw towers106 1.5mw towers
$500 million investment, $1 million lease $500 million investment, $1 million lease payments, $456,000 local tax paymentspayments, $456,000 local tax payments
Met tower (2004), FPL (2006)Met tower (2004), FPL (2006)
Wind - Local Government IssuesWind - Local Government Issues
Large Wind – Infrastructure, labor, housing Large Wind – Infrastructure, labor, housing community servicescommunity services
Small Wind – Zoning, siting, setback, Small Wind – Zoning, siting, setback, inspections, complaints, decommissioninginspections, complaints, decommissioning
Taxation/investmentTaxation/investment
Purchasing – How much? Purchasing – How much?
Generation – Where? Size? Own/Contr.?Generation – Where? Size? Own/Contr.?
www.ndsu.edu/energywww.ndsu.edu/energy
Common Landowners Questions on Wind Lease Contracts
Basics of Farm/Residential Small Wind Turbines
Wind Energy Development: Key Financial Considerations
Managing Your Expectations - Sizing a Small Wind Turbine To Your Land
Understanding Wind Energy Leases
Public Involvement and Land Issues Relating to Wind Projects
Questions?Questions?
Investment & Risk ComparisonInvestment & Risk Comparison
•Transmission Risk•2-3 years wind studies
•Engineering $$$•Permitting Risk•Operating Risk
•Market Risk•Tax Risk
¼ to ½ acre ofland per turbine
Project Developer
Landowner
Cost: $3-5 Million/turbineRevenue:
$4-$6000/turbine/yr
Wind will displace the Wind will displace the system’s highest cost fuel system’s highest cost fuel
Fuel Cost of Electricity…
Gas is a likely partner for wind energy
Power Curve:Power Curve:Generation vs Wind SpeedGeneration vs Wind Speed
56 - 62 MPHCutout
Reaches Rated Capacity at 26 - 31 MPH
6 - 8 MPHCut-in
250 kW @ 13 MPH
1475 kW @ 26 MPH