I was considering making this my first diary here - but a little something about Chavez keeping the home fires in New Hampshire burning caught my attention instead. Still the subject of Pickens Plan and what it really means hasn't left my thoughts for the last few days.
This all began with an email I received, a few days back, that pointed directly to the Pickens Plan site and lauded his agenda as the right thing, right now. I immediately sent back a message to that list outlining some of the inherent flaws in the plan's logic.
I have been refining that response since then. The following is a first look at what I like to call "Running on Empty" for, in the end there are too many flaws for the full Pickens Plan to make complete sense to me.
More follows ...
I would probably have foregone writing this for a couple of days or so, but, then interesting discourse occurred in another energy related thread this week, in which Pickens Plan was once again lauded.
I recognize that some aspects of the Pickens Plan have been discussed in general terms earlier in other diaries. The best of these, to my mind, was an inclusion of Wind Power in a recent diary by Jerome a Paris - which was more focussed on an analysis of Gore's Plan (and call to action). What I hope to bring is a concrete numeric analysis of what I see as the key flaws in the plan.
First, I'll lay out the by the numbers argument.
Second, I will talk to the issue of Pickens perceived altruism (To put it plainly, T. Boone Pickens is out to save America).
Third, I'd like to introduce the concept of doing what makes sense, locally, and I'll invoke the spirit of Frank LLoyd Wright to make my point.
Finally, we'll drill down all the way to China to see what really makes sense for their growing needs. An important destination in my view as they are one of the growing causes of increased demand in a world of diminishing, or relatively diminishing, supply of oil. (Oh, yes and Pickens apparently agrees).
First - Laying Out The Numbers
Pickens Plan Numbers - Bare bones
Some numbers do favor Pickens. Many that he lets flow from those that support his premise do not.
By now we are all familiar with Pickens circa 22:22 vision.
- 20% of Electricity is made at NG burning Power Plants
- Pickens sees a 10-year project to add 20% of generating capacity from Wind Turbines.
- The excess generating capacity gets converted (voila, snaps fingers and utters magic incantations) into CNG fuel for transportation.
to
All well and good. More on the particulars below.
Pickens is also spot on in saying that the growing imports of petroleum, which are driven in large part by transportation consumption, account for 70% of all oil consumed and some $700 Billion in exported money each year.
Beyond that point though it must be said that Pickens numbers fall apart at the seams when examined in even modest detail.
Such as in this manner:
Pickens cites a figure of 38% of oil being displaced by CNG powered vehicles. Is that realistic? Is it perhaps an inflated estimate?
Let's run some numbers and see - the Energy Information Administration is a reasonable source for baseline data. Wherever data is not calcualted a source for the same is used in a link.
Fair warning - this is not short on numbers.
Pickens Plan By The Numbers
- 2007 Natural Gas Consumed 22,900,000.00 Million Cubic Feet
- 2006 Natural Gas Consumed - 21,650,000.00 Million Cubic Feet
- Proportion Used in Electric Power Generation ~ 26.5%
- MCF in EPG
- 2006 - 5,737,250.00
- 2007 - 6,068,500.00
So, basically there was somewhere over 6,000,000 Million Cubic Feet of Natural Gas used in Electrical Power Generation last year. Just how may gallons of gas does this make? A reasonable conversion formula is that 127.77 Cubic Feet of Natural Gas is equal to one gallon equivalent of Gasoline - 127.77 CF of NG = 1 GGE.
Thus, in 2007, if all the natural gas used for Power Generation were used for transportation fuel then:
- 6,068,500 MCF / 127.77 CF = 47,495.50 (MIllions GGE)
How much of the Gasoline used in transportation does this represent?
According to FHWA in 2006 some 140,422 Million gallons of Gasoline were consumed in transportation. (Figures for 2007 were not available). Thus:
Thirty-four percent of 2006 gasoline use, based on 2007 NG use in Electric Power Generation is reasonably close to the number given by Pickens of 38% - but it is lower than Pickens cites.
This is not the only numeric gloss I feel Pickens is giving in his plan. There is the critical issue of responsible use of a resource.
Consider the following numbers:
- The Efficiency of a NG burning plant ranges between 60 and 85%.
- After accounting for transmission losses to the consumer the systemic efficiency of energy conversion is between 54% and 77%.
Compare and contrast with the following efficiencies:
- The typical efficiency of a car engine is 18%
- That 18% is a best case number! Air conditioning and aerodynamics drag things down further.
- Diesel is better at powerplant, with 25% efficiency of energy in to energy out - before other losses.
- The efficiency of a CNG powered vehicle is at best 21%.
- If the CNG vehicle is dual fuel that efficiency drops to 18% - no better than Gasoline.
The question might be asked, what are we gaining here? Better yet, how much potential energy are we discarding?
Let us do as Pickens suggests and convert the gasoline fleet to CNG.
- Compared to 77% energy delivery efficiency in power generation, we rate 18% (likely worse).
- At best then, this wastes 37,576 Millions of GGE compared to power generation.
- At worst the wasted GGE total 38,851 Millions.
- Once again the above are conservative numbers.
Clearly those numbers shift somewhat when doing an NGV from Diesel vs. Power Gen comparison, but the lesson remains the same. Turning a gasoline fleet to CNG has the unintended consequence of wasting the intrinsic high hydrogen, hence high energy signature of the Natural Gas.
There are other issues with Pickens proposal that others have argued in detail - particularly the limited number of years over which CNG could theoretically supply a third or better of the fleet. There is also three very critical issues - delivery of the fuel, conversion of the fleet and intrinsic economics.
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UPDATE: NG Power Plant Efficiencies
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As CA Physics Grad points out NG burning Power Plant efficiencies are often lower than the peak numbers I employ above.
New designs are indicated to have peak efficiency of 60%. Whereas only Combined Heat & Power Plants (CHP), or Microturbines yield efficiencies up to 80%. The former option uses a topping cycle to capture otherwise wasted heat energy, thus CHPs are not guaranteed to convert all the NG to distributed electrical energy.
Employing the less favorable numbers for NG Power Plant efficiency with the more favorable efficiency of an optimized CNG engine yields a gasoline displacement figure of 39%, right around Pickens' estimate. I maintain my contention that this depends on immediate fleet conversion of consumer vehicles - the economic obstacles to which make this an unlikely outcome.
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Delivery of CNG Fuel
Put simply, there is not a well developed infrastructure for fuel delivery. Go to the Alternative Fuels site, they have links to interactive maps telling you how many stations will deliver CNG into automobiles. Some areas are better served than others, none have the same intensity of delivery points near highway, that are afforded gasoline or diesel powered vehicles.
For example, if you live somewhere like Kentucky you are basically screwed. No CNG for you today. In terns of the numbers, I'll give the Pickens plan a zero on this critical point.
Conversion of The Fleet
Conversion of the fleet is not something to take lightly. It will not happen overnight, it will not happen with the willing participation of the consumer. This isn't because the average consumer isn't averse to the current high prices of gasoline, they are. It is because, in the end, the almighty dollar will fill their minds, rather than fulfilling the vision that Pickens lays out.
There is one consumer automobile currently manufactured to run on CNG - it is the Honda GX. The cost of the CNG version of the Honda EX (Honda GX) is roughly $3,500 more than than the comparably equipped Honda EX - $ 24,500 vs. $21,000. For those who might argue that it is possible to convert existing vehicles to CNG for less, you are right, but the differential is much higher. Perhaps double the $3,500 EX to GX price differential.
Consider the differential in those Honda prices. How much CNG cost savings would be realized by buying the GX over an EX for a first-time car buyer?
The answer depends of course on the relative costs of the competing fuels. Per the April report from the Alt Fuels Price Report, that will vary from $2.00 per GGE to under $0.90 differential. (When you can find fueling points that is).
There is much OLDER information out there on the Web suggesting that CNG is going to be much cheaper versus gasoline. That may be true when NG is not in demand - but, simple supply / demand issues will likely shrink that gap.
It is clear that CNG, at fueling points on highways, when available, is not a guaranteed bargain. Consider also what is likely to happen if a substantial portion of the fleet converted to CNG, the demand for NG would rise, which would naturally increase price. The price equilibrium point for NG would shift to a point of energy equilibrium. The net result, no cost incentive may eventually exist for fleet conversion, one would have to be created. The only remaining intrinsic benefit is the higher MPG offered by the Honda GX over out theoretical 20 MPG vehicle.
Committed consumers who wish to make a difference will likely still be swayed - but the average consumer, the one we need to sway, they are likely to look at this from a purely economic standpoint. That probably means a thumbs down for range limited, cost sensitive (once in demand) conversion to a higher priced vehicle, with delivery problems for it's prime fuel.
Intrinsic Economics
From the car-buyers viewpoint, CNG conversion isn't a win-win, even at today's prices.
That differential remarked upon above of $3,500 dollars. Let us consider that versus the $1.39 per GGE average price benefit for CNG. If you were driving a Honda GX the extra cost for the vehicle is only offset after driving some 90,000 miles.
Given the average miles per annum at around $15K, that means the Honda GX owner must keep that vehicle for over 6 years before they see pay-back.
That is longer than most people typically hold on to a car.
Summary of Part One:
The primary emotive selling point for the Pickens Plan is that there will be this switch from foreign oil to domestic CNG for fueling the fleet. This only makes sense if you believe that you and I will wake up tomorrow with a free Honda GX in our driveways.
All the alternative generation proposed by Pickens is good - make no mistake. But, also avoid the following error, that because his wind power generation scheme has long-term promise, that makes everything he says good as gold.
Pickens Isn't Being Altruistic
It is only fair to point out that Pickens make no explicit claim of being a forward thinking, altruistic visionary. He lets others make that claim for him.
Even without the "saving America" storyline though, it would be hard not to view Pickens goals and Pickens Plan as anything other than self-serving.
Pickens primary companies BP Capital Management and TBP Investments Management have one single goal - making money from energy. Together, these companies have their fingers in many energy development projects. Mostly involving fossil fuels. Many, in the US involving Natural Gas.
It is in Pickens best interests to broaden the use of NG as a transportation fuel. If I had to hazard a guess I'd suggest he views future value of NG as enhanced if it becomes a transportation fuel of choice.
All the windmills aside, might adherents of the Pickens Plan be inviting us to exchange one set of energy masters with another?
Think Locally - Think Like Frank Lloyd Wright
Frank Lloyd Wright had a wonderfully simple approach to building his homes. Make them out of locally available materials.
Does the same "think locally" mind-set fit meeting energy needs? Intuitively, the answer to that is yes. In fact, that is how our existing power generation profile has been built, though with a heavy dose of coal in the mix.
Still, the Pickens Plan is right in suggesting wind power as an attractive option to supplant our current power generation model. Though, I argue that by trying to take NG off the table for power generation, Pickens targets the wrong fuel source.
- Currently coal provides roughly 50% of our Electricity.
- NG burns as a cleaner fuel at Power Plants than does Coal.
- NG burning power plants are in the same geographic regions as proposed Wind Power farms.
- And, NG Power Plants would be able to aid in load management if the winds die down.
- So, why the emphasis on NG out, Wind in, when Coal out Wind In makes more sense?
Perhaps the answer lies in Pickens lack of altruism?
A Little Ray of Sunshine?
The Pickens Plan site makes passing mention of the availability and merits of solar power. I'll believe Pickens is serious about solar when he puts his money where his mouth is. Till then, the most important thing for me is that this represents the ease with which some will treat the Pickens Plan as an empty vessel into which others can pour their wishes.
Too often I see and hear gaps in the Pickens Plan being back-filled by apologists. The fact is that the Pickens Plan has two clear goals, enumerated at the beginning of this diary. If there are gaps that reveals Pickens lack of thinking on these matters. There is no need to credit his plan with virtues it does not explicitly express.
Even though solar power would be an equally troubled, and perhaps equally attractive option for power generation, the Pickens Plan gives it relatively short mention. That glossing and omission is no accident. Solar Power doesn't fit Pickens' other real need; to be a purveyor of fossil fuels.
Ending this section on a positive note, it is in keeping with thinking locally to implement power generation from wind as a significant component of our renewable strategy. Plus, passing mention or no, solar is another sure fit that could further reduce our dependence on coal.
Digging to China?
Too often we think too locally. We are one of the wellsprings of innovation. Not, as McCain infamously insisted this year the only one, but one of them. When our inventions make their way onto the marketplace they influence others. Others who may not have the resources, locally, to take unencumbered benefit from those innovations.
Nowhere is that more true than in the energy sector and transportation. No greater contrast with our technology and a new world's needs can found than the West cf. China.
The West has (or had) lots of oil. China does not, it is an oil producer, but already, early in it's adoption of automobiles, consumes more than it is capable of producing - to the tune of 47% of it's demand. It is a natural result of an accident of geography that the US and later the rest of the Western World, became dependent on oil derived fossil fuels to power the transportation fleet. China is insufficiently blessed to follow the same path.
If we are to apply this local resource argument to China, what would it's logical energy choice for transportation become?
The major fossil fuel resource available to China is coal, and their reserves are substantially lower in quantity, though marginally higher in quality than the US.
Proved recoverable coal reserves at end-2006 (million tonnes) in China
- Bituminous Coal - 62,200
- Sub-Bituminous Coal - 52,300
- Combined Resource - 114,500
That's a lot of coal reserves, and China is digging those reserves at a prodigious rate. Their burn rate is north of 2,400 million tonnes per annum and growing. Worse, a significant proportion of that coal is being used in domestic heating and cooking. This is sad as it makes questionable how easily China could convert (as an interim measure) to Sasol style conversion of Coal to Oil. The cost, per se, is not the over-riding issue. China already subsidizes imported gasoline through complex taxation schemes to the tune of $1.30 to $1.50 per gallon. Enough to cover the cost to convert Coal to liquid fuels.
What other opportunities for energy generation or provision does China have at their disposal?
China's Energy Profile
Renewables
China is actually a heavy investor in renewable energy development (even excluding hydroelectric power). Wind energy factors strongly in that approach. They are looking to provide up 12% of their annual power generation from wind by 2020. In addition China has solar, bio-mass and other projects in the pipeline, they seek to have at least 30% of all energy derived from renewables by 2050.
Anyone might think they'd been cribbing from Pickens.
Power Generation in China Today
Currently China makes the majority of it's electrical power from coal. This, together with the growing number of automobiles and the still common use of coal for domestic cooking and heating make China the number one emitter of greenhouse gases in the world. Not per capita though, Uncle Sam has them beat on that score.
The industrial growth in China makes it all the more important that they make the best choice for transportation energy moving forward - and gasoline simply will not do the job, at least not without killing the patient.
Broken down by category their power production looks like this:
- Over 2/3rds from Coal.
- Renewables comprise 7% of power production - and this is presently almost all from hydro-electric generation.
- Nuclear Power delivers under 2% of China's electricity.
Those renewable developments suddenly look very important. Especially if they can be married to the right kind of vehicle. Based upon the relative paucity of fossil fuels in China, and given their thrust to increase renewable energy sources, it seems obvious that China's choice is much like ours.
Unavoidable and Electric.