State of Alternative Energy in Pennsylvania

Transcription

1 State of Alternative Energy in Pennsylvania Presented by: John Hanger, Special Counsel May 18, 2011

2 Power Generation Trends Coal Gas Nuclear Wind Solar % 16% 20% % 24% 20% 2.3% 0.2% Renewable Energy of all Types (Ethanol, Hydro, Biomass) provided d 10% of all US Energy in

3 Power Generation Trends Since 1996 US Electricity Production up 20% Coal up 2% Gas up 115% Nuclear up 20% Non-Hydro Renewables up 123% Hydro down 27% 3

4 Natural Gas Usage 24% of Electricity comes from natural gas plants 51% of homes use natural gas 0.2% of natural gas used in vehicles 4

5 Wind Now Mainstream 40, megawatts (mw) installed in USA; another 5,000 mw under construction Wind provided 35% of all new generation from Iowa 20%; Texas 7% of annual generation Pennsylvania ni will have 950 mw by 2011 at 20 operating wind farms 5

6 Solar Market Soars Globally 18,000 mw installed in 2010 Globally total of 40, mw now installed world solar industry has manufacturing capacity for about 27,000 mw per year Global solar market about $85 billion/year 6

7 Solar Market Soars USA installed about 1,000 mw in 2010 USA total about 3,100 mw Pennsylvania has 80 mw operating and under construction 7

8 Solar Costs Plummet solar cost about $9 per watt installed in PA 2010 median solar costs $5.90 per watt for small residential system in PA 2011 large solar of 1 MW and up in PA at $3.00 to $4.00 per watt 8

9 Solar Costs Plummet California mw auction had new solar projects equal or below new gas plant Prices declining nationally at about 1% per month Solar efficiency e cy increasing 0.5% per year 2015 solar prices at $1.50 to $2.00 per watt 9

10 Renewables Grow Strongly gyin PJM April renewable generators registered in GATS at PJM April ,723 renewable generators registered in GATS at PJM 10

11 Renewables Growing Strongly in PJM million mwh million mwh 2005 Wind 0.5 million mwh 2010 Wind 11 million mwh Renewables provided enough power for 3.8 million homes in PJM 11

12 Substantial Renewables in PJM Queues 34,079 mw of Wind 3,721 mw of Solar 382 mw of Hydro 218 mw of Biomass 79 mw of Captured Methane 12

13 PJM Solar Weighted Average Credit Pi Price March 2011 Capacity Registered New Jersey $675/mwh 250 mw Maryland $478/mwh 37 mw Pennsylvania $233/mwh 59 mw 13

14 Pennsylvania AEPS Credit Prices Tier 1 $3.65/mwh $4.77/mwh Tier 2 $0.36/mwh $0.32/mwh 14

15 RPS in PJM 9 of 13 PJM states have an RPS In million mwh needed to comply In million mwh produced In million mwh needed to comply 15

16 Policy Issues Going Forward Expansions of states RPS California increased to 33% from 20% National Clean Energy Standard Pricing of carbon in USA & globally 16

17 Pricing of Fossil Fuels Oil up about 40% in a year April 15 th $109 per barrel at NYMEX & $123 per barrel at Brent Oil prices moving toward $147 peak in July 2008 Oil consumption globally at record level 17

18 Pricing of Fossil Fuels Natural gas prices at $4.20 for thousand cubic feet as of 4/15/2011 July 2008 price of $13/mcf 24% of US electricity gas fired 18

19 Natural Gas Supplies Jump USA has enough natural gas to provide 100 years at current consumption EIA doubled US shale gas reserves from 400 trillion cubic feet to 837 tcf Shale gas alone provides 35 years of supply USA gas production in 2010 highest since 1973 and highest in world 19

20 Present National Electric Mix 45% Coal 24% Gas 20% Nuclear 10% Renewables 1% Petroleum 20

21 Our Future Electric Mix? 2% Coal 55% Gas 15% Nuclear 28% All Renewables 21

22 NATURAL GAS A CLEAN, DOMESTIC, AFFORDABLE TRANSPORTATION FUEL

23 U.S. Energy Flow By Source and Sector TRANSPORTATION 27.0 Source U.S. Energy Information Administration, Annual Energy Review

24 Growing Global Oil Demand Is an American Disaster Waiting to Happen By 2020, the IEA predicts oil consumption will increase 60% During that time, China s consumption of oil will increase 7.5% each year; India will increase 5.5% each year Oil is predicted to be at least $200/bbl by 2030 To keep up with the demand, OPEC countries will have to add 64 million barrels of production per day for the next 22 years* This needed growth will require $350 billion per year on new projects OPEC only spent $390 billion on new projects from Source: International Energy Association, IEA October,

25 Natural Gas Vehicles Are a Clean Transportation Solution and the Most Efficiently Scalable Answer Natural gas vehicles, combined with Plug-In Hybrid Electric (PHEV) sedans, will support America s economy, environment, and energy security Natural gas is an ideal replacement for high-fuel consumers and polluting vehicles such as: Transit buses Refuse trucks Commercial fleets* Semi-trucks School buses Delivery vans PHEVS are only clean if powered by clean electricity All Current Natural Gas Vehicles 4

26 Natural Gas Vehicles Are An Answer to Americans Rising Fuel Prices $/mmbtu Price of Oil vs. Natural Gas $/bbl When NYMEX Mcf is $12.00, CNG will be priced at $2.50/gge When NYMEX Mcf is $8,00, CNG will be priced at$2.00/gge When NYMEX Mcf is $4.00, CNG will be priced at $1.50/gge This is why AT&T, UPS, Verizon, Waste Management, etc. are switching to natural gas they can save millions on fuel costs Source: Henry Hub CERA Reference Case (Feb 2010/ Briefing), IHS Global Insight WTI June 09, CERA, NYMEX (as of 4/4/10) / CNG is priced by gge (equivalent to a gallon of gasoline). 1 Mcf = 8 gge s of CNG. A gge is priced by $1.00 for Operating, Tax, Profit, and Compression + the Cost of the Commodity (Mcf/8). Even at $16 Mcf you ll have ~$3/gge fuel. 5

27 Each National Fleet Using Natural Gas Is An Economic and Clean Energy Stimulant Using AT&T s vehicle replacement program as an example: The impact of buying or converting 15,000 vehicles to cleaner technology over a 10-year period. Should reduce gasoline consumption by more than 49,000,000 gallons Trim carbon dioxide emissions by 211,000 metric tons the equivalent of removing more than 38,000 vehicles from the road for a year. In addition, the AT&T replacement program will help support an average of 1,000 vehicle manufacturing related jobs each year from Source: Center for Automotive Research

28 NGV Demand Potential is Extraordinary According to several research groups, there is approximately 6-12 Tcf of new, annual demand potential that exists by targeting high volume fleet applications. Wide variances exist due to the speed of economies of scale development. According to EIA: 6 Tcf of annual natural gas demand exists in current diesel consumer markets 15 Tcf of annual natural gas demand exists in current gasoline consumer markets 7

29 If Economies of Scales for NGV Are Supported, the Demand Growth is Significant 16 Natural Gas Demand Projections Power Transportation 14 Only focusing upon refuse trucks, 12 transit buses, school buses, commercial fleets, and semi-trucks; 10 the benefactors of NATGAS provisions = ~ 8-12 Tcf/year of new 8 demand The Top 55 Coal-fired Candidates Equivalent Demand 1.2 to 2.0 Tcf/year Transportation Power Source: ClearView Energy Partners

30 Why Haven t NGVs Been More Widely Accepted the Past 30 Years? Global vs Domestic Market 14 million+ vs. 130,000 Price of Petroleum Fuels/Need for Change Economies of Scale Strategic Growth in Fueling Confidence in Natural Gas Shales have unlocked the acceptance on supply abundance 9

31 The Domestic NGV Market Is Growing; You re Just Not Hearing About It Stations Are Being Built LNG and CNG Station Growth is Currently at 13% Regional Corridor Projects are Under Development Products Are Being Improved and Adopted by the OEMs Ford and GM providing OEM-support CNG vans Chrysler/Dodge to come out with 2012 Model Year CNG Bi-Fuel Dodge Ram G M currently tweaking final computer changes on CNG Silverado/GMC Sierra Chrysler working on bringing Fiat CNG sedans to the US market Heavy-duty y trucks are rolling into the market Westport Legislation Being Passed and Proposed at the State Level for NGV Incentives Legislation being filed in TX, PA, NM, WY, etc. Vhil Vehicle incentives exist itin OK, CO, GA, IL, LA, MT, OR, UT, and SC NGV infrastructure incentives exist in CA, LA, OK, MO, NJ, NY, and OR Cities and States Adopting NGVs in a Big Way Corporations Adding NGVs to Their Fleet 10

32 Light-Duty Vehicle RD&D Customers will want a more appealing vehicle concept from an OEM (currently only the Honda Civic is a consumer-focused vehicle produced from an automaker) Vehicle should command the attention and support of OEMs, policymakers and the public simultaneously Chrysler is moving fast on 2-3 models The US Natural Gas Industry will fund the RD&D process with 6 concepts on existing production models for 6 different automakers that also: a) assemble vehicles in the US, from 4 global regions (US, Japan, Europe, Korea) b) regionally diverse factory locations c) sympathetic or important policymakers in specific states d) high-volume and/or high appeal segments: 11

33 Detroit Can and Will Make a Natural Gas Light-Duty Truck America s natural gas industry is currently in discussions with the Big 3 US automakers about producing a natural gas light-duty truck US automakers only require the initial minimum commitment of annual sales to produce an OEM-supported vehicle The natural gas industry, using our corporate truck fleets, will be the catalyst for this initial commitment and partner with the OEMs to offer these commercial vehicles for: National Fleets Municipal/Public Works Federal and State Fleets Dept. of Defense Product #1 Is Available CNG Commercial Van! 12

34 Heavy-Duty RD&D Some characteristics of construction and mining equipment are conducive to the use of heavy-duty NGVs, including high fuel use and centralized fueling, and engine manufacturers have expressed interest in entering such markets with largedisplacement natural gas engines Equipment manufacturers need fuel sourcing education Demonstration Projects: Wyoming Mining Operations Kentucky Locomotive Research Key manufacturers and users are already considering this market LNG Mine Truck 13

35 Heavy-Duty RD&D Heavy-duty construction: equipment ranging in size from less than 50 horsepower to more than 1,000 horsepower despite the availability of natural gas engines in many common horsepower ranges used in construction equipment, few if any, natural gas options are currently available for construction equipment challenges/opportunities: 1) fuel tank integration and, 2) changing regions of operation Mining Equipment: engines range from 1,000 to 4,000 horsepower there is very limited availability of natural gas engines suitable for this market segment challenges/opportunities: high fuel consumption per vehicle and other use logistics make this niche attractive for engine and vehicle OEMs to consider for introduction of NGV offering Locomotives: recent focus has been on switcher locomotives that are used in urban rail yards to move freight cars these locomotives typically have 1,200 to 2,000 horsepower diesel generator set engines that power electric drive systems 14

36 Chesapeake Fleet Transformation Test Various Vehicle Applications Partner w/ Reputable and Committed Companies Vhil Vehicles Carter Chevrolet Conversion Kits OEM Systems/IMPCO Retail Fuel Providers OnCue/Love s/hutch s Vehicle Standardization Begins Employee NGV Leasing Program Senior Management Purchases and Drives NGV s Announce Fleet Transformation Phase I: Oklahoma Initiative 12 Months Phase II: Louisiana/Texas 2011/2012 Phase III: Pennsylvania/West Virginia/Ohio Phase IV: Colorado/Wyoming/New Mexico/S. Texas Senior Management Vision and Support Priority is Dependent on Infrastructure Availability 15

37 The Dairy Farmer Must Drink Milk Projected Annual Fuel Savings for Converted Fleet within next 36 Months 4,100 CNG Fleet Vehicles x $1,850 annual fuel savings= $7,585,000! CHK Example: All 4,100 trucks will be on natural gas by Phases: Oklahoma Louisiana/North Texas Eastern states(pa,wv,oh) Rockies and South Texas *Partnering with public retailers for CNG stations in operating areas and building our own $1.00/gge currently seeing $1.60 savings in OK 16

38 Strategic Station Locations Can Quickly Build the Necessary Foundation 11 Stations Alone Create a Clean Transportation Footprint Over Oklahoma. Each Green Highway Represents 100 Miles and Back from a CNG Station A single piece of legislation can help position Oklahoma to not only be a leader in the country using a modern energy resource, but it also positions our state s economy for increased sustainability 17

39 Natural Gas Vehicles Help Oklahomans Reduce Their Costs and Reallocate Capital Within the Local Economy RETAILER (Supply) Local retailer invests in CNG infrastructure FLEET (Demand) Energy sector uses CNG to provide base demand while saving the company on fuel cost WINNERS Our communities, schools, families, and governments now have access to CNG Oklahoma has more than 62 CNG stations; many more under development 18

40 Fleet Outreach Medium to Heavy Duty markets for refuse, public transit, and ports is maturing Sector has continuing industry partner focus Clean Energy NGVAmerica Clean Cities Sector supported by mandates and incentives CHK will develop Top 33 Plan for each operating area: Vendor database Fleet database Service sector data collecting and reporting / work with production superintendents, district managers Education on supply is critical and leveraging all opportunities will be a key focus 19

41 Natural Gas Vehicle Economics: Proven Field Data 20

42 Northeast Corridor 21

43 Pennsylvania Clean Transportation Corridor 20 existing NG stations in PA 12 are public access Existing LNG source from natural gas peaker plant Roadmap for Pennsylvania Jobs, Energy Security and Clean Air with Natural Gas in the transportation sector Establish new fueling Infrastructure (LCNG) Based on HD fleets in urban centers 17 new public access proposed ~$45 Million MD/HD Vehicles 850 new high h fuel use vehicles required 22

44 Northern Tier CHK Fleet Conversion Regional NGV Partnership: Dandy Mini Markets- will construct a fueling facility in Towanda area. Endless Mountains Transportation Authority (serving Bradford, Tioga and Sullivan Counties) will convert (5) 18 passenger transit buses to natural gas. Chesapeake Energy will convert 50 of its light duty trucks to CNG and will fuel these trucks at the Dandy fueling station. 23

45 CHK: NGV Industry Leadership Since 2008 #1 Greenest Natural Gas Exploration & Production Fleet #1 Greenest Drilling Fleet: Nomac Drilling #1 Greenest Gas Compression Company: MidCon Compression #1 Greenest Trucking Company: Hodges Trucking Company #1 Greenest Tool Company: Great Plains Oilfield Rental #1 Greenest Compression Company: Compass Manufacturing #1 Greenest Midstream Operator: Chesapeake Midstream Partners Chesapeake s Fleet Transformation In Pennsylvania Will Make Our Fleet One Of The Top Alternative Fueled Fleets In The Region By Converting over 400 Vehicles CHK expects to save approximately over $2,000,000 in fuel costs CHK has led the natural gas industry s movement towards natural gas vehicle market development, fleet transformation, creative business modeling with private retailers, legislative advocate, and industry collaborative spokesperson 24

46 National Alliance Market Leadership CLEAN AMERICAN TRANSPORTATION ALLIANCE (CATA) Collectively represent: 6-7 million direct or indirect employees Active in 46 of the Lower 48 States 100,000 fleet vehicles among the 60 companies Serve 64 million households (Utilities) 25

47 We ve established a national network of natural gas partners 12+ million Americans working within the ANGA and AGA affiliated networks 26

48 How Can We Work Together in Pennsylvania? Utilize NGVs throughout our corporate fleets and operations and encourage the oil and gas sector companies to follow suit Strive for no less than 60% utilization across all vehicle fleets Increase natural gas utilization in our drilling rig fleets as a fuel using dedicated and dual fuel technology to no less than 25%. Indentify areas for natural gas utilization as a fuel in our service sector, i.e., hydraulic fracturing equipment, creating operating areas using natural gas throughout the value chain. Partner on public CNG and LNG stations Securing fuel contracts with current retailers or constructing our own and encouraging public access Support and encourage the auto industry to produce OEM supported CNG and LNG vehicles, particularly fleet vehicles Facilitate the creation of NGV corridors and NGV regional alliances. 27

49 The Global NGV Opportunity Expansion of global natural gas resources can further increase the dramatic growth in natural gas vehicles (NGV) worldwide Currently 12 million but expected to be 65 million by 2020 at current pace Growing world economies will continue to use natural gas vehicles and lessen their dependence on current imports of oil Global growth of natural gas vehicles will improve the opportunity for economies of scale to develop in the United States t Domestic economies of scale is the only impediment for US s widespread adoption of NGVs 28

50 Natural Gas Shales Create A Key Solution For Global Air Quality Expansive development of global gas shales will have a dramatic, positive impact on global air quality by enabling more low air polluting natural gas to reach energyconsumer markets Increased utilization of cleaner, abundant, affordable natural gas for power generation improves air quality Natural gas usage reduces emissions through underutilized combined-cycle power plants will dramatically reduce air emissions and increase health benefits Replacement of imported petroleum fuels with cleanburning natural gas in the transportation sector Global NGVs currently at 12 million; expected to be 65 million by 2020 Vehicle production and oil consumption growth is accelerating rapidly in developing world; proliferation of global shale gas will offer option for new vehicles to run on cleaner, cheaper natural gas 29

51 QUESTIONS???? 30

52 Gettysburg Energy & Nutrient Recovery Project Infrastructure for Ecosystem Services Presented to the State of Alternative Energy In Pennsylvania Discussion Sponsored by Eckert Seamans May 18, 2011 Harrisburg, PA by Patrick Thompson President & CEO, EnergyWorks Group

53 Gettysburg ENRF Background Pennsylvania s Largest Certified Nutrient Credit Generator Processes entire amount of manure from Pennsylvania s largest egg producing CAFO US-manufactured equipment Demonstrates the technical and commercial feasibility of Infrastructure for Ecosystem Services 2

54 The Processing Plant Fully enclosed, LEED Certified, 30-year design life Throughput: 240 tons/day Ash Byproduct: 12,875 Tons/yr Power Generation: 3.5 MW Nitrogen Credits: 1,051,570 lb-n/yr RECs: 24,800 MWh/yr Phosphorous Credits: 53,583 lb-p/yr GHG Credits: 38,600 Ton CO 2 e/yr 3

55 Nutrient Credit Generation Concept Daily collection eliminates long-term storage and land application of manure Continuous processing Gasification of organic solids, transforming Nitrogen (N) compounds to non-polluting N 2 gas Recovery and recycling of Phosphorous (P) and other minerals as fertilizer or animal feed supplement N & P mass flow continuously monitored to document water quality benefits 4

56 Projected Nutrient Load Reductions 87,500 Tons/yr of processed Egg Layer Manure (ELM) Nitrogen Phosphorous Nutrients Contained in ELM Processed Annually Nutrients Captured or Converted Annually 5,965,670 lbs 3,049,763 lbs 5,577,902 lbs 3,049,650 lbs Certified Credits 1,168,422 lbs 57,531 lbs Generated Annually Credits Traded Annually 1,051,570 lbs 53,833 lbs Traded Credits Share of PA Reductions to Meet TMDL 3.56% (Target = 29,530,000 lb*) 4.45% (Target = 1,210,000 lb*) * Based on Pennsylvania s Final Chesapeake WIP 5

57 Gettysburg ENRF Ecosystem Services Profile Environmental Quality Air: reduction of ammonia, odors, GHG releases Water: reduction of surface water contamination and nutrient loading to the Chesapeake Bay Public Health & Safety Local insect and rodent control Regional pathogen control Resource Conservation Production of carbon-neutral, renewable Energy Recycling of minerals and nutrients 6

58 Policies to Promote Infrastructure Ecosystems Services 1. Manure-to-Energy Enhanced net metering or feed-in tariffs (FiTs) RPS carve-out or quota 2. Water Quality Trading Market Interstate certification and trading Voluntary purchase and retirement of credits 3. Nutrient recycling RPS for agricultural fertilizers RPS for animal feed supplements 4. GHG Credits for nitrous oxide reductions 7

59 Conclusions Ecosystems Services Technologies are available now Benefits are predictable, long-term and cost effective Infrastructure solutions can foster sustainable agriculture Infrastructure Ecosystems Services create jobs and benefit regional economy Regional policies are needed to promote regional markets 8