Kurdistan Attracts Billions for Oil Exploration

Investors are betting billions of dollars that oil will flow freely from wells being drilled in Kurdistan. The Financial Times reports that one small oil exploration company, Gulf Keystone Petroleum, already has a market capitalization of $1.9 billion, which would put it on the FTSE 250 index if it gets listed on the London Stock Exchange. Not bad for a company that has no proven reserves, has never earned any money for its investors, and has run operating losses every year of its existence.

Of course, Kurdistan is a pretty dangerous and unstable place. Just because you find oil today doesn't mean you will get to profit from it in the future.

So why does this company have a market capitalization of almost two billion dollars? Analysts say it is because investors are very confident that there are large oil reserves in the parts of Kurdistan where Gulf Keystone has been drilling. In fact, Gulf Keystone hit oil with its first well drilled in August 2009.

Ok. I can understand that line of thought. But this oil is in Kurdistan, a place that has been in almost continual violent conflict with Iraq since it was first recognized as an autonomous region in 1970. What about the very significant risks of violence, war, or even just political instability? How can a company afford all the security and insurance that must be necessary to cover those risks.

This is where we start to understand how the oil industry benefits from costs assumed by others. The ability to drill for oil in Kurdistan is a direct result of the hundreds of billions of dollars our governments have spent on the Iraq war and the ensuing seven years of efforts to stabilize that country. The door was opened, and it remains open, because of huge government investments and the personal sacrifices of hundreds of thousands of American, British, and other troops, including almost 5,000 Americans who lost their lives and more than 30,000 who were seriously wounded.

Next time we fill up our cars with relatively inexpensive gasoline, let's remember the hidden costs that are not reflected in the price. And let's also keep those costs in mind when we consider government investments in sustainable alternatives.

John Howley
Woodbridge, New Jersey
www.HowleyGreenEnergy.com

The (Green) Military-Industrial Complex

The US military is making a major push to deploy renewable energy on the battlefield because our soldiers are being killed protecting convoys of gasoline trucks. According to a front page story in The New York Times, the Secretary of the Navy "wants 50 percent of the power for the Navy and Marines to come from renewable energy sources by 2020."

There are many reasons for this dramatic push towards renewable energy on the battlefield:

1. Oil Kills

A US Army study found that one soldier or civilian is killed for every 24 fuel convoys that are sent out to provide fuel to troops on the battlefield. The Times reports that six Marines were wounded guarding oil convoys in just the past three months.


2. Oil Keeps Our Troops from Fighting the Enemy

The Navy Secretary is quoted in the Times as saying that guarding fuel in Afghanistan "is keeping our troops from doing what they were sent there to do, to fight or engage local people."


3. Oil is Outrageously Expensive

Do you think the military pays $2 or $3 per gallon for gasoline? Actually they get it for a wholesale price of about $1 per gallon, but transporting it to the battlefield adds on huge costs. For some remote locations, the cost of supplying fuel reaches $400 per gallon.


4. Oil Telegraphs Our Strategy to the Enemy

Want to know where our troops are low on fuel or getting ready to fight? Just follow the convoys of oil tankers. They will lead the enemy directly to our troops, inform the enemy of the size of our forces (more oil for larger contingents or more equipment), and provide hints of what might happen next. On the other hand, troops that do not need to re-fuel have tactical advantages not only on land but on sea as well. The Navy Secretary told the Times that "[e]very time you cut a ship away from the need to visit an oiler -- a fuel supply ship -- you create an advantage."


5.  Oil Causes Wars

Although not directly quoting the Secretary of the Navy, the Times reports that he and others said that "greater reliance on renewable energy improved national security, because fossil fuels often came from unstable regions and scarce supplies were a potential source of international conflict." Duh! You mean we fight wars over oil? When did someone realize that?

We have known all this for, well, forever. So why are we only now making the push for renewable energy on the battlefield? The Times suggests that recent advances in technology make renewable energy more viable. This tells only a very small part of the story. Most of the renewable energy technologies being used by the military are not based on dramatic technological breakthroughs. If the military had been serious in the past, it could have financed and tested new technologies better than almost anyone else. The Navy Secretary admitted as much: "If the Navy comes knocking, they will build it. The price will come down and the infrastructure will be created."

So why is the military "knocking" on the renewable energy door now? Simple. The war is not ending, and our the competitive advantages on the battlefield from high-tech weapons and communications are far more dependent on energy than ever before. Oil supply convoys have become a very dangerous Achilles heel.

Civilians should take note. Our civilian economy is also far more dependent on energy than ever before. In the future, other countries will compete against us for jobs and growth not on the basis of lower wages, but on the basis of lower energy costs. How competitive will our economy be when we are still paying for oil, coal, and other non-renewable fuels, while other countries are getting 50% or more of their power from sources with almost no ongoing fuel costs such as wind, solar, geothermal, hydro, and nuclear?

A great nation will not wait until we are in a crisis and stalemated on the economic battlefield. If we want to retain our status as a great nation, we must start building sustainable energy infrastructure right now. Let's build a competitive advantage into our economy with energy sources that have no fuel costs. Let's build a society that can say "No" to despotic oil regimes, "Keep your oil because we're not buying it." Let's build a society with a foreign policy focused on promoting our economic interests and our interests in democracy and human rights, instead of one that goes to war to protect access to oil fields.

If the military can do it on the battlefields of Iraq and Afghanistan, certainly we can do it from the comfort of home. Let's start right now.

John Howley
Orlando, Florida
www.HowleyGreenEnergy.com

Does It Matter Where Your Electricity Comes From?

Recently we switched our New Jersey home to a third party electricity supplier that gives customers a choice of either 20% or 100% wind power -- and that charges about 10% to 15% less per kwh than the utility's rates.

This is one of the little known benefits of energy deregulation. In many states, the delivery of electricity has been separated from the supply. Our utility company still provides delivery, service, emergency repairs, customer support and a single bill, but we can choose a third party for the supply portion of our bill.

With supply opened up to competition, third party suppliers are competing for our business by providing electricity that is greener and less expensive. It is similar to when long distance companies competed with one another after phone services were deregulated.

We quickly understood the financial impact of our choice when our electric bill went down, but I wasn't really sure about the "greenness" of the electricity. Was this just a marketing gimmick? After all, it's not as if the specific watts that find their way to our home can be identified as wind generated. The utility and the third party suppliers push all their electricity onto the same grid, and by the time it reaches our home you cannot distinguish between the watt generated by a dirty coal-fired plant and the nice, clean wind power that we bought. In fact, depending on the time of day, overall demand on the system, and strength of the wind, most of the electricity powering our home could be "dirty."

So, does it matter that we signed up and paid for 100% Green-E certified renewable power?

Yes. Because over time the demand created by people choosing renewable electricity will require more of it.

Watts, volts, and amps can be difficult to comprehend, so let me explain by analogy to something more tangible. Consider a car dealership that carries an inventory of 80 gas guzzling SUVs and 20 hybrids. If 8 out of 10 customers continue to buy the less fuel efficient SUVs, then the dealership will continue to replenish its inventory with 80% gas guzzlers and only 20% hybrids.

Now consider what will happen if 8 out of 10 customers start buying hybrids. The car dealer does not want to lose money. It will start to rebalance its inventory with more of the fuel efficient hybrids and fewer of the gas guzzlers. Which will cause the manufacturers to start producing more hybrids and fewer gas guzzlers.

The same thing can happen with electricity. If enough of us start choosing clean, renewable electricity, then more wind, solar, hydro, and geothermal plants will have to be built to meet the demand.

To help make that happen, we decided to promote the company that provides our home's clean, green electricity supply. We will earn a small referral fee whenever anyone signs up for the service through our web site and, more importantly, we will do our small part to increase the demand for clean and renewable energy.

If you live in New Jersey, Pennsylvania, Connecticut, or Maryland, you can click here to find out how much it will cost (actually, how much you will save) by switching to either 20% or 100% clean, renewable electricity. New Yorkers should be able to take advantage of this in a month or so, with Massachusetts and Illinois not far behind. You can also check with your utility or state regulatory agency to find the names of other third party suppliers.

With a little collective action that costs us nothing, and can actually reduce our electric bills, we can promote a cleaner and greener energy future.

John Howley
Woodbridge, New Jersey
www.HowleyGreenEnergy.com

DOE Says Grid Needs Upgrade to Handle Wind Power

The U.S. Department of Energy's National Renewable Energy Laboratory today released a major study of the technical, operational, and economic issues facing the integration of large amounts of wind energy into the power system.

The bottom line is: The existing grid serving most of the United States east of the Rockies would need a multi-billion dollar upgrade before it could handle even 20% wind-generated power.

The DOE's Eastern Wind Integration and Transmission Study (EWITS) evaluates the impacts of wind energy penetration into the power system through 2024. The study encompasses the majority of the utilities in the Eastern Interconnection, one of the two major alternating current (AC) power grids in North America. The Eastern Interconnection reaches from Central Canada eastward to the Atlantic coast (excluding Québec), South to Florida, and back West to the foot of the Rockies (excluding most of Texas).

About a year ago, a Joint Coordinated System Plan study group concluded that a 20-percent wind energy scenario would “require 15,000 miles of new extra-high voltage lines, at an estimated cost of $80 billion, in addition to $1.1 trillion in total generation capital costs by 2024.”

The new DOE study increases those numbers to 22,000 miles of new transmissions lines at a cost of $90 billion. But it argues that the $90 billion cost for transmission upgrades is only a small percentage of the total cost to build the wind generation capacity.

The new study also cautions that wind farms must be spread out geographically so they will not account for a large percentage of power generation at any given point in the grid. According to the new DOE study, "increasing the geographic diversity of wind power projects in a given operating pool generally makes the aggregated wind power output more predictable and less variable, while also reducing the variation in load and increasing the number of generation assets that can be committed and dispatched."

Other highlights from the new DOE study include:

• There are no fundamental technical barriers to the integration of 20% wind energy into the electrical system, but transmission planning and system operation policy and market development need to continue to evolve in order for these penetration levels to be achieved;

• Without transmission enhancements, substantial curtailment of wind generation would be required for all of the 20% wind penetration scenarios;

• Although the costs of aggressive expansion of the existing grid are significant, they make up a relatively small piece of the total annual power system costs in any of the scenarios studied;

• Wind generation displaces carbon-based fuels, directly reducing carbon dioxide emissions. Emissions continue to decline as more wind generation is added to the energy supply; and

• Reduced expenditures on fossil fuel costs more than pay for the increased costs of transmission in all wind scenarios.
  

For more information about incorporating increasing amounts of wind energy into the power system while maintaining reliable grid operations, see the DOE's Wind and Hydropower Technologies Program's Renewable Systems Interconnection web site.

John Howley
Orlando, Florida