by jboullion | Aug 15, 2012 | Uncategorized
August 10, 2012
A commentary by Michael Vickerman, RENEW Wisconsin, Director, Policy and Programs:
After skidding below $2.00/MMBtu this winter, wholesale natural gas prices are now creeping toward the $3.00 mark. This upward movement is the result of below-normal volumes of natural gas going into storage for the winter heating season. The latest report, released August 16th, marks the 16th straight week where injection volumes lagged significantly behind the five-year average.
Notwithstanding this mild rebound, everyone in the energy industry, including the traders themselves, knows that $3.00/MMBtu is well below the cost of producing natural gas, and cannot deliver a return that can support future drilling efforts. This is particularly true with shale gas, the so-called “game-changer” that industry flacks contended would topple King Coal’s reign over the electricity sector.
High-profile shale gas producers like Chesapeake Energy are now running out of ways of concealing their financial distress. Consider the following developments that occurred over the last fortnight.
- Chesapeake Energy announced plans to reduce domestic gas production in 2013 by 8%;
- BHP Billiton wrote down $2.84 billion on the value of Fayetteville shale gas assets it had acquired in 2011; and
- The most recent count of rigs drilling for natural gas in the United States is 495, down 70% from the record-setting levels seen in September 2008.
“Write down” is a fairly bloodless way to describe the loss of $3 billion; “carnage” is better at conveying the pain that now grips the natural gas sector. This begs the question: why are wholesale natural gas prices still under the $3.00/MMBtu level?
I believe that there are two reasons for this phenomenon. The first is that energy traders, like virtually everyone else in this country, are truly convinced that the United States is awash in shale gas, thanks to a brilliant industry-led public relations campaign. Lower prices help reinforce the popular belief that cheap gas will be with us for another century. Unfortunately, federal energy agencies and universities have also bought into this view of the supply picture big-time, leaving little room for skeptics and agnostics to influence public perceptions.
This overarching belief has been unintentionally reinforced by local and regional controversies over the practice of hydraulic fracturing solid rock to obtain the shale gas trapped inside. Virtually unheard of four years ago, “fracking” has vaulted into the public consciousness, and in doing so, sustains the society-wide belief that natural gas can be accessed almost anywhere in the United States.
Ironically, the myth of abundance that E&P companies so carefully cultivated–and bankrolled–is now clearly working against their short-term interests.
The other factor that keeps prices so low is the traders’ fear of large demand swings. For example, the phantom winter of 2011-2012, which cut demand for heating fuel by more than 25%, creating a colossal oversupply that sent wholesale prices crashing. The supply pendulum is now swinging the other way, and more than half of the bulge has melted away. Assuming a continuation of smaller-than normal injections, natural gas inventories should be in line with the five-year average by mid-December.
Traders attribute the ongoing reduction in inventories to a hotter than normal summer, prompting utilities to switch on more gas generators to meet system peaks. But weather isn’t the only thing that influences the storage picture; output does as well. But as long as traders and speculators subscribe to the myth of nearly limitless supply, they will discount the possibility that declining output is also responsible for lagging storage volumes.
The paradigm shift ushered in by the fracking phenomenon won’t go away easily. But in the not-very-distant future, the reality of reduced drilling activity and capital spending, along with rapid decline rates in shale gas plays, will bite deeply into natural gas supplies and cause yet another overturning of expectations in this sector. For electric utilities as well as end-users, the results will not be pretty.
Michael Vickerman is program and policy director of RENEW Wisconsin, a sustainable energy advocacy organization. For more information on the global and national petroleum and natural gas supply picture, visit “The End of Cheap Oil” section in RENEW Wisconsin’s web site: www.renewwisconsin.org. These commentaries also posted on RENEW’s blog: http://renewwisconsinblog.org and Madison Peak Oil Group’s blog: http://www.madisonpeakoil-blog.blogspot.com
by jboullion | Jul 18, 2012 | Uncategorized
Immediate release: July 18, 2012
More information:
Michael Vickerman Director, Program and Policy
608.255.4044, ext. 2, mvickerman@renewwisconsin.org
Two-turbine project sets a number of firsts for Wisconsin
A vision of Wisconsin’s renewable energy future came to life with the dedication today of the two-turbine Cashton Greens Wind Farm, Wisconsin‘s first community wind development. This five megawatt project rises alongside Organic Valley Cooperative’s distribution center in this village 40 miles southeast of La Crosse.
Owned by La Farge-based Organic Valley Cooperative and Gunderson Lutheran Health System, La Crosse, Cashton Greens will generate enough electricity to offset the energy use for Organic Valley’s corporate headquarters and distribution center, as well as 5% of Gundersen Lutheran’s energy needs.
“This ground-breaking community wind project represents a number of firsts for Wisconsin,” said Michael Vickerman, director of programs and policies for RENEW Wisconsin, a renewable energy advocacy organization.
“Cashton Greens is both Wisconsin’s largest customer-owned renewable energy installation and the largest ever to receive a grant from Focus on Energy, the state’s energy efficiency and renewable energy program,” Vickerman said. It is also the first wind project permitted following the enactment of Wisconsin’s three-year-old wind siting law (2009 Act 40).The Village of Cashton approved the project in June 2010.
“RENEW and all of our members salute the team of Organic Valley, Gundersen Lutheran, and the village of Cashton for their audacious commitment to energy independence,” said Vickerman. “They are plowing ground that will result in new renewable energy systems supporting Wisconsin’s economic vitality while protecting its environmental health.”
“This project clearly shows that Wisconsin energy customers are eager to move forward to reduce their use of fossil fuels. Rather than wait for their utilities to act, many of them are now taking the initiative and installing systems to supply their own businesses and residences with clean renewable energy produced,” he said.
Organic Valley is America’s largest cooperative of organic farmers and one of the nation’s leading organic brands. Gundersen Health System provides health services to its patients at is hospital and clinics throughout west Wisconsin, southeast Minnesota, and northeast Iowa.
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RENEW Wisconsin is an independent, nonprofit 501(c)(3) organization that leads and represents businesses, organizations, and individuals who seek more clean renewable energy in Wisconsin. More information on RENEW’s Web site at www.renewwisconsin.org.
by jboullion | Jul 13, 2012 | Uncategorized
From a presentation on July 11, 2012, at a news conference in the state Capitol:
Pathways to Increase Renewable Energy
1. Allow private companies to sell renewable energy to home and building occupants if the renewable system is on private property;
2. Allow fair and uniform net energy billing and interconnection policies;
3. Increase Focus on Energy funding for renewables;
4. Reinstate utility renewable energy commitments;
5. Increase renewable energy requirements.
by jboullion | Jul 11, 2012 | Uncategorized
Immediate release
July 11, 2012
More information
Jenny Heinzen,President
715.592.6595
jennyh@midwestrenew.org
RENEW Announces New Members of Board of Directors
RENEW Wisconsin (RENEW) members elected new directors to its governing board in July.
“The new board represents a wide range of talents and interests in supporting RENEW’s mission of leading and representing businesses, organizations, and individuals that seek more clean renewable energy in Wisconsin,” said Jenny Heinzen, RENEW’s board president. The new board offers a healthy mix of new and familiar faces, Heinzen said.
RENEW is an independent, nonprofit organization that leads and represents businesses, organizations, and individuals who seek more clean renewable energy in Wisconsin.
The following were elected to three-year terms on RENEW’s board:
• Jeff Anthony, Director of Business Development, American Wind Energy Association, Milwaukee;
• Alex DePillis, principal, Clean Energy Partners, specializing in commercial wind and solar thermal systems, Madison;
• Maureen Faller, co-owner, Kettle View Renewable Energy, LLC, installer of wind and solar systems, Random Lake;
• Jim Funk, owner and engineer for Energize, LLC, specializing in providing high quality, high performing solar PV systems, Winneconne;
• Gary Haltaufderheide, Sun Prairie;
• Duane Kexel, President, Duane T. Kexel Consulting, LLC, Madison;
• Jeff Peterson, executive director, Polk County Energy Fair and director at the Polk-Burnett Electric Cooperative, Luck;
• Pam Porter, owner, P Squared Group, energy consulting, Madison; and,
• Carl Siegrist, Managing Partner, Carl Siegrist Consulting LLC, Whitefish Bay.
The new directors will serve three-year terms and join existing board members to form the group that sets overall direction for the organization.
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RENEW Wisconsin is an independent, nonprofit 501(c)(3) organization that leads and represents businesses, organizations, and individuals who seek more clean renewable energy in Wisconsin. More information on RENEW’s Web site at www.renewwisconsin.org.
by jboullion | Jul 5, 2012 | Uncategorized
Immediate release
July 5, 2012
More information
Don Wichert
Interim Executive Director
608.2554044
dwichert@renewwisconsin.org
Focus on Energy Resumes Offer of Renewable Energy Incentives
Financial incentives to support customer-sited renewable energy systems are once again available from Focus on Energy, the ratepayer-funded energy efficiency and renewable energy program in Wisconsin. About $2 million will be available for solar, wind, biomass, and biogas energy systems between now and December 31, 2012.
The resumption of renewable energy incentives marks the end of a suspension on applications for funding support that lasted six months for residential customers and an entire year for business customers.
“We are pleased that the funding uncertainties with Focus on Energy are behind us and that the renewable energy program is back up and running,” said Don Wichert,
Interim Executive Director of RENEW Wisconsin (RENEW), a nonprofit renewable energy advocacy organization.
“With the resumption of incentives, there is no need for customers to ‘wait and see’ what the future holds.”
In January, RENEW Wisconsin delivered a letter, signed by over 150 businesses, schools, and local officials, to the Public Service Commission asking the agency “to exercise its oversight authority over Focus on Energy and restore funding, without delay, for renewables at a level consistent with previous years’ allocations.” In early March, RENEW organized a similar write-in campaign to the PSC with over 200 comments submitted.
“I am hopeful that the reinstatement of incentives signals a closer working relationship between renewable energy businesses and Focus on Energy administrators,” Wichert said.
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RENEW Wisconsin is an independent, nonprofit 501(c)(3) organization that leads and represents businesses, organizations, and individuals who seek more clean renewable energy in Wisconsin. More information on RENEW’s Web site at www.renewwisconsin.org
