WIND ENERGY WEEKLY
Vol. 15, #684, 12 February 1996, published by the American Wind
Energy Association. The full text of the WEEKLY is available
in hardcopy form for $595/year and is recommended for those with
a serious commercial interest in wind (the electronic edition
contains only excerpts). A monthly hardcopy publication, the
WINDLETTER, more suitable for those interested in residential
wind systems is included with a $50/year individual membership in
the Association. AWEA's goal is to promote wind energy as a
clean and environmentally superior source of electricity. Anyone
sharing this goal is invited to become a member. For more
information on the Association, contact AWEA, 122 C Street, NW,
4th Floor, Washington, DC 20001, USA, phone (202) 383-2500, fax
(202) 383-2505, email "firstname.lastname@example.org. Or visit our World
Wide Web site at "http://www.econet.org/awea
World oil production to peak soon; price shocks foreseen
Zond turbines survive 117 mph winds at CSW plant
ZOND TURBINES WITHSTAND
BRUTAL WEST TEXAS WINDS
Zond turbines installed at Central and South West Services'
(CSW) 6-MW wind plant in west Texas survived a wind storm with
117 mph gusts January 19.
The project, comprised of 12 Zond Z-40 turbines, operated as
expected during the storm. "These were high wind speeds, but you
occasionally see such extremes, and the Z-40 is designed to
withstand even greater winds," said Zond's vice president of
operations, Tom Biernat. The Z-40 is designed to meet ECI Class
One standards, he explained, which require turbines to endure a
50-year extreme wind of 157 mph and an annual wind speed of 117
mph. According to Biernat, winds at the west Texas site average
about 15 mph.
The CSW project was dedicated on September 29, 1995 (see
WIND ENERGY WEEKLY #666, October 2, 1995). According to CSW's
Ward Marshall, minor startup problems have been ironed out and
the project has been operating as expected.
The plant was developed under the Utility Wind Turbine
Performance Verification Program (sponsored by DOE and the
Electric Power Research Institute), which is meant to encourage
commercial purchases of advanced wind turbines by providing data
on their performance and giving utilities firsthand experience
with them. According to Marshall, the turbines are now going
through "acceptance testing." To be accepted, each turbine must
operate without any mechanical glitches for 30 days. Once each
of the turbines has made it through this trial, they will be
accepted as a group.
NEW OIL PRICE SHOCK SEEN
LOOMING AS EARLY AS 2000
If present economic and oil industry trends continue, future
price shocks appear likely as early as the year 2000, with the
world facing permanent increases in the price of oil, two new
studies have concluded.
The first study, THE WORLD OIL SUPPLY 1990-2030, which was
completed in late 1995 by the prestigious Geneva, Switzerland-
based group Petroconsultants, deals with the realities of the
statistics, pointing out that the world is finding only about
seven billion barrels of oil each year in a falling trend, while
producing 23 billion barrels a year in answer to rising demand.
The study describes this situation as a recipe for bankruptcy.
The second report, prepared by Oak Ridge National Laboratory
for the Office of Transportation Technology of the U.S.
Department of Energy and made public in mid-January, suggests
that the OPEC (Organization of Petroleum Exporting Countries)
nations, in control of two-thirds of the world's reserves, will
soon have the ability to regain monopoly power in world oil
"Price shocks can be very profitable to oil producers, and
consuming nations appear to have developed no adequate defense
against them," the report warns.
A summary of the studies' findings was released January 30
by Fuels for the Future, a Washington, DC-based public relations
Another warning signal came February 5, as Japan's Ministry
of International Trade and Industry (MITI) reported that the
level of Japan's crude oil imports from the Middle East reached a
new high in 1995 of 78.6 percent of the country's oil imports.
Japan imported slightly more than 1.3 billion barrels of oil
during the year from the Middle East. Imports from Indonesia and
China shrank, partly because of increased consumption within
China itself, the Ministry said.
The Petroconsultants study concludes that while the world
may not be running out of oil, it is running out of cheap oil.
And nothing, it states, contributes more to the high cost of
living than high energy prices.
The study emphasizes that a country's or region's peak oil
production comes at the midpoint of depletion, when half of its
oil has been produced. Then oil production declines to zero at
its depletion rate. North American production peaked in 1974,
and the world will hit its midpoint around 2000, the consultancy
estimates. Although detailed numbers from the Petroconsultants
study were not made public, the group previously predicted in
1994 that production would peak in the year 1999 at 65.6 million
barrels a day, and decline to 52.6 million barrels a day by 2010.
By 2050, the 1994 report said, world oil production would drop to
17.5 million barrels a day, or slightly more than it was in the
Interestingly, the Petroconsultants analysis appears to
track fairly closely the projections made in the 1950s and 1960s
by Dr. M. King Hubbert, the petroleum geologist who first
predicted the eventual exhaustion of U.S. and world oil supplies.
Hubbert forecast that U.S. production would begin to decline in
about 1970 and that world production would crest in 1995. U.S.
crude oil output did in fact peak in 1970 at slightly over nine
million barrels a day and has declined substantially since.
Dr. Colin Campbell, another oil analyst and author of THE
GOLDEN CENTURY OF OIL, 1950-2050: THE DEPLETION OF A RESOURCE,
pegs cumulative world oil production through 1993 at 718 billion
barrels, with remaining reserves at 932 billion barrels. At the
world's current production rate of 23 billion barrels a year, the
midpoint between past output and remaining reserves (about 826
billion barrels) should be crossed sometime before the end of the
The problem of gradually tightening world oil supplies is
exacerbated by a growing concentration of remaining reserves in
the Persian Gulf. All other producing countries but the five
Persian Gulf states (Saudi Arabia, Iran, Iraq, Kuwait, and the
United Arab Emirates) will peak before 2000. The Oak Ridge
report points out that by the turn of the century only OPEC will
have the capability of developing and producing energy in the
quantity required. The report says the problem is not one of the
United States running out of oil, but that a handful of nations,
which today control about two-thirds of the world's reserves,
will have the monopolistic power of a cartel as early as the turn
of the century.
During the 1970s the OPEC cartel was able to raise prices
dramatically, extracting billions of dollars from consuming
nations. But higher prices spurred drilling activity worldwide,
and newer technologies reduced consumption to the point that the
world had excess capacity for more than a decade. Now supply and
demand are nearly in balance and the advantage is swinging to the
oil producers. With world demand increasing and the reserves of
most producers gradually diminishing, the OPEC cartel with its
many resources appears ready to control the market for oil during
the early days of the new century, the Oak Ridge analysts said.
The Oak Ridge report, in emphasizing the problem, points out
that while farm commodities can increase production within a
year, it takes 10 to 20 years to develop and produce oil, lending
far greater power to an oil cartel's monopoly in the short run.
The Petroconsultants study suggests that few new petroleum
sources will be found in the future, and that therefore, most oil
production will have to come from existing fields. Established
oil well reserves are currently at about one trillion barrels,
but the report does not make the error of dividing this figure by
current production to suggest wrongly an extended period of
supply-demand balance. The scene, the researchers conclude, is
set for another major oil price shock. With a chronic shortfall
in supply, the world faces a permanent increase in the price of
The data supplied by Petroconsultants lend support to the
conclusions reached in the Oak Ridge report that deal largely
with economic consequences to the United States and its standard
of living in having to deal with a cartel and its pricing power.
One of the factors that has brought about the increased
demand for oil -- estimated to increase by more than two million
barrels per day over the next seven years to more than 80 million
barrels per day -- is transportation. The growing demand for
automobiles in China, India, South Korea and other Asian nations
pinpoints the fact that oil production provides 97 percent of the
fuel used in transportation. The 600 million motor vehicles
worldwide will eventually consume as much as 60 percent of the
Simply put, demand for oil is outpacing the world's ability
to produce it. Nations unprepared to handle the shortfall will
be paying a significantly higher price for oil.
Although wind energy is used predominantly to produce
electric power, and competes primarily against gas, coal and
nuclear power, its future prospects will also be affected by
tighter world oil supplies and rising prices. If compressed
natural gas (CNG) becomes the substitute of choice for gasoline
as a transportation fuel, then gas producers, too, are likely to
find themselves facing supply problems. And to the degree that
public attention is focused on energy issues, a pollution-free
alternative that now costs only slightly more than conventional
sources can only gain.
* from the *
* AMERICAN WIND ENERGY ASSOCIATION *
May 13, 1996
Contact: Karl Gawell, Director of Governmental Affairs, (202)
On Friday, May 10, the Texas Sustainable Energy and Economic
Development (SEED) Coalition issued a statewide Action Alert
urging renewable energy advocates to write to Governor Bush and
urge the adoption of "minimum benchmark goals" for the
incorporation of renewables and energy efficiency in the state's
Integrated Resource Planning (IRP) process.
The SEED Coalition action follows the announcement that
Governor Bush's "Vision Texas" plan, which has been issued to all
state department heads and to the Public Utilities Commission,
includes a plan for a benchmark for "renewables as a percentage
of total energy used." This is a very positive development in a
pivotal state for wind energy, and must be encouraged.
The Renewables Portfolio Standard (RPS) that AWEA has been
championing as a means of preserving a market for electricity
generated from renewables after utility restructuring fits well
with the "minimum benchmark for renewables" concept. We
therefore strongly endorse SEED's position that the Governor
should be asked to urge the Public Utilities Commission to
incorporate the benchmark for renewables as a requirement in the
IRP, which governs acquisition of resources by utilities.
We call on AWEA members and other renewable energy
supporters in Texas to join in responding to the SEED initiative,
quoted in part below:
"Take five minutes and write a letter to the Governor. The
letter need not be fancy. Please make the time now--he has to
hear from you in the next seven days for your letter to have the
most impact. Here's the message we want to send him:
"1) Thank you for including renewables in your Vision Texas
"2) I encourage you to further support energy sustainability
by asking the PUC to require that utilities use a portfolio of
resources, including renewables and conservation, to meet energy
"3) Texas also needs to adopt minimum benchmark goals for
the incorporation of renewables and conservation.
"4) Ask him to respond. A 'Please respond' as your last
sentence will do nicely. Don't forget your return address!
"Address your letter to the Governor at:
The Honorable George W. Bush, Governor
Austin, TX 78711
"Or fax your letter in: (512) 463-1849
"And make a phone call: (512) 463-2000!"
You may also want to stress the fact that the State of Texas
owns sizable amounts of land in west Texas that are suitable for
wind development and could provide a substantial amount of income
from land rents. Gary Mauro, the state's Land Commissioner,
noted at a recent meeting in Austin that the Land Office had
recently received its first monthly check, for $29,000, from a
wind plant in west Texas. Mauro said the state expects to
realize $3 million in rents over the life of the wind project.