Would you believe the State of Ohio doesn't know and can't tell you who many acres we own, or even where it all is? Neither can they tell you specifically what minerals interests that we own.
This isn't really that strange or uncommon in fact. Often fractional property interests are conveyed and through time is widely distributed in tiny pieces.
Furthermore, each state agency who owns property, basically manages that property itself. All the property, that means their mineral interests as well. Certainly the Department of Transportation can assess and evaluate it's own mineral estate interests, right? And I am a doctor, let me write you a prescription. If you had an expert in the family you would ask, right? How often do you think the the Ohio Division of Geological Survey is asked about mineral resources from other state agencies? The Survey is home to the experts within state government and they are rarely, if ever consulted, on mineral (geologic) resources.
Nor can they tell you the total value of the property they are managing (particularly the mineral estate). And by value, we mean tangible value to the citizens of Ohio. A value that considers all potential revenue generating resources. This is not to say just because we know the value of something that we are somehow obligated to exploit it. It is like your home, you kind of like to know its value, so you know how much equity you have in it. Whether you chose to access that equity, well, that is a separate and distinct question.
What we are really talking about here is oil and natural gas, although the same applies to any potential resource (coal, peat, limestone, gravel, etc.). With respect to these mineral interests we don't know what the value is, and state government are not the people to make those assessments. Reserve analysis can be excruciatingly simple, or excruciatingly complex (the product price has a huge impact on reserves - what will prices be in five years? Who knows?).
We applaud Ohio lawmakers for beginning to recognize that they are responsible for the management of the resources of the state. While the serenity and beauty of our natural areas, parks, preserves, lakes, etc seems boundless, we should temper a protective attitude with some reality. These areas have been farmed, timbered, dumped on, used, and abused since the colonization and industrialization of Ohio, so as beautiful as they are, pristine they are not. These areas are covered with trails, access roads, nature centers, cabins, and hotels, all of which have a significant and lasting footprint on the parks, not to mention the pollutants generated by the operations of the parks so that Ohio's can drive to and in, to hunt, fish, hike, and play (with smog spewing cars, boats, 4-wheelers, snowmobiles, etc).
We suggest that the oil, gas, and mineral interests of the parks, owned by the citizens of the state of Ohio, are also resources, potentially valuable resources. We believe the regulatory agencies in place can effectively manage wells on state lands as they manage the currently 50,000 producing wells that exist here today. The real risks are minimal, and the payoff enormous.
The economic impact of the energy extraction activities in the state is real and significant. Opening state lands and waters to development will create a significant economic impact, in jobs, in royalty revenue, all to produce a energy resource produced here, and used here, that reduce costly imports for the citizens of Ohio.
The states of Michigan and Pennsylvania have an excellent nomination system, by which parties who are qualified to assess value and are ready to assume the risk nominate properties that they are interested in. Once or twice a year the state holds an auction, for nominated properties which meet some criteria, and for which a minimum bid is established and we see what the market bares.
Don't believe the naysayers, the State lands contain significant energy resources, which like any other resource, should be managed. Make state lands, parks, natural areas, fee properties in any agency, available for reasonable resource development. It makes sense that these resource be managed by a central agency. Ohio needs Ohio’s energy, and we need, more than ever, every job we can keep or create here and every dollar we can save and keep within Ohio.
Tuesday, March 31, 2009
US Forest Service and Solar Panels, what would you do?
We are proponents of wind, solar, and other alternative energy generation and capture methods to supplement conventional sources. America needs to cultivate a diverse portfolio of energy supplies, for national security and the recovery and maintenance of our economy. America is now feeling the sting of decades of funding cuts to basic research and technology development. America's current reality is that there are few alternative energy options that are technologically and economically viable, and we have to take issue with bad math to support unrefined technology to justify decisions, particularly spending public dollars.
The news release from the US Forest Service is woefully devoid of information (http://www.fs.fed.us/r9/wayne/press_releases/contract_awarded_solarpanels.html), here it is:
"Nelsonville, Ohio (March 13, 2009) – The U.S. Forest Service has awarded a $398,000 contract to the Ohio-based D.J. Group from Beverly, Ohio. The contractor, a Service Disabled Veteran Owned Small Business is being hired to purchase and install more than 250 additional solar panels to the roof top of the Wayne National Forest Headquarters building, bringing the total to over 300 solar panels.The funding for the contract is coming from the American Recovery and Reinvestment Act of 2009. It’s estimated four jobs will be created by the Wayne National Forest six-month project that gives business to Ohio’s growing solar industry. The Wayne began its Solar Energy Program in 2007, by installing a 20-panel solar system. Last year, the Forest added 30 more panels to bring the total to 50. The current system is generating 7% of the facilities energy needs. Once the new expansion is completed later this summer, up to fifty-percent of the Wayne National Forest headquarters building will be powered by the sun."
Past references in the news to this project have included little additional information, until this morning.
The Columbus Dispatch published and article in the Business Section called "Solar Power Bolts Forward" (http://www.dispatch.com/live/content/business/stories/2009/03/31/moresolar.ART_ART_03-31-09_C10_MFDDBNP.html) which included some additional and interesting information.
The US Forest Service is outfitting a building with solar panels for $398,000 that will reduce the annual electric bill by (up to) half. The article states that the past twelve month's electric bill was $31,000. It also states that the project will pay for itself in 10 to 15 years.
That can't possibly be so.
Simply using last year's expense, and the quoted forecast, basic math show us that "payout" is between 25 and 40 years. The only way to make this expense payout somewhere within the reasonably lifespan of the solar panels, is to dramatically increase the cost of electricity, and soon. Here in Ohio, electricity means coal. About 90% of our electricity comes from coal (by the way, Ohio is one of the nations leading consumers of electricity).
Lets look at this. The total annual bill is $31,000. We don't know how much electricity that is, but using the Energy Information Administration (http://www.eia.doe.gov/) data in Ohio electricity costs about ten cents per Kilowatt hour, we can estimate that the US Forest Service Wayne National Forest Headquarters uses about 310,000 Kilowatt hours of electricity per year. For a point of reference, the best solar panel generated electricity runs around fifty cents per Kilowatt hour. Ohio is not Arizona or Hawaii, unfortunately we have clouds from time to time...
It will take about 126 tons of coal (one ton of coal will generate 2,460 Kilowatt hours) to generate the power for the HQ. Now coal costs about $30 per ton, so that is $3,780 worth of raw fuel to provide $31,000 of electricity for the HQ.
The DOE says coal fired power plants release two pounds of CO2 per Kilowatt hour. HQ currently is responsible for 620,000 pounds of CO2 "pollution", 310 tons.
We have two issues here. A financial problem, and an environmental pollution problem.
Financials. The US Forest Service says their $398,000 expenditure will payout in 10-15 years. Let's use their disclosed electric cost for lack of actual data. $31,000, and let's assume they can cut that in half with the solar panels, $15,500 per year. We are not going to considering time/value of money or future price fluctuations for electricity, we simple divide - 398,000/15,500 = ~25 years. We can tweak the financial model, but we doubt we can tweak it to get a 10 year payout. That would require, again ignoring the value of money, annual maintenance and replacement costs, and the balance of the electric bill which (at least half) , their annual electric bill would need to soar from $31,000 per year to nearly $80,000 per year, right away, and for the next ten years (forget about any maintenance service costs) to get an annual electric bill of $39,800 "saved" for ten years!
On the CO2 "pollution" side of the equation. They currently are responsible for spewing 310 tons of CO2 into the atmosphere per year. Again we are halvsies, so the solar panels will replace 155 tons of CO2 emissions. Did you know that you (or they) could buy offsetting CO2 credits for between $2 and $15 per ton? So for no more than $2,325 per year they can offset the CO2.
We suggest putting the $398,000 in a savings account and using the interest to offset the CO2 and the account will never run out, EVER, in fact it will probably GROW.
Why is almost a half a million dollars being spent on this project? 2 net jobs for the year? Another future property maintenance liability? In the most basic sense there is no justification, financial or environmental (for this site specific case).
We propose that America's efforts are better spent practicing conservation (reduce consumption!), to ramp up research funding, and work diligently to keep the flow of affordable energy moving so that we can climb out of this economic hole stronger than before.
Increasing the cost of energy to make stale technology viable is wasteful, and bad policy, and at this strained economic time, a potential death knell for our high quality of life.
The news release from the US Forest Service is woefully devoid of information (http://www.fs.fed.us/r9/wayne/press_releases/contract_awarded_solarpanels.html), here it is:
"Nelsonville, Ohio (March 13, 2009) – The U.S. Forest Service has awarded a $398,000 contract to the Ohio-based D.J. Group from Beverly, Ohio. The contractor, a Service Disabled Veteran Owned Small Business is being hired to purchase and install more than 250 additional solar panels to the roof top of the Wayne National Forest Headquarters building, bringing the total to over 300 solar panels.The funding for the contract is coming from the American Recovery and Reinvestment Act of 2009. It’s estimated four jobs will be created by the Wayne National Forest six-month project that gives business to Ohio’s growing solar industry. The Wayne began its Solar Energy Program in 2007, by installing a 20-panel solar system. Last year, the Forest added 30 more panels to bring the total to 50. The current system is generating 7% of the facilities energy needs. Once the new expansion is completed later this summer, up to fifty-percent of the Wayne National Forest headquarters building will be powered by the sun."
Past references in the news to this project have included little additional information, until this morning.
The Columbus Dispatch published and article in the Business Section called "Solar Power Bolts Forward" (http://www.dispatch.com/live/content/business/stories/2009/03/31/moresolar.ART_ART_03-31-09_C10_MFDDBNP.html) which included some additional and interesting information.
The US Forest Service is outfitting a building with solar panels for $398,000 that will reduce the annual electric bill by (up to) half. The article states that the past twelve month's electric bill was $31,000. It also states that the project will pay for itself in 10 to 15 years.
That can't possibly be so.
Simply using last year's expense, and the quoted forecast, basic math show us that "payout" is between 25 and 40 years. The only way to make this expense payout somewhere within the reasonably lifespan of the solar panels, is to dramatically increase the cost of electricity, and soon. Here in Ohio, electricity means coal. About 90% of our electricity comes from coal (by the way, Ohio is one of the nations leading consumers of electricity).
Lets look at this. The total annual bill is $31,000. We don't know how much electricity that is, but using the Energy Information Administration (http://www.eia.doe.gov/) data in Ohio electricity costs about ten cents per Kilowatt hour, we can estimate that the US Forest Service Wayne National Forest Headquarters uses about 310,000 Kilowatt hours of electricity per year. For a point of reference, the best solar panel generated electricity runs around fifty cents per Kilowatt hour. Ohio is not Arizona or Hawaii, unfortunately we have clouds from time to time...
It will take about 126 tons of coal (one ton of coal will generate 2,460 Kilowatt hours) to generate the power for the HQ. Now coal costs about $30 per ton, so that is $3,780 worth of raw fuel to provide $31,000 of electricity for the HQ.
The DOE says coal fired power plants release two pounds of CO2 per Kilowatt hour. HQ currently is responsible for 620,000 pounds of CO2 "pollution", 310 tons.
We have two issues here. A financial problem, and an environmental pollution problem.
Financials. The US Forest Service says their $398,000 expenditure will payout in 10-15 years. Let's use their disclosed electric cost for lack of actual data. $31,000, and let's assume they can cut that in half with the solar panels, $15,500 per year. We are not going to considering time/value of money or future price fluctuations for electricity, we simple divide - 398,000/15,500 = ~25 years. We can tweak the financial model, but we doubt we can tweak it to get a 10 year payout. That would require, again ignoring the value of money, annual maintenance and replacement costs, and the balance of the electric bill which (at least half) , their annual electric bill would need to soar from $31,000 per year to nearly $80,000 per year, right away, and for the next ten years (forget about any maintenance service costs) to get an annual electric bill of $39,800 "saved" for ten years!
On the CO2 "pollution" side of the equation. They currently are responsible for spewing 310 tons of CO2 into the atmosphere per year. Again we are halvsies, so the solar panels will replace 155 tons of CO2 emissions. Did you know that you (or they) could buy offsetting CO2 credits for between $2 and $15 per ton? So for no more than $2,325 per year they can offset the CO2.
We suggest putting the $398,000 in a savings account and using the interest to offset the CO2 and the account will never run out, EVER, in fact it will probably GROW.
Why is almost a half a million dollars being spent on this project? 2 net jobs for the year? Another future property maintenance liability? In the most basic sense there is no justification, financial or environmental (for this site specific case).
We propose that America's efforts are better spent practicing conservation (reduce consumption!), to ramp up research funding, and work diligently to keep the flow of affordable energy moving so that we can climb out of this economic hole stronger than before.
Increasing the cost of energy to make stale technology viable is wasteful, and bad policy, and at this strained economic time, a potential death knell for our high quality of life.
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