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Oil and Wind Energy: North Dakota Update

Oil and Wind Energy: North Dakota Update. Dr. Cole Gustafson Feb. 9 , 2011. North Dakota Production. July 2010 – 321,042 BOPD July 2010 – 320,371 MCF/D 5,051 Producing Wells. Courtesy: Neset Consulting. Williston Basin Deposition - ND. Courtesy: Neset Consulting. Relative Thickness.

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Oil and Wind Energy: North Dakota Update

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  1. Oil and Wind Energy: North Dakota Update Dr. Cole Gustafson Feb. 9, 2011

  2. North Dakota Production • July 2010 – 321,042 BOPD • July 2010 – 320,371 MCF/D • 5,051 Producing Wells Courtesy: Neset Consulting

  3. Williston Basin Deposition - ND Courtesy: Neset Consulting

  4. Relative Thickness Courtesy: Neset Consulting

  5. ND Bakken and Three Forks Courtesy: Neset Consulting

  6. Mud Motors Drillpipe Courtesy: Neset Consulting Non-magnetic Drill Collar Bent Sub Mud Motor Rotating Sub

  7. Rebuild Gravel Road $300,000/mile Road Repair Paving $1,000,000 / mile Graveling $3600 /mile Courtesy: Neset Consulting

  8. Farm Windmill--Aermotor

  9. 262 ft 242 ft Overall Diameter Incl. Hub: 252 ft

  10. Wind Generation in North Dakota • Operational: • Turbines 770 • Rated Capacity 1223 Mw • Under Construction: • Rated Capacity 76 Mw • Planned: • Rated Capacity 6684 Mw

  11. Power Generation Capacity in North Dakota MegawattsPercent • Wind 1223 21 • Hydro-Electric 515 9 • Coal-Fired 4071 70 Total 5809 100

  12. Some “Back-of-the-Envelope” Numbers… Rough Cost at 39% Capacity Factor: ¢/kWh Capital Cost ($2.2Million/MW, 6%, 23 yrs): 5.2 ¢/kWh Land Lease: 0.1 ¢/kWh O&M / Insurance: 0.9 ¢/kWh Property Taxes: 0.2 ¢/kWh Total Estimated Cost: 6.4 ¢/kWh Less Offsets… Production Tax Creditor 30% Treasury Grant Accelerated Depreciation Renewable Energy Credit Sales Net Cost After Tax -- Less than 4¢/kWh

  13. Local Economic Impacts - Langdon • 106 1.5mw towers • $500 million investment, $1 million lease payments, $456,000 local tax payments • Met tower (2004), FPL (2006)

  14. Wind - Local Government Issues • Large Wind – Infrastructure, labor, housing community services • Small Wind – Zoning, siting, setback, inspections, complaints, decommissioning • Taxation/investment • Purchasing – How much? • Generation – Where? Size? Own/Contr.?

  15. www.ndsu.edu/energy • Common Landowners Questions on Wind Lease Contracts • Basics of Farm/Residential Small Wind Turbines • Wind Energy Development: Key Financial Considerations • Managing Your Expectations - Sizing a Small Wind Turbine To Your Land • Understanding Wind Energy Leases • Public Involvement and Land Issues Relating to Wind Projects

  16. Questions? Cole.gustafson@ndsu.edu 701-231-7096

  17. Investment & Risk Comparison Project Developer • Transmission Risk • 2-3 years wind studies • Engineering $$$ • Permitting Risk • Operating Risk • Market Risk • Tax Risk Landowner ¼ to ½ acre ofland per turbine Revenue: $4-$6000/turbine/yr Cost: $3-5 Million/turbine

  18. Gas is a likely partner for wind energy Wind will displace the system’s highest cost fuel Fuel Cost of Electricity…

  19. 6 - 8 MPH Cut-in 1475 kW @ 26 MPH 250 kW @ 13 MPH Power Curve:Generation vs Wind Speed Reaches Rated Capacity at 26 - 31 MPH 56 - 62 MPH Cutout

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