From Robert Bryce Substack
Robert Bryce
Texas ranchers are fighting “green” hydrogen plans. “This is a ridiculous amount of water.”
The drought has hit Schleicher County hard. Many storage tanks are dry. The only lush vegetation in this part of the Edwards Plateau is the skinny mesquite tree and the ubiquitous cacti. As we turned onto County Road 339, the dust on the unpaved road was so thick that I slowed to make sure there was at least 100 yards between my vehicle and the tailgate of Ray and Sandra Pfeuffer's pickup truck. That was the afternoon of August 15th. There was almost no wind. The sky was dotted with a bare cloud.
The Pfeffers, who raise goats and cattle on a 3,300-acre ranch about a dozen miles southeast of Cristobal, take us to a remote site in a remote county: the Carmelite Monastery of Our Lady of Grace.
Sandra wanted me to meet the nuns at the convent because, like the Pfeuffers and many other nuns in Schleicher County, they were staunchly opposed to a “green” hydrogen project called Tierra Alta, which was being developed by an Irish company. Proposed by ET Fuels for their community. At the convent we were warmly welcomed by Sister Mary Grace and Sister Mary Michael. Both men were quick to explain their objections to the project. Not only does it include dozens of wind turbines visible from the monastery, but it also requires large amounts of water. Sister Mary Grace spoke first. “We are all praying. We are all for justice. We are all about people,” she told me. The project, she went on, would completely change the character of the area.
Sitting in a wheelchair, Sister Mary Michael speaks softly but to the point: “We're in a drought and they want more water,” she said. “This is a ridiculous amount of water.”
“Absurd” is the right word. But the water demands of the proposed “green” hydrogen-to-methanol project are just one in a long line of absurdities fueled by the vast amounts of federal money provided to companies to subsidize miners under the Inflation Reduction Act. (You may recall that this legislation was passed into law by Kamala Harris by one vote.) And those subsidizing miners are eagerly targeting the bottom. However, in order to raise the maximum amount of federal funding under the IRA's “green” hydrogen, they would have to lay out wind turbines and grass on dozens or even hundreds of square miles of ranchland from San Angelo to Fort Stockton. Solar panels.
As I explained on Substack last month, subsidies for “green” hydrogen are 1,900 times greater than subsidies for nuclear energy. In that article, I quoted the late Charlie Munger, who famously said, “Show me the incentives and I’ll show you the results.” I wrote: “According to the Treasury Department and the IRS Regulations released earlier this year allow hydrogen producers to charge $3 per kilogram of hydrogen if they use electricity from low-carbon or no-carbon sources. “As I pointed out, the energy content of hydrogen is approx. is 120 megajoules (MJ) per kilogram. When converted to Btu, the subsidy is approximately $25 per million Btu. As shown above, this means The green hydrogen subsidy is 11 times the current market price of natural gas.
Furthermore, companies producing “green” hydrogen may – repeat, possible – Also able to collect tax credits for the energy it generates from solar and wind power. The result, as shown in the slideshow above, is that for an $800 million project (that's the estimated cost of ET Fuels' Tierra Alta project), the developer could collect more than half that from federal taxpayers. Note that I'm hedging my statement here because the rules for tax credits are vague. That said, it's clear that the 45V tax credit for green hydrogen alone could provide over a third of the project's cost in the first year alone.
Such staggering levels of subsidies explain why ET Fuels, NextEra Energy and Apex Clean Energy are trying to develop large-scale “green” hydrogen projects in the Edwards Plateau. ET Fuels plans to cover 30,000 acres of ranchland in Schleicher County and provide 300 megawatts of wind capacity, 300 megawatts of solar capacity and an unspecified amount of battery storage capacity. The capacity will fuel a fleet of electrolysers to produce enough hydrogen for a 100,000-ton-per-year “green” methanol plant. Meanwhile, NextEra and Apex are planning projects that could dwarf ET Fuels' proposal.
When I asked the Pfeffers why they and other leaders of the Edwards Plateau Alliance worked so hard to stop the hydrogen project, they responded. “Water, water, water,” Ray said. “We wouldn’t have cared if they built wind turbines and solar. They could have done whatever they wanted. But after learning how much water these companies wanted, Sander La said it was clear the plans “made no sense.”
The ET Fuels project alone requires approximately 485 acre feet of water per year, or approximately 433,000 gallons per day. To put it in perspective, that's enough water to fill more than four Olympic-sized swimming pools each week. “Our aquifers cannot sustain” that much demand, Ray explained. When local ranchers irrigate using center-pivot sprinkler systems, they only run their irrigation pumps for one or two days. Even that demand can cause local wells to drop 15 or 20 feet until pumping stops. The hydrogen plan would place continued demands on the aquifer, which would be devastating to the region’s ranchers. But that hasn’t stopped subsidizing miners.
Apex Clean Energy, a subsidiary of Ares Management Corporation, a publicly traded Los Angeles-based company with a market capitalization of $45 billion, also has big plans. In 2022, the company announced it was building a “green fuel center” at the Port of Corpus Christi that would draw fuel from large wind and solar power facilities in the area near Fort Stockton. The project, called Big Trail, reportedly aims to lease 280,000 acres of land and install about 3,200 megawatts of alternative energy capacity. A map shown to me by local residents shows the company plans to develop solar and wind energy in more than 700 square miles of Pecos County. Apex, which often uses for-profit front groups to attack its opponents, has been very active in building alternative energy projects across the country. It declined to answer a series of questions I submitted.
Florida-based NextEra Energy, the world's largest producer of alternative energy, is planning to lease large tracts of land in the region. The company, which has a market capitalization of $165 billion, is promoting a project called Achilles. According to the Pfeuffers, two land managers working for NextEra told them the company aims to lease 3 million acres (!) of land in West Texas for alternative energy projects. Some of the land will be used to produce hydrogen, and the rest will be used to generate electricity for the Texas grid. The company did not respond to my email seeking details about its project.
While these companies lease land in the region for hydrogen projects, it's clear they face many obstacles. Local opposition, especially in Schleicher County, was fierce. (For the record, I don’t want to tangle with the nuns or Sandra Pfeffer.) Local aquifers may not be able to produce the large amounts of water needed for the project. The Pfeuffers, who attended a local water board meeting last Thursday, said the test wells recently drilled by ET Fuels were not very productive.
Market risk is greater. Last month, Bloomberg published an article titled “Why Almost No One Is Buying Green Hydrogen.” It explained that while some 1,600 projects are in the pipeline, “the vast majority of them do not have a single customer actively purchasing fuel. Of the few countries that have some kind of fuel purchase agreement, most have vague, non-binding arrangements, which may be quietly abandoned if potential buyers pull out. As a result, many projects may never be built. Additionally, these projects may be located further away from potential markets than Apex may wish to deliver its fuel to. But Fort Stockton is 456 miles from the beaches of Corpus Christi.
Finally, as I explained in May, hydrogen production is clearly “the dirty work of thermodynamics.” I wrote:
From an energy perspective, hydrogen is extremely expensive to produce. It takes approximately three units of electrical energy to produce two units of hydrogen energy. In other words, a hydrogen economy requires massive amounts of electricity—a high-quality form of energy—to make tiny molecules that are difficult to process, difficult to store, and expensive to use.
The thermodynamic harshness of making hydrogen, coupled with the need to mix it with carbon dioxide (produced elsewhere) to make methanol, means companies will encounter friction throughout the production process. As I explained to approximately 200 local ranchers and citizens during a free lecture on August 15 at the Schleicher County Civic Center in El Dorado, the ultimate energy yield of ET Fuels’ proposed Tierra Alta project (annual 100,000 tons of methanol) will be relatively small, only about 985 barrels of oil equivalent per day.
Taken as a whole, and particularly in Texas—a state that produces more oil and natural gas than all but two or three countries—that's a minuscule amount of energy. As shown in the chart above, the latest data from the U.S. Energy Information Administration shows that new wells in the Permian Basin, about 150 kilometers northwest of El Dorado, are currently producing about 1,300 barrels per day. Remember, this output does not include the energy in the associated gas flowing from the well. Keep in mind that the ET Fuel Project would require covering approximately 47 square miles of pasture with alternative energy materials, and all of these alternative energy materials would require the use of countless tons of steel, copper, concrete, wire, and countless tons of gravel. the way. Keep in mind that in the Permian, a dozen or more wells are typically drilled on more than an acre of land. So while the oil and gas industry's footprint is shrinking dramatically, the alternative energy industry hopes to cover hundreds or even thousands of square miles of rural America with wind turbines and solar panels in its never-ending quest to gain access to Bigger and bigger government handouts.
The point here is obvious: everything about “green” hydrogen being pushed is ridiculous. But billions in federal tax dollars are at risk. That much cash can buy you a ridiculous amount of stuff.
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