From Robert Bryce Substack
Robert Bryce
Texas ranchers are fighting “green” hydrogen projects. “That’s a ridiculous amount of water.”
The drought has hit Schleicher County hard. Many stock tanks are dry. The only plants that seem to thrive in this part of the Edwards Plateau are the gnarled mesquite trees and the remaining prickly pear cactus. When we turned onto County Road 339, the cloud of dust from the unpaved road was so thick that I slowed down to make sure there was at least 100 meters between the vehicle and the tailgate of Ray and Sandra Pfeuffer’s pickup. It was the afternoon of August 15. The dashboard in our 4Runner showed the temperature outside was 103 F. The sun was not giving up. There was almost no wind. A bare handful of clouds dotted the sky.
The Pfeuffers, who raise sheep and cattle on their 3,300-acre farm about twelve miles southeast of Christoval, lead us to a remote spot 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 others in Schleicher County, they are dead set against the “green” hydrogen project called Tierra Alta, which has been proposed for their neighborhood by Irishman ET Fuels. a company backed by private equity firms based in Zurich and Paris. At the convent, we were greeted by Sister Mary Grace and Sister Mary Michael. Both were quick to explain why they opposed the project. Not only does it include dozens of wind turbines visible from the monastery, but it also requires a lot of water. Sister Mary Grace spoke first. He said, “We are all about prayer. We are all about justice. And we are all about people. He went on to say that the project will change the character of the area.
Sister Mary Michael, who is dependent on a wheelchair, spoke slowly but immediately cut to the chase: “We’re in a drought, and they want to take more water,” she said. “That’s a ridiculous amount of water.”
“Ridiculous” is the right word. But the need for water from the proposed “green” hydrogen-to-methanol project is just one absurdity in a corral full of absurdities propelled by the outrageous amount of federal money available to miners subsidizing companies under the Inflation Reduction Act. (That legislation, you may recall, became law by one vote, thrown out by Kamala Harris.) And those subsidized miners are eagerly aiming for food at the trough. However, to collect the maximum amount of federal money in the IRA for “green” hydrogen, they have to pave dozens, or even hundreds, of square miles of ranchland from San Angelo to Fort Stockton with wind turbines and solar panels.
As I mentioned in Substack last month, the subsidy for “green” hydrogen is 1,900 times greater than that given to nuclear. In that piece, I quoted the late Charlie Munger, who famously said, “Show me the incentives, and I’ll show you the results.” I wrote, “Under rules issued earlier this year by the Treasury Department and Internal Revenue Service, hydrogen producers can collect $3 per kilogram of hydrogen in production tax credits if they use electricity from low- or no-carbon sources.” As I said, the energy content of hydrogen is about 120 megajoules (MJ) per kilogram. If converted to Btu, it could be a subsidy of about $25 per million Btu. As seen above, it means The subsidy for green hydrogen is 11 times the current market price for natural gas.
In addition, companies that produce “green” hydrogen can – repeat, can – can also collect tax credits for energy generated from the sun and wind. The result, as seen in the slide above, is that for a project worth $800 million, which is the estimated cost of the Tierra Alta ET Fuels project, the developer can collect more than half of that amount from federal taxpayers. Note that I am hedging the statement here because the rules on tax credits are vague. That said, it is clear that the 45V tax credit alone for green hydrogen can provide more than a third of the project’s cost in the first year alone.
The gobsmacking level of subsidies explains why ET Fuels, NextEra Energy, and Apex Clean Energy, are trying to develop massive “green” hydrogen projects in the Edwards Plateau. ET Fuels plans to cover 30,000 acres of ranchland in Schleicher County with 300 megawatts of wind energy capacity, 300 megawatts of solar capacity, and unspecified battery storage. That capacity will produce a bank of electrolysers to produce enough hydrogen for a 100,000 ton annual “green” methanol plant. Meanwhile, NextEra and Apex are planning projects that could dwarf what ET Fuels is proposing.
When I asked Pfeuffers why he and other leaders of The Edwards Plateau Alliance fought so hard to stop the hydrogen project, he answered. “water, water, water.” Ray said, “We don’t care if they build wind and solar turbines. They can do whatever they want. But after learning how much water the company wants, Sandra says the project is “absurd.”
The ET Fuels project only requires about 485 acre feet of water per year or about 433,000 gallons per day. For perspective, that volume of water is enough to fill more than four Olympic-sized swimming pools every week. “Our aquifer can’t sustain itself” is what Ray wanted to explain. When a local rancher irrigates with a center pivot sprinkler system, he only runs the irrigation pump for a day or two. Even that demand lowered local water wells by 15 or 20 feet until the pumps stopped. The hydrogen project will continuously demand the aquifer, which will harm the farmers in the area. But this did not stop the subsidized miners.
Apex Clean Energy, a subsidiary of Ares Management Corporation, a Los Angeles-based publicly traded company with a market capitalization of $45 billion, also has big plans. In 2022, he announced plans to build a “green fuel hub” at the Port of Corpus Christi that would be fueled by a large wind and solar complex in the area near Fort Stockton. The project, known as Big Trail reportedly aims to lease 280,000 hectares and install around 3,200 megawatts of alt-energy capacity. A map shared by local residents shows that the company is targeting more than 700 square miles of land in Pecos County for solar and wind development. Apex, which often uses for-profit front groups to attack its opponents, has been very aggressive in its efforts to build alt-energy projects across the country. It refused to answer the list of questions I sent.
Florida-based NextEra Energy, the world’s largest alt-energy producer, plans to lease a large amount of land in the region. The company, which has a market capitalization of $165 billion, is pushing a project called Achilles. According to Pfeuffers, two landmen working for NextEra told them that the company wants to lease three million hectares (!) of land in western Texas for alt-energy projects. Part of the land will be used for hydrogen production and the rest will be used to generate electricity for the Texas grid. The company did not respond to my email seeking details about the project.
When these companies lease land in the area for hydrogen projects, it is also clear that they face many obstacles. Local opposition, especially in Schleicher County, is fierce. (For the record, I don’t want to tangle with the nuns or Sandra Pfeuffer.) Local aquifers may not be able to produce as much water as the project needs. According to Pfeuffers, who attended the local water board meeting last Thursday, the test well recently drilled by ET Fuels was not very productive.
There are many market risks. Last month, Bloomberg ran an article titled, “Why hardly anyone is buying green hydrogen.” It is explained that there are 1,600 projects on the drawing board, “most of these projects do not have a single customer who buys fuel. Among the handful with some type of fuel purchase agreement, most have a vague, nonbinding arrangement that can be quietly discarded if the potential buyer withdraws. As a result, many projects will not be able to be built. Also, the project is far from the potential market. But Fort Stockton is 456 miles from the coast in Corpus Christi.
Finally, it is clear that hydrogen production is, as I said in May, “a thermodynamic obscenity.” I wrote:
Hydrogen is very expensive, in terms of energy, to produce. It takes about three units of energy, in the form of electricity, to produce two units of hydrogen energy. In other words, the hydrogen economy requires scads of electricity (a high-quality form of energy) to make small molecules that are difficult to handle, difficult to store, and expensive to use.
The thermodynamic difficulty of making hydrogen, combined with the need to mix it with carbon dioxide (produced from elsewhere) to produce methanol, means that companies will encounter friction during the production process. As I explained to 200 ranchers and local residents in a free lecture I gave in Eldorado on August 15 at the Schleicher County Civic Center, the final energy output of the Tierra Alta project proposed by ET Fuels (100,000 tons of methanol per year) will be. relatively small, only about 985 barrels of oil equivalent per day.
In the big picture, especially in Texas – which produces more oil and gas than all but two or three states – the amount of energy is small. As seen above, the latest data from the Energy Information Administration shows that new oil wells in the Permian Basin, located about 150 miles northwest of Eldorado, are currently producing about 1,300 barrels per day. And remember, the output does not include the energy in the associated gas that comes out of the well. And remember, the ET Fuels project requires 47 square miles of farmland with alt-energy materials, and all of that alt-energy stuff requires countless uses of steel, copper, concrete, wire, and gravel. for untold miles of new roads. And remember, in the Permian, a dozen or more wells are often drilled on a single multi-hectare pad. Thus, as the oil and gas industry’s footprint shrinks drastically, the alt-energy sector hopes to cover hundreds, or even thousands, of square miles of rural America with wind turbines and solar panels in a never-ending quest. for larger government handouts.
The punchline here is obvious: everything about the “green” hydrogen push is absurd. But billions of federal tax dollars are at stake. That much cash can buy a pile of ridiculousness.
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