Natural Gas Irrigation Situation Analysis

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Natural Gas Irrigation Situation Analysis

• Presented by
• Thomas Marek, P.E.
• Senior Research Engineer and
• Superintendent, North Plains Research Field
• Texas AM University System
• Texas Agricultural Experiment Station

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Natural Gas Irrigation Situation Analysis

• prepared by
• Steve Amosson, Professor Regents Fellow Thomas
  Marek, P.E., Sr. Res. Engineer Dustin Gaskins,
  Risk Mgmt. SpecialistDeDe Jones, Risk Mgmt.
  Specialist Bridget Guerrero, Extension Assistant
  Lal Almas, Asst. Professor - Economics
• Texas Cooperative Extension , Amarillo, TX
• Texas Agricultural Experiment Station, Amarillo,
  TX
• West Texas AM University , Canyon, TX
• Texas AM University System

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Natural Gas Price History
Natural Gas Futures Price (Nearby Monthly,
04/1990 10/2005)
Source New York Mercantile Exchange
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Study Objectives

• Phase I Characterize the Natural Gas Driven
  Irrigation Market
• Phase II Evaluate Wind Energy as an Alternative
  to Natural Gas Driven Irrigation

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Phase I Characterize Natural Gas Irrigation
Market

• Quantify the following
• Study Area
• Number of Wells
• Size of Wells
• Annual Fuel Use
• Months of Operation
• Estimated Cost by State

Photo by Suncor Energy Inc
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Phase I Characterize Natural Gas Irrigation
Market

• Study Area

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Study Area

• gt 500,000 Irrigated Acres
• gt 250,000 Acres Irrigated by Wells
• gt 50,000 Acres Powered by NG
• gt 100,000 Acres Powered by NG
• 1,000,000 gt Acres Powered by NG

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States With More Than 500,000 Irrigated Acres
1,806,782
2,131,955
1,731,660
3,126,857
1,415,037
7,516,171
639,310
1,082,213
2,562,329
2,543,950
1,020,728
8,471,936
3,944,867
508,842
1,169,793
836,587
769,787
710,893
838,717
1,497,653
4,947,745
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States With More Than 250,000 Acres Irrigated by
Wells
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States With More Than 50,000 Acres Irrigated By
Natural Gas Powered Wells
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States With More Than 100,000 Acres Irrigated by
Natural Gas Powered Wells
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States With More Than 1,000,000 Acres Irrigated
by Natural Gas Powered Wells
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7 State Study Area
1,207,644
67,837
1,231,518
194,361
82,028
51,561
1,750,619
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Phase I Characterize Natural Gas Irrigation
Market

• Study Area
• Number of Wells

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Number of Irrigation Wells Powered With Natural
Gas
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Irrigation Pumps Powered By Natural Gas
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Phase I Characterize Natural Gas Irrigation
Market

• Study Area
• Number of Wells
• Size of Wells

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Number of Irrigation Wells Powered With Natural
Gas
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Horse Power Requirements by State Well Depth
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Phase I Characterize Natural Gas Irrigation
Market

• Study Area
• Number of Wells
• Size of Wells
• Annual Fuel Use

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Mcf Used per Hour by Well Depth
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Total Natural Gas Usage(Study Area)

• ?SA61,360,026 Mcf / Year

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Annual Natural Gas Use for Irrigation (Mcf) By
State
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Phase I Characterize Natural Gas Irrigation
Market

• Study Area
• Number of Wells
• Size of Wells
• Annual Fuel Use
• Months of Operation

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Primary Irrigated Crops and Season by State
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Phase I Characterize Natural Gas Irrigation
Market

• Study Area
• Number of Wells
• Size of Wells
• Annual Fuel Use
• Months of Operation
• Estimated Cost by State

Photo by Suncor Energy Inc
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Estimated Natural Gas Use for Irrigation By Month
for Arkansas
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Estimated Natural Gas Use for Irrigation By Month
for Kansas
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Estimated Natural Gas Use for Irrigation By Month
for Nebraska
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Estimated Natural Gas Use for Irrigation By Month
for Oklahoma
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Estimated Natural Gas Use for Irrigation By Month
for Texas
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Investment Costs and LMR of Engines by Pumping
Lifts
LMRLube, Maintenance, and Repair LMRRIncludes
Allocated Replacement Cost
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Engine Fixed Costs by Pumping Lift for Furrow and
Sprinkler Irrigation System
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Average Natural Gas Basis Summary (per mcf)

• Texas 0.48
• Kansas 0.50
• New Mexico 0.64
• Nebraska 0.38
• Colorado 0.71
• Arkansas 0.44
• Oklahoma 0.46

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Natural Gas Price History
Natural Gas Futures Price (Nearby Monthly,
04/1990 10/2005)
Source New York Mercantile Exchange
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Total NG Related Irrigation Costs by Crop for
Texas (/acre)
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Irrigation Costs for Corn in Texas for Various
Lifts
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Irrigation Exp as of Variable Costs on Corn in
Texas Under Various NG Prices
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Summary of the Natural Gas Market

• 7 State Study Area (AR,CO,KS,NE,NM,OK,TX)
• ?SA61,360,026 Mcf / Year
• Largest NG Users are TX, KS, NE
• NG Costs Vary Greatly by State, Crop, Well Depth

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So..

• Where Does Wind Energy Fit Into the Irrigation
  Market?

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Breakeven Over Variable ExpenseNG Level for Corn
in Texas
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Breakeven Over Total Expense NG Level for Corn
in Texas
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Expectations for Grain Sorghum Cotton Compared
to Corn
Cotton
Grain Sorghum
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Breakevens Over Any ExpenseNG Level in any
State!!!
legal
illegal
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Where Will We Go From Here?

• Phase II
• Wind Maps
• Monthly wind patterns
• Detailed NG sensitive irrigation markets
• In Windy areas
• Electricity rate structures
• Net metering rules
• Economic Assessment of Wind and Wind/NG Hybrid
  Systems

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Questions ?

• These should be directed to the economistcall
  BR549!
• Thanks, folks.