Richard Ha writes:
The Hamakua Coast is becoming the Wild Wild West.
A stop sign on Highway 19 is shot full of holes.
Someone cut through our iron gate with a torch just recently.
They left a flashlight (by accident?)
We're installing camouflaged infrared monitors at different places on the farm.
Our neighbors at the quarry had fuel stolen and their surveillance camera stolen.
Many farmers are reporting product and equipment stolen.
It's not easy being a farmer.
Richard Ha writes:
This is a letter that Del Monte recently sent to its customers. It's interesting how world conditions can affect our local marketing.
Sometimes they get blown down. Sometimes we get blown down. We just need to keep on going.
Richard Ha writes:
Because Hawai‘i relies so much on oil for its energy, the state will be a major beneficiary of the shale oil phenomenon. Conventional oil development takes a long time – five to ten years – whereas activating a shale oil well takes less than a year.
The result is that whenever the Saudis try to raise the price of oil, our U.S. shale oil drillers will react wherever they can make money.
From The Barrel Blog, the essential perspective on global energy:
Energy Economist: Shale oil’s response to prices may call for industry re-evaluation
Shale oil’s investment cycle is shorter and its decline profile sharper than conventional oil production. Current indicators suggest legacy declines from shale will catch up fast with the industry. This points to a sharp deceleration in US shale oil output. But, while conventional oil takes time to slow down, it also takes time to speed up. It will be shale that is best placed to benefit from any oil price recovery, as Ross McCracken, managing editor of Platts Energy Economists, explains in this month’s selection from the publication. Read the rest
At $70 a barrel, a lot of people make money and at $40, a lot of people lose money. This safety valve is very good for us in Hawai‘i.
This will give us time to make rational energy decisions. Oil and gas are still finite resources. Because two-thirds of our economy is based on consumer spending, we need to find solutions that take care of the rubbah slippah folks. Low prices for them strengthens the economy for all.
Each island has its own basket of energy resources. The Big Island, because of its abundant geothermal resource, has the biggest basket of lowest cost alternatives. O‘ahu has the smallest basket of resources and so it needs help from the other islands—hence, the talk about cabling resources.
The elephant in the room is cabling geothermal resources from the Big Island. That will never happen, though, unless the Big Island residents themselves receive a demonstrated benefit from geothermal.
So now we need to work on getting Big Islanders definite low cost and other benefits from geothermal—like making hydrogen for transportation and even nitrogen fertilizer.
Then we can have a group of Big Islanders, representing the people, sit across the table and negotiate the conditions under which the people would approve exporting energy off island.
I would think education for our keiki might be a good starting point.
Richard Ha writes:
It’s time for another photo contest.
We want to see your favorite shot of where all the rubbah slippahs gather at your place.
Maybe it’s that spot just outside the back door. You know where it is. The place where everybody leaves their slippahs when they come over.
So take some photos and give us your best shot. Send your favorites to leslie@leslielang.com by Friday, February 6, 2015.
We’ll announce a winner shortly after that.
The prize is the satisfaction of knowing you won.
We can’t wait to see what you’ve got!
TO RECAP:
For the contest, we are looking for a photo of where your slippahs all congregate. Not just a pair of slippahs. Take a photo of that big mess of slippahs right outside the door, when everyone is home or when everybody comes over.
Richard Ha writes:
The response we've been getting from the community since we stopped producing tomatoes has been absolutely overwhelming. We did not expect it.
We knew people liked our Hamakua Springs tomatoes, but none of us anticipated the extent or amount of comments we've been getting. It's really been unbelievable.
I recently got a note about our tomatoes from a couple in Kailua, on O‘ahu, and I wanted to share it with you. I'm posting it here with their permission:
Dear Richard and June Ha,
I read with great dismay that you will no longer be growing tomatoes due to the age of your hydroponic equipment. I don’t know how others feel about this, but my husband and I adored your tomatoes and will be very sad to be without them in the future.
I have a suggestion that you may not have considered. I know that I would be more than willing to donate money towards a new system. I imagine that there are others who feel the same way we do and would do likewise.
Is it worth your time to make a plea to the public for funds, stating the goal and having a chart indicating how close you are to that goal? Would the newspaper support your goal and put the information in a box on the front page, keeping track of the progress as well as keeping the public aware of your need? If there was a bank account or some such place to send funds, you might just receive enough to update your equipment and be back in the tomato business.
It is so sad to see HI become more dependent on imported food rather than less, as should be the goal. Anyhow, this has been on my mind since the article was published. I contacted the reporter who said he would pass along the information, but I just had to see if you were even considering the idea.
Thank you for listening.
That was very nice of them. I had to tell them that we've passed the point of no return at this point. The problem is that costs have gone up, but the energy that drives tomato production – the sun – has not gone up.
Richard Ha writes:
Mina Morita is resigning from her position on the Hawaii Public Utilities Commission, Governor David Ige’s office yesterday.
After noting “many in the energy industry had applauded [then-Governor Neil] Abercrombie’s appointment of Morita, who is known as a strong advocate and expert on clean energy,” Pacific Business News wrote:
But some questioned her leadership in a PUC decision denying the Aina Koa Pono project’s 20-year Big Island biofuel supply contract with Hawaii Electric Light Co.
I can’t let that slide.
We in the Big Island Community Coalition applaud her leadership. We do not question her leadership in the slightest, and we regret that she is resigning.
It is because of Mina Morita’s leadership that the Aina Koa Pono (AKP) project didn’t go through, and that is a good thing.
Here’s what I wrote about this back in 2012. I saw the potential for disaster back then, and so did Mina Morita. It’s because of her Aina Koa Pono didn’t succeed and this didn’t happen. That’s true leadership. She is a true consumer advocate.
You know the Wayne Gretzky quote about skating to where the puck is going to be, not where it is? It refers, of course, to planning ahead.
My Pop’s story about climbing the bamboo pole taught me a lesson about planning ahead, too. He told me about fishing for aholehole with some friends at Maku‘u. They stuck a bamboo pole into the rock and hung a kerosene pole on it when, suddenly, they saw white water coming straight for them. It was going to cover the rocky point where they were fishing.
“What you going do?” my Pop asked me when he told me this story. I had no idea. He told me he climbed up the bamboo pole, hand over hand, lifted up his legs, and let the water go under him. Then he dropped back down and used the pole to fish his friends out of the water.
Before the white water arrived, he already knew what he would do. He had a plan.
NextEra is proposing to purchase the Hawaii Electric Company (HECO) grid, and this is a good time to compare alternatives. HECO has been having a tough time making necessary changes. NextEra looks like they can make the changes, but they’re not from here.
We have seen how the Kaua‘i Island Utility Cooperative (KIUC) has done over the last 12 years. Each meter has one vote. KIUC has nearly $100 million in retained earnings that would have gone off island, but has stayed in the state instead. And they are flexible and can make changes in a timely manner.
The Big Island Energy Utility Cooperative steering committee we’ve created – to look into forming a Big Island Energy Co-op here on the Big Island – is our way of skating to where the puck is going to be, or climbing the bamboo pole. We are planning ahead.
We are doing all the legwork and research and information gathering now so that if there is an opportunity, we will be in position. If we don’t do this, we won’t be in the game.
The goals and benefits of a Big Island Energy Cooperative are:
If not here, where? If not now, when? If not all of us, who?
Richard Ha writes:
This is a really good graph that shows three projections for future gas production through the year 2040. Click on this postcarbon.org graph and you'll see the black line shows a University of Texas study, the red line shows David Hughes's projection and the blue line represents the government's EIA projection.
The government projection shows nothing to worry about. Plenty, plenty, plenty!
But the others show an entirely different story. They suggest we better start making some other plans.
Conventional oil, which is our regular oil supply like from Russia and OPEC, hit its max in 2005. It's shale gas and oil that has increased our oil and natural gas supply in the last few years. But it appears that shale gas and oil will start to decline soon and if so, we need to start down the road to adapting to what will soon be again-rising oil prices.
On the Big Island, geothermal can replace oil and LNG. Not many other places are as fortunate. We just need to be smart and figure out what works.
Geothermal works. We don't have to get there tomorrow, and we don't have to get there in a straight line. We just have to get there.
We have a way to do this on the Big Island: Geothermal. It's a gift.
This podcast with David Hughes, author of the recent report Drilling Deeper for the Post Carbon Institute, talks more about this.
It's all common sense. It’s about data and science—water does not flow uphill, no matter how much we wish it would. Nothing about this is beyond the average person. I find that rubbah slippah folks understand all this in a few minutes.
Richard Ha writes:
We are getting ready to make huge liquified natural gas (LNG) decisions, and LNG is a big risk. We need to understand the risk and who’s going to be left paying the price.
The first time I heard about shale oil and gas was at an Association for the Study of Peak Oil (ASPO) conference. I attended five of those conferences, the only person from Hawai‘i to do so. Hawai‘i County paid for the trip to the 2010 ASPO conference, held in Washington D.C., and is still benefitting from that small investment.
That discussion about shale oil and gas though was at the 2009 ASPO conference, in Denver, and it turned into a sharp discussion between the geologist Art Berman and a drilling company executive.
Art said he had studied data from 4,000 wells in the Barnett Shale and found that the average well gave off 72 percent of its production in the first year.
The executive countered that his figures showed a hyperbolic curve indicating that production lasts for 22 years.
Somebody was wrong. Later I learned that hyperbolic curves only mean that the following year is less than the one previous.
I didn’t know the definition then, but common sense told me that at the end of 22 years, maybe just a gallon might be coming out per hour. I felt like the executive was just trying to sell stock.
Later, a study of 19,000 wells showed that the average well gave more than ninety percent of its production in its first five years. This was not rocket science – even a banana farmer could tell that you would need to replace one-fifth of the wells each year just to stay even. More if production is higher in the first few years.
As of 2010, it was common knowledge that the average shale oil and gas well depleted in a short time, and it was a subject of intense discussion among those of us who attended the ASPO conferences.
In the meantime, some of the folks out there trying to sell stocks were using the terms “resource” and “reserves” interchangeably in describing what was available. The phrase “Saudi America” started to be thrown around.
The U.S. Energy Information Administration (EIA) finally estimated that the U.S. had an economically accessible shale oil supply of about 100 more years.
But David Hughes, a Canadian geologist, challenged the availability of the Monterey Shale oil due to its geological characteristics. Instead of being flat, the resource rock was wavy and squished. It was hard to access via horizontal drilling.
And then this March, the EIA quietly changed its estimate. In a low-key announcement, it readjusted its estimate of Monterey Shale oil availability – which was two-thirds of our national recoverable supply – downward by an amazing 96 percent.
I saw the announcement and realized its significance immediately. Readjusting the estimate of the US supply of oil downward by two-thirds was a huge, huge deal. But the news kind of just slipped by.
Shale gas has the same characteristics of shale oil – it depletes rapidly. If you ask me who I believe about shale oil and gas? Based on his track record, I believe the data and conclusions of David Hughes.
He based his studies on the same historical data and information the U.S. EIA used, but analyzed it in a more meticulous and targeted way. His data shows natural gas declining much, much faster than does the EIA. A recent University of Texas study agrees more with David Hughes than with the EIA.
This Peak Prosperity podcast features an interview with David Hughes talking about shale production and how he did his analysis. It’s a good interview (47:24). Alternately, you can read the transcript here.
On p. 300 of his report, in figure 3-116, Hughes shows an interesting graph of the EIA’s forecast for shale gas projections and how, in the long term, they are greatly overestimated.
At the end of Hughes’ study on natural gas, he cautions (click to enlarge) :
Here on the Big Island, based on the precautionary principle, I would rely on geothermal rather than liquid natural gas for our electricity generation. A faster decline probably means a faster rise in natural gas price. If we rely on LNG, the rate payer will assume that risk.
And in Hawai‘i we do not have methane underground. So the bad effects of fracking does not apply to us at all. We have drilled 85,000 wells by now. It’s a mature industry that deals with H2S routinely.
In the future, geothermal could also help us solve our transportation problem by providing hydrogen for fuel-celled vehicles. The cost of hydrogen comes from either natural gas or from passing electricity through water. Eventually, the cost of making hydrogen from natural gas will pass the cost of making hydrogen from electricity from geothermal. Then we will have a permanent advantage over the rest of the world. That’s what we want!
Geothermal is climate change-friendly and as infinite as we can get—we will sit for 500,000 to a million years over the “hot spot.” And we are one of the few places in the world with these circumstances and this opportunity.
We have truly come to a crossroads in our history. We must put our personal agendas behind us and do the right thing for ourselves and future generations.
Richard Ha writes:
We had an interesting presentation Friday from two executives from Kaua‘i’s electrical utility, the Kaua‘i Island Utility Cooperative (KIUC). David Bissell is CEO, and Dennis Esaki was a founding member who only recently left the KIUC board.
It was amazing to hear what KIUC went through to purchase Kaua‘i Electric Company and form the utility cooperative. The Kaua‘i County Council and mayor were originally against the purchase, and the PUC turned down its first purchase bid as not being in the best interest of the users. But the founding group continued to rework its plan and was ultimately successful the second time it presented a bid.
In total, it was about a two-year process and the group purchased Kaua‘i Electric Company in 2002 for $215 million. And, Esaki said, referring to the county administrators, “they’re all on board now.”
This month, Kaua‘i’s electricity rates are lower than any of the islands but O‘ahu’s (mostly because of the oil price decline). Most months, its rates are a little lower than the Big Island's and a little higher than Maui.
Since 2003, ratepayers have received $30 million in refunds and patronage capital — the amount of money left after all the bills are paid, and the co-op has met its lenders’ requirements. This is money that circulates back into the community.
Members have $80 million in equity, which is what they own of the co-op. When the utility was purchased 12 years ago, it was 100 percent debt-financed, so the equity at that time was zero.
KIUC has gone from about five percent renewable energy in 2009 to 18 percent today. It will be at about 40 percent by the end of next year.
From the KIUC 2013 Annual Report (click to enlarge):
The organization of the co-op also reflects what the people of Kaua‘i want, because its board is selected by the people. Esaki and Bissel said that at first there was almost total, and repeated, board turnover as ratepayers regularly voted out board members who weren’t doing what they wanted. Eventually, they said, the board has stabilized.
Projects are financed through national co-op financing, which results in much lower financing costs.
You can watch a video of the meeting below. Thanks to Chester Lowrey for videotaping!
There was a lot of community interest in the KIUC presentation, with a good turnout from various community groups. The presentation was sponsored by three organizations:
The Big Island Community Coalition, the steering committee of which is made up of David DeLuz, Jr., Rockne Freitas, Michelle Galimba, myself, Wallace Ishibashi, Kuulei Kealoha Cooper, Ka‘iu Kimura, D. Noelani Kalipi, Robert Lindsey, H. M. Monty Richards, Marcia Sakai, Ku‘u Lehua Veincent, and William Walter.
The board of the Hilo-Hamakua Community Development Corporation, which is President Donna Johnson, Judi Steinman, Glenn Carvalho, Eric Weinert, Jason Moniz, Gerald DeMello, Colleen Aina, and Richard Ha.
And Hawai‘i Farmers and Ranchers United, which represents more than 90 percent of the farming goods produced on the Big Island.
Ed Olson donated the use of his Wainaku Executive Center for the meeting.
We have formed a steering committee to discuss this further. The committee consists of Gerald DeMello, Michelle Galimba, Wally Ishibashi, Donna Johnson, Eric Weinert, Vincent Paul Pontieux, Marco Mangelsdorf, Russell Ruderman, and myself. I’ll keep you posted on further developments.
Edited 12/21/14 at 10:45 pm; 1/5/15; 1/30/15.
