 Hi everyone, another Wednesday. I can't believe it's already Wednesday. Where did Monday and Tuesday go? This is Mitch Yuan. I'm your host today for Hawaii, the state of clean energy. And I'm very fortunate to have Richard Ha as my guest today. Richard is actually over on the big island in Hamakua and through the magic of technology, almost the magic of technology. We couldn't quite get him on the video, but we do have him on the phone. So we'll be crossing the water over to the big island to talk to Richard. So I've known Richard for a long time. He's a good friend and he's a good friend for Hawaii. Richard is a big fan of hydrogen, so we'll get to that eventually, which is great. Without more ado, I'd like to introduce Richard Ha. Richard Aloha. How's it? Aloha. Good. So there you go. There's a picture of Richard on the screen doing the shaka. So Richard, just tell me a little bit about your background like you're a farmer. So tell me a little bit about your background and your business. Yeah, okay. My family is a community family from lower Puna. And I've been farming for 40 years, commercial farming, bananas at first, and then we went on to hydroponic tomatoes. Right. So how big was your farm, Richard? It was like a pretty big farm and you employed a lot of people. So how big an operation was it? Well, at one point we were farming 600 acres of bananas. We produced about 6 million pounds annually. And the hydroponic tomato operation, we were doing about a million pounds annually. So it was a fairly large operation. Right. I remember buying your products at Costco. I think Costco was one of your vendors, correct? Yeah. So now we have to buy tomatoes too. So Richard, why did you get out of farming? There must be a story here. Well, you know, we're all about keeping track of the numbers. The idea is that the pluses have to exceed the minuses. And it's all math. It's not very confusing as far as that. It's just math. But one thing that was possibly unusual is that from the early days, we would do a weekly breakeven analysis. So we always view exactly where we were. And the reason we did the breakeven analysis, besides keeping track of what's in this today, was we were always looking into the future, maybe 10 years out, and trying to figure out where we wanted to be. And then with the breakeven analysis, we forced the changes necessary to get where we needed to be. So we didn't just look at the numbers and make a decision based on the profitability. What we did was we tried to determine where we wanted to be. And then we forced the change to get us there within the parameters of the numbers. What kind of changes would you make? Give us an example. Well, you know, so we were farming in Kapuho. And then we started to realize that we were far away from the, we had to travel a lot. And the ground there was mostly a cinder from the Kapuho eruption. And it wasn't the most, the best situation. So we figured out that we needed to move. So what we did was we set up on KL when we put the sugar plantations closed. And we essentially forced the Kapuho business out of business. Because, you know, we could tell it would have been more profitable to set up in KL after a certain volume. So we did that. Excellent. So how about talking, before we get into some of your other notes that you passed on, let's talk a little bit about the nexus between, or the connection between energy and farming and your ability to make the pluses equal more than the minuses. Because this is an energy show and I think it's important for our viewership and people out there in Hawaii to know how important energy is to farmers and agriculture here in Hawaii because I don't think people realize that. Like you moved your business just to get a little bit closer, you know, in addition to getting better land or more fertile land, you're still traveling a lot, using a lot of energy. So tell us about how important energy is to farming. Yeah, well, you know, back in 2007, we noticed that our cost of operating started to go up and it was mostly related to our supplies. You know, the plastics, the chemicals, boxes and stuff like this. It took us a while to realize that these were all related to my product of fossil fuels. Once we realized that, then we figured, okay, I need to go learn about this stuff and I heard about this association for the study of peak oil that we were having annual conferences at that time. So I went to the first conference and it was pretty eye-opening because the first thing I picked up out of that, and keep in mind that I'm not a scientist, I'm a farmer. I'm looking over there, trying to figure out who's saying what, who is believable, who's just blowing smoke and that kind of stuff. Just trying to figure it out. But the first thing I picked up was that the world had been using places as much oil as it had been finding for the last 20 years and they showed it on the graph and I told myself, holy smoke. It's a finite resource and sooner or later, the price is going up. So the first thing I did was come back to Hawaii and work with the legislators to pass a bill so that farmers could get low interest loans for a renewable project. So I came back in October or so and by the time the session was over in May, we had the bill drafted and signed by the governor. So how big a difference did getting that bill in place make to your energy usage and your ability to make a profit? Yeah, so it just only happened that we had a flume running through our property. It was an old plantation flume, maybe 100 years old. And so as soon as I started to realize that it was all about energy, I started to think about that flume. So when I came back, first of all, we made the law and second of all, we applied for that loan and we did get the loan and so we developed a 100 AW hydro project and generate our own electricity. That's great. So what did that do to the pluses and minuses? It didn't zero out all your bill but how big an impact did it have on your ability to farm? Well, you know, at that time I think the biggest bill we had was about $13,000 or $14,000 a month and when we got the hydro operating, it dropped it down to $2,000 a month. Wow, that's huge. It made a huge difference, yeah, absolutely. So moving forward, I mean, why did you eventually have to close your farm? I mean, so you managed to make the pluses better than the minuses for a while so you were a farmer making money so you were farming and as you like to say, when farmers make money, farmers farm but now you're not farming, so what happened? Was it just slowly raising prices or what was the situation? Well, you know back in 2008 when the oil price spiked to $247 a barrel the price dropped soon after that and when the price dropped, not everything dropped. You know the cost of fertilizer didn't go down as much as we thought it should have as well as the plastics and everything. So the price didn't drop as much as we thought it should have. So that was one thing. But as time went on, it was more the effect of the bunch of top firings and it was located, we knew it was in Funa and then we were watching it because we knew exactly what it looked like and we would scout around in Hilo because generally what would happen is coming out of Funa, it would blow towards the north and so we drove the communities to see if any plants were affected and then we started finding plants getting closer and closer to the Wailuka river and then one day it jumped across and then it went further up and then we was embedded in the culture and once it was embedded in the culture, there's nothing we could do to stop it because it's spread by an Asian. So then we knew sooner or later we were going to get it. So then the question became how much time do we have? What does the economic cycle look like? If we did close it down, what would happen to our workers? So at that particular time the economy was still good. So our workers could actually find other jobs so we figured, okay why don't we make that decision instead of make the decision when there were no jobs and the workers had no alternatives. So that's the reason we got out of bananas. Okay, go ahead, sorry. Yeah and tomatoes, at some point before we decided to close on the bananas we saw that competition was coming and we needed to diversify so we looked at what kind of crops we could grow and we decided to do hydroponic tomatoes and the reason for it was because of the cost characteristic. Bananas was a crop that was a small margin but large volume so we decided we'd do something that had a small volume but large margin and that would be hydroponic specialty tomatoes, yeah. So that's when we went into tomatoes so we had both going. Then at some point then we had the effect of the virus which we had already seen what we can do with KL so we knew what could happen. So we got out of bananas but at the same time tomatoes, we were coming up at the 12 year mark and we had finances for 10 years and we were fighting up to 10 years but when the time came to redo the infrastructure we did the numbers and the numbers wouldn't come out so instead of spending money we decided to close it. So how big a factor was energy in your tomato farming operation? It was a big factor but what is important to know is that energy is embedded in everything you do in the building material, in the paint, in the driving vehicles around it's not only what you expect to see on your financial report it's embedded everywhere. So the cost of energy had gone up since 2000, 1970 it was $20 a barrel for the longest time and it started to climb up and then eventually reached 70 and all that cost was embedded so in other words and it is right now more difficult to be a farmer than it's been since at least 2008. So talk to us about the shale situation because everybody views shale gas as the savior of our energy economy and we're now the world's largest producer and exporter of fossil fuels but you have a different angle on that. So what's your understanding of how long is that going to last? Is that just like a bubble that's going to pop? Where are we? Yeah, well this is what happened. So 2007 we went to the conferences, 2008 got really scared because it was real clear at that time that the US oil supply was declining. But at the same time 2009, 2010 the shale oil started to increase in volume and then eventually it made it look like there was no problem because the US started to increase its production of oil which we didn't expect in 2007, 2008 in that area. But in 2009 I was sitting at a country and this shale geologist was explaining what he thought things looked like so he said, you know, take the bayonet shale in Texas out of 4,000 wells. He said the average well would be lasted for 4 years. And that was kind of a shock because if you know it lasts only 4 years then that means that every 4 years you've got to drill another one just to stay even. I knew that back in 2009 and I knew the guy that was saying it was credible because I'd be following it. I know what he says and I double check to make sure he's writing all that. So first of all, you know that it doesn't last long and it's also not very large to shale wells. Right. So Richard, I want to interrupt you. We're coming up to a break for advertisement so we'll be right back so hold that thought. Okay. Thank you. Aloha and welcome to At the Crossroads. I'm your host Keisha King. I'm live at five every Wednesday where we have entertaining and educational conversations that are real and relevant, both here in Hawaii and across the globe. I'll see you at the Crossroads. Aloha. Hey, Aloha. My name is Andrew Lanning. I'm the host of Security Matters Hawaii airing every Wednesday here on Think Tech Hawaii, live from the studios. I'll bring you guests. I'll bring you information about the things in security that matter to keeping you safe, your coworkers safe, your family safe, to keep our community safe. We want to teach you about those things in our industry that may be a little outside of your experience. So please join me because Security Matters. Aloha. Okay. Well, we're back from the break. We're live on the phone from the Big Island. We have Richard Ha, a farmer who is well known to all of us here in Hawaii. A heck of a guy. So we're talking about shale oil and how it may just be a flash in the pan. So Richard's going to continue on on that dialogue. So Richard, carry on and tell us more about shale oil. Okay. I was saying that the average well doesn't last very long. Less than four years, 90% comes out. And not only that, they're small. So to give you an idea, in the last 10 years, we drilled 70,000 of those wells. Wow. That's a lot. Most people don't have a clue that we did that. So if we need to double it, can you even imagine doing another 70,000 in the next 10 years? Amazing. I don't know where we'd go look for it. But when you're looking at today, what's happening today, two months ago, Schlumberger, the president of Schlumberger at an earnings call said that 50% of the wells in the permanent basin, which is the biggest shale play now, are child wells. And he explained what child wells were. And basically what it was is when you go and decide how to build a sweet spot, you just kind of figure out a diagram and decide how far the places, but they don't cannibalize each other, and you fill them all. Well, what he's saying is that now 50% of the wells are child wells, which means that they're drilling in between what they initially set out. So 50% of that are child wells, and they can see that it's not producing as much. Now what happens after you drill all the child wells? To me, there's no room to go drilling between anymore. Hi, I'm a banana farmer, but I'll tell you what, it makes common sense to me. Everything I see is that's what's going on. Well, it seems to me like farmers are the true entrepreneurs in our economy, because they take all these risks. We've heard how you've had to analyze weekly your profit and loss, and look forward several years up. When is the plague of affid's going to hit my farm and you plan for that and you get ready for it to hit and you're proactive and keeping your head above water and taking care of your employees? Wow, that's a huge deal. So what are the solutions then to this? It sounds like we're going down this rocky road and there's a big cliff waiting for us at the end. Is it going to be that severe? So what do you think are the solutions we should be taking right now? You know, once I went to those conferences I started to pay attention so I ended up going to Iceland to look at their situation with geothermal and hydro. Then I went to the Philippines to see how they jailed and how they got themselves set up and stuff like that. We are so lucky in Hawaii on the big island of geothermal because we're going to be over the hotspot for 500,000 to a million years. That's not me talking. It's the senior scientist over there talking. So kind of sustainable it seems to me. I think so. It sounds like they're planning to have the geothermal wells of PGV up and running by the end of this year. There's a lot of bureaucracy permitting but in the press today there's people that are still against it which is hard to believe. What's your idea? What's your thoughts about that? Well, you know, I've been all over looking at geothermal from, take this for example, 70,000 wells, shale wells, and they all have SO2 and hydrogen sulfide. It's part of the operation. They know exactly what they need to know, their very experience. I don't know if people actually realize that second nature for them to deal with this kind of stuff. And when I went to Iceland, and we were passing the fuels coming out of the, the steam coming out of the geothermal well, and I was describing to them how stringent our rules and regulations, the Department of Health rules are in Hawaii. The scientists rolled their eyes because they, you know, it was like, wow, you guys are, anyway, you know. So I felt kind of good because I felt like Hawaii was taking care of their people. Right. But yeah, so I feel like in general it's, you know, they regulate the geothermal H2S system and H2S and stuff like that from a nuisance level. The nuisance level is based on what you can smell, and the human nose is very, very sensitive. Yeah. You know, compared to what the requirements are for a pusher to stop work. I mean, it's incredible the differences. So I feel like it's pretty safe. So getting back to my favorite topic, what do you think about hydrogen? Hydrogen factor into our energy system going forward in the future. Many people, myself included, think that it's the big solution for our energy system going forward. Yes. Share your thoughts. Yeah, okay. And there's two ways you can make hydrogen. Yeah, one is you reform natural gas or whatever is cheapest at that time. That's one way of getting hydrogen, and natural gas is cheap, so making hydrogen is relatively inexpensive if you were to put it on a main map. On the other hand, you can make it out of electricity by sending electricity to water and the hydrogen bubbles up. Now, the thing about it is this, hydrogen, the source of the electricity is a cheap source. Now you're talking, and especially if it's geothermal, that'll last for 500,000 years because the heat is basically free. It won't go up in price. On the other hand, the fossil fuel is a finite resource. Wake long enough, it'll pass across the geothermal sooner or later. So it's a safe bet to rely on hydrogen based on geothermal plus the other, the solar and wind and stuff like that. I think my personal opinion is the big advantage of geothermal is, as you said earlier, it's steady state baseload power. Talking from the point of view of making the best use of your capital investment in the infrastructure to produce hydrogen, which is essentially an electrolyzer, it means that that electrolyzer is always working. Solar is a great resource too, but it's only good for five or six hours a day. Even though we're hearing stories about solar getting down to around two cents to three cents a kilowatt hour, which makes it totally economic compared to fossil fuel, it's only there for five or six hours of the day, whereas the old geothermal plants like the Energizer bunny, it just keeps going and going and going and going. So you make the best use of that big capital investment in these big electrolyzers. And that's where we have to graduate to is what they call hydrogen at scale. Right now I have a 65 kilogram per day electrolyzer at the Nelha site. It was pretty big at the time when we first purchased it, but now it's a tiny little thing compared to what we actually need. We need to be producing thousands of kilowatts, kilograms of hydrogen to at least convert over our transportation system. So for example, I have a bus that's almost ready to deploy to the big island. It uses 20 kilograms of hydrogen, gets about 200 mile range and carries 29 passengers. Beautiful bus and it's a taxpayer money, so the taxpayers are going to get a chance to use the bus and get the benefit of their tax dollars. So do you have any comments about public transportation? No, I like the idea. And especially hydrogen, I like the idea of line heels and you can carry big loads of hydrogen compared to a battery so I really like hydrogen. Absolutely. Yeah, fuel cells have really advanced. You know, when I first started in the fuel cell business, it was really great if a fuel cell could go for 1,000 hours or even 500 hours. Now we have buses in California, fuel cell buses, they've got over 30,000 hours on their fuel cell and it has a very slight degradation curve that's just slightly trending down but they're probably good for many more thousands of hours and so when you look at that compared to an engine, a diesel engine, it's starting to look much better than a diesel engine or a diesel engine bus. And for generator braking instead of having to use the brakes you use your electric motor as a generator that slows the bus down so you're recovering energy and you can't even tear on your brakes. So a lot of really big benefits there with public transportation. The people in California love their hydrogen buses. They'll wait for that diesel bus to go away with all its diesel fumes and noise and wait for that nice, stealth, quiet, clean hydrogen bus to show up and that's the preferred method of transportation. So we're getting down to towards the end of our show, and it's gone really fast so I'm going to let you do some more talking and I'd like you to talk a little bit more about hydrogen if you think you'd care to do that. Yeah, sure. You know what I think the possibilities for geothermal and cathodicardly hydrogen around the base of Monokea, you know Professor John Thomas was drilling for water and he ran into hot water and he didn't have a permit to do hot water but he's always interested to know about geothermal so he was watching the temperature rise as he was deeper he drilled and he's a good friend of mine so I asked him so Don, so what was the limit he said, boiling water is outside of this permit. So I told him how much deeper would you have to drill to get to geothermal temperature? He said I might guess about a thousand more feet and then my next question was how much energy do you think is under the soaps of Monokea? He said, you know unofficially I wouldn't be surprised if there were more, there was more energy underneath there than the entire East Rift. Wow. I saw it in the Philippines because we were on a mountain that had last erupted a thousand hundred thousand years ago Monokea last erupted four thousand years ago. Right. So there was a big potential over there so you know if you could do geothermal on Hawaiian homes land you could take the electricity and bring water up and you could turn that higher level into orchids you know after the beaches. Never thought of that, very good. Well we got to wrap it up we're out of time believe it or not but I want to bring you back and we can carry on this conversation which was a great conversation and we'll even get you live next time so you're live but I mean picture wise so thank you very much for coming on the show Richard I really appreciate it and look forward to seeing you the next time over on the Big Island so everybody that wraps up Hawaii the state of clean energy for this Wednesday and before I know it next Wednesday we'll be here and I have no idea who we're going to have yet so anybody out there want to talk about energy put your hand up phone or send an email to me or to think tech Hawaii we'd love to have you on and hear your story. Okay aloha everybody have a great Wednesday evening