 and welcome to Stan Osterman's show here, Stan the energy man coming to you live and direct from lovely Kailua Hawaii. The background in the picture is actually on the on Leeward side of the island, a place called Point Panic of all places. It's a nice surfing place, but in the summertime the waves can get pretty big and you do panic because boats go running right by you while you're surfing. Anyway, we're going to continue our discussion with Dan Gowan this week. We started off last week and I just want to kind of recap what we're talking about. Dan gave us a picture or painted a picture of the possibilities of how we could be tapping into basically abandoned or finished oil wells and gas wells and how we could use those facilities to store hydrogen on a large scale. He gave us a bunch of data like these wells could be used for energy storage under salt domes because the salt deposits are not permeable by hydrogen, which is a really small atom and that's one of the problems of storing hydrogen. It's so small, it's hard to compress and it's hard to store because it can kind of squeeze by just about anything. We could use this hydrogen in a couple of ways and one of the ways we talked about was taking the residual natural gas that's in those wells and as we pump hydrogen in there, we could use a hodgepodge of gas that comes out of the well, run it through a gas turbine to make electricity and then we could even take some of that less pure hydrogens being stored in there and run it through some membranes that would screen out all the impurities except the hydrogen with the right size membrane and that could be used in fuel cell vehicles or even put back on the grid with stationary fuel cells as another power source and then he said that we could use that hodgepodge of gas in a gas turbine and it would be about 47% efficient as long as we're using what we call cogeneration or reason not only the the turbine to make electricity but the steam and the heat to use for other sources of power generation. We also talked about some interesting items that we talked about were that fossil fuels are finite. Now whether you think of fossil fuel in terms of climate change, the reality is that we're running out of fossil fuels. The stuff that was easy to get that was high quality is already used up and we're spending a lot more money to get to a lot more resources that are of less quality and at some point in the future we will run out but it's going to be hard for us to run out of hydrogen because hydrogen is the most plentiful atom in the universe. So we have to kind of look at these discussions about hydrogen through that lens of at some point in time whether you're in a hurry or not we're going to run out of fossil fuels. There's three metals including 316 stainless steel and a couple of plastics that can contain the hydrogen for moving through pipes or moving through tubes or putting in storage vessels and I hope we can talk a little bit more about that and something was news to me is that hydrogen becomes a super critical fluid and 187 psi which is relatively low pressure considering considering that low pressure in the cars is 350 bar and 187 is what 20 bar or something like that it's really low compared to even the low pressure that we put in cars nowadays. We also talked about something that I think is really important and that's that wind power is currently getting very very efficient and very very cheap in terms of generating electricity and if we take that electricity Dan told us that we could we could actually produce hydrogen for as little as 68 cents per kilo for a kilogram of hydrogen to give you what we call a gallon of gas equivalent number that would mean gasoline at 35 or 34 cents a gallon so think about if you had a fuel cell car and you could get your hydrogen for 68 cents a kilogram you'd actually be getting essentially 34 cents a gallon gasoline for your car. The high end of four cents a kilowatt hour for your electricity coming off the wind turbines which is what I was told if you just build a purpose built wind field you could sell the electricity for four cents a kilowatt hour that would give you a two dollar and sixty cents a kill two dollars sixty cents for a kilogram of hydrogen which again would be a dollar and thirty dollar thirty cents of gallon of gas equivalent so even in a case we can do right now you could make be making the gallon of gas equivalent a dollar thirty instead of the three or four dollars that california and hawaii are looking at right now. We also learned that there's some new technologies to compress hydrogen more efficiently and I'd really like to learn more about that from Dan because he was talking pressures up in the tens of thousands of pounds per square inch so Dan I don't know if you want to add anything to that but that's kind of a recap from from last week and we're going to kind of roll into more of the discussion that there's something you want to recap from last week as well. Well I mean when we talked about the the metals you were talking about they're actually metal alloy families entire families that are impervious to hydrogen metals okay you know family metals that that's right so so it's not just three alloys there's a lot of metals that are actually compatible with hydrogen and then when you combine it with some of the plastics that are impervious with it too that that'll be a game changer so I I can imagine when we sit down and do the the compressor show we probably have a lot of executives running these pipe companies and stuff probably going to watch that show because that'll probably be a moneymaker for a lot of people so if I can get them to put slide number two up okay okay so what we're talking about there slide number two that would be a system that's centerpiece here with the electrolysisers the gas wells on the gas turbine and the compressors that right there is what we would put down at the community level what you would do is you probably have this at the county level or something like this now it's not hundreds of millions of dollars but it is in the millions of dollars so it would be something that you would distribute at the county level but that that facility there you could expand it or contract it but that that facility would produce enough gas that you could provide fuel for a number of fuel stations and whenever you guys need it whenever you need to produce electricity and you've been islanded off the power grid you've got you know power there now so when you're talking about the facility there you're talking about about probably about 20 million dollars but half the cost there's actually going to be that gas turbine because an LM 6000 those are usually about 10 million dollars beef okay so let's go to page number three and I'll talk a little bit about the cost there so that's from next year we had a little bit of talk about that but the big part that I wanted to talk with two things one was I already knew was out there because well here in the Midwestern part of the United States our average cost of electricity is about 18 dollars a megawatt hour now there's a thing on there called a storage app okay if you look real closely at that page you'll see what that is is what we call in the business we call it the battery care okay and usually between five and ten dollars and what that is is that's when the wind's not blowing they make up the power for some place up so I chipped in a little bit of money the next air they find power from from a solar or gas turbine or nuclear wherever you get the power to make up that now I can opt to go without that happen to say okay when the wind's not blowing shut my electrolysis are on it just so happens I'm running electrolysis and that's one of the devices you can turn it on like a like a light turn it on turn it off and it doesn't really matter because you turn it on I produce gas you turn it off I don't produce gas what triggers your compressor all the compressor system is the pressure from the electrolysis so so the point is I got infrastructure that can be dynamically turned on and off that's what we call dynamic load okay in the business so if you want to know what some of the one of the things that the the guys at the ISO the independent system operator the runs a power grid that they would love to have is dynamic load load they can turn on when there's a lot of load the system everybody's using the air conditioner hey turn that dynamic load off it helps them out a lot balancing the grid so they would kind of they would kind of like us to make hydrogen be caught on to help them out okay can I get to let's see page number four please okay okay so where did this idea come from notice I got here transport electrons not fuel so on that picture down there you'll see this square down there the sort of like down there in yellow there's a power plant down in southern Indian called Petersburg Petersburg power plant they originally built that in 67 they've been adding generated units all the way up to 1986 but basically what they did is they built the power plant on top of a coal mine because the utility company I end up as power light decided that it was cheaper to transport electrons and not coal okay now so all those red dots you see those those coal far power plants some of those orange dots those are the power plants we converted over to gas terms so unfortunately you know the coal is running out and I know that sooner or later that Petersburg power plant is going to be turned over to natural gas and I'm going to lead that into the next one we've got right here I kind of go to page number five okay so that's the gas field down the southern Indiana down around 20 Evansville and Petersburg that's the latest data I pulled that out Monday now that picture has the red those were actually oil wells there's actually pupper jacks I think well other ground there's not many of them there aren't many depleted wells out there a lot of those wells if you look at that underlying thing right there this is gas storage we store a lot of gas down in southern Indiana down in that area we pump that gas up from Texas okay now I'm going to talk the next slide I'm going to talk about a situation and it's leading up to what's going on right now it's causing prices to be unstable in the gas markets throughout the United States right you might be hearing about that especially in the next couple months but we can we go to page number six please okay so that's the gas grid throughout the United States with all those pumping stations where we talked about that first meeting we did and I said we're consuming 30% of the gas in that pipeline just powering the pump states okay so yeah so in the past what we would do is we would pump gas from Texas all the way up here and we'd store up up here in our gas field up here and that way when the hurricanes hit in the fall down in Texas and it takes out all the infrastructure we would actually pump gas back down there to keep everybody supplied with natural gas but this year what happened is we had some freak storms in the spring time and it took out the infrastructure down in Texas so we haven't stored enough gas up here and right now we've had a hurricane go through and it took a lot of the infrastructure down down in Texas and down in Louisiana offline so this winter we're going to go into a gas shortage now that's going to turn into an interesting opportunity for hydrogen and it's going to cause what we call price parity let me explain how this is working what we're talking about is a B2 to B2 comparison between natural gas and hydrogen I would I thought I'd never see this but that's what's happened so what happens is whenever natural gas between five and ten dollars per million BTUs that's comparable to hydrogen that's being produced by electricity we're we're purchasing electricity at the power grid between ten dollars a megawatt hour and twenty dollars a megawatt hour and you know so understand that one pound of hydrogen is equal to two and a half pounds of natural gas so we're getting a B2 to B2 comparison and that that's where the price is actually lining up so whenever the price of electricity wholesale on power grid is under twenty dollars a megawatt hour and whenever the price of natural gas is greater than five dollars per million BTUs we get to a point where it's more economical to to make hydrogen stored in the ground than it is to mess with that natural gas and what's been happening the last couple years is because the weather's becoming more and more unstable we're also getting a situation down in the Gulf where we're not seeing as much drilling for oil and hence gas down in the Gulf and if the reason why has to do with the the fact that as we go deeper and deeper out into the water they're in the Gulf and the costs go up because you're going farther and farther out the water's going deeper and deeper believe or not uh Lloyd's a London and all these big the insurance companies they ensure those those drill rigs they they they don't want to insure them right so you're seeing the insurance actually dying that's actually starting to kill off drilling so now the gold stage usually go die between one to two million barrels of oil a day and of course there's gas associated with it but because we uh because the insurance companies won't cover the rigs we're going to see that production start to shrink and like I said she's including one million one million barrels to two million barrels a day so we're actually going to start getting a lot less gas from down in the Texas area now that doesn't include all the shale that they're drilling down so that's going to we're going to see that more and more often so so economically we're going to be driven into doing something else uh and and the hydrogen is most logical thing we can do yeah let me let me just point out there too that you know when you made that point-to-point comparison between natural gas and hydrogen you're talking electrolysis which is we call green hydrogen or the most expensive way of making hydrogen as opposed to steam reforming and you're saying the most expensive way of making hydrogen could potentially be on par with natural gas that's like a mindblower that's going to be a game changer for a lot of people when they really start to understand hydrogen yeah and what why that's happening is that well we talked about last time about these electrolysisers that we pack into a 40-foot cargo container 40-foot cargo container you know big box 1 megawatt of power 22 kilograms per megawatt you know simple idea simple concept but that's a nominal yield some of the more advanced electrolysisers of some of stuff come in the department of energy some of that stuff in theory should produce something close to 45 kilograms per megawatt hour but we'll see but right now the stuff I can go buy right now produces 22 kilograms for a million watts of electricity and when I can buy electricity for less than $20 for a megawatt hour you know you can see where hydrogen green hydrogen electrolysis hydrogen starts to sink and you're going to have a hard time making in the the only reason why we even had steam reforming and why that even exists or that form of hydrogen because it's being made out of the ore refinery what they're using they're using what are called flare gases and flare gases are gases they just it's a byproduct of refining oil as gas they were going to burn up and throw away so it was throw away gas and that's the reason why it was so cheap because it was something they're throwing away from their fire well if you're not refining as much gasoline or if the crude oil that you've got is so expensive to refine into gasoline and it causes the prices to go up that means people aren't going to buy the fuel the point is that that source of hydrogen is going to go away and if that goes away and then we're having problems with the coal you're not going to see that source of hydrogen because that's another way of making hydrants from coal so you're not going to be able to make hydrogen from that just because you won't have the material to make it so what you're going to be left with is green hydrogen that's from the electrolysis and and it has to do with we had this old way of making hydrogen was still there but the costs are going up because the fuel's being depleted and the electrolysisers just got down to the point where like I said we're packing into a 40 foot cargo container and that's the perfect format for hydrogen and electrolysis so the parallel to that too is as we draw down in fossil fuel use we also lose those formerly cheap ways of making hydrogen yeah yeah yeah they all disappear yeah all right can we go to uh was it page number seven please okay so that map right there that's from the department of energy okay and it's been out for for quite a while but that is a map it's the united states so those are places where we're currently storing hydrogen underground places where we we stored hydrogen in the past places where we know we can convert over to hydrogen storage and there are two different ways we can make synthetic hydrogen repositories the light blue areas you see right there those are salt deposits so there's a salt deposit right down around the Tampa bear area that I would love to turn into a giant hydrogen repository drill down underneath that salt frack the rock underneath that salt and build a giant hydrogen repository very tip of the state of florida okay so there's a lot of opportunity there the other one is there's sedimentary rocks there's a type of rock called dolomite which is a very dense formal limestone what happens is when that limestone and the shashree rocks all it's one of those materials that's impervious to hydrogen now you can drill down 10 000 v horizontally drill the rock frack it make a hydrogen repository it's not as robust as the salt so it kind of depends on what areas we try because there might be some areas we make this work and other areas where we can't but the areas where I know we can make work are those blue areas and that's where the salt is so that's a huge huge possibility now if you're a horizontally drilling and fracking understand the total cost you're probably talking about $10 million per well so it's not cheap the good news about that process once you drill it it'll always be there okay but if you drill one in one of those sedimentary areas and it doesn't work out that might be a $10 million loss so there's a risk there with trying to make something like this work okay so page number eight please page number eight there we go okay so what's in that there uh that's northern part of indiana down there you see a box in it's like yellow with a red box okay around it that's a town called fowler indiana that is a wind farm town literally you're driving the town is surrounded by wind turbines okay so the northern part of indiana from about there going north that is wind power country okay so from there and all around the great lakes you're going to see a lot of wind okay now what are the truths about india and it's true here and it's similar for a lot of other states but here in indiana we curtail seven terawatts of wind every year that curtailment means we throw away we don't use the winds blowing but we have no use for the power to to get an idea about how much hydrogen we're talking about that's 154 million kilograms of hydrogen we could be storing today right if you were refueling toitum or i cars you can refill your car 25 million times okay and if you refill your car let's say once a week we could support 493,000 cars on something we're throwing away yeah i mean yeah and that's really the point we try and make to a lot of the electric utilities that are starting to get intermittent renewables they start to saturate out at about like 18 to 20 percent intermittent because of stability issues on the grid and what the point you made earlier the electrolyzer could be turned off and turned on and turned off and turned on it's it can be a load or it can be shut off and you know it it's like you put those two together you got curtailed power from utilities that's being wasted and you see you turn your electrolyzers on and they're make hydrogen and store all the hydrogen for later in the day or at night and or down the road and the prices you're like it's efficient you're you're using that curtailed power to make all this hydrogen which has a value to it that we're not doing right now yeah here's the the benefit here so so and i've said this before to everybody so i'm the guy that designed the system here a big what big cotton iso designed the computer system and so we the iso we have our own internet and so i know how to interface that those electrolyzers into that computer system i can't say that about other isos but i know myself i know exactly how to build the interface on those electrolyzers directly into the computer system that they're on my so you could do this in real time at the speed of light because my so the we use a dark fiber intranet to control all the different systems so so it's so it's not just doable it'll be done in real time in fact i can tell you we have load out there that we dynamically control right now um yeah right so for example there are certain manufacturers that we turn on and off dynamically when we have to curtail power uh certain places that do like roll steel and places like that we dynamically turn the power uh concrete any place that makes concrete we dynamically turn that power off when we've got too much load on their grid we have to dynamic them so when i'm not doing we're not doing anything we're not doing already is what i'm getting uh if i can go to page number nine please yeah even Hawaiian electric they have a they designed a thing called the smart grid and what it really does is it allows the electric company to turn off each individual residential inverter it's like well if you can turn off you know a couple thousand individual residential inverters you can certainly turn off a couple electrolyzers you know it'd be a whole lot easier to program that into your system so okay yeah so if we can go to slide number nine please okay and that's that's the last slide i've got and that's just wind power throughout the united states uh the state of texas you were talking we were talking about texas the state of texas according to my friends down at urca the state of texas curtail 17 terawatts of wind every year 17 terawatts that's a huge amount of wind and you know and we're in the only place we really haven't got really good i don't know why maybe the guys at next area could tell you they're the southern part of the united states you know louisiana all the way to florida for a reason we don't have good penetration with wind but but i i think we've got some other opportunities for the florida coast anyway but but you can see look at that i mean we've got quite a bit of winds throughout the united states and uh there's a report that i have from the department of energy that simply states between texas and the border with canada up there there's a 300 terawatt wind quarter right now if we understand we're talking about canza soklahoma and Nebraska northern south dakota right uh and that's wind country anyway but as far as the rest of country trying to take advantage of it we probably only need to upgrade the grid by about 30 percent just to take advantage of that wind port so so it isn't going to take as much of an effort what everybody thinks is what i'm getting at and upgrading the power grid by 30 percent over a 10-year period of time that's really nothing considering the herculean effort we did in building the current power grid so well this just kind of gets us to the point where you know i wanted to go with uh last show and this one together and that is we don't need to keep the traditional grid design that we have right now which is basically taking a relatively few number of generation sources and pushing it out we could actually have a lot of smaller size generation and storage and dispatchable power uh you know systems i.e. microgrids in like rural areas or residential areas that don't have a huge power fluctuation like industrial areas and we could more efficiently use power in those areas because we're not pushing that electricity through long power lines um at high voltages and stuff so i have a quote you know i used to have to do cubby stuff you know if you're a business guy we had we're always at gunpoint held to do cubby studies and his one point though was transportation of a product uh is non-value added to the process in other words if you have to move it it costs you money that doesn't really add any value to your product it's just getting at places and then you came up the last time we talked and said if you're going to move something move the electrons and that makes sense to me because electrons don't weigh a whole lot they don't they don't take them all out of space you know it's easy to push them through a wire or to to push them through a pipeline if it's a hydrogen and you're using basically the electrons but can you expand a little bit on on that concept but i mean the idea is simple i mean electrons weigh nothing and hydrogen is a close second so so what you want to do is you could purchase look you could purchase the power across the power grid using that energy system in the markets and and purchase the power and if we've got wind or solar or whatever it is that we've got out there producing power geothermal may maybe nuclear power i don't know we'll see maybe we'll get fusion working who knows but the point is when there's power out there available you you purchase it inexpensively and there's times here when you can do that and you turn that in a hydrogen and you store it locally so you purchase across the grid you produce it store it and consume it locally and not try and try to reduce your transportation of it i one of the things that i kind of cringe at when i look at california even hawaii about the you know the the truck you guys got your your putting hydrogen in these big cylinders or a big tank whatever you're hauling that thing around i'm like well you're losing so much how much energy and cost that's just sunk just you're trying to transport or compress gas when all you have all you really need is that power grid and and and just move the electrons rather than you know didn't mess with that truck trying to ship around this and that's that's one of the things killing the fossil fuel business all that cost of transportation yeah and it's a two-edged sword though and my point would be we should be making that electricity locally and making the hydrogen locally and not having to truck it around versus even putting up power lines which for us we have a hurricane about every five ten years and it wipes out a whole bunch of power lines that take a week or so to get back online and that means people go without power and refrigeration and ice and hospitals get stuck and water pumping stops so the idea is if we could make the use renewables and make hydrogen when we could with curtailed power and or use real efficient geothermal like in hawaii to make the hydrogen we could be doing really well if we would redesign our grids to accommodate traditional grid structure for for urban areas and industrial areas and then for rural areas maybe do more dispatchable power and micro grids so i i know one of the things i talked with you about hawaii for why i'm not really a big fan of things like wind power for hawaii because like i said you've got a real state challenge but i think one of the better ideas out there is sea turbines so it's underwater not the ones that take advantage of waves but these are turbines that you sink like 100 or 200 meters underneath the water and take advantage of those deep ocean currents which you've got around the Hawaiian islands and and the concept's really simple you just take a wind turbine you chop it down you and you anchor it down to the bottom the bottom of the ocean and it takes advantage of those deep sea currents and that whole technology i think is just it's going to be an incredible thing and for hawaii i mean i the latest reports i've got you guys could be reduced about 80 terawatts of sea turbine power 80 terawatts i don't think you guys will ever use that much power i don't think that's a huge amount of power that's just right there looking right out there without water that's right there available to you and all you just need to do is you know put a sea turbine out there and grab a hold of it okay well it's planned on doing that show in a couple weeks and we'll uh we'll have you back on and we'll talk about that and we're going to have you back on a couple times because we've dug up a few other really good things that you happen to have expertise on that we can really explore more so that's going to do it for stan energy man today and we'll see everybody next week and thanks to dan going again for spending some time with us aloha