by tom schuman - bizvoice magazine...motor gasoline 3,503 thousand barrels 4.40% distillate fuel oil...

By Tom Schuman

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F ive years ago, Indiana did not have a comprehensiveenergy blueprint. That was achieved in 2006 withthe release of Hoosier Homegrown Energy – astrategic plan that incorporates economic growth

into the mix. Legislation in 2005 and 2006 spurred theplanned development of numerous ethanol and biodieselplants, and provided incentives for retail gasoline outlets tocarry biofuels.

Indiana is turning the community of Reynolds into BioTown,USA. The White County town of slightly more than 500people is striving to become the first in the country to totallyrely on locally generated renewable energy sources. It isencouraging to see Indiana in front of the pack for long-termdevelopment instead of trailing behind.

In addition, the Lugar/Purdue Summit on Energy Securityin August 2006 brought state, national and internationalleaders to West Lafayette for a daylong event. Sen. RichardLugar told BizVoice® in an earlier interview that changingIndiana and the nation’s reliance on volatile sources of energywould be one of his top priorities in his next six years inWashington. The summit was recaptured in BizVoice® underthe heading: Energy at a Crossroads.

More questions, however, remain than answers. Lugarhas been unsuccessful thus far in implementing legislationat the federal level. He wants to expand ethanol productionto 100 billion gallons a year by 2025, enact stricter vehiclemileage standards, make virtually every new car sold inAmerica a flexible-fuel vehicle and ensure that a significantnumber of filling stations offer E85 (a blend of 85% ethanoland 15% gasoline) as a fuel alternative.

In Indiana, two new ethanol facilities have begunproduction and others are under construction, although anumber of the 20 proposed plants are unlikely to come tofruition due to an overabundance in the market. Purdueremains among the research leaders in developing the cellulosicmethods that are critical to the next stage of ethanol plants, but

the solutions needed to make it cost-effective are still severalyears away, according to university experts. Wind energy in limitedareas has emerged as a potential source of power, but its impactis expected to be quite minimal in meeting long-term needs.

Efficiency and conservation efforts gain attention whengasoline prices soar, but quietly fade away when the pressureat the pump declines. Lugar says consumers, oil and carcompanies, and the federal government – for not treatingenergy vulnerability as a crisis – are among those who canshare the blame.

The state’s dwindling energy reserves and Indiana’s statusas a provider of low-cost, reliable electricity concern theIndiana Chamber and its business constituency. The Chamberhas continued to advocate for:• a diversified fuel mix including clean coal technologies,

natural gas, nuclear and renewables;• investment in new energy technologies such as the fuel cell;• assessment of our electric power infrastructure, including

transmission and distribution capabilities;• sensible regulatory controls that promote the responsible

building of new electric power stations; and• energy efficiency and conservation.

The ensuing pages in this section do not offer solutions.They provide a snapshot of our energy status through:• numbers – a variety of charts, graphs and tables that help

paint the picture;• fact boxes – from the Hoosier Homegrown Energy plan as

well as the Lugar/Purdue summit; and• a BizVoice® ReVisited story on the yet-to-be-approved

state-of-the-art Duke Energy/Vectren coal gasificationplant in Edwardsport.

BBoottttoomm lliinnee:: What does this mean for Indiana business?Reserves are dwindling, there is no “silver bullet” solutionand increased attention must be paid before one of Indiana’sstrongest assets – its supply of low-cost, reliable electricity –becomes a liability.

48 BizVoice/Indiana Chamber – JJuullyy//AAuugguusstt 22000077

Current Indiana coal reservesare roughly 17 billion tons and Indiana mines roughly 35 million tons a year. Thatequals more than 485 years

of coal supply.

LAKE

GRANTHOWARD

CARROLL

TIPPECANOE

ADAMSWELLS

HU

NT

ING

TON

WABASH

MIAMICASSWHITE

BENTON

ALLENWHITLEY

FULTONPULASKI

NEWTON

JASPER

STARKE

MARSHALL

KOSCIUSKO

NOBLE DEKALB

STEUBENLA GRANGE

ELKHARTST JOSEPH

LA PORTE

PO

RT

ER

UNION

WAYNEHENRY

HANCOCKMARIONHENDRICKS

RANDOLPH

JAY

BLACK-FORD

PARKE

DELAWAREMADISON

HAMILTONBOONE

TIPTONCLINTON

MONTGOMERY

FOUNTAIN

JACKSON

MARTIN

LAWRENCE

DAVIESS

KNOX

FRANKLINDECATUR

BARTHOLOMEWBROWN

GREENE

MONROE

FAYETTERUSHSHELBY

JOHNSON

OHIO

SULLIVAN

OWEN

CLAY

PUTNAM

PERRY

CLARK

SCOTT

MORGAN

ORANGE

SWITZERLANDJEFFERSON

WASHINGTON

DE

AR

BO

RN

RIPLEYJENNINGS

VE

RM

ILL

ION

POSEY

VANDER-BURGH

WARRICK

SPENCER

GIBSON

PIKE

DU

BO

IS

FL

OY

D

HARRISON

CRAWFORD

VIGO

WARREN

Indianapolis Power & Light [#7]Harding St. (Coal)

NIPSCO [#3]R M Schahfer (Coal)

Duke Energy [#6]Cayuga (Coal)

Hoosier Energy [#9]Merom (Coal)

Indianapolis Power & Light [#4]AES Petersburg (Coal)

Indiana Michigan Power [#2]Rockport (Coal)

Duke Energy [#1]Gibson (Coal)

Indiana Michigan Power [#10]Tanners Creek (Coal)

PSEG Lawrenceburg [#8]PSEG Lawrenceburg Energy Facility (Gas)

Indiana-Kentucky Electric Corp. [#5]Clifty Creek (Coal)

Source: U.S. Energy Information Administration

Ten Largest Indiana Plants by Generation Capability, 2005

In the National Fuels Initiative legislation, Indiana Sen. Richard Lugar calls for expanding U.S.

ethanol production to 100 billion gallons a year by 2025.

2005 WorldEthanol Production(millions of gallons)

United States 4,264Brazil 4,227China 1,004India 449France 240Russia 198Germany 114South Africa 103

Source: F.O. Licht

U.S. Ethanol Production Projections(billions of gallons; primary sources)

2006 4.8 (corn)2008 7.5 (corn and cellulose)2015 12.0 (corn and more cellulose)2030 60.0 (a lot of cellulose and corn)

Source: Purdue University, 2006 Summit on Energy Security

JJuullyy//AAuugguusstt 22000077 –– BizVoice/Indiana Chamber 49

Purdue University’s StateUtility Forecasting Group

predicts that Indiana will needmore than 10,600 megawattsof additional electricity – theequivalent of 15 new baseload

plants – by 2023. Indianahas not built a new baseload

generation plant in the last 20 years.

We should rely upon new clean coal power plants for a substantialpart of the new electricity supplies we need by 2023. Thebalance should come from retro-fitting existing units with

pollution control devices, from greater energy efficiency andfrom the further development of renewable energy sources.

– Hoosier Homegrown Energy plan

IInnddiiaannaa EElleeccttrriicciittyy FFoorreeccaasstt 22000055 PPrroojjeeccttiioonnss ((mmeeggaawwaattttss))

EExxiissttiinngg//NNeett PPeeaakk AApppprroovvaall TToottaallDDeemmaanndd CCaappaacciittyy PPeeaakkiinngg CCyycclliinngg BBaasseellooaadd TToottaall RReessoouurrcceess

2008 20,820 21,493 760 930 670 2,360 23,8532011 22,167 21,869 930 1,190 1,420 3,540 25,4092014 23,666 21,704 1,460 1,430 2,490 5,380 27,0842017 25,362 21,260 2,150 1,960 3,600 7,710 28,9702020 27,211 21,097 2,730 2,180 5,030 9,940 31,0372023 29,196 21,044 3,240 2,420 6,560 12,220 33,264

1. Existing/approved capacity includes installed capacity plus approved new capacity plus firm purchases minus firm sales.2. Projected additional resource requirements is the cumulative amount of additional resources needed to meet future requirements.3. Total resource requirements are the total statewide resources required including existing/approved capacity and projected

additional resource requirements. (includes a 15% reserve margin)

Source:State Utility Forecasting Group

PPrroojjeecctteedd AAddddiittiioonnaall RReessoouurrccee RReeqquuiirreemmeennttss

Within 25 years, the worldwill need 50% more energy

than it does now.

69%

3%12%

16%

2002 – 4.791 million tons

79%

1%

8%

12%

Source: DOE-EIA, World Energy Outlook 2004

2030 – 7.029 million tons■ Power generation■ Industry■ Other■ Residential

■ Power generation■ Industry■ Other■ Residential

World Coal Demand by Sector 2002 and 2030


94.4%

2.4%

74%

26%

0.4%1.9% 0.4%0.4%

0.4%

Source: U.S. Energy Information Administration, State Utility Forecasting Group

■ Coal■ Other Gases■ Natural Gas■ Petroleum■ Other■ Renewables

Indiana Electricity Generationby Energy Source

2004 Total Indiana Generation = 127,770 GWh

■ Hydroelectric■ Other

49.7%

88%

3%

1.5%3.7%

16.5%

28.6%

1.5%

9%Source: U.S. Energy Information Administration, State Utility Forecasting Group

■ Coal■ Petroleum■ Natural Gas■ Net Interstate Flow

of Electricity/Losses■ Renewables

Indiana Total Energy Consumptionby Energy Source

2004 Total Indiana Consumption = 2.88 Quadrilion GWh

■ Biomass■ Hydroelectric■ Other

Indiana used to be a major natural gas producer,but now essentially imports 100% of the naturalgas typically used for home heating, electricitygeneration and to power manufacturing facilities.

Indiana produced an estimated 1.3 million barrelsof petroleum in 2003, down substantially from10 years earlier and representing only 3.7% of

the petroleum the state consumes.

Indiana is the sixth largest per capita naturalgas consuming state in the nation.

Indiana consumes 1.8 million gallons of petroleum every day, an increase of

300,000 gallons from 1999.


Indiana consumes 60 million tons of coal a year (second only to Texas in raw tonnage) and mines 35 tons a year.

40%

23%

23%

8%6%

47%

1%6%

2%

6%

45%


■ Petroluem■ Coal■ Natural Gas■ Nuclear Energy Power■ Renewable Energy

U.S. Total Energy Consumptionby Energy Source

2004 Total U.S. Consumption = 100.278 Quadrilion GWh

■ Biomass■ Hydroelectric■ Geothermal■ Wind■ Solar

In 2003, the U.S. had 4.6% of the world’s population, but consumed nearly 25%

of the world’s energy.

49.6%

19.8%

17.8%

9.2%

0.2%0.4%3.0%

77%

0.2%4%11%

4%7%

9.2%


■ Coal■ Nuclear■ Natural Gas■ Renewables■ Petroleum■ Other Gases■ Other

U.S. Electricity Generationby Energy Source

2004 Total U.S. Generation = 3,970,555 GWh

■ Conventional Hydro■ Wood■ Waste■ Geothermal■ Wind■ Solar

“I cannot envision a future without nuclearplaying a major role. Nuclear is at a crossroads

because the current fleet is in the second half of its expected life span.”

– U.S. Rep. Pete Visclosky, D-Merrillville


Indiana spent approximately$14 billion for imported energyin 2006, including naturalgas, coal and petroleum.

Indiana Energy Reserves & SupplyRReesseerrvveess IInnddiiaannaa SShhaarree ooff UU..SS..Crude Oil 16 million barrels 0.10%Recoverable Coal at Producing Mines 382 million short tons 2.00%

WWeellllss IInnddiiaannaa SShhaarree ooff UU..SS..Crude Oil Producing Wells 5,044 1.00%Natural Gas Producing Wells 2,321 0.50%

PPrroodduuccttiioonn IInnddiiaannaa SShhaarree ooff UU..SS..Crude Oil 148,000 barrels 0.10%Coal 34,457,000 short tons 3.00%

CCaappaacciittyy IInnddiiaannaa SShhaarree ooff UU..SS..Crude Oil Refinery Capacity 433,000 barrels/day 2.50%Electric Power Industry

Net Summer Capability 26,984 MW 2.80%

SSttoocckkss IInnddiiaannaa SShhaarree ooff UU..SS..Motor Gasoline 3,503 thousand barrels 4.40%Distillate Fuel Oil 3,185 thousand barrels 3.00%Natural Gas/ Storage 104,023 million cu ft 1.50%Petroleum at Electric Producers 138 thousand barrels 0.30%Coal at Electric Producers 8,627 thousand tons 6.30%

FFuueelliinngg SSttaattiioonnss IInnddiiaannaa SShhaarree ooff UU..SS..Motor Gasoline 1,684 1.00%Liquefied Petroleum Gases 36 1.40%Compressed Natural Gas 11 1.50%Ethanol 42 4.30%Other Alternative Fuels 9 0.80%

Consumption

ppeerr CCaappiittaa IInnddiiaannaa UU..SS.. RRaannkkTotal Energy 470 million Btu 6

bbyy EEnndd--UUssee SSeeccttoorr IInnddiiaannaa SShhaarree ooff UU..SS..Residential 537,902 billion Btu 2.50%Commercial 367,707 billion Btu 2.10%Industrial 1,341,080 billion Btu 4.10%Transportation 666,072 billion Btu 2.50%

ffoorr EElleeccttrriicciittyy GGeenneerraattiioonn IInnddiiaannaa SShhaarree ooff UU..SS..Petroleum 28 thousand barrels 0.40%Natural Gas 2,313 million cu ft 0.50%Coal 5,626 thousand short tons 6.10%

ffoorr HHoommee HHeeaattiinngg IInnddiiaannaa ((hhoouusseehhoolldd sshhaarree)) UU..SS.. AAvvgg..Natural Gas 65% 51.20%Fuel Oil 3% 9.00%Electricity 22% 30.30%Liquefied Petroleum Gases 9% 6.50%Other/None 1% 1.80%

Source: U.S. Energy Information Administration

“I believe that in the future, the United Statescan be energy self-sufficient or nearly so.Over the long term, we have the resourcesand the ingenuity to achieve this goal.

“The crucial question is what happensbetween now and then. Will we achievethis goal rapidly through a coherent andresolute national policy that takes advantageof America's natural assets to create neweconomic opportunities, a cleaner environment,and improved national security? Or will weachieve our objective only after many yearsof widespread economic pain and nationalvulnerability caused by scarcity, terroristattacks, market shocks and foreign manipulationof our energy supplies?”

– U.S. Sen. Richard Lugar (R-Indiana)

“I came away convinced the word crisis isnot too strong a word. I concluded that ifwe’re going to solve this problem, we’regoing to have to solve it ourselves. I didn’thear anything today that says we can’t.” – Purdue University President Martin Jischke

at the conclusion of the 2006 Lugar/PurdueSummit on Energy Security


by tom schuman - bizvoice magazine...motor gasoline 3,503 thousand barrels 4.40% distillate fuel oil...

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