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- OTEC comparatively too expensive-cost too much only effective when compared to fossil fuel platns
- OTEC plants cost too much to build and maintain-price is unsustainable
- Link—Oil Drilling
- Off Shore drilling costs are skyrocketing-costs for equipment, personnel, and management are millions of dollars
Link—OTECOTEC is super expensive and not economically viableFriedman 06 (Becca Friedman, Harvard Political Review Writer, 2006, “EXAMINING THE FUTURE OF OCEAN THERMAL ENERGY CONVERSION,” http://www.oceanenergycouncil.com/examining-future-ocean-thermal-energy-conversion/) Despite the sound science, a fully functioning OTEC prototype has yet to be developed. The high costs of building even a model pose the main barrier. Although piecemeal experiments have proven the effectiveness of the individual components, a large-scale plant has never been built. Luis Vega of the Pacific International Center for High Technology Research estimated in an OTEC summary presentation that a commercial-size five-megawatt OTEC plant could cost from 80 to 100 million dollars over five years. According to Terry Penney, the Technology Manager at the National Renewable Energy Laboratory, the combination of cost and risk is OTEC’s main liability. “We’ve talked to inventors and other constituents over the years, and it’s still a matter of huge capital investment and a huge risk, and there are many [alternate forms of energy] that are less risky that could produce power with the same certainty,” Penney told the HPR. OTEC comparatively too expensive-cost too much only effective when compared to fossil fuel platnsRacindran 2000 (shri, Director National Institute of Ocean Technonlgy IIT Campus, Chennai, India, bhttp://www.oocities.org/pemnq/oceanthermalscan.pdf) The OTEC power can be cost effective only if the unit cost of power produced is comparable with the fossiljVfuelled plants. OTEC system can also have other benefits like enhanced mari culture, desalination or even air conditioning, which might reduce the cost of electricity generated. As OTEC is capital intensive, Government agencies may provide substantial initiative in developing the technology. Dr. Luis A. Vega has done extensive work on OTEC economics for open cycle plants and closed cycle plants. The co-production of fresh water along with power is to be considered for the estimation of unit cost for OTEC plants in islands. It is apparent from the study of Dr. Vega that OTEC is economical and production cost is comparative for higher range of plants. It could notice that OTEC plants of 100 MW range are competitive with other conventional energy sources such as coal or hydel power plants. There are steep cost improvements for these energy sources. The learning rate (the pattern of diminishing costs with increasing experience) is nearly 20% for photovoltaics and windmills. The same result can be expected for OTEC in future with increase in experience and development of technology. OTEC plants cost too much to build and maintain-price is unsustainableMario 01(Rupeni, Team Leader at Secretariat of the Pacific Community Adviser at SOPAC Project Officer at SOPAC, “OCEAN THERMAL ENERGY CONVERSION AND ¶ THE PACIFIC ISLANDS”. March 2001, SOPAC) One of the disadvantages of land-based OTEC plants is the need for a 3 km long cold water pipe to transport the large volumes of deep seawater required from a depth of about 1000 m. The cost associated with the cold water pipe represents 75% of the costs of current plant designs. Studies show that OTEC plants smaller than 50 MW cannot compete economically with other present energy alternatives. A 50 MW plant will require 150 m3 /s of cold water thus, the 3 km long cold water pipeline has to be at least 8 m in diameter. Another disadvantage of a land-based plant would be the discharging of the cold and warm seawater. This may need to be carried out several hundred metres offshore so as to reach an appropriate depth before discharging the water to avoid any up dwelling impact on coastal fringes (i.e., fish, reef, etc). The arrangement also requires additional expense in the construction and maintenance. To minimise construction costs of the cold water and discharge pipes, a floating OTEC plant could be an option. However, the costs associated with the maintenance and mooring facility of such a structure is of significance. Further to the structural needs of the OTEC plant there is also energy required for pumping the sea water from depths of about 1000 m. Meeting the energy requirements for the OTEC plant’s operation is a factor to be noted as the need to install diesel generators may arise. The economics of energy production have delayed the financing of permanent OTEC plants. At present, the cost per kWh from OTEC is more than that of the electricity generated from fossil fuels and decreases with increasing capacity of the power plant. Link—Oil DrillingOffshore drilling is ridiculously expensive and an unnecessary risk-oil wells are drying up now and its expensive to find new wellsPetroChase 12 (Independent oil and gas investments firm specializing in the acquisition and development of drilling sites, PetroChase, “OIL DRILLING INVESTMENTS- AN EXPENSIVE AND RISKY VENTURE”, http://petrochase.com/blog/2012/04/oil-drilling-investments-an-expensive-and-risky-venture/) One of the most expensive and risky ventures in terms of investment is oil drilling. We can take an example to understand it. Mukluk Island is a place where drilling process was carried out in 1983. In this project, about 12 oil companies spent practically $2 billion for oil drilling in the Beaufort Sea, North of Alaska. This oil exploration investment was based on oil stains discovered by the experts. However, the well was only a dry hole where oil did not exist at all. Thus, oil drilling is not only expensive but risky as well. According to the Arizona Geological Survey, in Arizona, an oil drilling companies project costs around $1,000,000 depending upon the location and depth of hole. A rig which can drill the most exploratory holes can cost from $8,000 to $15,000 per day. This might not be an expensive deal for big companies. However, below mentioned an oil drilling companies project costs around $1,000,000 depending upon the location and depth of hole, making it expensive: Costs associated with hiring welders, contractors, engineers, mud loggers, scientists, geologists, and supervisors Personnel for logging, drilling, casing, cementing and other logistics Settlements with landowner such as for offshore locations, territorial payments, attorney fees, permission to perform well drilling and various other tax payments Maintenance costs including staffing. Specialized personnel would work in three shifts to supervise the location 24 hours a day. Amenities for personnel such as restaurants, motels, transport, food & water. Not only is the drilling process expensive for oil exploration companies, but the contractors are also costly to hire and the major reasons are mentioned as follows: It is very difficult and rare to find new oil wells Very low yields from the aged and mature wells Risks associated in the process of exploration The price of oil & gas is very fluctuating Elevated demand for drilling contractors and oil Drilling tasks are performed by specialized oil drilling companies such as Diamond offshore drilling Inc., Transocean, and Noble. Generally, these companies lease or rent their drilling rigs to oil & gas companies such as BP, Royal Dutch, ExxonMobil and Shell. This way, they can earn revenue based on day rates. Due to the high costs and complicated drilling processes, oil companies always look for alternative and better techniques so that costs can be reduced and drilling process can be increased. New technologies and innovations are taking place on a regular basis. However, it might take a few more years to experience real changes for enhancement in the oil & gas investing industry. Off Shore drilling costs are skyrocketing-costs for equipment, personnel, and management are millions of dollarsSCHAEFER 12(Ketih, Editor, Publisher, Owner at Oil and Gas Investments Bulletin VP at Vanguard Shareholder Solutions) Offshore drilling is the most complex and expensive way of accessing oil and gas reserves, particularly when it comes to deep water and ultra-deep water exploration activities. While presenting the industry with its biggest challenges, deep water exploration and development yields the greatest potential rewards and healthy profit margins to the oil service companies involved. The rising complexity and costs of such endeavours demands huge capital investments, long term commitments, higher efficiencies and a growing reliance on technology in order to reduce uncertainties. The market fundamentals for oil service companies remain solid, oil prices are stubbornly holding their ground above $100 per barrel in a tough macroeconomic environment. The resiliency of high oil prices is fuelling increasing exploration and production spending by operators as the industry pushes further offshore into ever-deeper water. By 2020, offshore oil production is expected to account for 34% of the global output up from 25% in 1990. offshore-drilling-rigs Offshore drilling companies are seeing a significant increase in tenders and requests from customers, particularly for the ultra-deep water rigs which are commanding higher daily rates for its units. The brightening outlook mirrored by record backlog orders and rising rates encouraged the industry to focus on adding new equipment in all market segments in a bid to provide the most versatile fleets of mobile offshore drilling units. Jack-up rigs are mobile, self-elevating drilling platforms that are towed by tugboats to the drill site with water depth of up to 400 feet. Jack-Ups are equipped with tubular structure legs that are lowered to the sea floor where jacking elevates the hull above the water surface before drilling operations begin. Semi-submersible rigs operate in a semi-submerged position with the lower hull ballasted down below the waterline. The rig consists of a deck which contains working areas, equipment and living quarters that is able to carry drilling operations in deep and ultra-deep waters of up to 10,000 feet in water depth. Drill Ships are self-propelled ships equipped for drilling in water depths in which jack-up rigs are incapable of working. They can drill in deep and ultra-deep waters in up to 12,000 feet of water depth. reserve-discoveries-by-water-depth Rising oil prices have also spurred a construction boom in drilling rigs; the cost for a drilling ship easily surpasses $600M per unit where it is leased at $500k/day or more on 2 or 3 year contracts. The Jack-up market is seeing increased demand in Mexico, the North Sea, the Middle East and Asia while the floaters market which includes ultra-deep water rigs has been improving markedly in Brazil, Africa and the Gulf of Mexico. 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