The Fourth in a Series of Articles on the Sea of Cortez to Salton Sea Channel Project Published by
Cal-Neva Water Quality Research Institute and written by Dr. Abe Beagles, Director of Research, Dan Cooper Consultant and Walter H. Eason, Jr. CEO of Norc.
PROFIT POTENTIAL OF THE CHANNEL
December 31, 2007
The first thing people ask us about the Channel is; how much; that is, how much will it cost? They ask this because they cannot comprehend how the production of water could be profitable. That’s because the production of water has always been subsidized. The Channel, however, would be a profitable venture. As with any profitable venture, the appropriate question should be, instead; just how much money will it make?
The most recent version of the Channel was proposed by the National Outdoor Recreation Council, (NORC), on August 18, 2005, in the Press Enterprise, Desert Edition. It is a canal, actually, to be built from the Sea of Cortex, Mexico, to, and as far north as, Palm Springs, California. We call it the “Channel”, instead of the “Canal”, because that is how it is legally coached.
NORC is a non-profit corporation, so obscure and so unknown, that no one really took us seriously, in the beginning.
Every aspect of the Channel will be profitable. The short list is; Desalination; Hydrogen Gas production, Electricity production; land development; shipping; manufacturing; mining; recreation; and, gaming. We will estimate a few. Take heed; these estimates were very shoddily done. They weren’t meant for rocket scientists to dissect.
Profit Potential from the Sale of Channel Desalinated Water Using the Plasma Incubator Reactor System
Utilizing the Plasma Incubator Reactor System, the Channel is estimated to produce as much as 300 million acre feet (maf) of desalinated fresh water, per year, from the desalination of 306 maf of seawater. Less is probable. More is possible. Never-the-less, 300 maf/yr is the figure we based our estimates upon.
For this estimate, we make eight other assumptions: (1) that, the sales of water will pay for all of the cost of infrastructure of the Channel, including all its ports, etc.; (2) that, the sales of water will pay for all the cost of desalination facilities; including all its distribution networks; (3) that, the sales of water will pay for all the cost of electric generation facilities, including all its distribution networks; (4) that, given the choice, the end consumer will pay as much, for water, as they are paying today; (5) that, the real and total, unsubsidized, cost of water, today, is, on average, approximately $3000/ac ft.; (6) that, the predominant, ongoing, cost of producing this water is the cost of electricity; (7) that, the, ongoing, cost of producing this water will be factored into the cost of producing electricity; and, (8) that, the Channel and all its associated infrastructure would have a useful life of 70 years. That would mean a potential profit of $60.82 quadrillion from the sale of water, over its lifetime or, $868.79 trillion/yr, [(300 maf/yr x $3000/af x 70yrs - $2.19 quadrillion)/70] , from the sale of Channel water each year.
This is not the only profit to be gained from the sale of Channel desalinated water. Profit from the sale of Channel desalinated water will, primarily, come in the form of environmental restoration. Previously, in our Article of December 26, 2007, we showed that the Channel would allow for as much as a 90 percent recovery of all threatened and endangered species throughout the Western United States. Can you put a dollar figure on 90 percent restoration of the environment of the Western States? No! The environment is irreplaceable and priceless.
Profit Potential from the Sale of Channel Hydrogen
The Plasma Incubator Reactor System is designed to produce electricity using the Norweigan technology known as Wave Action, we have renamed this for our system as the Bubble Gen Electric Co-Generation Technology. It is made possible because of newly developed Permanent Magnets from Europe and made available to Cal-Neva for manufacture in the US. These magnets are 10 times more powerful than any magnet known to man today. Utilizing the Bubble Gen along with the Plasma System in desalination technology, the Channel is estimated to give off a byproduct of as much as 6 maf/yr of a hydrogen/oxygen mix from the process of desalinating 306 maf/yr of seawater.
For this estimate, we make four other assumptions: (1) that, because it is a by-product, the cost of producing that hydrogen has already been borne; (2) that, two thirds of that hydrogen/oxygen mix would be usable gaseous hydrogen, (4 maf/yr); (3) that, given the choice, the end consumer would prefer to buy hydrogen, even at the same price as they are now paying for gasoline and diesel fuels, on average $3.50/gal; and, (4) that, the cost of compression, storage, distribution, etc., of that hydrogen is approximately $ 1.50/gal. That would mean a potential profit of $2.61 trillion/yr, (4 maf/yr x 325,851 gal/af x $2.00/gal), from the sale of Channel hydrogen each year.
Profit Potential from the Sale of Channel Electricity Within the Harbor Districts
Recall, the hydrogen/oxygen byproduct gained from Channel desalination is estimated to be 6 maf/yr. Before that gaseous mix is processed and consumed, as usable hydrogen, it can be used to drive linear permanent magnet (PM) generators, all along the Channel. That’s right; it will generate power, twice! After this gas is used, initially, electricity to drive the linear PM generators can come from those generators, themselves. Since, it only takes 1 percent of the electricity produced to generate electricity with a linear PM generator, the only limit to the amount of electricity that can be produced is space.
Utilizing the Plasma System, it takes 1 megawatt of electricity to desalinate 1 million gallons of sea water. Thus, it would take 99.71 terawatts of electricity to desalinate 306 maf of seawater and produce 300 maf of fresh water, each year. [(306 maf/yr x 325,851 gal/af) / 1,000,000 gal/Mw]. This amount is included in the cost of desalination and, as such, will not be sold.
For this estimate, we will not consider the amount of electricity that can be produced but, instead, will limit the potential production of electricity to the demand that the Channel may create, over and above that required for desalination; and, we will make seven other assumptions: (1) that, all of the 6 maf/yr of hydrogen/oxygen mix can be used as input power; (2) that, there is approximately a 99 percent gain in electricity from the generation of electricity by linear permanent magnet generators, over and above input power; (3) that, on average, a developed Channel square mile will regularly consume approximately 2 megawatts (MW) of electricity; (4) that, 1,108 square miles are to be provided electricity from the Channel, as if developed; (5) that, given the choice, the end consumer would prefer to pay for Channel produced electricity, even at the same price as they are now paying, on average, $ 0.20/kWh; (6) that, buying back electricity is unnecessary; and, (7) that, the cost of production and distribution of that Channel electricity has already been borne, factored into, the ongoing cost of desalination. That would mean a potential profit of $388.24 million/yr, [(1,108 sq mi x 2 Mw x 1000 kW/Mw) x ($0.20/kWh x 24hr/day x 365 days/yr)], from the sale of Channel electricity each year.
Profit Potential from Land Development Within the Harbor Districts
This estimate does not consider potential profit from the development of land outside the Harbor Districts or, outside the United States. We expect that it will be considerably more, there.
Total land area, encompassed by the boundaries of the Harbor Districts, is approximately (2,164 sq mi). Less the water surface area of the Salton Sea, (365 sq mi), the Harbor Districts bound approximately (1,799 sq mi) of land. About ⅓ of that is either Federal, State, or Sovereign Tribal Indian, etc., land. Thus, the Harbor Districts may include as much as (1,199 sq mi) of land. The main channel, through both Harbor Districts, would consist of, no less that, (91 sq mi), altogether; (33 sq mi in the Harbor District of Riverside Co. and 58 sq mi in the Harbor District of Imperial Co.). That leaves approximately 1,108 sq mi to develop.
For this estimate, we make four other assumptions: (1) that, the current base cost of land is $40,000/ac; (2) that, most property owners, in the Harbor Districts, will want to develop or redevelop their properties; (3) that, as a consequence of the Channel, vacant land values will increase 10 fold; (4) that, the net profit potential of developed land, less costs, is 10 fold that of vacant land value. That would mean a net potential profit of $283.65 billion, on land alone, (640 ac/sq mi x 1,108 sq mi x $400,000/ac); and, a net profit potential of development of $2.84 trillion.
Profit Potential from the sale of Channel Minerals and Precious Metals
The Channel must be built large enough to accommodate the desalination of 306 maf/yr., without causing entrainment of sea life. We estimate that this will entail excavating, approximately, 43.2 billion cubic yards. Restoration of the Salton Sea may entail excavating another 77.6 billion cubic yards. The actual dimensions of the water surface will be one mile wide and 250 foot deep starting at the US border just west of Calexico, Ca. and run east to the existing irrigation channel now coming from the Colorado River. At that point it will curve north and head towards the city of Indio, Ca. where another large Harbor will be built. The channel will then curve west towards Palm Springs with turnouts at various places along that route to accommodate the docking of cruise ships in close proximity to the Indian Casinos in the area. This will afford added income to those establishments and will add revenue to the state of California by virtue of the Gaming Compacts in place as of the writing of this article. The channel from Indio to Palm Springs will only be one half of a mile wide and will be 200 feet deep.
For this estimate, we make four other assumptions: (1) that, the sale of fill will offset much of the cost of excavation; (2) that, the cost of excavation would be borne by, factored into, the cost of desalination; (3) that, excavated material will be high graded, if not altogether processed for minerals and precious metals; (4) that, on average, the profit from the sales of minerals and precious metals, over and above all other costs, will be, approximately, $15 per cubic yard (CY). That would mean a potential profit of $1.81 quadrillion, (43.2 + 77.6 billion CY x $15), from the sale of minerals and precious metals. It is a known fact that the area where this channel will go through contains some of the richest gold and silver alluvial deposits in southern California.
Profit Potential from the sale of the Manufacturing of Some Hydrogen Vehicles
We are not even going to try to list all of the numerous areas of manufacturing that the Channel will foster or benefit. A discussion of just one, however, should be sufficient to show that potential.
By 2020, 45.5 million Californians will drive 31.5 million vehicles. For this estimate, we make five other assumptions: (1) that, the Channel will allow for the manufacture of hydrogen vehicles for all Californians, at the very least; (2) that, 31.5 million new hydrogen vehicles will be purchased by Californians over a 10 year period of time; (3) that, the average net profit from the sale of a hydrogen vehicle, to all involved, is approximately $7,500; (4) that, all Californians will buy a new hydrogen car every 10 years; and, (5) that, all the hydrogen that all those new cars will use will come from the Channel. That would mean a potential profit of $0.23 quadrillion, every 10 years or, $23.63 trillion/yr, [(31,500,000 x $7,500)/10], each year.
Profit Potential from Gaming
Altogether, tribal casinos, in California, brought in $7.00 billion in 2007. With an international market to draw from, the Channel’s casinos are expected to, at least, match that; $7.00 billion/yr. Public perception is the key factor, here; and, that depends upon how well they, the prospective owners, will market the Channel Casinos to the public.
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