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13 Aug 2012

Natural Gas and Its Role In the U.S. Energy Endgame

The boom in natural gas production has undeniable benefits for the United States. But two policy analysts argue that embracing a monolithic energy future dominated by gas will mean the loss of a golden opportunity: Leveraging cheap, abundant gas to create a sustainable future based on renewable power.
By kevin doran and adam reed

The United States has won the lottery on natural gas. According to the most recent estimates by the Energy Information Administration, the U.S. has some 2,214 trillion cubic feet cubic feet of technically recoverable natural gas — enough to satisfy all of our natural gas demands for the next century at current consumption levels. The extraction of shale gas, enabled by technological advances such as hydrofracturing and horizontal drilling, has led the way in creating this largely unforeseen cornucopia. Domestic natural gas is now a cheaper fuel for electricity generation than coal — long our go-to fuel for power around the clock — and emits roughly half the greenhouse gas emissions.

It appears that our energy problems are over — or are they?

A full-throttle shift to a gas-dominated electricity system, which now appears to be the ordained path forward in many parts of the country, will flash through our newfound abundance more quickly than we realize, and will not ultimately stave off catastrophic climate change, which by any reasonable measure of sanity is still the defining challenge of the 21st
The rose of abundant gas is not without thorns, including the risk of price increases.
century — cheap gas or not. Within a decade or less, we could be facing high natural gas costs again, plus the added burden of a planet in an ever-deepening ecological crisis.

Amid the din of enthusiasm surrounding the rush to natural gas, we run the risk of losing the real prize: a U.S. energy future consistent with our economic, environmental, and lifestyle aspirations. Wise use of natural gas, in conjunction with policies to support continued growth in renewable energy, can serve as a catalyst to quicken the transition to a sustainable energy system.

The recent and staggering abundance of natural gas is, ostensibly, a very good thing. Provided that current low natural gas prices persist and that resource estimates hold true, natural gas combined cycle power plants will gradually replace our nation’s aging coal-fired generation fleet. Our electricity will become cleaner, cheaper, and more efficient, and the superior ability of natural gas combined cycle turbines to ramp up quickly will allow easier grid integration of variable energy sources like wind and solar power.

This shift is already happening. Cancellations of coal deliveries and advance coal contracts have become common as utilities switch to natural gas. The U.S. Environmental Protection Agency (EPA) recently promulgated carbon dioxide emissions thresholds for new power plants that exactly match specs for natural gas combined cycle plants. The agency went so far as to opine that the rule actually wasn’t even necessary since such plants “will be the predominant choice for new fossil fuel-fired generation even absent this rule.”

Natural Gas Drill in Pennsylvania
Mladen Antonov/AFP/Getty Images
A gas drilling rig explores the Marcellus Shale in southwestern Pennsylvania.
But the rose of abundant natural gas is not without thorns. One such thorn is the risk of price increases. James Rogers, the CEO of Duke Energy, recently quipped that to Benjamin Franklin’s observation that only death and taxes are certain in life, “I would add the price volatility of natural gas.” Creating a gas-dependent generation fleet exposes us to future price spikes and hitches our fuel security to large uncertainties in the amount of domestic gas that is ultimately recoverable. A full century’s worth of a relatively clean and potentially cheap fuel at our current rate of consumption is obviously an extraordinary thing. Equally obvious is that our current rate of consumption will not remain flat for the next 100 years. If anything, natural gas will likely play a far greater role in our energy mix than it currently does, whether by displacing coal-fired generation, utilization in natural gas vehicles, increased use in manufacturing, or by outcompeting renewables as the cheapest source of power.

Another set of thorns comes in the form of adverse environmental and social impacts from natural gas production. Despite recent advancements in impact mitigation such as faster drilling, smaller and fewer well-pad footprints, and EPA methane capture requirements that go into effect in 2015, there remain serious concerns regarding the potential for shale gas production to contaminate sources of ground and drinking water, induce seismic events, and harm local air quality. Conflicts have already arisen between industry and the communities that bear the burdens of gas development, and they will likely increase in number as development continues: The Energy Information Administration estimates that bringing most of the U.S. shale gas and shale oil resources into production will require more than 630,000 new wells, in addition to the approximately 487,627 natural gas wells producing in 2010.

Communities that have never seen a drilling rig will be inundated with heavy truck traffic, blanketed with acrid exhaust from trucks and generators, and exposed to a surfeit of noise, lights, and dust from drilling and related activities. When communities face up to these realities, as is already occurring, it may become significantly more difficult and expensive for developers to obtain the so-called “social license to operate” in populated areas. This is not to say that community opposition will stop gas development entirely, but rather that it is wickedly hard to predict just how much of the gas resource will be socially developable, and how expensive it will become for developers to comply with tighter regulations that are likely to come with community opposition.

The natural gas boom also presents the prospect of imminent harm to the deployment of renewable energy, and dire environmental consequences that will follow from a failure to cease adding greenhouse gases to the atmosphere. The growing swell toward a utility sector dominated by
The natural gas boom presents the prospect of imminent harm to the deployment of renewable energy.
natural gas has already resulted in collateral damage throughout the renewables industry. Wind, for example, had previously been capable of competing with natural gas generation on a cost basis, thanks to advances in technology and a federal production tax credit that seems poised to expire at the end of this year. Installation of new renewable energy facilities has now all but dried up, unable to compete on a grid now flooded with a low-cost, high-energy fuel that can provide power on demand. What little support there is for renewables is mostly found in state renewable portfolio standards — a policy subsidy that many states appear to be rethinking in light of hard economic times and cheap natural gas.

The U.S. now faces a choice: We can rush into a monolithic energy future dominated by natural gas, or we can leverage the gift of cheap and abundant natural gas to create an energy system that is profitable, affordable, and more sustainable over the long run. To this end, we offer the following recommendations.

First, we should gradually utilize natural gas as the generation backbone for much of the electricity grid, replacing coal-fired generation. Coal-fired generation is aging and approaching retirement and new EPA air regulations make the construction of new coal plants profoundly uneconomic. Gas is cleaner than coal both in terms of localized pollutants and greenhouse gases, and so there is a net benefit for the environment as well as an economic benefit for the system. We could speed this up by guaranteeing cost-recovery for utility investments that replace coal capacity with natural gas capacity.

Second, as we pursue the gift of plentiful and cheap natural gas as the primary alternative to coal-fired generation, we should ensure that renewables — particularly wind and solar — are used as strategic hedges against the risks presented by increased reliance on natural gas for electricity generation. Whatever the factors that could lead to increases in
We should ensure that renewables are used as a hedge against the risk of increased reliance on natural gas.
natural gas prices — overestimation of resources, increased regulation, seismic events from drilling or wastewater injection, internationalization of prices via export linkages — these factors are fundamentally an argument for rather than against renewable energy expansion. Renewable energy’s zero-fuel-cost realities operate as a hedge against fluctuating fuel prices. A power system that balances gas and renewables will be able to take advantage of cheap gas while simultaneously insuring itself against fuel price spikes. It is thus imperative that we expand renewable energy standards at the state level. We must also ensure such expansions are strategically and legislatively coupled to the deployment of natural gas.

Third, we should take advantage of cheap gas to lower the integration costs of renewable energy. We’ve all heard that the wind doesn’t blow and the sun doesn’t shine all the time. The rest of the power grid must be flexible enough to accommodate these energy sources when available. In other words, conventional, controllable generation should be able to adjust its output to keep the grid balanced when, for example, wind power output rises or falls. Natural gas is an excellent generation asset for this role. Indeed, it is a model “grid citizen” — flexible, accommodating, and abundant. Provided renewable energy maintains a strong presence in the generation portfolio, gas will automatically assume this role due to its low cost and high flexibility.

Renewable energy is often criticized as expensive and undependable, and thus undeserving of public support and subsidization. But the presence of abundant natural gas mitigates both of these factors ably. With cheap gas replacing coal, power system costs should decline over time anyway, leaving a chunk of savings that could be applied to renewables investment with relatively low impact on consumer rates. The presence of additional gas-powered, system-balancing resources will further lower these costs, as well as account for renewable energy’s natural variability. Moreover, increasing concentrations of renewable energy will actually reduce its overall variability, since the net variability of a collection of many wind farms is lower than the variability of a single wind farm.

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There is a more fundamental point to be made. It is high time that we dispense with the notion that gas and renewables should compete in the first place. The real value of renewable energy lies not in low costs (though lower costs are certainly a laudable development), but in its environmental benefits — the cleaner air, water, and land that we all enjoy, and the hope of a future without catastrophic climate change. If we force renewables to go toe-to-toe with fossil fuels on costs, they will lose, again and again, until it is too late to matter. Renewables are worth their extra costs because they are clean. No other fundamental justification is required.

Shale gas production has fundamentally changed the energy game. It has opened the door of opportunity and presented us with a clear choice: to either use our windfall to build an electricity future dominated by natural gas and all its attendant risks, or to leverage the gift of natural gas to build a future that is more economically and environmentally sustainable. We should opt for the latter.

Correction, Aug. 17, 2012: Due to an editing error, an earlier version of this article misstated the estimated technically recoverable reserves of natural gas in the U.S. The correct figure should have been 2,214 trillion cubic feet.

ABOUT THE AUTHOR


Kevin Doran, left, is an institute fellow and assistant research professor at the Renewable and Sustainable Energy Institute (RASEI), a joint institute of the National Renewable Energy Laboratory and the University of Colorado at Boulder. His research focuses on the legal, regulatory and public policy dimensions of energy development. Adam Reed is a research associate at RASEI. He researches and writes on the legal, policy, and regulatory issues surrounding the deployment of sustainable energy technologies.

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COMMENTS


Both this article and today's New York Times Op-Ed are missing a likely problem with natural gas.

Methane is a far more potent greenhouse gas than CO2

And we don't know how much is being emitted from fracking sites. Not because those emissions don't exist but because the natural gas industry is not required to study or report them and makes every legal attempt possible to undermine efforts to do so.

If you think hydraulic fractuaring only results in an easily-funneled stream of gas, I'd say you're probably wrong, having seen the process myself.

It's quite possible fracking releases far more greenhouse gasses than does burning coal. Don't confuse not knowing emissions levels with there being none.

Posted by VWWV on 13 Aug 2012


"If we force renewables to go toe-to-toe with fossil fuels on costs, they will lose, again and again, until it is too late to matter. Renewables are worth their extra costs because they are clean. No other fundamental justification is required."

Wind and solar will always need a reliable form of power generation to back it up, if power quality regulations are kept as they are today. This means wind and solar costs will always be greater than any competition, since they require the competition to pick up the inevitable unpredictable power shortages. There isn't enough hydro pump storage (the only cost-effective energy storage technology available today) to fill the gap, there is no chance any new dams will be built, and what hydro exists today will likely be removed through EPA regulations in the near future.

Ironically, low cost power generation like NG turbines that can be quickly cycled up and down to source-track wind and solar will help reduce the total system cost of wind and solar.

Unfortunately, renewables plus required low cost generation is much more expensive than simply using the low cost generation alone. Plus, all of that power cycling results in little or no reductions in overall CO2 emissions with renewables versus without renewables.

Now, what was the point of renewables in the first place?

Posted by chris y on 13 Aug 2012


The article supports the use of natural gas as a bridge fuel without considering the controversy over the level of methane emissions it causes during extraction and transporting, in addition to the CO2 emissions when used as a fuel. Here are some sources that raise questions about natural
gas as a bridge fuel:

http://www.eeb.cornell.edu/howarth/Howarth\%2 0et\%20al.\%20--\%20National\%20Climate\%20Assessment.pdf

http://thinkprogress.org/climate/2012/02/08/421588/high-methane-emissions-measured-over-gas-field-offset-climate-benefits-of-natural-gasquot/

But the following, more recent study disputes the data and conclusions of the Howarth study and argues that even with significant leakage natural gas is an important bridge fuel:

http://www.geo.cornell.edu/eas/PeoplePlaces/Faculty/cathles/Natural\%20Gas/Assessing\%20the\%20greenhouse\%20impact\%20of\%20natural\%20gas\%20FINAL\%20UNFORMTTED.pdf

However these differences are resolved, we need much better information about the rate of methane emissions. Another concern about the increased use of natural gas is that it will slow
conversion to clean, renewable energy, which is essential if we are to preserve anything like our
present world. Whether or not it's better than coal, natural gas still produces significant amounts of greenhouse gasses.

Stopping global warming will require virtual elimination of anthropogenic greenhouse gas emissions ASAP (mid-century is probably the best we can hope for). And once natural gas infrastructure is built, a strong lobby will be paid to perpetuate its use indefinitely.

Perhaps our best hope is that the rapidly dropping prices of wind and solar PV will soon fall below the price of natural gas. Unfortunately, the obstruction of clean energy development by coal and oil companies and their congressional minions that is preventing further financial backing by Congress interferes with this development.
Posted by John L. Ward on 13 Aug 2012


One ton of natural gas when burnt produces 2.75 tons of CO2. It degrades at this rate to CO2 after 10 to 12 years if airborne.

When released without being burnt it's higher global warming potential comes into play: 75 times that of CO2 over a 5 year time frame. So just a 2\% leak in Natural gas volumes produced negates much of the reduction in CO2 emissions.

For a given unit of energy Natural Gas has a CO2 footprint 50 percent that of coal. This is very useful.

However, we will use up the global carbon budget for the entire 21st century for the 2C target with a 70 percent chance of success within the next 15 to 18 years. Therefore, a switch to gas is an illusory solution to climate change. It buys us a little time. Time that should not be wasted.

Posted by michael on 14 Aug 2012


Its "role in the energy game" is huge! learn about what our areas are experiencing at halestuff.com!

Posted by Eric Ryan on 14 Aug 2012


I was ready to read and go on until I saw the word 'Endgame' in the title of this article. What exactly is our endgame?

The premise seems to be that we will of course transition to renewable fuels at some point and that everyone will live happily ever after. The details seem to be how we get there, coal or gas. Never mind that coal exports are increasing as is worldwide coal usage.

When discussing the 'endgame' the primary factor is the culture of perpetual growth, both population-wise and economic-wise. If we don't come to realize that perpetual growth is not possible, it really doesn't matter if we figure a way convert to all renewable energy (which may not be possible). Growth and its partner-in-crime consumption will still cause it all to come crashing down at the end.

Posted by John Dyer on 15 Aug 2012


The addiction metaphor still holds. Yes, there's a lot cheap stuff out there that gives us the high we all crave and yes we all know that it's bad for us, but as long as the dealers are there making really good money and as long as we haven't enrolled in a serious program, then things will continue until we hit the wall and are forced to face some ugly consequences.

Posted by Adam Albright on 16 Aug 2012


Article writes: "recent estimates by the Energy Information Administration, the U.S. has some 2.2 trillion cubic feet of technically recoverable natural gas — enough to satisfy all of our natural gas demands for the next century at current consumption levels."

EIA places current estimate at 482 Tcf of unproven technically recoverable shale gas reserves, and current consumption of natural gas in US is 23.8 Tcf (or about 20 years).

http://www.eia.gov/countries/country-data.cfm?fips=US

http://www.upstreamonline.com/live/article299492.ece

Not sure where Kevin Doran and Adam Reed are getting their numbers, but they appear to be entirely incorrect. Could someone please respond, and update the numbers in the article so nobody is misled into thinking that natural gas consumption isn't rising in the US, and that by some dint of magical thinking we have 100 years of supply. NG is just one form of stored energy, no more. We have a 20 year window to develop more cost effective, less risky, more reliable, and less damaging to the environment energy storage alternatives to add flexibility and capacity reserves to our electricity infrastructure. I have no doubt natural gas is a temporary move that will be replaced with more cost effective alternatives in the long run.

Posted by EL on 16 Aug 2012


"Renewables are worth their extra costs because they are clean. No other fundamental justification is required."

Low carbon at any cost, really? This assertion highlights how dangerous and expensive it can be when people (lawyers and social scientist in this case) who have a poor grasp of numbers envision policy. If the goal is carbon reduction, energy technologies should be judged in view of their 'cost per unit of carbon avoided'. That measure will show that the US would run out of money long before solar (especially residential photovoltaics) could have any significant impact, and that only in the best locations does wind power help.

Some prima-facie evidence that Messrs Doran and Reed have a poor grasp of the numbers: The firgure in their second sentence is off by about a factor of a thousand: I imagine they meant "quadrillion" rather than "trillion". Typo? Maybe, but their absence of subsequent quantitative
analysis rather suspect a knowledge gap.

Posted by Energy Sage on 16 Aug 2012


America has yet to learn that natural gas is an energy source that can be consumed to almost 100 percent energy efficiency. Every natural gas appliance has a chimney, and with the technology of Condensing Flue Gas Heat Recovery the heat energy can be recovered from the waste exhaust gases, so that leaving the chimney is COOL exhaust. Global warming? Natural gas can be consumed so efficiently that the WATER can be recovered from these combusted exhaust gases. This clean distilled water is very usable. Water conservation? Increased natural gas energy efficiency = reduced greenhouse gas emissions. It is time to get our government and industry to start consuming our natural gas more efficiently. What natural gas is not wasted today will be there to be used another day.

Posted by Sid Abma on 16 Aug 2012


It seems to me that if your goal is the destruction of ecosystems that are necessary to support life on this planet then this plan is a sure winner.

Posted by Ronnie Wright on 19 Aug 2012


Natural gas is the future of energy. It is replacing dirty, dangerous, expensive coal and nuclear plants. It is producing the electricity for electric cars. It will directly fuel cars,pickup trucks, vans, buses, long haul trucks, dump trucks, locomotives, aircraft, ships etc. It will keep us out of more useless wars, where we shed our blood and money. It is lowering our carbon emissions. Here are over 800 recent links for you:

https://docs.google.com/document/d/1NbaKYme3bqOw0b6KMxXSjOLHLNeflalPy9gIAiTYFMQ/edit

http://ronwagnersrants.blogspot.com
Posted by Ron Wagner RN, MA on 21 Aug 2012


There seems to be significant uncertainty in the size of "technically recoverable natural gas" reserves in the US. EIA places this number at 2,214 tcf (enough for 92 years at current consumption), and USGS places conventional reserves at 291 tcf and unconventional reserves at 84 tcf (enough for 15 years at current consumption).

http://pubs.usgs.gov/fs/2012/3108/FS12-3108.pdf

http://www.usgs.gov/newsroom/article.asp?ID=2893&from=rss_home

How are we to understand this very large difference, and are we in for a wake up call in the near future (another bubble in our already fragile economy).

Posted by EL on 20 Sep 2012


First, natural gas is ours. LET ME REPEAT THAT. It is ours. Higher prices go to AMERICA not OPEC: and jobs. 4th-generation nuclear (pebble bed reactors) are probably the best way to provide energy abundance. I also feel in the future we will dispose of the waste by lifting safely via space elevators or balloons into and releasing it into deep space.

Posted by brian on 17 Oct 2012



 

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