Energy 101 - natural gas

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  • 1. Truman National Security Project
  • 2. What is Natural Gas Used For? Who uses it? Top consuming states (2010):  Texas  California  Louisiana  New York  Florida  IllinoisTruman National Security Project 2
  • 3. Natural Gas vs. Coal Gas cheaper The price of natural gas is at a 10 year low and has recently dropped below the price of coal (EIA 2011) Natural gas power generation costs have also fallen For power generation, natural gas has environmental advantages over coal  Natural gas produces lower quantities of nitrogen oxides and carbon dioxide (CO2) than coal  Emissions of sulfur dioxide and mercury compounds are negligible Despite environmental benefits of natural gas power generation, over 600 coal fired plants producing between 45% of our electricity (vs. 23% for gas) Natural gas power generation demand outlook is mixed  Demand for natural gas power generation may increase if policies to place a price on CO2 emissions are adopted  But renewable energy generation resources may reduce natural gas demand for electric power generation Truman National Security Project 3
  • 4. Natural Gas Conventional vs. Unconventional SourcesCONVENTIONAL SOURCES “Free gas” Easier to produce. Accounts for about 94 percent of the gas produced in the U.S.UNCONVENTIONAL SOURCES The increasing availability of Shale gas (which is natural gas trapped in shale formations) has raised its profile among unconventional sources. Other sources include Deep Natural Gas, Tight Natural Gas, Coalbed Methane, Geopressurized Zones, and Methane Hydrates. Truman National Security Project 4
  • 5. Natural Gas: Where’s the Gas? Conventional Sources  Shale Gas-- Approximately three-tenths of total U.S. natural gas production occurs in Texas,making it the Nation’s leading natural gas producer.-- As of 2009, nearly 92 percent of shale gas production came from Texas,Arkansas, Oklahoma and Louisiana.Truman National Security Project 5
  • 6. Natural Gas: Extraction Technologies Technologies like hydraulic fracturing (aka “fracking”) has helped produce a shale gas boom… …BUT, there are also environmental concerns.Truman National Security Project 6
  • 7. Natural Gas Production Expected to Increase Globally Natural gas production expected to increase But depends on  Environmental concerns, particularly regarding fracking  Climate policy (carbon pricing, renewable energy requirements for power generation)  Fuel price relationships, which can be altered by technology and policy, affect long term demand trends  Upstream costs Truman National Security Project 7
  • 8. Energy (and Environmental) SecurityImplications Development of U.S. shale gas resources has significantly reduced need for the U.S. to import LNG for at least two to three decades, thereby reducing negative energy-related stress on the U.S. trade deficit and economy. Rising shale gas supply has led to lower domestic natural gas prices, which lowers the costs to average Americans of reducing greenhouse gases as the country moves to lower carbon/non-oil based fuels (e.g., electricity, compressed natural gas). Potential increase in demand for natural gas which can displace high carbon fuels. Increased production by U.S. and other countries weakens ability of long-term potential monopoly power of a “gas OPEC” or a single producer (such as Russia) to use energy resources as a tool for political gain.Truman National Security Project 8