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Summary:

As countries gather in Cancun, Mexico to figure out a coherent plan to reduce greenhouse gas emissions, you can bet that natural gas will get plenty of attention. A study says 40 percent of the U.S.’s electricity could come from natural gas by 2035.

Natural gas power plant in Portland, Oregon

As countries gather in Cancun, Mexico to figure out a coherent plan to reduce greenhouse gas emissions, you can bet that natural gas will get plenty of attention. That’s because natural gas production has boomed – to the point of oversupply by some estimates — and it’s less polluting than coal, the devil in the climate change fight.

The U.S. could see 21 percent of its electricity in 2011 coming from power plants running on natural gas, and that stake will likely grow to 40 percent by 2035, according to a study released Monday by the engineering and construction firm Black & Veatch in Kansas. At 40 percent, natural gas will become the dominant source of electricity for the country. At the same time, renewable electricity such as wind and solar could account for 4 percent in 2011 and 11 percent in 2035. Hydroelectricity will add another 7 percent to the pie in 2011 and 6 percent by 2035.

The projection is much more bullish about natural gas’s role in the country’s electricity supply than the U.S. Energy Information Administration’s outlook, which was published in May this year and is set for an update later this month. The EIA said natural gas accounted for 21 percent of the sources in 2008 and, depending on the pace of renewable energy generation, policies and pricing, it could still account for 21 percent in 2035. The EIA sees renewable electricity taking up 17 percent of the supply in 2035 (including hydro).

Natural gas has won fans in recent years as the U.S. struggles to figure out its short- and long-term energy policies, particularly in the context of reducing greenhouse gas emissions. Successes by natural gas producers to extract the fossil fuel from shale formations in North America have positioned natural gas as a reliable, long-term source of energy. That makes it appealing to lawmakers who like to use “energy independence” as a rallying cry for their causes, even though the term really should refer only to oil, which has no direct impact on electricity generation.

So much natural gas has been flowing through distribution pipelines that T. Boone Pickens, a natural gas evangelist and investor, told Bloomberg last month that he was in no hurry to invest in natural gas because no good profit can be made from it.

“Natural gas is oversupplied and you’re looking at a $4 to $4.50 natural gas next year. 2011, you have to shut down some of these rigs because they are not making money. You’ll have to have $6 gas to make money off of a lot of the wells being drilled,” Pickens said.

The glowing profile of natural gas is sometimes seen as a threat to renewable electricity development. The rational is that utilities will favor investing in natural gas-fed power plants to help them meet goals to reduce carbon emissions and do so at the expense of investing in renewable energy. Coal-fired power plants generate twice as much emissions as the natural gas variety, an MIT report said.

Black & Veatch’s Mark Griffith doesn’t believe natural gas will have that big of an impact on renewable electricity development. He pointed out that utilities are building solar and wind farms – or signing contracts to buy those sources of electricity from power producers – because they have to comply with state mandates. Over half of the states in the country have policies (renewable portfolio standards) that require their utilities to buy and sell certain amount of renewable electricity.

However, natural gas prices do have an impact on prices for renewable electricity. California, for example, has used the wholesale prices for natural gas-based electricity to calculate some of the incentives for solar energy. “If you are talking about (renewable portfolio standards), then natural gas price is a factor, but it’s not a driving factor of how many megawatts will get built,” said Griffith, a managing director at Black & Veatch. But lower natural gas pricing could lower the amount of profits made by renewable energy developers, he added.

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Photo courtesy of Portland General Electric

  1. I still can’t comprehend the Obama administration’s reluctance to push on natural gas vs coal. The ease of cleaning up what pollutants there are in the former is a piece of cake compared to coal.

    Yes, the current costs per BTU are probably the decider; but, you aren’t going to be able to use coal to power automobiles anytime soon. The nearest city to me had the first natural gas-powered bus fleet in the country and it’s helped maintain the clean air we enjoy. And has provided a point source for one of the few natgas filling stations in the county.

    Even at arbitrary pricing, the cost of operating the few natgas Hondas around town is about 40% lower than the gasoline Hondas they replaced.

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  2. Dan Schecksneider Friday, December 10, 2010

    Actually, coal has been power transportation for over 70 years – it powered aircraft, trucks tanks and more during WWII – the Germans had developed Fischer-Tropsch technology for the conversion of coal to liquid fuels and chemicals in 1923 and S Africa doesn’t import oil because their economy runs on coal converted to liquid fuels and chemicals.

    Coal converted to liquid fuels and chemicals via FT synthesis has the interesting capacity to produce a net of more than 1 MW/ton of electrical power AND 1 barrel of FT products (40% diesel and 40% gasoline with the remaining 20% as chemicals that are the precursors to a variety of manufacturing processes). This equation actually makes coal a lower carbon producer per unit value than any other fossil resource.

    There are (and have been for more than 50 years) ways to convert the CO2 from such a facility to other fuels sources thereby making coal carbon negative while growing the biomass necessary to displace coal from the enrgy mix.

    There are currently ~195 trillion cubic feet of proven natural gas reserves in the US. While this sounds like quite a bit, the US uses 60 Billion cubic feet/day and will exhaust the current proven reserves within twele years at current usage rates. With increased usage for power production and transportation we will be back on imported fuels within seven years.

    The country with the greatest proven reserves of NatGas is Russia, Follwoed by Iran, Qatar, Saudia Arabia, United Arab Emirates and THEN the US (sixth place in proven reserves of both oil and NatGas). How this will get us off imported fuels I still haven’t seen. At least as it stands now more than 50% of our oil imporst come from Canada and Mexico – allies both.

    BTU is the proper measure on which to base fuel source choice. The energy content of coal is what makes it such an attractive shoice for a bridge fuel. I have spent forty years working to devise a solution to the pollution and environmental contamination inherent in the use of fossil fuels. This work has led to the developement of a patent pending (US) business process comprised of existing, long proven, technologies in a novel configuration that would make coal carbon neutral, eliminate waste from the conventional lexicon and permit the displacement of fossil fuels over a 15 – 50 year period (dependent on levels of investment and governmental interest).

    Please remember that T. Boone Pickens wants you to buy Russion or OPEC NatGas after lining his pockets buying a diminishing US product.

    Cheers,

    Dan

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