Natural gas is expected to play a larger role in the nation's energy future, but the industry must overcome opposition to building pipelines in areas that need them the most, and it needs to address its aging workforce by getting more children and young people interested in pursuing careers in the field.
Despite the challenges, the natural gas industry has "a really bright future," according to Natural Gas Supply Association (NGSA) CEO Dena Wiggins. She said the organization expects 20 GW of coal-fired power generation will be retired and come offline this year, followed by an additional 24 GW between 2016 and 2020.
"Natural gas is standing ready to fill that gap," Wiggins told attendees of the North American Gas Forum in Washington, DC, on Monday. She added that power generation is only part of the picture -- NGSA analysts say about 66 new industrial projects and expansions are in the planning phase, which collectively will increase natural gas demand by 4 Bcf/d.
Liquefied natural gas (LNG) exports from the United States are also a source for optimism, Wiggins said. She said NGSA expects the first LNG exports from the U.S. in late 2015 or early 2016, and that eight terminals with 14 trains will come online between 2015 and 2020.
"At an 85% capacity factor, we expect to see exports in the range of 8 Bcf/d," Wiggins said, adding that exports to Mexico this winter are expected to exceed 3 Bcf/d, up from a little more than 2 Bcf/d last winter. "There's a lot of infrastructure that's being put in place on the Mexican side of the border that will enable gas from the United States to reach Mexico."
But there are challenges. "We've got to find a way to get pipeline built in the areas of the RTOs [regional transmission organizations]," Wiggins said. "In those regions, it doesn't make sense for the generators to go up and sign for long-term firm capacity on the pipelines. We've got to find a market-based solution to get gas in those areas where it's needed.
Wiggins said the NGSA has seen "unprecedented levels of activism" this year. She cited protests outside of FERC's headquarters in Washington, and the disruption of a Natural Gas Roundtable meeting with House lawmakers in June (see Daily GPI, June 18; May 5; April 16; March 19).
"We can't overlook the challenges, both at the federal and state level, of getting new pipeline in the ground," Wiggins said. "There are people out there that don't like this pipeline infrastructure, that don't like natural gas, that don't like fracking. And we know that."
Another challenge, according to Wiggins, is that the Obama administration's policies seem to be working against each other. Case in point, the Mercury and Air Toxics Standard (MATS) rule, which encourages the use of natural gas, and the White House's Council on Environmental Quality (CEQ), which has proposed having federal agencies analyze upstream and downstream impacts as part of the process for the Federal Energy Regulatory Commission to certify natural gas pipelines (see Daily GPI, Dec. 19, 2014).
"We've got to find some way to get this gas to market," Wiggins said. "We need the pipelines and we've got to find some way to coordinate these federal policies so that we end up with rational policies."
Gordon Pickering said Navigant Consulting Inc., where he serves as director of the energy practice, projects that U.S. domestic natural gas production will increase 74% between 2012 and 2040, thanks in large part to shale gas. The energy consulting firm also projects that annual U.S. shale gas production will increase 140% from 2014 to 2040.
"Shale gas and climate change has been positive, not all people understand that," Pickering said, adding that without it, prices for electricity and natural gas would be higher, and would likely lead to lower total energy created. He said a world without shale gas would also decrease demand for natural gas because renewables and perhaps some other forms of energy, like nuclear power, are diverted to help generate electricity.
During the Q&A session, Wiggins said RTOs have been working hard to ensure fuel assurance for the upcoming winter season.
"With the exception of the ISO-New England and the Northeast, it seemed that all the RTOs believe that there will be plenty of gas to meet demands of their industry this winter," Wiggins said. "ISO-New England still has some concern. They think they still need some infrastructure, and they think they can rely a little bit more heavily on LNG [imports] coming in through the Northeast."
Gordon said that for the last seven years, the industry has been fortunate to have good access to natural resources. But that could change.
"The threat today at some level is will the industry be entitled to have access, to be able to continue to do what they have been doing, and do it better in the future through technology innovation?" Gordon said. "There are some [people] that think some access, or maybe all access, should be constrained.
"There is a social license that needs to be won by the industry -- to be able to have access, but to do other things that are important, [like] providing energy to the constituents in this country and around the world. It is not a given. Truth be told, the industry is probably doing better than it has in the past, but it needs to do better in the future."
Allen Burchett, global head of the Next Level program for oil, natural gas and chemicals at Zurich, Switzerland-based ABB, said the natural gas industry faces the same challenges as others.
"When I look at the future, I think of an aging workforce and the technology and innovation needed," Burchett said. "We need technically trained operators and engineers.
"It's going to be an issue for us going forward. We need to be strategic and intentional about supporting things like STEM [science, technology, engineering and math] education. We need to open up our facilities to encourage that at an early age."