Daily GPI / NGI The Weekly Gas Market Report / Markets / NGI All News Access / Liquefied Natural Gas (LNG)

While California Debates Natural Gas Use, Research Points to Bullish National Future

Despite climate change-related challenges and anti-carbon skeptics, the National Regulatory Research Institute (NRRI) and the American Petroleum Institute (API) said natural gas likely will remain an integral part of the U.S. energy mix going forward, but California regulators aren’t quite as sure.

The state’s energy regulators and utilities are re-examining the role of gas in power generation going forward, given projected excess electric generating capacity and more reliance on renewable energy resources. The Los Angeles Department of Water and Power (LADWP) said Tuesday it will reconsider its plans for a $2.2 billion facelift of several old gas-fired power plants it has in the Los Angeles Basin.

The Los Angeles Times earlier this year reported that a glut of electricity generation capacity was projected to hit 21% above power demand by 2020, costing consumers billions. New gas-fired generation was identified as the primary reason for the excess utility rate charges.

Now, the California Energy Commission is reconsidering a series of gas-fired plant repowerings along the Southern California coast, while the California Independent System Operator is recalculating the need for new gas-fired generation. LADWP plans to look at potential renewables or other “clean” energy alternatives for the gas-fired plant refurbishing.

Nationally, however, and contrary to scenarios promoted by carbon-free advocates, phasing out gas for power generation over the next 10 years by replacing it with renewables "doesn't seem feasible, let alone economical," said NRRI's principal researcher Ken Costello, who authored the report, "Questioning the Future of Natural Gas.”

"The most rational policy, at this time, is to continue relying on natural gas for electric generation for the next two decades and probably even longer," he said.

Opposition to gas "has little merit," and "should continue as a bridge fuel,” he said. Gas-fired electricity generation constitutes about 30% of the total U.S. generation, "a sharp increase" from 17% in 2003.

Over the decades as gas provides a bridge for renewables,  "the United States can grow the penetration of zero-carbon technologies, like renewable energy and nuclear power, to meet increased demand for electricity and replace coal-fired power plants," Costello wrote. "In fact, a reasonable argument is that the U.S. and state energy policy should encourage the expansion of natural gas for different uses rather than its suppression."

Climate change concerns should be a factor in developing energy policy, but "not the sole or even overriding factor,” Costello said. He also stressed that the gas sector needs more research and development on carbon capture and sequestration to make gas in the long run more
“carbon friendly.”

It is "critical” for the oil and gas industry to spend more on research to “make natural gas more environmentally and overall socially acceptable,” he said.

"It is beyond dispute that natural gas for electricity generation has contributed to a decline in carbon emissions over the past several years by substituting for coal-fired generation.”

Meanwhile, API touted technology and industry knowhow as providing 75 years worth of oil resources and up to 145 years worth of gas reserves, which presents the nation with new economic opportunities.

"The U.S. energy revolution has not only brought positive impacts to communities, but it also allowed the United States to become a leader in emissions reductions," API noted.

Exploration and production companies are capturing more methane leaks and gas at the wellhead, cutting fugitive methane emissions by 16.3% since 1990 while overall gas production was increasing by 53%. During the same period, emissions from hydraulically fractured (fracked) gas wells were reduced by 59%, according to API.

"U.S. energy-related greenhouse gas emissions are now at their lowest level in nearly 25 years," API researchers said, citing an industry investment of $90 billion between 2000 and 2014 for zero- and low-carbon technologies.

Recent Articles by Richard Nemec

Comments powered by Disqus