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Chu Sees 'Slight Shift' to More Gas Use

In a forum stressing renewables at the Western Governors' Association (WGA) annual meeting last Monday in Park City, UT, U.S. Department of Energy (DOE) Secretary Steven Chu said the view of natural gas in the energy mix is becoming more bullish for the next 10 years, given the breakthrough in obtaining economic supplies from shale. North American power generators are rethinking the role of gas over the next decade, Chu told the governors group, which issued a new policy resolution on renewable development in the West.

Noting there has been a "sea change" in the outlook for natural gas, Chu said that it is going to "take awhile" to get to significant levels of new renewable-based power generation and to various clean coal technologies, including carbon capture/storage (CCS). "For natural gas we can now fracture rock, we can capture natural gas from shale, and we can capture these supplies even at today's depressed prices," he said.

"Between Canada and the United States the estimates now are that the gas resources in North America have essentially doubled since it is now viable to extract gas from shale. That is actually very significant and really changes the outlook of the power companies who have been petrified by the volatility of gas prices, but when you just doubled one of your natural resources, it is a different issue."

As a result, Chu said many people in the energy industry are "rethinking what the world will be like in the next decade." He thinks there will be a "slight shift" to more natural gas use, but he hopes there will also be some breakthrough in clean coal technology. He noted that gas is about half as carbon intensive as coal for equivalent amounts of power generated.

Earlier, in response to comments by Montana Gov. Brian Schweitzer who chaired the WGA meeting, Chu reiterated his strong support for obtaining commercial-scale technology for coal capture as a means of using the nation's large fleet of traditional coal-fired generation plants. Schweitzer said the world's vast coal reserves, of which the United States has the largest share, demand that "someone lead globally," and he is looking for U.S. leadership in this area.

Chu said DOE has a lot of stimulus dollars earmarked for various aspects of clean coal, totaling some $3.4 billion. Chu recently announced a provisional agreement between DOE and the FutureGen Alliance that includes $1 billion in funding from the American Recovery and Reinvestment Act of 2009 to help pay for the project's construction in Mattoon, IL. DOE expects to contribute $1.1 billion toward the project, with $1 billion of that amount coming from ARRA funds for CCS research. The FutureGen Alliance would provide another $400-600 million, based on a goal of 20 member companies each contributing a total of $20-30 million over a four- to six-year period.

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