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DOE: Shales Make Natural Gas 'Cost-Effective' for Power Gen

The nation's natural gas resources, which have grown with the expanded potential of shale plays -- including as much as 20 years supply from the Marcellus Shale -- can be used to cost-effectively generate electricity, and any environmental burdens will come primarily from combustion when the fuel is used, not when it is extracted, according to a report from the Department of Energy (DOE).

The growth in domestic natural gas supply "may be hindered by the possibility of surface water deterioration and legislative uncertainty...[but] properly engineered and implemented natural gas systems have favorable environmental and cost profiles in comparison to other energy sources," according to the 165-page report, which was completed at the end of June and released by DOE last week.

In 2009 Marcellus guru Terry Engelder said there was a 50% probability that the Marcellus would ultimately yield 489 Tcf (see NGI, Aug.3, 2009). Last August the U.S. Geological Survey said the Marcellus held just 84 Tcf of undiscovered, technically recoverable natural gas (see NGI, Aug. 29, 2011), a figure that was eclipsed by studies by ICF International Inc., which estimates 461-698 Tcf of natural gas is technically recoverable from the shale play, and IHS Inc. which estimates 267-534 Tcf is technically recoverable from the play (see NGI, March 26).

Engelder's estimate "is enough to meet nearly 20 years of natural gas demand," according to the DOE report, but "the estimated recoverable amount is based on an extraction period of 50 years, meaning that the 20-year supply will not be extracted within a 20-year timeframe."

Whatever the final number turns out to be, one thing seems certain, according to the report: all of that shale gas will help to keep costs down for the nation's electricity generators.

Analysts at DOE's National Energy Technology Laboratory focused on seven criteria -- resource base, growth, environmental profile, cost profile, barriers, implementation risks, and expert opinion from stakeholders in academia, government, and private industry -- in their evaluation of the role of natural gas in the U.S. energy supply chain. They evaluated four natural gas power technologies: natural gas combined cycle (NGCC), NGCC with carbon capture and sequestration (CCS), gas turbine simple cycle, and the U.S. fleet baseload average.

The cost of electricity (COE) is lowest in the NGCC case ($53.36/MWh), according to the report. NGCC with CCS had the highest COE ($81.37/MWh). The COE of the gas turbine simple cycle case was calculated at $71.76 MWh.

"The projected supply contributions afforded by new natural gas plays may keep the price of natural gas relatively low for the foreseeable future. However, since natural gas is comprised mostly of methane, the control of fugitive emissions is imperative to reduce the greenhouse gas footprint of natural gas extraction, processing, and transport," according to the report.

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