Natural gas and related infrastructure will play an integral role in the U.S. transition to a lower-carbon economy and remain a significant contributor to the country’s energy portfolio as well as economic growth over the next two decades, according to the Interstate Natural Gas Association of America’s (INGAA) INGAA Foundation.
“Over the next 20 years, the current United States natural gas pipeline infrastructure will continue serving both traditional end use sectors such as residential, commercial and industrial, and emerging sectors such as pipeline exports to Mexico and LNG exports to the global market,” the INGAA Foundation said in a report released Tuesday.
“Rising gas demand and production levels could spur the need for up to 21 Bcf/d of new gas pipeline infrastructure to support the shift on demand and supply driven by global LNG demand growth, booming pipeline exports to Mexico, continued demand growth from the petrochemical sector, or enhancing the reliability of the power generation sector.”
At the same time, gas-fired power generation will continue to play a key role in the nation’s energy mix, according to the report.
“Natural gas-fired generation will allow an increasing amount of renewable energy in the electric generation portfolio by providing electric grid reliability in the form of load and generation profile following, backup power, frequency regulation, and spinning services,” the foundation said. While battery storage at scale could provide some of those services, current battery technologies do not provide the full range of flexibility needed and, even with technological advances, may not be economical compared to gas-fired generation until near the end of the study’s analysis period.
“Therefore, regardless of any assumptions about increasing renewable generation, natural gas-fired generation will continue to play a crucial role in ensuring that peak electric demand is met reliably.”
And the report concluded that demand for nonratable flow interstate gas transmission services and hourly nominations will increase as the integration of renewables continues.
“If natural gas-fired generators are expected to serve as the backup when renewable generation is unavailable, these shippers may require pipeline services that allow them to nominate on the pipeline with little to no notice and the ability to consume gas non-ratably,” the INGAA Foundation said. “In such cases, pipelines must have the capacity to offer such services, and if not, pipelines must be sized to do so.”
The report’s findings are based on two scenarios that consider different levels of renewable escalation from 2020-2040 and how those levels affect natural gas demand. In both scenarios, gas was found to play a key role in the transition to a greener economy.
Analysts from Black & Veatch Management Consulting, which conducted the study, assumed that about 80 GW of coal capacity and 42-48 GW of nuclear capacity would be retired over the 20-year study period, according to principal author Deepa Poduval.
“In the balanced future scenario, natural gas presents a very efficient power generation source that will replace coal and nuclear capacity that retires over the study period,” Poduval said. In that scenario, 300 GW of renewable generation capacity was added, along with 35 GW of new natural gas capacity.
“So this is a balanced world where natural gas plays a part, but not a dominant part in replacing the coal and nuclear retirements. But we see that even at that level, gas demand to serve power generation is about 11 Bcf/d, and quite robust.”
Analysis of the rapid renewables transition scenario, in which 450 GW of renewable resources and 16 GW of gas capacity were assumed added, natural gas demand holds steady at current levels, Poduval said.
According to the report, the intermittent nature of solar and wind power generation “will intensify the need for flexible, nimble, fast ramp-up generation that natural gas supplies to maintain the reliability of the electric grid in the United States,” and gas power generation will require additional, flexible transmission services “to balance the growth in renewable generation and support electric grid reliability. New pipeline capacity will support this transition.”
A separate study released by the INGAA Foundation last year concluded that natural gas, oil and natural gas liquids midstream infrastructure development in the United States and Canada will continue at a significant pace through 2035, with an average $44 billion investment needed each year.