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Analysis: Switching to Natgas Benefits Texas

Fuel switching to natural gas in the power, transportation and residential sectors "has significant economic and environmental benefits for Texas," and could potentially have the same benefits on a larger scale if implemented nationwide, according to an analysis performed by researchers at the University of Texas at Austin (UT).

The researchers concluded that some fuel switching from coal to gas in the power sector, from petroleum to gas in the transportation sector and from electricity to gas in the residential sector "is not impact free and is exposed to a different set of economic risks than the current fuel mix, [but] with proper policy incentives and fully functioning markets, the benefits can be harnessed while the risks minimized."

The fuel-switching examples analyzed, "while having minimal impact on natural gas supply and infrastructure, would have large and meaningful impact in improved energy efficiency, air quality and energy security," according to a 105-page pre-release draft of the report. A final version of the report, which will include detailed conclusions and follow-on work, is due to be completed later this year.

The analysis focused on the Electric Reliability Council of Texas service area for electrical generation, with a hypothesis that "if increased penetration of natural gas can't be justified on economic and environmental grounds in Texas, then it can't be done anywhere in the U.S.," according to researchers Fred C. Beach, Marianne Shivers, John C. Butler and Michael E. Webber.

In the power sector, the researchers found that replacing 4,000 MW of capacity from coal-fired plants would require roughly 0.23 Tcf of gas annually, an amount unlikely to have much influence on the natural gas market but enough to potentially replace 24% of the state's 2007 coal-fired generation. "In the process, this fuel switching would yield a variety of economic benefits to producers and environmental impacts to the state," they said.

The analysis indicated that it is "technically feasible for Texas to significantly surpass California in its use of natural gas for transportation" over the next 10 years. Doing so would require significant compressed natural gas and liquefied natural gas infrastructure investments, clear signals of support in the form of policies and incentives at the state and federal level, and education of light- and heavy-duty fleet vehicle operators and manufacturers.

In the residential sector, where natural gas use is dominated by water heating, the researchers concluded that if 10% of electric water heaters in Texas were converted to gas it would reduce the state's electricity consumption by 1.36 million MWh annually and would require only 0.01 Tcf of additional gas.

While it focused on Texas alone, the UT study built upon previous studies that analyzed the future of gas both nationally and globally, including reports from the International Energy Agency (see NGI, June 13), the U.S. Energy Information Administration (see NGI, May 2), the Aspen Environmental Group (see NGI, July 12, 2010) and the Massachusetts Institute of Technology (see NGI, June 28, 2010).

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