With unconventional supplies on the rise, natural gas will be the go-to fuel for power generation over the coming decade, but the electric and natural gas industries need to cooperate better to avoid service interruptions, according to a North American Electric Reliability Corp. (NERC) report issued last month.

“Natural gas is becoming an increasingly important part of the North American fuel mix for electric generation,” Mark Lauby, NERC director of reliability assessments and performance analysis, said. “This report provides the foundation for both the gas and electric industries to work together, ensuring that sufficient infrastructure and operation coordination is in place to maintain bulk power system reliability.”

The biggest obstacle is the structural differences between the industries. For instance, a pipeline system designed for seasonal swings in residential and commercial demand does not always accommodate the day-to-night, weekday-to-weekend and hourly swings in demand of the power sector, making it uneconomic for some generators to reserve capacity and creating unique challenges for future storage facilities.

“The two industries must reconcile the divergent views such as firm contracting needed to build new pipeline capacity and how to secure day-to-day delivery of gas,” the report recommended.

That call for better communication extends to a need for “increased transparency,” particularly in sharing information about maintenance issues, load levels, dispatch principles and forecasts for both industries. The industries should all identify their vulnerabilities, such as the generators most likely to be impacted by pipeline disruptions and the pipeline systems needed to meet the 45 GW of planned capacity and 48 GW of conceptual capacity in the works for the coming decade, according to NERC estimates.

NERC’s 2011 Special Reliability Assessment expects the power sector to account for most of the growth in gas demand over the next 10 years as old coal-fired plants retire and new gas-fired plants come online.

The importance of natural gas to the power sector is being driven in part by historically low natural gas prices, which have pushed some coal-fired plants out of the generation dispatch stack, as well as pending environmental regulations, which will tilt the playing field in the favor of gas (see related story).

Between 1988 and 2007 the power sector went from being the smallest to the largest customer of the natural gas industry, increasing the interdependence of the industries, according to NERC. To reduce the risk of natural gas supply and delivery interruptions to the power grid, the industries need to plan together on storage, contracting, delivery alternatives and duel-fuel capabilities, according to the report.

The current recommendations mirror a 2004 report by NERC on the interdependency of natural gas and electricity, but the 2011 report shows that many of the issues have been addressed at least in part, if not entirely. The 2011 report is only a primer, and the first of two phases for the study. In the second, planning for 2012, NERC will “leverage this report as a platform for discussion with both industries.”

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