During a recent meeting of state utility commissioners, the CEO of a Fortune 500 electric power company said natural gas prices promise reliability but "always break your heart." What breaks my heart is the electric power industry’s ongoing love affair with natural gas. Using natural gas for generating electricity is not the best or highest use for this clean, green, and domestically abundant resource.
Focusing on the Best Use for Natural Gas
Our energy system will always require some natural gas to be made into electrons. Today 22% of electricity is generated by natural gas. But any engineer will tell you that the most efficient and carbon friendly way to use natural gas is piping it directly into homes and businesses. Policy makers should seek to design policies that incentivize our reliable energy supplies being put to their highest and best use at reasonable costs. Direct use of natural gas does just that.
It is indisputable that for every 100 molecules of methane produced at the wellhead, more than 90 are delivered directly to the stove’s burner tops in my Virginia home. On the other hand, electrons generated from fossil fuels are less than 30% efficient. Basic physics tells you that converting energy reduces Btus. In fact, former U.S. Energy Secretary Samuel Bodman said that "burning natural gas for electric generation is like washing dishes with a good scotch."
An Abundant, Clean Energy Source
In the past decade, many electric utilities have dashed to natural gas for its flexibility and cleaner-burning properties in anticipation of a carbon cap. Natural gas is over 50% less carbon intensive than coal. Almost 90% of the U.S. power generation capacity that has been added since 1998 is natural gas – fired. Today there are more than 1,700 power plants in the U.S. that generate electricity from natural gas. According to the U.S. Energy Information Administration (EIA) 2010 Short-Term Energy Outlook, over 50% of the expected 23,475 MW of new generation capacity planned in the U.S. will be natural gas – fired additions.
There is certainly ample gas to meet our future needs. In 2008, the joint government-industry-academic Potential Gas Committee published its highest-ever estimate of domestic natural gas reserves: 2,074 trillion cubic feet (Tcf). This estimate was 35% higher than two years earlier and 77% higher than the estimate made in 1990. The committee reported that approximately 600 Tcf (29%) of the estimated 2,074 Tcf is gas produced by unlocking shale formations.
Going forward, the EIA projects that natural gas production from U.S. unconventional resources such as shale will increase 35%, or 3.2 Tcf, through 2030. Our collective goal should be to put these new supplies to their most efficient use and be mindful of overreliance on gas to generate electrons.
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