The Future of Natural Gas: An Interdisciplinary MIT StudyJune 25, 2010 (Massachusetts Institute of Technology)
THE POINTTwo crucial things to know about natural gas right now are that (1) a lot of people who live near it hate it and (2) a lot of people who live far away from it think it is the bridge to the New Energy future.
Natural gas can be used to generate electricity, to supply heat or as a transportation fuel. With the discovery of methods to obtain it from previously inaccessible shale deposits, it has become domestically abundant. And, because burning it creates roughly half the greenhouse gas emissions (GhGs) as burning coal and significantly fewer than burning oil, transitioning to it could mean replacing both the financial black hole of oil imports and the environmental degradations of coal mining with an energy source that would double the time the nation has to cope with the onslaught of global climate change.
In
The Future Of Natural Gas; An Interdisciplinary MIT Study (Interim Report), scientists who previously studied the practicality of “clean” coal and “safe” nuclear as means to face the coming “carbon-constrained” world say that in the next forty years (to the middle of this century) natural gas may be the best choice there is and a "bridge" to a New Energy economy. This suggests three possibilities.
First, they may be right about the idea of using natural gas as a bridge. Or they may be underestimating what the New Energies are capable of right now. Or they may know what the New Energies are capable of but are choosing the inevitability of natural gas because they anticipated what the U.S. Senate is flagrantly displaying this week for all the world to see: U.S. fossil foolishness will only die hard, no matter how bad it is for the people of this great nation and this good earth.
click to enlargeThe paper’s “big picture” conclusions about natural gas:
(1) The new-found abundance of international natural gas supplies will drive much more extensive use, especially in electricity generation.
(2) The U.S. shale gas reserves will drive increased domestic use.
(3) The increasing pressure to reduce GhGs will force a longer-term reduction of naturl gas reliance unless the capture and sequestration of fossil fuel emissions miraculously becomes both technically feasible and price-competitive with the ever-renewable, emissions-free wind, solar, geothermal and hydrokinetic energies.
(4) The domestic and international natural gas markets are so volatile that things could change before this sentence ends.
One of the biggest reasons there is so much talk about natural gas as the bridge to a New Energy future is that the present New Energy supply and infrastructure is inadequate to take over from coal. This is quite ironic. If the nation had not dallied with the volatilities of natural gas and sharply cut back on the research, development and deployment of New Energy in the 1980s, it might now be ready to throw off its fossil foolhardiness for good.
Yet here are the big brains at MIT urging the nation to make a similar mistake yet again by turning to natural gas. It's formulation is nuanced: Technological advance (of New Energy and Energy Efficiency, “safe” nuclear and “clean” coal) should not be crowded out while natural gas rises in demand but development of natural gas, especially the shale reserves, should not be impeded by over-investment in technological advance before the technologies are mature.
If there weren’t this small matter of global climate change, it might be fine to leave all this to the so-called invisible hand of the marketplace, though the invisibility of the oil & gas industries’ phantom lobbyists is probably not what Adam Smith had in mind when he coined the construction. Given the urgency of an all too rapidly rising global average temperature, it is patently obvious that all barriers to the development and implementation of New Energy and Energy Efficiency must be eliminated.
One of those barriers is wasting time on developing any Old Energy infrastructure. That includes the cleaner fossil fuel (and “clean” coal and “safe” nuclear). When there is enough solar energy in the Southwest and enough wind off the Atlantic coast to power the Eastern Seaboard, what is the point of building natural gas pipelines?
The use of compressed natural gas (CNG) as a heavy transport fuel may be the exception that proves the rule. Limiting its use to buses and trucks minimizes the need for a delivery infrastructure and maximizes its effectiveness as a replacement for oil. Especially as subsidized in the “no-energy” bill currently being considered by the Senate, there is merit in this limited application of the resource.
The MIT report did not take much notice CNG as a heavy transport fuel because the authors do not expect it to be a large part of the potential market. It is true that it will not be a large part of the market but it could be a significant part. Just as
Boone Pickens.MIT will deliver its full and final report on natural gas later this year but this interim paper could not be more timely
Footnote: New research from Cornell university suggests that natural gas derived from shale by hydrofracturing could generate more life-cycle GhGs than coal. (See
THE GHGS FROM NATURAL GAS) The process is certainly becoming controversial. (See
MUST SEE TV - HBO'S GASLAND)
click to enlargeTHE DETAILSDeterminative natural gas market factors:
(1) lower GhGs
(2) abundant newly accessible “unconventional” natural gas reserves via hydrofracture drilling techniques
(3) the abundance of cheap natural gas supplies is once again making it more challenging for the New Energies to sustain a place in energy markets and expand their installed capacity and infrastructure to the point where they become price competitive
(4) Regionalized natural gas markets in North America, Europe and industrialized Asia increase access to supplies
each with a different market structure; and
(5) Volatility in the diversified and unpredictable markets create feast or famine tendencies in supply, rapid and frequent price swings and a boom and bust industry
The MIT study is aimed at providing “integrated, technically grounded analysis” to inform the debate over the feasibility of using natural gas as a bridge.
The uncertainties that could impact the value of natural gas as a bridge:
(1) How soon will GhG restraints be imposed and how strong will they be?
(2) How extensive are the “unconventional” shale reserves and foreign conventional reserves?
(3) Which New Energies will emerge and when? (And how will GhG restraints affect that emergence?)
(4) How will “economics, geology and geopolitics” affect international gas markets?
click to enlargeThe MIT study examines the potential of natural gas to impact U.S. GhGs in the hope of educating “government, industry and academic leaders and decision-makers” on the “technical, economic, environmental and political issues” but also includes a consideration of the international marketplace.
International Supply:
The world is rich in natural gas and the U.S. is rich in unconventional (shale) gas.
Recoverable resource: 16,200 Trillion cubic feet (Tcf) (12,400 Tcf to 20,800 Tcf), 150 times yearly world consumption.
Economically recoverable resource: ~9,000 Tcf (at a gas price at or below $4/Million British thermal units (MMBtu) at the export point.
U.S. unconventional (shale) supply:
Recoverable shale gas resource: 650 Tcf (420 Tcf to 870 Tcf).
Economically recoverable resource: ~ 400 Tcf (at a gas price at or below $6/MMBtu at the well-head).
Environmental impacts of shale gas: “manageable but challenging.” The main challenges are in keeping gas and fracture fluids from leaking into the water table. Management is believed to be possible by following “industry best practices” for hydrofracturing and fracture fluid recycling and disposal.
click to enlargePolicy:
A “carbon-constrained” world will value the lower GhGs and high malleability of natural gas.
Just the threat of a price being imposed on GhGs has increased the use of natural gas and the imposition of an emissions cap and a real price will increase that movement.
Studies of a requirement to cut GhGs just 50% by 2050 shows the primary impacts to be a reduction in energy use and the displacing of coal use with natural gas.
The only uncertainty to gas’s predominance is the technological advance of New Energy and Energy Efficiency, “safe” nuclear and “clean” coal (carbon capture and sequestration, CCS).
If a cap and price mechanism aspires to cut GhGs 80% by 2050 (the minimum level science agrees is truly necessary to interrupt the rising global average temperature), this is expected to require “complete de-carbonization of the power sector.” MTI believes this would necessitate the development of CCS.
MIT’s formulation is that technological advance (of New Energy and Energy Efficiency, “safe” nuclear and “clean” coal) should not be crowded out while natural gas rises in demand but development of natural gas, especially the shale reserves, should not be impeded by over-investment in technological advance before the technologies are mature.
click to enlargeDemand and Infrastructure:
The marketplace will demand natural gas, at least in the near term, because of its GhG profile and its malleability, allowing use for power generation, heating and transport. The demand will necessitate decisions about developing infrastructure.
MIT foresees the primary growth of use in the electricity sector because of the GhG profile. It will be valuable as baseload supply and as a ramping partner to variable sources (wind and solar).
Short- and long-term impacts will differ:
In the short-term, more solar and wind will displace natural gas use for ramping if gas remains more expensive than coal. On the other hand, market forces will be driving generators toward base as baseload, especially underutilized existing Natural Gas Combined Cycle (NGCC) capacity.
In the longer term, MIT expects 2 eventualities: (1) Increased natural gas (for its flexibility), but utilized less, and (2) displacement of all forms of baseload generation, including natural gas, as more variable generation is integrated into the transmission system. The 2 will vary by region.
click to enlargeUse of compressed natural gas (CNG) as a vehicle fuel is not foreseen to be a major factor in the transition away from oil. Its role is expected to be in the private vehicle market. MIT found liquefied natural gas (LNG) to be unsatisfactory as a vehicle fuel because of the minus 162 degree Centigrade it requires for storage.
Natural gas to methanol is a more practical option but methanol does not solve any GhG problems.
Development of the shale gas reserves will necessitate expansion of pipeline, storage and processing infrastructure, a costly undertaking for an energy source expected to lose market share in the longer term.
click to enlargeMarkets & Geopolitics:
North America, Europe and Asia form individual natural gas regional markets with differing characteristics.
The U.S. market is described as functioning well and in no need of anything but a level playing field.
International natural gas markets are face impediments. If they integrate successfully, they will grow and eventually turn the U.S. into a net importer.
More use of LNG will increase international trading, steady prices and provide security of supply by diversifying sources.
click to enlargeSecurity concerns:
(1) Gas dependence extends foreign entanglements.
(2) Some new market players, closed societies, could impede transparent markets.
(3) Competition for control of some pipelines is intense and potentially volatile.
(4) Longer supply chains increase vulnerability of infrastructure and supply.
Research, Development and Demonstration (RD&D) into the development of unconventional (shale) reserves could be determinative by eliminating dangers. The feasibility of advances is significant, considering that it was technology advances that made today’s controversial exploration and development of shale gas possible.
click to enlargeThe study’s “high-level recommendations:
(1) Natural gas will thrive if GhG-cutting policies create a “level playing field” for all energies. This would be a price on emissions and no subsidies to any energy source.
(2) If there is no price on GhGs, policies should “mimic” a level-playing-field approach with efficiencies and displacement of coal with gas.
(3) If there is no price on GhGs, supported RD&D and targeted shorter-term subsidies for low-emission technologies (New Energy, Energy Efficiency, “clean” coal, “safe” nuclear) might work.
(4) Displace coal with NGCC.
(5) Natural gas should grow with New Energy installed capacity.
click to enlarge(6) Regulatory and policy barriers to CNG and natural gas liquid fuels for vehicles should be eliminated.
(7) Policies that create an efficient, integrated, transparent, diverse international market will enhance security and economic growth.
(8) Foreign policy measures to support natural gas: (a) energy should ne considered in U.S. foreign policy, (b) support the International Energy Agency (IEA) in getting natural gas into large emerging markets (China, India, Brazil), (d) share know-how for development of shale reserves, (e) advance physical and cyber-infrastructure, and (f) promote efficiency.
(9) Environmental measures to support shale development: (a) Government-funded R&D, especially of subsurface aspects and improved water use in fracturing and recycling, (b) improved assessment of resources by the U.S. Geological Survey (USGS), (c) transparent public/private advancement of minimized impacts of fracturing operations and water management including communication of oil- and gas-field best practices, integrated regional water use and disposal, and disclosure of hydraulic fracture fluid components.
(10) Public/private RD&D for environmentally responsible development
click to enlargeQUOTES- From the report: “The environmental impacts of shale development are manageable but challenging. The largest challenges lie in the area of water management, particularly the effective disposal of fracture fluids. Concerns with this issue are particularly acute in those regions that have not previously experienced large-scale oil and gas development. It is essential that both large and small companies follow industry best practices, that water supply and disposal are coordinated on a regional basis, and that improved methods are developed for recycling of returned fracture fluids.”
click to enlarge- From the report: “A more stringent CO2 reduction of, for example, 80%, would probably require the complete de-carbonization of the power sector. This makes it imperative that the development of competing low-carbon technology continues apace, including CCS for both coal and gas. It would be a significant error of policy to crowd out the development of other, currently more costly, technologies because of the new assessment of gas supply. Conversely, it would also be a mistake to encourage, via policy and long-term subsidy, more costly technologies to crowd out natural gas in the short to medium term, as this could significantly increase the cost of CO2 reduction.”
click to enlarge- From the report: “Development of the U.S. vehicular transportation market using compressed natural gas (CNG) powered vehicles offers opportunities for expansion for natural gas use and reduction of CO2 emissions, but it is unlikely in the near term that this will develop into a major new market for gas or make a substantial impact in reducing U.S. oil dependence. However, significant penetration of the private vehicle market before mid-century emerges in our carbon-constrained scenario...Liquefied natural gas (LNG) does not currently appear to be economically attractive as a fuel for long-haul trucks because of cost and operational issues related to storage at minus 162 degrees Centigrade.”