Energy Sources
Natural Gas
Facts
Despite rising prices, natural gas used mainly in combined-cycle gas turbines (CCGTs) is expected to remain the preferred option for new power stations in many parts of the world. This reflects lower capital costs and shorter construction lead times for natural gas plants compared with coal and nuclear plants, as well as the inherent environmental advantages of natural gas over coal—notably the former’s much lower carbon content and smaller contribution to local air pollution.
Source: “International Energy Outlook 2010”; Energy Information Administration
Electricity is generated from natural gas in one of three ways: (1) a combustion turbine powered by natural gas; (2) a combined-cycle gas turbine that couples a combustion turbine with a steam generator powered by recovered waste heat; or (3) a natural-gas-fired boiler that produces steam to power a generator.
Source: "Fueling the Future- Better Ways to Use America’s Fuel Options," Consumer Energy Council of America, May 2006; “International Energy Outlook 2006,” Energy Information Administration
Overview
There are massive deposits of natural gas in shale rock in the United States. Estimates now state that the U.S. has more than 2,200 trillion cubic feet of shale gas waiting to be pumped, enough to satisfy nearly 100 years of current U.S. natural-gas demand. The discovery of locally, easily available natural gas has increased interest in expanding the role of natural gas in the U.S. energy market. However, the process of producing natural gas from shale is not without some challenges. For example, large amounts of water are required in the process and resulting waste water must also be handled.
Source: “U.S. Gas Fields go from Bust to Boom”; Wall Street Journal; available: http://online.wsj.com/article/SB124104549891270585.html
Conventional natural gas is concentrated in relatively few places around the world. Around 55% of proven conventional reserves are located in just three countries: Russia (25%), Iran (16%), and Qatar (14%). An additional five countries make up 17% of proven conventional reserves: Turkmenistan, Saudi Arabia, the United Arab Emirates, Niger and Venezuela. This means that nearly three quarters of the world’s proven conventional natural gas reserves are located in just eight countries, some of which are not highly stable politically. Unconventional resources, such as from shale, are much more dispersed, reducing the concern that some countries have expressed about relying on natural gas sourced primarily from a small number countries.
Source: CIA World Factbook
Source: Oil & Gas Journal (via EIA), 2007; “Russia Pushes an ‘OPEC’ for Natural Gas Nations,” The Christian Science Monitor, October 30, 2008
Updated from EIA
Natural gas-fired plants will account for 18% of new electricity generation capacity between now and 2030, compared with 40% for renewables, 32% for coal-fired plants and 9% for nuclear.
Source: “International Energy Outlook 2010,” Energy Information Administration
Natural gas is a desirable fuel for electric power generation because of its relative efficiency and low carbon content compared with other fossil fuels. This makes it an attractive choice for countries interested in slowing their growth of greenhouse gas emissions. Worldwide, natural gas will be the fastest growing source of electricity behind renewables between now and 2030. However, at that time, the total amount of electricity generated from natural gas will still be less than half that generated from coal.
Source: “International Energy Outlook 2010,” Energy Information Administration
Among the end-use sectors, the industrial sector remains the largest consumer of natural gas worldwide, accounting for over 60% of total demand for natural gas in 2030.
Source: "International Energy Outlook 2010," Energy Information Administration
Developing countries like China and India have limited discovered natural gas reserves. China is forecast to import around 50% of its total natural gas requirement, while India is forecast to import around one-third of its total requirement by 2030. China and India could cut the level of imports if they are able to significantly tap their unconventional gas resources.
Source: "International Energy Outlook 2010," Energy Information Administration
In 2009, an additional 27 trillion cubic feet of natural gas reserves were discovered in the United States, a 13% increase. Much of this increase in known reserves came from expanded exploration of unconventional gas resources, such as from shale. Outside of the United States, exploration of unconventional gas is less significant, although Canada, Australia, and Poland all began exploration activities in 2010. Additionally, China is believed to have significant unconventional gas resources.
Source: “International Energy Outlook 2010”; Energy Information Administration
The potential to create high-quality diesel and other light oil products out of natural gas is increasing. Currently, only three plants are capable of converting natural gas to oil products, although two more are under construction. If these plants prove to be financially successful, many more may be on the way. Additionally, the use of compressed natural gas for automobiles is expected to increase, mostly in Latin America and Asia where it is already prevalent, but potentially in North America as well.
Source: “World Energy Outlook 2010.” International Energy Agency
Natural gas prices have traditionally been linked to oil prices in many countries, but the recent expansion of unconventional natural gas resources and liquefied natural gas (LNG) trade has increased the supply of gas, resulting in prices that are half of what they would be if they were tied to oil.
Source: “World Energy Outlook 2010.” International Agency
Natural gas is forecast to be among the cheapest sources of electricity through 2030. However, if there were a large price on carbon—either through a carbon tax or a cap on carbon emissions—the price of natural gas would likely prove to be more expensive than the cheapest renewables, such as geothermal.
Source: Electric Power Research Institute
A cumulative investment of around $7.1 trillion dollars (equivalent to around $270 billion per year) in the gas supply chain by 2035 will be required in order for the supply of natural gas to meet the forecast rise in demand. In particular, investment will need to be directed towards pipeline and LNG port construction.
Source: “World Energy Outlook 2010.” International Energy Agency
The operational flexibility, short planning and construction times, fuel efficiency, and relatively low capital costs will make natural-gas fired electricity capacity an attractive choice in the coming years, particularly in developed countries trying to reduce greenhouse gas emissions. Total world capacity is expected to increase by 33% between 2006 and 2030. In percentage terms, it will be the fastest growing source of electricity behind renewables. However, high price volatility could curtail the projected growth.
Source: “International Energy Outlook 2010” Energy Information Administration
Today, the most efficient natural-gas fired plants converts 60% of the energy value of the natural gas into useable electricity, as compared to approximately 30% for conventional and 44% for advanced coal-fired plants.
Source: Institute of Electrical and Electronic Engineers; available: http://www.spectrum.ieee.org/blog/energy/renewables/energywise/siemens-natural-gas-plant-sets-new-efficiency-record Source: “China Outpaces U.S. in Cleaner-Coal Fired Plants”; New York Times; available: http://www.nytimes.com/2009/05/11/world/asia/11coal.html
Efficiency in the conversion of natural gas to electricity is improved through fuel cell technology that utilizes waste heat generated by a fuel cell. This technology could improve efficiencies from around 60% to 85% or more.
Source: U.S. Department of Energy; available: www1.eere.energy.gov/femp/pdfs/FTA_natgas_fuelcell.pdf
While unconventional gas is expected to play a major role in the U.S.’s energy mix, the prospects are less clear outside of North America. There are high expectations for discovering recoverable reserves in China, India, and Australia, and exploration began this past year in Eastern and Central Europe, but environmental obstacles relating to the hydraulic fracturing process used to acquire shale gas could keep production at minor levels in Europe.
Source: “World Energy Outlook 2010.” International Energy Agency
Although U.S. dependence on imports of natural gas could conceivably increase in the short term, new domestic sources of supply, improved clean-coal technology, and domestic production from unconventional energy sources will decrease U.S. demand for imported gas in the long term. U.S. dependence on natural gas imports declines from 16 % in 2007 to 6% in 2035.
Source: “International Energy Outlook 2010”; Energy Information Administration
Natural Gas: Opportunities
Natural gas is cleaner and abundant.
Natural gas has only about 70% the carbon content per unit of energy as oil and 55% that of coal.
Use of natural gas soars.
Consumption worldwide is expected to increase from 110 trillion cubic feet (tcf) in 2007 to 153 tcf in 2030, an increase of 39%. Demand in non-OECD countries will grow more than twice as fast as that in the OECD.
Source: International Energy Outlook 2010; Energy Information Administration
Natural Gas: Challenges
Costly future for natural gas infrastructure.
The Interstate Natural Gas Association of America estimates that between $6 to $10 billion will have to be invested each year over the next 20 years (for a total of $133 to $210 billion) to deliver the full supply of North American natural gas to consumer markets in the U.S. and Canada.
Source: “Natural Gas Pipeline and Storage Infrastructure Projections through 2030.” INGAA. http://www.ingaa.org/cms/31/7306/7828/9224.aspx
Increased demand requires greater imports.
Imported natural gas will account for 57% of total natural gas consumption in Europe by 2030, up from around 53% currently. As a result, the region will remain dependent on external sources of natural gas.
Source: International Energy Outlook 2010; Energy Information Administration