A white paper from the U.S. Department of Energy’s National Energy Technology Laboratory (NETL) predicts that an increased reliance on natural gas could make our energy supply more vulnerable and significantly drive up the cost of electricity.
In the report, “Natural Gas and Electricity Costs and Impacts on Industry,” NETL analysts added their voices to others expressing alarm at the prospect of a “dash to gas.”
NETL analysts question whether natural gas supply can support the increasing demand – demand that is rising in part because of opposition to new coal plants and anticipated climate change legislation.
According to the report, domestic production is projected to decline steadily to 20 Trillion cubic feet (Tcf) by 2030. At the same time, even as Canadian imports decline, liquid natural gas (LNG) imports have been minimal.
While natural gas prices have more than tripled between 2002 and today, the authors note the “likely way for LNG to increase natural gas supply to the US is for price to rise substantially.” Currently, the U.S. prices for natural gas are at the low-end.
An additional 3.7 Tcf over 2008 consumption levels (5.1 Tcf) would be needed to replace expected coal plants and accommodate higher growth. To displace 20-35 percent of coal-fired generation – that is, to use natural gas for baseload rather than just peak generation – would require an additional 5.4 Tcf.
“Clearly, the existing natural gas fleet cannot meet the growth in peak demand expected before 2016 and also substitute for coal to meet carbon caps…. Since the approximate 9 Tcf increase in natural gas consumption would be occurring at high prices, the impact on the economy would be severe.”
To download the full report, see the related links box.