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Natural Gas: Is It Stunting Innovative Thinking?

Christine Hertzog's picture
Principal Technical Leader, Cyber Security Strategic Initiative Electric Power Research Institute

Christine Hertzog is a Principal Technical Leader focused on OT Cyber Security research at EPRI.  She conducts research on new technologies suitable for OT environments and informs industry...

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  • Oct 1, 2012
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Let’s admit it, infrastructure is a boring word.   There’s nothing sexy about it.  It implies disruptions to our lives as we deal with delays and detours for construction and repair projects.  Yet it is absolutely necessary, and infrastructure is what needs to be upgraded in our water, gas, and electric grids.

My previous articles discussed investments that are ongoing or needed in the electrical grid to modernize generation, transmission, distribution, and consumption.  However, the same issues exist for gas and water too.  In some aspects, the needs are even more striking.  But how we build our infrastructure and what we build for our infrastructure also says a great deal about how innovative is our thinking.  And unfortunately, right now that thinking is “like for like”, and merely replicates existing energy models with known weaknesses in reliability and resiliency instead of building infrastructure based on new models.

Natural gas is seen by some in the energy business as a panacea to all energy concerns.  It’s domestic.  It’s cleaner than coal.  However, it requires significant infrastructure investments.  No matter how much innovation you put into the extraction technologies for fossil fuels (which by the way had HUGE federal government assistance), the supply chains still require buildouts of pipelines to transport it to refineries and on to points of consumption.  We simply don’t have sufficient pipeline capacity to transport it to all the places that want it in the USA.  It’s an infrastructure play that has a number of challenges.

The natural gas that is extracted must be processed, just like oil must be refined, or electricity must be generated.  These industrial operations expend lots of energy in processing gas into what is considered pure gas for end use consumption.  The transport of processed natural gas in pipelines requires more energy to compress it and move it in pipelines, and compressor stations, like electricity substations, are placed along major transmission corridors to boost pressure.  This map shows the interstate natural gas pipelines that transmit highly compressed natural gas.  Pipelines have physical constraints – there is only so much space available for gas, and they require electricity to compress the gas in the pipelines.  Therefore, when there is a significant electricity outage in a region, it can also impact the transmission and distribution of natural gas.

According to the US Department of Transportation’s Pipeline and Hazardous Materials Safety Administration records, there are over 2 million miles of distribution pipeline.  As we saw in San Bruno, California two years ago, failure to properly monitor and maintain distribution pipelines has consequences.  Smart Grid technologies including the colorfully named PIGS (Pipeline Insertable Gauges) that can monitor and transmit measurements within pipes can help reduce the odds of similar mechanical, technical, and human failures.

But with natural gas, we are once again relying on a model of centralized production, large-scale transport, and wide-scale distribution.  It has all the weaknesses of today’s electrical grid.  Acts of nature and human causes can cause disruptions.  And because natural gas is a conveniently transportable fuel, that also means it is a very exportable fuel.  Sine we won’t see any federal or state laws that require that natural gas produced in the USA must be consumed in the USA – it will go to the highest bidder – on or offshore.  While gas is inexpensive now, it hasn’t always been, and if history is our guide, there’s no guarantee that it won’t be in the future.

So at the cusp of grid modernization, we are placing much of our energy future in a source that we hope will remain cheap and be readily available at any point it is needed, which requires committed investments in new infrastructure and enhancements to existing infrastructure.  It is an energy source that also generates concerns about potential environmental degradation and seismic destabilization.  And somehow, this all looks better than clean domestic renewables that require a different infrastructure investment, but avoid those troubling questions about price fluctuations, exportability, and environmental impacts.  Yes, we have too much “like for like” thinking about infrastructure going on when we need truly revolutionary thinking.

Image: Natural Gas Drilling via Shutterstock

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Matthew Stepp's picture
Matthew Stepp on Oct 1, 2012

Christine - 

A couple of points for further discussion.

1 - You correctly list all of the drawbacks of building out natural gas.  It's surely not the long-term solution.  But another way to look at it is why it's being built out over renewables + nuclear and to figure out ways of limiting those particular drawbacks.  For instance, at least today and in the near/mid-term future, natural gas is the least cost, highest performance energy option. In other words, LNG is cheaper than coal and offers similar performance to using coal.  It's infrastructure exists and is well understood, so that expanding it isn't very risky (or at least no riskier than what the industry is used to).  So can today's renewables offer the same benefits? If not, how can we get renewbles that do? 

2 - What kind of infrastructure do you foresee necessary to enable 80%+ renewable penetration in the U.S.? Smart grid is being built out, albeit slowly, so how do we accelerate that? EV charging infrastucture comes down to cost. The best charging stations are very expensive, so what's needed technoloigically to bring those costs down?

Matthew Stepp

Senior Analyst, ITIF

Lewis Perelman's picture
Lewis Perelman on Oct 2, 2012

As Matt Stepp's fair questions suggest, Herzog seems to overstate her case.

For one thing, because gas can easily be transported, it does not follow that it can as easily be exported -- except perhaps within NAFTA. Liquification presents substantial further costs, complications, and hurdles.

Also, while it's true there is no guarantee, the abundance of domestic and N. American reserves implies that gas prices are likely to remain modest for some time to come. And the same technology that has expanded supplies here is being applied in other parts of the world with similar effect.

Still, I sympathize with Herzog's concern that enthusiasm for natural gas might dilute commitment to breakthrough energy innovation. The low cost of gas does amplify the challenge of developing cost-effective alternative systems. But that can be as much a motive to intensify energy innovation efforts as to neglect them.

 

Adam James's picture
Adam James on Oct 4, 2012

This is a great post. I would add that making investments in natural gas infrastructure today will lock utilities into certain sunk costs over the next 20 years which will stifle other capital investments over their lifetime. Particularly if other capital investments (in renewables) become the lower cost option, leaving utilities holding the natural gas bag.

As far as Matthews good additions:

1- You lay out a few criteria for energy sources to meet, a) cost b) performance and c) risk/ability to "plug in" to existing infrastructure. Renewables are becoming cost competitive, solar PV on their day and sometimes wind. I think their costs will continue to fall, but the other important factor is that natural gas prices will rise. $3 isn't going to stick, I think it will cliimb to $5-7. So the target is to get renewables competitive at those prices. Performance is as much about the percentage of renewables online as anything else, they will be more variable in lower concentrations than in higher concentrations. If there were only 1 coal mine and 1 coal truck, coal would be a variable resource because you'd have to shuttle it back and forth, causing intermittency. Enough solar PV, wind, some storage, demand response, and you have a totally different grid which performs the same. As to the risk, while I agree there is a tendency towards centralized energy because it is what we know- I would add that distributed resources would be more popular if there were regulations which enabled utilities adequate cost recovery. It seems like more of a business model question to me.

2- The NREL study called for more transmission, but most of what we need- we already have. Acceleration requires incentivizing the people who have the money to invest (utilities). Incentivizing requires regulation and rate reform to change core business models. There is some federal and state coordination to ensure this gets done in a responsible way, of course, but I think thats where the action is. Not in another big federal cash infusion.

Thanks for the additional thoughts!

-Adam James

@adam_s_james

Louise Stonington's picture
Louise Stonington on Oct 4, 2012

Domestic natural gas plays only a minor role in reducing US dependence on foreign oil since the 30% of natural gas is used for electricity and less that 1% for transportation, whereas 70% of oil in the US is used for transportation, and an insignificant amount for electricity.

Natural gas cannot accurately be called clean. Statements calling it clean refer to the fact that it does not emit the gases and particles in smog, but it is as bad as coal or oil for the climate.  Natural gas, when it burns, emits 117,000 tons of carbon dioxide (CO2) per billion BTU of energy output, oil emits 164,000 and coal 208,000. CO2 is the main greenhouse gas that is overheating the planet.

Natural gas is methane, another and more powerful greenhouse gas, warming l72 times as much as CO2 over a 20 year period,  and 25 times as much over a 100 year period. When natural gas is drilled, processed and transported it leaks between 1.5% to 8%.

If we calculate the leakage at 3% and use the lower 100 year warming period, the CO2 equivalent emissions of natural gas are 207,450 tons per BTU, or more than oil or coal.  When natural gas is liquefied, the use of additional energy to pressurize it and transport it further decreases its efficiency.

Calculations of the return on earnings for natural gas as compared to solar and wind should take into account

Last year, the natural gas industry published unrealistically high estimates of the reserves of natural gas, estimates repeated by U.S. agencies.  Investment money flowed into natural gas. The estimates of reserves were lowered by the Department of Energy as some initial wells gave out earlier than expected. Enthusiastic drilling in new locations resulted in a glut of natural gas and increased land values. Land sales helped investors recoup losses.

Most natural gas companies took losses with the very low prices, however there was a pay-off. U.S. Congressional Committees put a hold on approving renewal of production tax credits for wind energy.

Wind has, for the past couple years, been able to provide electricity more cheaply than natural gas plants. The tax credits were instrumental in helping get buyers for wind farms, but not essential in keeping prices competitive. However, with the much lower prices for natural gas, orders for wind towers manufactured in the US nearly evaporated, eliminating that competition for natural gas electricity.

Lewis Perelman's picture
Lewis Perelman on Oct 8, 2012

Wind power does not compete with natural gas since it is intermittent, unreliable, and requires backup and/or storage. In that regard, Willem's point is valid.

An advantage of replacing coal with natural gas generation is that the output of the latter can be adjusted to the level of demand. Natural gas generators can, in effect, provide both baseload and peaking power.

This suggests that natural gas generation may be somewhat more attractive as a backup to variable, renewable power sources. http://j.mp/TlOr4N

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