2. What is Natural Gas Used For?
Who uses it?
Top consuming states (2010):
Texas
California
Louisiana
New York
Florida
Illinois
Truman National Security Project 2
3. Natural Gas vs. Coal Gas cheaper
The price of natural gas is at a 10 year low and has
recently dropped below the price of coal (EIA 2011)
Natural gas power generation costs have also fallen
For power generation, natural gas has
environmental advantages over coal
Natural gas produces lower quantities of nitrogen
oxides and carbon dioxide (CO2) than coal
Emissions of sulfur dioxide and mercury compounds
are negligible
Despite environmental benefits of natural gas
power generation, over 600 coal fired plants
producing between 45% of our electricity (vs. 23%
for gas)
Natural gas power generation demand outlook is
mixed
Demand for natural gas power generation may
increase if policies to place a price on CO2 emissions
are adopted
But renewable energy generation resources may
reduce natural gas demand for electric power
generation
Truman National Security Project 3
4. Natural Gas
Conventional vs. Unconventional Sources
CONVENTIONAL SOURCES
“Free gas”
Easier to produce.
Accounts for about 94 percent of the
gas produced in the U.S.
UNCONVENTIONAL SOURCES
The increasing availability of Shale
gas (which is natural gas trapped in
shale formations) has raised its
profile among unconventional
sources.
Other sources include Deep Natural
Gas, Tight Natural Gas, Coalbed
Methane, Geopressurized Zones, and
Methane Hydrates.
Truman National Security Project 4
5. Natural Gas: Where’s the Gas?
Conventional Sources Shale Gas
-- Approximately three-tenths of total U.S. natural gas production occurs in Texas,
making it the Nation’s leading natural gas producer.
-- As of 2009, nearly 92 percent of shale gas production came from Texas,
Arkansas, Oklahoma and Louisiana.
Truman National Security Project 5
6. Natural Gas: Extraction Technologies
Technologies like hydraulic fracturing (aka “fracking”)
has helped produce a shale gas boom…
…BUT, there are also environmental concerns.
Truman National Security Project 6
7. Natural Gas Production Expected to
Increase Globally
Natural gas production expected to increase
But depends on
Environmental concerns, particularly
regarding fracking
Climate policy (carbon pricing, renewable
energy requirements for power generation)
Fuel price relationships, which can be
altered by technology and policy, affect long
term demand trends
Upstream costs
Truman National Security Project 7
8. Energy (and Environmental) Security
Implications
Development of U.S. shale gas resources has significantly reduced need for
the U.S. to import LNG for at least two to three decades, thereby reducing
negative energy-related stress on the U.S. trade deficit and economy.
Rising shale gas supply has led to lower domestic natural gas prices, which
lowers the costs to average Americans of reducing greenhouse gases as the
country moves to lower carbon/non-oil based fuels (e.g., electricity,
compressed natural gas).
Potential increase in demand for natural gas which can displace high carbon
fuels.
Increased production by U.S. and other countries weakens ability of long-term
potential monopoly power of a “gas OPEC” or a single producer (such as
Russia) to use energy resources as a tool for political gain.
Truman National Security Project 8