COMMENTARY
Rethinking the Power Industry’s Dash to Gas
By Bert Kalisch
During a recent meeting of state utility commissioners, the CEO of a Fortune 500 electric power company said natu- ral gas prices promise reliability but “always break your
heart.” What breaks my heart is the electric power industry’s
ongoing love affair with natural gas. Using natural gas for generating electricity is not the best or highest use for this clean,
green, and domestically abundant resource.
Focusing on the Best Use for Natural Gas
Our energy system will always require some natural gas to be
made into electrons. Today 22% of electricity is generated by
natural gas. But any engineer will tell you that the most efficient
and carbon friendly way to use natural gas is piping it directly
into homes and businesses. Policy makers should seek to design
policies that incentivize our reliable energy supplies being put
to their highest and best use at reasonable costs. Direct use of
natural gas does just that.
It is indisputable that for every 100 molecules of methane
produced at the wellhead, more than 90 are delivered directly
to the stove’s burner tops in my Virginia home. On the other
hand, electrons generated from fossil fuels are less than 30%
efficient. Basic physics tells you that converting energy reduces
Btus. In fact, former U.S. Energy Secretary Samuel Bodman said
that “burning natural gas for electric generation is like washing
dishes with a good scotch.”
An Abundant, Clean Energy Source
In the past decade, many electric utilities have dashed to natural gas for its flexibility and cleaner-burning properties in anticipation of a carbon cap. Natural gas is over 50% less carbon
intensive than coal. Almost 90% of the U.S. power generation
capacity that has been added since 1998 is natural gas–fired.
Today there are more than 1,700 power plants in the U.S. that
generate electricity from natural gas. According to the U.S. Energy Information Administration (EIA) 2010 Short-Term Energy
Outlook, over 50% of the expected 23,475 MW of new generation
capacity planned in the U.S. will be natural gas–fired additions.
There is certainly ample gas to meet our future needs. In 2008,
the joint government-industry-academic Potential Gas Committee published its highest-ever estimate of domestic natural gas
reserves: 2,074 trillion cubic feet (Tcf). This estimate was 35%
higher than two years earlier and 77% higher than the estimate
made in 1990. The committee reported that approximately 600
Tcf (29%) of the estimated 2,074 Tcf is gas produced by unlocking shale formations.
Going forward, the EIA projects that natural gas production
from U.S. unconventional resources such as shale will increase
35%, or 3. 2 Tcf, through 2030. Our collective goal should be to
put these new supplies to their most efficient use and be mindful
of overreliance on gas to generate electrons.
Growing Storage Capacity
The ability to store those new gas supplies is increasing,
which lessens the need to use the fuel immediately for electric generation. The U.S. has the largest capacity for underground storage of natural gas in the world. Natural gas supply
is injected and stored in more than 425 facilities across the
country in geologic settings including depleted oil and gas
The dash to gas has also led to
concern that the infrastructure
will not be adequate to handle
the increasing demand.
reservoirs, aquifers, and salt caverns (bedded salt formations). Operational underground working gas storage capacity increased by about 100 billion cubic feet (Bcf) from the
spring of 2008 to April 2009. In fact, the new total of more
than 3. 8 tcf was essentially filled prior to the 2009–2010
winter heating season, resulting in the largest inventory of
working gas ever recorded.
A very cold start to winter in December 2009 and January
2010 attested to the value of growing storage. Utilities draw
15% to 20% of all gas consumed during the period of November
to March from working gas. This flexibility is crucial to meeting
heating load peak demands by local gas utility customers, and
all customers for that matter.
The dash to gas has also led to concern that the infrastructure will not be adequate to handle the increasing demand.
Investment in natural gas pipeline infrastructure continues
to grow steadily while the industry maintains a strong record
of safety. In 2008, an estimated $11.4 billion was invested
to complete 84 pipeline projects, adding 44. 6 Bcf per day of
capacity to the pipeline grid. These figures represent a nearly
threefold increase over 2007, when $4.3 billion was spent to
complete 50 projects that added 14. 9 Bcf per day of capacity
to the network.
The Better Option: Direct Use of Natural Gas
Ample indigenous gas resources, record gas storage, and flexible
and reliable pipelines all help to make the natural gas system
one of the most efficient energy systems in the U.S. We should
build on this system by dashing to more direct use of natural gas
in homes and businesses. Gas should be a building block of a
secure energy future for America—not a bridge. ■
—Bert Kalisch ( bkalisch@apga.org) is president and CEO of the
American Public Gas Association in Washington, D.C.
