Making Energy Work: Building a Sustainable Energy Economy in the Southeast

Natural Gas

Natural gas, as it is found in the ground, is a gaseous fossil fuel composed of short hydrocarbon compounds such as methane, ethane, and butane. Natural gas can be found in suitable underground rock layers either by itself or mixed with oil. Methane, the main component of natural gas, can also be derived from a number of other sources including coal seams, landfills, and agricultural waste. The natural gas consumed in the U.S. is processed before end use to create almost pure methane.

Over a quarter of the world’s natural gas reserves lie in Russia, which possesses over 45 trillion cubic meters (tcm) of the resource. After Russia, the region with the largest concentration of natural gas wealth is the Middle East which altogether holds 40% of the world’s natural gas reserves, lead by Iran and Qatar who each possess more than 14%. Compared to the world leaders, the United States’ has only a moderate natural gas endowment, with reserves equaling 3% of the world’s1.  At the same time, the U.S. is a major producer of natural gas. As a result, existing domestic natural gas reserves were equal to only 10.4 years worth of production in 20052.  While additional natural gas reserves are likely to be found in the U.S., particularly offshore, it is worth noting that natural gas production in the U.S. will not last indefinitely and may decline sharply with little advanced warning.

North Carolina does not have any natural gas production from natural gas wells. As a result, almost all natural gas consumed in the state is imported from other regions of the U.S. and world.

The vast majority of the natural gas traded and consumed in the U.S. moves around the country in pipelines that are centered in the Midwest and Gulf regions of the country where the majority of the country’s natural gas resources reside. Along with domestic production, the U.S. has for many years imported a significant percentage of its natural gas from western Canada via pipelines.

How It’s Used

Natural gas, which provides 24% of the primary energy used in the U.S., has the most varied number of uses of any major energy resource in the country. In most cases natural gas is burned to generate heat for direct heating, electricity generation, or mechanical power. Other uses for natural gas include its use for the production of fertilizer and chemicals as well as for use as a fuel in fuel cell technology.

Combined, the U.S. residential and commercial sectors consume 36% of the natural gas delivered to end-users, largely for space and water heating and cooking. Another 33% of U.S. natural gas consumption goes to the industrial sector to provide space, water, and process heating, to fuel industrial equipment, and as a feedstock for fertilizer and chemical manufacturers. 31% of U.S. natural gas is consumed for the generation of electricity. Finally, a miniscule 0.1% of U.S. natural gas is consumed by cars and buses that operate using either compressed or liquefied natural gas.

While older natural gas technologies exist, most modern natural gas power plants operate using simple-cycle or combined-cycle technology. Simple-cycle power plants generate electricity by burning natural gas to drive a gas turbine. While these power plants typically have an efficiency of 25%, they are inexpensive to build and can be quickly turned on and off, making them ideal for supplying power on the peak electricity demand days of the year.

Combined-cycle natural gas plants have taken advantage of technological breakthroughs in recent decades to become the most popular power plant technology of the 1990s and early 2000s. By burning natural gas to generate heat which is then used first in a gas turbine and second in a steam turbine, these power plants are able to obtain efficiencies as high as 60%. This technology has proven to be so popular in the past two decades that there is now a glut of natural gas power plants in the U.S. which has driven the price of natural gas to historically high prices.

Environmental Impact

Of the three conventional fossil fuels (oil, natural gas, and coal), burning natural gas has the smallest environmental impact. Unlike with other fossil fuels, burning natural gas results in negligible mercury, sulfur dioxide, nitrogen oxide, and particulate emissions. Natural gas, which provides 24% of the primary energy in the U.S., also emits 45% less carbon dioxide than per btu than coal and 30% less than for oil3.  Even so, natural gas still represents a significant factor in the United States’ contribution to greenhouse gas emissions and Global Warming.

An additional global warming concern comes from leakages of natural gas from the resource’s production and transmission infrastructure. It is estimated that 1.5% of produced natural gas in the U.S. escapes into the atmosphere. This percentage is higher for many other countries, in particular developing ones. Since natural gas is almost entirely methane, a potent greenhouse gas at least 21 times as strong as carbon dioxide, these emissions are a significant factor in the Global Warming impact of natural gas that could potentially diminish the environmental superiority of natural gas over oil and coal.

Carbon monoxide emissions from natural gas, while low and not a significant contributor to total U.S. carbon monoxide emissions, are an environmental concern because of the prevalence of natural gas within homes and businesses. Carbon monoxide has the potential to reach high concentrations in indoor air if natural gas fueled heating equipment is not functioning properly. High concentrations may cause flu-like symptoms in people while extremely high levels will cause unconsciousness, brain damage, or even death.

Advanced Technologies

Since much of the world’s natural gas reserves are located in regions of the world that are distant to the U.S. and other major energy consuming nations, more advanced methods of transporting natural gas beyond pipelines have been necessary. The liquefaction of natural gas by cooling it to -162°C, increasing its density 600 times, has established itself as the best method for trans-oceanic natural gas transport. In its liquefied state, natural gas can be placed into large, insulated tankers, transported across oceans, and offloaded on the other side at a LNG terminal that will store and return the resource to its gaseous state before continuing on to end-users through conventional pipelines. The processes of liquefaction, transportation, and regasification require large capital investments as well as 10-15% of the natural gas to burn as fuel for the process, raising the cost of delivered LNG significantly above their production costs. Consequently, only large, “stranded” natural gas reserves with production costs under a $1 per thousand cubic feet (tcf), are economical to develop into LNG4.  By comparison, wellhead prices for U.S. natural gas have been hovering in the range of $6-$7 per tcf in recent years5.

Despite the low production cost requirements, there are significant natural gas resources in the Middle East, Africa, and South America that have the potential to be developed for conversion to LNG. An estimated $30 billion dollars is being invested annually in the development of LNG terminals in exporting and importing countries by companies like ExxonMobil, ConocoPhillips, and Royal Dutch/Shell as well as national companies like Qatar Petroleum and Nigeria LNG. The U.S. Department of Energy has estimated that LNG deliveries to the U.S. will increase by 35% in both 2007 and 2008 thanks to increased global supply and the addition of new domestic LNG terminals. In the long-term future, LNG consumption in the U.S. is expected to rise rapidly from current consumption of 583 billion cubic feet in 2006 to 4.5 trillion cubic feet in 20306.

Another technology that is competing for development of stranded natural gas resources with LNG is Gas-to-Liquids (GTL). GTL technology utilizes the gasification process to break natural gas down into carbon monoxide and hydrogen. The created syngas is then purified and recombined via catalysts to create the longer hydrocarbon chains that comprise diesel and gasoline fuel. The capital and energy intensive process for converting natural gas into refined petroleum products necessitates that input natural gas cost between $0.50 and $2.00 per tcf.

While this technology has the potential to create markets for moderate and large stranded natural gas reserves, it has the negative environmental impact of increasing the amount of carbon dioxide emitted in the production and consumption of a gallon of diesel or gasoline. This is because the GTL production process requires significant amounts of natural gas to be burned, emitting large amounts of carbon dioxide, while generating diesel or gasoline that will result in an equal amount of carbon dioxide emissions as conventionally derived diesel and gasoline.
  1. http://www.bp.com/sectiongenericarticle.do?categoryId=9010958&contentId=7021578
  2. http://www.bp.com/sectiongenericarticle.do?categoryId=9010958&contentId=7021578
  3. http://www.naturalgas.org/environment/naturalgas.asp
  4. http://www.eia.doe.gov/oiaf/servicerpt/natgas/chapter3.htm
  5. http://tonto.eia.doe.gov/dnav/ng/hist/n9190us3m.htm
  6. http://tonto.eia.doe.gov/dnav/ng/ng_move_poe1_a_EPG0_IML_Mmcf_a.htm
  7. http://www.eia.doe.gov/oiaf/aeo/pdf/trend_4.pdf