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Natural gas a future energy key role player

 By Nicholas Newman on

Natural gas will play a major role in the power market of the United States and the wider economy through to 2040, according to a new report from the Interstate Natural Gas Association of America (INGAA) Foundation…

The Role of Natural Gas in the Transition to a Lower-Carbon Economy, published in May 2019 by a lobby group representing pipeline owners and operators., envisages two scenarios for the U.S. energy evolution. In both the “Balanced Future” and the “Rapid Renewables Transition” scenarios, natural gas remains an important part of the U.S. energy mix through 2040.
The “Balanced Future” scenario presents a sustained transition to a low carbon economy, driven by policy and market economics, in which renewable portfolio standards (RPS) goals are met on schedule and facilitated by adoption of energy storage. In addition, it foresees a strong second wave of LNG exports as well as pipeline exports to Mexico based on sustainable economic investment decisions. In contrast, the “Rapid Renewables Transition” scenario foretells of a global acceleration in carbon reduction goals in combination with an increase in operational and under-construction LNG terminals encouraged by policy or technology-driven investment decisions.

TransCanada - Gas Pipeline Construction. This footage shot more than 50 years ago shows that, even back then, TransCanada understood pipeline construction in remote areas and extreme climates.

Natural gas and renewables are highly complementary energy sources

Gas-fired and renewable power plants are reliable sources of base load power, which— for peak times of electricity demand, gas peaking plants and pumped stored hydro—are highly competitive. However, the INGAA report maintains that natural gas and renewables working together is the best way to reduce greenhouse gas emissions. Because of the intermittency of wind and solar energy, the power grid still needs to have natural gas to provide fast and flexible back-up power, to allow the grid to quickly respond to fluctuations in supply and demand. The report notes that energy storage technology is not yet viable or competitive with flexible, fast-ramping natural gas generation. Demand for gas will grow until viable grid-scale battery technologies become available, perhaps not until 2040 at the earliest. Therefore, gas-peaking plants will remain a significant complementary energy source alongside renewables. In contrast, industry forecasters BNEF (Bloomberg New Energy Futures) are less optimistic about the future of gas peaking plants, pointing out that solar with storage projects are already beginning to compete against gas peaking plants, which are running at just 10% of the time and standing idle for the rest. Moreover, solar storage can help with grid-balancing during down-time. BNEF expects utility-scale battery plant capacity to grow from 712 MW today to 12,645 MW by 2027.
Regardless of whether energy policies align closer to the “Balanced Future” or “Rapid Renewables Transition” models, concludes the INGAA, demand for natural gas will continue to grow through to 2040. This is supported by the EIA’s projection of a 50% percent rise in natural gas consumption between 2016 and 2040, driven mainly by incremental LNG exports and industrial demand. Others, however, foresee slower rates of increase in demand.

Increased infrastructure will be needed to meet rising demand

Under either INGAA scenarios, more gas infrastructure will be necessary to accommodate increased shale gas production, supply new markets and overcome pipeline congestion. The Appalachian region, home to the Utica and Marcellus shale basins, is a case in point, with just 28 billion cubic feet a day (Bcf/d) takeaway capacity. Projected demand and production level increases require up to 21 Bcf/d of new gas pipeline infrastructure to secure reliable power generation.

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New pipeline projects increase Northeast natural gas takeaway capacity (EIA)

Pipeline congestion

Current pipeline congestion between gas fields and their consumer markets, refineries and export terminals is causing an increase in prices. In the case of New England, for example, insufficient pipeline capacity requires winter supplies to be topped-up with imports of LNG from the Gulf of Mexico or even Europe, since the Jones Act limits intercoastal trade between U.S. ports to domestic registered shipping, and there are no US registered LNG tankers. This regulatory restraint resulted in New England importing LNG from Russia’s leading LNG exporter Novotek in January 2018.

Challenges facing new gas pipeline projects

Owing to a combination of legal and policy restraints, as well as vociferous environmental objections, it is becoming increasingly difficult to gain approval from both federal and state bodies for new gas pipeline construction. For example, California, Washington and New England have proactive energy and environmental policies to encourage renewables, energy efficiency and energy storage, all at the expense of fossil fuels including natural gas generation.

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PSE& GUpgrades Agng Gas Pipelines in Somerville (tapinto.net, PSE & amp:G)

California, a leader in the transition toward sustainability, has set a target of 50% electricity from renewables by 2030 and 100% by 2045. This has led utility company, Southern California Edison Co., to scrap a proposed 262-megawatt new gas-fueled peaker plant in favor of a 195 MW battery system that can store excess electricity from solar and wind when conditions are good, and cleanly dispatch it when needed.
New England has several major offshore wind power schemes at various stages of development as well, including the 800 MW Vineyard Wind project, which is slated to come online in 2022 and sell power at 8.9 US cents per kilowatt-hour, a price that is about a third the cost of Canadian hydropower and even gas power.

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Overview Vineyard wind (vineyard wind.com)

The areas’s local power and gas utilities providers, such as Britain’s National Grid and Con Edison, are experiencing difficulties in gaining approval for new gas pipelines to expand their customer base. These regional gas utilities have placed a moratorium on signing up new gas customers, including those wishing to switch from oil heating to gas.
New York State and others view increased investment in renewables and energy storage as the key to meeting energy demand in the medium- to long-term. This view prevailed in the decision in May of 2019 to refuse the Northeast Supply Enhancement (NESE) project, which encompassed 23 miles (37 km) of pipeline off New York City’s coast.
States will fall into one of INGAA’s two scenarios, “Balanced Future” or “Rapid Renewables Transition.” And for the US as a whole, demand for natural gas is likely to peak in coming years. It is clear that INGAA main lobbying effort is concentrated on supporting the expansion of the existing US pipeline infrastructure, especially the grid that links the national shale gas production areas with the main cities and LNG terminals along the coasts. Notwithstanding this, both INGAA and BNEF agree with EIA projections that identify low cost gas production and transportation as critical for the US transition to a lower carbon economy.

READ MORE: The end of coal, the rise of natural gas by Luca Longo

about the author
Nicholas Newman
Freelance energy journalist and copywriter who regularly writes for AFRELEC, Economist, Energy World, EER, Petroleum Review, PGJ, E&P, Oil Review Africa, Oil Review Middle East. Shale Gas Guide. https://nicholasnewman.contently.com/