Natural Gas & The Low-Carbon Economy
exploration proceeds and as extraction techniques are further developed. Since 1990, unconventional gas production has already
increased fourfold, with an even steeper rise in the past few years contributing to a sharp decline in gas prices and a collapse in the North American market for imported liquefied natural gas. Surprisingly, the boom has only slowed marginally in the face of a steep recession and a sharp decline in the price of natural gas since 2008, suggesting that unconventional gas may be cheaper to produce than conventional gas. The breakeven price for shale gas in various US basins is reported to range from just under US$3 to US$4.50/mmBTU. Notably, some of the most recent basins to be tapped, including the Marcellus, are among the least expensive. Moreover, unconventional gas costs are likely to continue to decline since the technology is still relatively immature and is continuing to advance. If these new gas supplies are sufficiently abundant and economical to end the boom-and-bust cycle that’s marked the industry for decades, gas could make major inroads in energy markets in the years ahead.
Figure 4: Unconventional Gas Production in US Lower 48 States
Generating Low-Carbon Electricity The prospect of more abundant and economical gas supplies,
together with the increasing urgency of the climate problem, is drawing increased attention to the role that natural gas might play in the transition to a low-carbon power sector. In addition to the emissions reductions it offers over coal, natural gas is a more flexible fuel, with the ability to provide backup power on a range of scales to an electricity system that will include a rising share of variable wind and solar energy, combined heat- and-power, and distributed generation. Generating electricity from natural gas rather than coal yields dramatic reductions in CO2 emissions. Natural gas contains only half as much carbon per unit of energy as coal does, and gas also lends itself to a more efficient form of power generation – combined-cycle technology. This consists of one or more combustion turbines (similar to jet engines) that are equipped with heat-recovery steam generators to capture heat from the combustion turbine exhaust. The heat-recovery steam generator powers a steam- turbine generator to generate additional electric power. Use of the otherwise wasted heat in the turbine exhaust gas results in high thermal efficiency compared to other combustion technologies, yielding efficiencies above 45% (compared with 30–35% for most coal plants). New combined-cycle gas plants produce 55% less CO2 than new coal plants do and 62% less than the average US coal plant. Although coal is the leading source of electricity in the US,
Source: IEA The rise of gas stands in sharp contrast to the three-
decade decline in US oil production. Since 1990, total US gas production has increased 20% while oil production fell 33% (Figure 5). Today, the US produces more than twice as much gas as it does oil, and that gap will almost certainly widen in the coming years. After decades of selling their domestic fields to independent producers, major oil companies such as ExxonMobil and BP have signalled a significant shift in their thinking about the future evolution of energy markets by purchasing tens of billions of dollars of gas reserves from those same independents in the past few years.
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most of the new power plants added to the US electricity grid since 1990 are powered by natural gas. This includes 201 gigawatts (GW) of highly efficient combined-cycle power plants and 107 GW of relatively inefficient gas-turbine peaking plants that are typically turned on only when needed during peak demand periods. Altogether, natural gas power plants now represent 31% of US generating capacity (excluding gas-fired peaking plants, which contribute another 13%), compared with 33% for coal. Even with the peaking plants excluded, gas-fired power generators are under-utilised, operating at an average of only 42% of their capacity. The carbon emissions of the US power sector could be
decreased significantly simply by running some of the existing plants more frequently and operating coal plants less, which would have a significant impact on carbon emissions. In a recent study, the Congressional Research Service found that if existing combined-cycle plants could be operated at 85% of their capacity, gas could replace nearly one-third of coal generation and reduce power sector CO2 emissions by 19%. Taking into account transmission and siting constraints, however, the author estimated that the amount of current coal generation that could be displaced by natural gas might be closer to 9%.
worldPower 2010
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