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Powerful Living


Natural Gas


A signifi cant energy fuel source option for your electric cooperative By Anna Politano


Associated Electric’s combined-cycle power plant in Chouteau, Okla. Photo courtesy of Associated Electric Cooperative, Inc. S


ay “natural gas” anywhere in the state of Oklahoma, and the words will im- mediately resonate. Rated as a Top 4 natural gas producer in the United


States, energy-rich Oklahoma stands tall in the gas production “pipeline.” Traditionally, natural gas has a long history as a fuel source used for heating homes. In recent decades, however, lower construction prices for gas-powered generating plants and supply growth have enabled natural gas to play a more vibrant role in utilities’ energy mix. Today, natural gas has become an integral fuel for electric genera- tion, accounting for nearly 30 percent of all elec- tricity generated in the U.S. in 2013, according to the Energy Information Administration (EIA). In Oklahoma, Anadarko-based generation and transmission (G&T) supplier, Western Farmers Electric Cooperative (WFEC), reported 16 per- cent in 2012 and 12 percent in 2013 was gener- ated from natural gas. WFEC’s natural gas generating capacity is at 45 percent. G&T KAMO Power, based in Vinita, Okla., has power gener- ated through its membership with Associated Electric Cooperative, Inc. (AECI) based in Springfi eld, Mo. KAMO reported 14 percent natural gas-generated electricity for 2012 and 4 percent for 2013, when natural gas prices were higher. The co-op’s natural gas generating capac- ity stands at 48 percent.


Let’s Talk Origins According to the EIA, most of the natural gas


6 WWW.OK-LIVING.COOP


consumed in the United States comes from do- mestic production. U.S. dry production in- creased from 2006 to 2013, when it reached its highest recorded annual total. Production con- tinues to grow in 2014. Increases in production are the result of more effi cient, cost-effective drilling and completion techniques. You may be wondering: how is so much natural gas trans- ported and distributed? The United States has a vast, interconnected pipeline network, which is a highly integrated transmission and distribution grid; it transports natural gas to and from nearly any location in the lower 48 states. “The natural gas AECI uses at its power plants can come from nearly any domestic source. This includes production and storage fields in Oklahoma, Arkansas, Texas, Louisiana, the Gulf of Mexico, Kansas, Michigan and Illinois,” AECI Gas Coordinator Cameron Eoff said. WFEC uses Oklahoma Gas Transportation for


its gas supply. The G&T’s gas-powered plant in Mooreland, Okla., is connected to a 16-inch pipeline that also goes from Mooreland to WFEC’s combined-cycle plant in Anadarko. For Oklahoma, one of the major advantages of using natural gas for electric generation is the readily available supply. However, there is a fi ne line between having supply and actually having the need to use it.


The Supply and Demand Game Natural gas prices are a function of market sup- ply and demand. Even small changes in supply


or demand over a short period can result in large price movements for natural gas. Like most com- modities (think wheat, livestock or corn), natural gas trades daily in various markets. These trades, infl uenced by supply and demand, determine the price of gas for any given day. Increases in supply generally result in lower prices; decreases in sup- ply most likely result in increased prices. EIA has identifi ed three factors that contribute to supply swings:


✓ Variations in the amount of natural gas being produced


✓ The volume of gas being imported and/ or exported


✓ The amount of gas in storage facilities (referred to as storage levels)


On the other side, these factors may impact demand:


✓ The level of economic growth ✓ Variations in winter and summer weather


✓ Competition with other fuel sources (coal, nuclear, renewables)


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