assessing uncertainty and risk for supply and reliability
TRANSCRIPT
Assessing Uncertainty and Risk for Supply
and Reliability
NCSL Natural Gas Policy Institute
September 10, 2015
Jason Smith
Director, Market Development
America’s Natural Gas Alliance
Driving Demand for Natural Gas
1,268
1,4141,312
1,532
2,0742,170
2,688
2,853
1,235
1,619
1,981
2,543
2,203
2,3352,266
2,836
2,100
3,350
3,600
2,102
3,105
3,545
3,933
0
1,000
2,000
3,000
4,000
Abundant SupplyEstimates of U.S. Recoverable Natural Gas
(trillion cubic feet)
CERA, MIT NPC, INGAA ICFPotential Gas Committee EIA
‘00 ‘02 ‘04 ‘06 ‘08 ’10 ’12 ‘14 ’08 ‘09 ‘10 ‘11 ’12 ’13 ‘14 ‘10 ‘10 ‘11 ‘11 ‘09 ’12 ’13 ‘15
1,2
68
1,4
14
1,3
12
1,5
32 2
,074
2,1
70
1,2
35
1,6
19
1,9
81
2,5
43
2,2
15
2,1
02
2,8
36
2,1
00
3,6
00
3,3
50
0
1,0
00
2,0
00
3,0
00
4,0
00
Proved
Reserves
Potential Shale
Gas ResourcesTotal Resource
(Uncategorized)
Non-shale Gas
Resources
Reserves Volume and Cost
0
1
2
3
4
5
6
7
8
9
10
0 500 1000 1500 2000 2500
$/m
mb
tu
Dry Gas Resouce (TCF)
U.S. & Canada Supply Curve
Source: ICF, “U.S. LNG Exports: Impacts on Energy Markets and the Economy”, May 2013.
Production Efficiency
1000
1200
1400
1600
1800
2000
2200
2400
200
300
400
500
600
700
800
900
1000
Jan
-10
Ap
r-1
0
Jul-
10
Oct
-10
Jan
-11
Ap
r-1
1
Jul-
11
Oct
-11
Jan
-12
Ap
r-1
2
Jul-
12
Oct
-12
Jan
-13
Ap
r-1
3
Jul-
13
Oct
-13
Jan
-14
Ap
r-1
4
Jul-
14
Oct
-14
Tota
l Pro
du
ctio
n (
Bcf
)
Ave
rage
# R
igs
Natural Gas Production Efficiency
Rig Count Total Production
Source: EIA, Baker Hughes
Annual Storage Fills
1625 2516
1681
2545
2313 2043
1766 20342254
2186 2225 2273
1560
2161
2789
0
500
1000
1500
2000
2500
3000
3500
4000
4500
'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14
Bill
ion
Cu
bic
Fe
et
Source: EIA
2014 Weekly Storage Injections
3.0
3.4
3.8
4.2
4.6
5.0
0
20
40
60
80
100
120
140
16 18 20 22 24 26 28 30 32 34 36 38 40 42
He
nry
Hu
b P
rice
($
/MM
BTU
)
Bill
ion
Cu
bic
Fe
et
Week of Year
10-Yr Injection Range 2014 Weekly Injection 2014 Weekly Price
Weekly Natural Gas Storage Injections and Prices
Source: EIA, NYMEX Henry Hub Price
Current Production Trend
Source: EIA Short-term Energy Outlook, July 2015
60
62
64
66
68
70
72
74
76
78
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Bcf
/d
U.S. Dry Gas Production
2016 STEO 2015 STEO 2015 Actual 2014 2013
Resource Reality
73 75 79 82 85 87
7378
8287 90
94
7380
8694 97 100
7482
92
104109 112
74
88
101
117
130
138
73
7983
9093
97
2015 2020 2025 2030 2035 2040
Low oil price Low economic growth High economic growth
High oil price High oil and gas resource Reference case
2015 Annual Energy Outlook: Domestic Production Forecast (Bcf/d)
Source: EIA Annual Energy Outlook, 2015
U.S. Natural Gas Pipelines
Reliable Delivery for Baseload Power
Coal Supply
Natural Gas Supply
Rail System
Coal-Fired Power Plant
Natural Gas-Fired Power Plant
Firm Transportation and Storage /Flexible ServicesOr appropriate portfolio management
Storage Location
Storage Location
(Depleted Reservoir, Salt Cavern, Aquifer)
CPP Gas Demand…?
Source: Sidley Austin
Lb/MWh
111(d) Implementation Matters
Critical Design Considerations
• Don’t lock in high costs
• Growth
– Rate-based standards versus mass-based standards and separate
treatment of new natural gas units to enable states’ economic growth
• Especially true for states that are benefiting from the manufacturing
renaissance brought about by abundant, affordable natural gas liquids
13
Appendix slides
• 111d basics
$0
$2
$4
$6
$8
$10
$12
$14
2000 2005 2010 2015 2020 2025 2030 2035
Long-term Price Stability
CERA 2012
WoodMac2012
ICF 2013
AEO 2015
Actual Projected
Henry Hub Spot Natural Gas Price(2011$/MMBtu)
Source: EIA Annual Energy Outlook: 2009, 2010, 2011, 2012, 2013, 2014, 2015Henry Hub Spot prices (Actual prices: 2000 to 2014)
Projection Range:
AEO 2009 – AEO
2015