Truman National Security Project

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Energy 101

Natural Gas

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What is Natural Gas Used For?

Who uses it?

Top consuming states (2010):

Texas California Louisiana New York Florida Illinois

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Natural Gas vs. Coal The price of natural gas is at a 10 year low

and has recently dropped below the price of coal (EIA 2011)

Natural gas power generation costs have also fallen

For power generation, natural gas has environmental advantages over coal Natural gas produces lower quantities of

nitrogen oxides and carbon dioxide (CO2) than coal

Emissions of sulfur dioxide and mercury compounds are negligible

Despite environmental benefits of natural gas power generation, over 600 coal fired plants producing between 45% of our electricity (vs. 23% for gas)

Natural gas power generation demand outlook is mixed

Demand for natural gas power generation may increase if policies to place a price on CO2 emissions are adopted

But renewable energy generation resources may reduce natural gas demand for electric power generation

Gas cheaper

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Natural Gas Conventional vs. Unconventional Sources

CONVENTIONAL SOURCES

“Free gas” Easier to produce. Accounts for about 94 percent of

the gas produced in the U.S.

UNCONVENTIONAL SOURCES The increasing availability of

Shale gas (which is natural gas trapped in shale formations) has raised its profile among unconventional sources.

Other sources include Deep Natural Gas, Tight Natural Gas, Coalbed Methane, Geopressurized Zones, and Methane Hydrates.

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Natural Gas: Where’s the Gas? Conventional

Sources Shale Gas

-- Approximately three-tenths of total U.S. natural gas production occurs in Texas, making it the Nation’s leading natural gas producer.

-- As of 2009, nearly 92 percent of shale gas production came from Texas, Arkansas, Oklahoma and Louisiana.

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Natural Gas: Extraction TechnologiesTechnologies like hydraulic fracturing (aka “fracking”)

has helped produce a shale gas boom…

…BUT, there are also environmental concerns.

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Natural Gas Production Expected to Increase Globally

Natural gas production expected to increase

But depends on Environmental concerns, particularly

regarding fracking Climate policy (carbon pricing,

renewable energy requirements for power generation)

Fuel price relationships, which can be altered by technology and policy, affect long term demand trends

Upstream costs

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Energy (and Environmental) Security Implications Development of U.S. shale gas resources has significantly reduced

need for the U.S. to import LNG for at least two to three decades, thereby reducing negative energy-related stress on the U.S. trade deficit and economy.

Rising shale gas supply has led to lower domestic natural gas prices, which lowers the costs to average Americans of reducing greenhouse gases as the country moves to lower carbon/non-oil based fuels (e.g., electricity, compressed natural gas).

Potential increase in demand for natural gas which can displace high carbon fuels.

Increased production by U.S. and other countries weakens ability of long-term potential monopoly power of a “gas OPEC” or a single producer (such as Russia) to use energy resources as a tool for political gain.