examining natural gas markets 2007-2008 c hris m c g ill m anaging d irector, p olicy a nalysis m...
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Examining Natural Gas Examining Natural Gas Markets 2007-2008Markets 2007-2008
CHRIS MCGILLCHRIS MCGILL
MANAGING DIRECTOR, POLICY MANAGING DIRECTOR, POLICY ANALYSISANALYSIS
MARCH 5, 2008MARCH 5, 2008
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Natural Gas ConsumptionAverage Daily January 1-December 31, 2007
Source: Bentek Energy LLC, Energy Market Fundamentals, December 31, 2007.
Dec
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Daily Natural Gas Consumption by Sector January 1-December 31, 2007
Source: Bentek Energy LLC, Energy Market Fundamentals, December 31, 2007.
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep Oct
Nov
Dec
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Power GenerationAverage Daily Natural Gas Consumption
January 1-December 31, 2007
Source: Bentek Energy LLC, Energy Market Fundamentals, December 31, 2007.
Dec
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AVERAGE ANNUAL DECLINE IN WEATHER AVERAGE ANNUAL DECLINE IN WEATHER NORMAL GAS USER PER CUSTOMERNORMAL GAS USER PER CUSTOMER
0%
1%
2%
3%
4%
5%
6%
1980-2001* 2000-2006 2004-2006
* 2004 AGA Energy Analysis: Patterns in Residential Natural Gas Consumption, 1980-2001
5
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Natural Gas Supply Sources(January 1-December 31, 2007)
Source: Bentek Energy LLC, Energy Market Fundamentals, December 31, 2007.
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NATURAL GAS PROVED RESERVESNATURAL GAS PROVED RESERVES1991 – 20061991 – 2006
Source: Energy Information Administration
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TOTAL GAS ADDITIONS ANDTOTAL GAS ADDITIONS AND GAS WELL COMPLETIONS GAS WELL COMPLETIONS
(1990-2006)(1990-2006)
Source: Energy Information Administration
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Daily Net Storage (Supply Source)January 1-December 31, 2007
Source: Bentek Energy LLC, Energy Market Fundamentals, December 31, 2007.
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WORKING GAS IN UNDERGROUND STORAGE COMPARED WORKING GAS IN UNDERGROUND STORAGE COMPARED WITH 5-YEAR RANGEWITH 5-YEAR RANGE
Source: Energy Information Administration.
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CANADACANADADRY GAS PRODUCTION AND US PIPELINE EXPORTSDRY GAS PRODUCTION AND US PIPELINE EXPORTS
Sources: Lippman Consulting, Inc. and Bentek Energy, LLC.
0.0
3.0
6.0
9.0
12.0
15.0
18.0
2001 2002 2003 2004 2005 2006 2007
Bcf/dDry Gas Prod.
Pipeline Exports
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Natural Gas Prices
Source: Energy Information Administration, February 2008.
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13
Average 2007-2008 WHS Henry Hub price estimated to be slightly more than 2006-2007
Underground storage position is strong compared to five-year average
Domestic production up from 2006
Influence of declining use per customer through efficiency and price-induced conservation
NATURAL GAS MARKET NATURAL GAS MARKET 2007-2008 Winter Heating Season2007-2008 Winter Heating Season
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Prolonged Tightness in Market Anticipated
Consumers Have Responded to Higher Prices
Technology, Legislation and Changing Rate Structures Will Enable and Promote More Efficiency
Climate Change Will Continue Trends
Greater Efficiency Electricity Generation Demand
NATURAL GAS MARKET – NATURAL GAS MARKET – LONGER-TERMLONGER-TERM
14
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SOURCES OF U.S. NATURAL GAS SUPPLY 2007
ALASKA
2.7
LOWER-48
19.0
Source: Energy Information Administration.
ALASKA
2.2
22.8 Tcf
LNG0.8
Lower-48
18.4
Canada3.2
Alaska0.4
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Less Traditional Sources Of Natural Gas Will Satisfy Growing Demand (2020)
ALASKA
2.7
LOWER-48
19.0
LNG
6.8
CANADA
2.3
Source: Energy Information Administration, Annual Energy Outlook 2008-2030.
24.0 TcfALASKA
1.2LNG
2.9
CANADA
1.4
LOWER-48
18.5
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Natural Gas Supplies Must be Increased Natural Gas Supplies Must be Increased to Meet the Demands of a Carbonto Meet the Demands of a Carbon
Constrained Energy EconomyConstrained Energy Economy
17
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18TCF
333 TCF 163 TCF
Restricted
37 TCF
21 TCF16 TCF
Restricted
100%100% 49%49%
100%100%
76%76%
Major Portions of the Natural Gas Resource Base Are Not Accessible
Resource estimates from Potential Gas Committee, Colorado School of Mines, December 31, 2006 and Minerals Management Service. Intermountain west includes estimate of gas reserves from Energy Information Administration, U.S. DOE. Of 163 trillion cubic feet (TCF) noted as restricted, 50 TCF closed to development and 113 TCF available with seasonal and other restrictions.
January 2008
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Natural Gas Production Barnett Shale 1993-2006
Source: Texas Railroad Commission.
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NEW NORTH AMERICAN IMPORT CAPACITYNEW NORTH AMERICAN IMPORT CAPACITYUNDER CONSTRUCTIONUNDER CONSTRUCTION
1.5 1.52.6
1 1 1
2.5
1.2
1.4
11.5
0
1
2
3
4
5
Freeport, TX Cameron, LA Sabine Pass, LA Golden Pass,TX
Costa Azul, Mex Canaport, Can
Phase 1 Planned Phase 2
Bcfd
Total Phase 1 Capacity: 8.6 BcfdPlanned Phase 2 Capacity: 7.6 Bcfd
Sources: FERC, US Coast Guard, LNG Express, WGI, LNG Observer, Cheniere, State of TX
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The Fuel Mix for New Electricity The Fuel Mix for New Electricity Generating Units Must be More Generating Units Must be More
DiversifiedDiversified
21
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GENERATION OPTIONS – GENERATION OPTIONS – AFFECTED BY PUBLIC POLICYAFFECTED BY PUBLIC POLICY
Source: Henwood Energy Consulting
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
CAA 1970
The Oil Embargo1973-1974
PURPA1978 CAA Amendments
1990
EPACT1992
RTO NOPR1999
Credit Crash2001
Vertically Integrated Utilities
PURPA QF Era
EWGs
Ca
pa
cit
y I
ns
tall
ati
on
s (
MW
)
Coal Hydro Renewables Uranium
Fuel Oil Natural Gas
Rise of the Merchant
2006 1998 19901982 1974 196619581950
22
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The Direct Use of Natural Gas is the The Direct Use of Natural Gas is the Most Efficient Use and the Best UseMost Efficient Use and the Best Use
23
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2004 U.S. GREENHOUSE GAS EMISSIONS ANDS.2191 ALLOWANCE DISTRIBUTION
ALLOWANCES
EMISSIONS
Millions of Metric Tons/Allowances
IND
EG
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LONG-TERM SUMMARYLONG-TERM SUMMARY
Increase Supply
Increase New Generation Diversity
Increase Direct Use
Increase Conservation & Efficiency
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THANK YOU!THANK YOU!