Nick Snow
Washington Correspondent
WASHINGTON, DC, Oct. 4 -- Conventional natural gas supplies from basins currently restricted for exploration and development will be needed if the US adopts greenhouse gas (GHG) emissions reduction mandates, the Natural Gas Council said Oct. 3.
The findings were contained in an NGC-commissioned study of S. 280, the Climate Stewardship and Innovation Act, which US Sens. Joseph I. Lieberman (I-Conn.) and John McCain (R-Ariz.) introduced on Sept. 12. The bill aims to reduce domestic GHG emissions by 30% below the "business as usual" scenario by 2020 and by 60-80% from current levels by 2050.
NGC said its study built on the US Energy Information Administration's recent analysis of S. 280's potential domestic economic impacts, but added that the study's findings can be applied to other climate-change proposals. NGC said it used conservative assumptions under the National Energy Modeling System, or NEMS, including the unlikelihood that 145 new US nuclear power plants would be built by 2030 as EIA assumed in a July analysis of the legislation.
More constrained nuclear power development means rising overall natural gas demand will put pressure on wellhead prices due to the increased need to comply with carbon dioxide limits, NGC's study said. The higher wellhead prices would affect all consuming sectors but have their biggest impact on electric utilities and industrial users paying more for CO2 allowances required to consume gas, it said.
Leaders from four oil and gas industry associations that are also NGC members said NGC believes gas will be a critical component in achieving GHG reductions under any climate-change legislation. They said the US gas industry would welcome the exploration of policies with Congress to facilitate optimizing the potential contribution of gas as a bridge fuel to generate electricity until GHG emission reduction technologies and market mechanisms can be implemented.
Significant component
"No climate-change approach should be adopted unless it includes mechanisms to assure access to American natural gas," said Mike Linn, chairman of the Independent Petroleum Association of America and NGC. "Even with the potential changes in the energy supply mix to expand renewable fuels, improve efficiency and enhance conservation, natural gas will continue to be a significant supply component and leading solution to reduce greenhouse gas emissions," he said.
Skip Horvath, president of the Natural Gas Supply Association, said NGC was puzzled by EIA's conclusion that less gas would be used under carbon-reducing legislation. "When we examined the reasons, we noticed that EIA's assumptions were constrained by that agency's restrictions on modeling US societal and political limitations. After adjusting these assumptions to better reflect US realities, we found that an additional 4 tcf of gas would be used above the base case by 2020," he said.
Results from NGC's modeling project show that gas will continue to play a key part in meeting US energy needs and reducing GHG emissions under the most likely scenarios, said Donald F. Santa, president of the Interstate Natural Gas Association of America.
"Yet some policymakers remain determined to frustrate the nation's ability to gain access to additional gas supplies that are available from both domestic sources and from the global market. We need an honest discussion about the importance of gas supply and infrastructure development as part of a comprehensive policy," Santa said.
"Unless policymakers adopt policies that encourage ample, environmentally responsible production of the gas we need to meet climate change goals and keep us globally competitive, future generations of American businesses and families will pay a hefty price," said David N. Parker, president of the American Gas Association.
Parker said the average American gas-consuming household uses 33% less gas than in 1980. "However, we can't rely on efficiency alone. We need supply to help us meet our environmental goals," he said.
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