Favorable supplies, costs, environmental profile for natural gas revealed in new department of energy study

WASHINGTON, DC — The nation’s large resource base of natural gas can be used for cost-effective power generation, with environmental burdens coming primarily from fuel combustion, not resource extraction, according to a new Department of Energy (DOE) study.

The report, Role of Alternative Energy Sources: Natural Gas Power Technology Assessment, was prepared by the Office of Fossil Energy’s National Energy Technology Laboratory (NETL).  Analysts focused on seven criteria to evaluate the role of natural gas in the U.S. energy supply chain: resource base, growth, environmental profile, cost profile, barriers, implementation risks, and expert opinion from stakeholders in academia, government, and private industry.

Four natural gas power technologies were evaluated: natural gas combined cycle, natural gas combined cycle with carbon capture and sequestration, gas turbine simple cycle, and the U.S. fleet baseload average.

The U.S. resource base for natural gas has exhibited recent growth that is expected to continue because of the expanded extraction potential of various shale gases. As an example, horizontal drilling and hydraulic fracturing could allow the technical recovery of natural gas from Marcellus Shale sufficient to provide 20 years’ supply to the nation at historic demand levels. The growth in natural gas supply may be hindered by the possibility of surface water deterioration and legislative uncertainty. However, property engineered and implemented natural gas systems have favorable environmental and cost profiles in comparison to other energy sources.

The development of shale gas and other unconventional natural gas wells requires the use of technologies that could release higher levels of methane, a greenhouse gas (GHG), than do conventional well technologies. However, power plant GHG emissions far outweigh those of natural gas extraction and transport, and improvements to policy and technology could reduce these upstream burdens. The current fleet of baseload natural gas power plants running on the domestic profile of natural gas has lifecycle GHG emissions of 514 kilograms of CO2 equivalent per megawatt-hour. If switched to an unconventional mix of natural gas, the lifecycle emissions of baseload power increase to 520 kilograms of CO2 equivalent per megawatt-hour—an increase of only 1 percent. In addition to GHG emissions, the report also inventories other air emissions, water use and quality, and resource consumption.

Historically, the price of natural gas has been volatile. This price volatility is due to supply uncertainty driven by natural and economic variables. However, some utilities expect natural gas prices to stay low in the long term and have decided to invest in new natural gas power plants. At a natural gas price of $5 per million Btu, the cost of electricity delivered by a new natural gas combined cycle power plant is $53.4 per megawatt-hour.

The report also includes the cost of electricity from other natural gas power systems, including simple cycle gas turbines and power plants with carbon capture, and evaluates the cost uncertainty caused by natural gas price volatility and capital cost contingencies.