[BETA] Fortnightly

In terms of the political calculus, GHG regulation faces an uncertain future, at least into 2013. And as a flood of cheap gas erodes the perception of an impending environmental crisis, politicians will have less incentive to impose carbon constraints. Does shale gas signal the end of the road for greenhouse gas regulation?

FERC’s final rule authorizing new natural gas storage facilities seems to presume market power for pipelines and new storage. FERC should consider changing that presumption to more accurately reflect Congress’s intent in EPAct 2005.

Will CO₂ reductions and investments in non-emitting resources lead to rising costs and economic malaise? Not if America ramps up natural gas generation and turns down coal generation to achieve CO₂ reductions of 14 to 20 percent.

In 2009, unconventional shale gas emerged as the dominant driver in North American natural gas markets. Rapid increases in shale gas production and shale-driven upward revisions to the U.S. natural gas resource base have reversed the outlook for the U.S. natural gas supply. In contrast, the economic recession and growing uncertainties around the role of natural gas in power generation have clouded the outlook for natural gas demand. Natural gas has been called the “bridge fuel” for its potential to support the transition to a low carbon U.S. economy.

Resource planners are faced with complex choices for developing cost-effective and robust energy supply portfolios. These choices are complicated by uncertainties inherent in future fuel and emissions costs. In the summer of 2008, retail energy providers with supply primarily from wind generation had a substantial cost advantage over gas-fired generation. In the summer of 2009, though, gas prices plummeted in the wake of the recession. Reversing the previous trend, this shift causes wind generation to appear more costly relative to gas-fired generation.

At the moment, the United States is experiencing a glut of natural gas with record underground gas storage inventories and prices around $4/MMBtu, which serves to underscore the new thinking about U.S. natural gas supply—i.e., future gas supplies might be less constrained than earlier studies suggested they would. Given the speed with which the expectations for U.S. natural gas have changed, it’s reasonable to ask how solid is this new thinking about U.S. natural gas supply and what should the role of natural gas be in meeting our long-term energy needs in a carbon-constrained economy?

At what daily temperature do customers turn on their furnaces? Or more realistically, given individual behavior, over what range of temperatures do they turn on their furnaces? To estimate the current base for its customers, Columbia Gas of Ohio used daily demand and temperature data for the three-year period from April 2005 through March 2008.

The future of natural gas supplies in the United States looks promising due to rising projections of recoverable resources, including unconventional production. A strong supply outlook bodes well for using natural gas as a low-emission transportation fuel.

Unconventional gas and LNG are changing the outlook for future gas prices.

Utilities are turning to natural gas as a bridge fuel, and to support non-dispatchable renewables.