The natural-gas and oil price run-up since hurricanes Katrina and Rita has subsided somewhat following a warmer than usual winter, record natural-gas storage levels, and successful conservation...
Betting on Shale
Will unconventional gas assure plentiful supplies?
then begins increasing after retrofit technology is assumed to be available. However, natural gas consumption increases even faster than in the retirement case. In large part this increase is due to the energy required by carbon capture, which reduces coal-fired plant power generation output to the grid, requiring additional generation from natural gas to meet loads (see Figure 6).
The point of this analysis isn’t to predict or forecast the exact outcome under a given set of GHG-reduction targets, but to highlight the wide range in potential impacts on natural gas demand from the power sector over time, and also to show that uncertainty exists not just in the long-term but also over the next decade.
Turn Around Time
The new thinking on natural gas supply in the United States marks a noteworthy turnaround. The notion of the U.S. natural gas resource base as old and in permanent decline has been banished—and possibly just in time, as it appears increasingly likely that natural gas consumption in the power sector will be increasing over the mid- and long-term following federal implementation of GHG regulation. This demand pressure on natural gas likely will encourage more drilling activity, and producers increasingly will look to new shale plays as growth areas. However, stakeholders in the U.S. energy industry shouldn’t count on a massive scaling up of natural gas production from shale gas resources, and planners and developers should consider the limitations and challenges that make realizing the full potential of U.S. unconventional production difficult.