March 19, 2010 Ohio Oil and Gas Association Columbus, Ohio
March 19, 2010 Ohio Oil and Gas Association Columbus, Ohio Christopher B. McGill Managing Director, Policy Analysis
Energy and Climate Change in Washington, DC
Cap and Trade House Bill – Waxman-Markey Senate Bill – Kerry-Boxer (Placeholder for Natural Gas)
Senate Energy Bill Renewable Energy Standards Efficiency Measures Limited Production Enhancements
U.S. NATURAL GAS SUPPLY (2007 - 2009) Average Daily U.S. Natural Gas Supply 70
62.6 2.1
60
Billion Cubic Feet per Day
8.8
63.1
62.9
1.0
1.2
8.2
7.0
50
40
LNG Canadian Imports
30 51.7
53.9
54.7
2008
2009
U.S. Production
20
10
0 2007
Source: Benter Energy LLC, Energy Market Fundamentals.
U.S. Dry Natural Gas Reserves (1988-2008) 250
Trillion cubic Feet
200
150
100
50
0
Data source: Potential Gas Committee (2009)
Energy Information Administration Reserves and Production of Dry Natural Gas in the United States (TCU) Year
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008
EIA Reserves
Dry Gas Production
169 165 164 166 164 177 187 193 211 245
17.8 17.8 18.8 18.9 19.0 19.2 18.9 18.6 18.5 20.4
U.S. Natural Gas Infrastructure Additions Underground Storage Working Gas(Bcf) Estimated Peak Capacity
Working Gas(Bcf) Design Capacity
April 2008
3,789
4,136
April 2009
3,889
4,313
Source: Estimates of Peak Underground Working Gas Storage Capacity in the United States-2009 Update, Energy Information Administration, September 2009.
Daily U.S. Natural Gas Demand By Sector January 1, 2007-December 31, 2009 120.0
100.0
Bcf per day
80.0 Power Gen
60.0
Industrial Res/Com 40.0
20.0
0.0 Jan 2007
Jan 2008
Jan 2009
Source: Benter Energy LLC, Energy Market Fundamentals.
U.S. NATURAL GAS CONSUMPTION Power Generation and Industrial Sectors
20
18
19.8 18.7
19.0
Billion Cubic Feet per day
17.3 16
14
Power Generation Industrial
12
10
8
6 2008
2009
Source: Benter Energy LLC, Energy Market Fundamentals.
U.S. NATURAL GAS CONSUMPTION BY SECTOR (EIA, AEO 2010-2035 REFERENCE CASE) 30.00
25.00 Power Generation
20.00
Quadrillion Btu
CNG Pipeline Fuel
15.00
Lease and Plant Fuel Industrial
10.00
Commercial Residential
5.00
0.00 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034
9
U.S. Natural Gas Supply EIA, AEO 2010-2035 Reference Case 30.00
Trillion Cubic Feet
25.00 20.00 15.00 10.00 5.00 0.00
Dry Gas Production
Net Imports
10
Natural Gas Resource Assessment of the Potential Gas Committee, 2008 (mean values) Traditional Resources Coalbed Gas Resources Total U.S. Resources Proved Reserves (EIA) Future Gas Supply
1,673.4 TCU 163.0 TCU 1,836.4 TCU 237.7 TCU 2,074.1 TCU * Value as of year-end 2007
POTENTIAL GAS AGENCY COLORADO SCHOOL OF MINES
Potential Gas Committee Determination of Future Supply of Natural Gas in the United States DOE Traditional Coal Future Cumulative Ultimate Reserves + Resources + Gas = Supply + Production = Resource
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008
169 165 164 166 164 177 187 193 211 238
855 854 881 921 896 936 958 950 1,155 1,673
147 147 147 146 141 155 169 169 166 163
1,172 1,166 1,192 1,234 1,202 1,268 1,314 1,312 1,532 2,074
777 815 853 893 933 973 1,013 1,053 1,091 1,132
1,949 1,981 2,045 2,127 2,134 2,241 2,327 2,364 2,623 3,206
NATURAL GAS SHALES
Source: Natural Gas Supply Association.
PGC Resource Assessments, 1990-2008 Total Potential Gas Resources (mean values)
Data source: Potential Gas Committee (2009)
Hydraulic Fracturing
Source: Chesapeake Energy.
Shale Basins and the U.S. Pipeline Grid
Source: American Clean Skies Foundation.
Shale gas and Alaska production offset declines in supply to meet consumption growth and lower import needs TCU
History
25
Projections Alaska
20
Shale gas Coalbed methane
15
Non-associated onshore
10
Non-associated offshore
5
Associated with oil
0 1990
Net imports
1995
2000
Richard Newell, SAIS, December 14, 2009
2005
2010
2015
2020
2025
2030
Source: Annual Energy Outlook 2010
2035
U.S. Natural Gas Pipeline Infrastructure 2009
Additions to U.S. Natural Gas Pipeline Infrastructure (2007-2011) (Bcf/d) Added Capacity
($ Billions) Estimated Cost
Miles
2007
14.9
4.3
1,663
2008
44.6
11.4
3,893
2009 (est.)
31.9
11.9
3,643
2010 (est.)
24.6
5.8
2,070
2011 (est.)
37.4
15.7
4,528
Source: Expansion of U.S. Natural Gas Pipeline Network: Additions in 2008 and projects through 2011, Energy Information Administration, September 2009.
20
U.S. LNG IMPORT CAPACITY 2009 Everett, MA
1.035 Bcfd
Cove Point, MD
1.800 Bcfd
Elba Island, GA
1.200 Bcfd
Lake Charles, LA
2.100 Bcfd
Gulf Gateway, LA
0.500 Bcfd
Northeast Gateway, MA
0.800 Bcfd
Freeport, TX
1.500 Bcfd
Sabine, LA
2.600 Bcfd
Hackberry, LA
1.800 Bcfd
Total
13.335 Bcfd Source: Federal Energy Regulatory Commission
Net U.S. Natural Gas Imports from Canada January 1- December 31, 2009 10.0 9.0 8.0
6.0 5.0 4.0 3.0 2.0 1.0
11 21 1-May-09 11 21 31 10 20 30 10 20 30 Aug 9 19 29 8 18 28 8 18 28 7 17 27 Dec 7 17 27
0.0 Jan 1 11 21 31 10 20 Mar 2 12 22
Buff per day
7.0
Source: Benter Energy LLC, December 31, 2009.
22
Key Themes • Transformative Forces - Shift in Natural Gas Supply Picture - Climate Change
• ‘Common Sense’ Policy Approach
Natural Gas Direct Use in the Home Solar Thermal Panel
Venting Innovations
Smart Energy Grid Gas Heat Pump
Real-time Energy Monitor
NGV Filling Station
Radiant Tubing 24
Tankless/Solar Hybrid Water Heater
MicroCHP
Natural Gas Direct Use in Businesses Smart Energy Grid
Solar Thermal Panel Radiant Heating
CHP Systems
Waste Heat Chiller/Heater High Efficiency Boilers
Humidity Control
25
Solar Hybrid Water Heating
NGV Filling Station
Commercial Food Service
Residential Natural Gas Customers Are Growing, But Their Greenhouse Gas Emissions Have Declined 70
RESIDENTIAL CUSTOMERS
300
250
65.3 268.2
262.4
50 200 40 150 30
38.1
100 20
50
10
0
0 1970
2008
1970-1979
2000-2008
Source: U.S. Environmental Protection Agency, U.S. Energy Information Administration and American Gas Association.
MILLIONS OF TONS/YR.
MILLIONS OF CUSTOMERS
60
GREENHOUSE GAS EMISSIONS
MMBtu/Year
CONSUMPTION PER RESIDENTIAL NATURAL GAS CUSTOMER
Source: U.S. Energy Information Administration and American Gas Association. NOTE: Data is “weather normalized” or adjusted to reduce the impact of abnormally warm or cold weather.
U.S. Energy / Environmental Legislation Cap-and-Trade Energy Security
Energy Efficiency
Greenhouse Gas Emissions
Technology Development Incentives and Taxes
28
“… the Commission’s recommendations reflect the view that tapping our nation’s rich endowment of indigenous energy resources is not only compatible with a clean energy agenda, but vital to its long-term success.”
The National Commission on Energy Policy, Bipartisan Energy Center, March 2010. 29
Christopher B. McGill Managing Director, Policy Analysis [email protected]
Energy and Climate Change in Washington, DC
Cap and Trade House Bill – Waxman-Markey Senate Bill – Kerry-Boxer (Placeholder for Natural Gas)
Senate Energy Bill Renewable Energy Standards Efficiency Measures Limited Production Enhancements
U.S. NATURAL GAS SUPPLY (2007 - 2009) Average Daily U.S. Natural Gas Supply 70
62.6 2.1
60
Billion Cubic Feet per Day
8.8
63.1
62.9
1.0
1.2
8.2
7.0
50
40
LNG Canadian Imports
30 51.7
53.9
54.7
2008
2009
U.S. Production
20
10
0 2007
Source: Benter Energy LLC, Energy Market Fundamentals.
U.S. Dry Natural Gas Reserves (1988-2008) 250
Trillion cubic Feet
200
150
100
50
0
Data source: Potential Gas Committee (2009)
Energy Information Administration Reserves and Production of Dry Natural Gas in the United States (TCU) Year
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008
EIA Reserves
Dry Gas Production
169 165 164 166 164 177 187 193 211 245
17.8 17.8 18.8 18.9 19.0 19.2 18.9 18.6 18.5 20.4
U.S. Natural Gas Infrastructure Additions Underground Storage Working Gas(Bcf) Estimated Peak Capacity
Working Gas(Bcf) Design Capacity
April 2008
3,789
4,136
April 2009
3,889
4,313
Source: Estimates of Peak Underground Working Gas Storage Capacity in the United States-2009 Update, Energy Information Administration, September 2009.
Daily U.S. Natural Gas Demand By Sector January 1, 2007-December 31, 2009 120.0
100.0
Bcf per day
80.0 Power Gen
60.0
Industrial Res/Com 40.0
20.0
0.0 Jan 2007
Jan 2008
Jan 2009
Source: Benter Energy LLC, Energy Market Fundamentals.
U.S. NATURAL GAS CONSUMPTION Power Generation and Industrial Sectors
20
18
19.8 18.7
19.0
Billion Cubic Feet per day
17.3 16
14
Power Generation Industrial
12
10
8
6 2008
2009
Source: Benter Energy LLC, Energy Market Fundamentals.
U.S. NATURAL GAS CONSUMPTION BY SECTOR (EIA, AEO 2010-2035 REFERENCE CASE) 30.00
25.00 Power Generation
20.00
Quadrillion Btu
CNG Pipeline Fuel
15.00
Lease and Plant Fuel Industrial
10.00
Commercial Residential
5.00
0.00 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034
9
U.S. Natural Gas Supply EIA, AEO 2010-2035 Reference Case 30.00
Trillion Cubic Feet
25.00 20.00 15.00 10.00 5.00 0.00
Dry Gas Production
Net Imports
10
Natural Gas Resource Assessment of the Potential Gas Committee, 2008 (mean values) Traditional Resources Coalbed Gas Resources Total U.S. Resources Proved Reserves (EIA) Future Gas Supply
1,673.4 TCU 163.0 TCU 1,836.4 TCU 237.7 TCU 2,074.1 TCU * Value as of year-end 2007
POTENTIAL GAS AGENCY COLORADO SCHOOL OF MINES
Potential Gas Committee Determination of Future Supply of Natural Gas in the United States DOE Traditional Coal Future Cumulative Ultimate Reserves + Resources + Gas = Supply + Production = Resource
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008
169 165 164 166 164 177 187 193 211 238
855 854 881 921 896 936 958 950 1,155 1,673
147 147 147 146 141 155 169 169 166 163
1,172 1,166 1,192 1,234 1,202 1,268 1,314 1,312 1,532 2,074
777 815 853 893 933 973 1,013 1,053 1,091 1,132
1,949 1,981 2,045 2,127 2,134 2,241 2,327 2,364 2,623 3,206
NATURAL GAS SHALES
Source: Natural Gas Supply Association.
PGC Resource Assessments, 1990-2008 Total Potential Gas Resources (mean values)
Data source: Potential Gas Committee (2009)
Hydraulic Fracturing
Source: Chesapeake Energy.
Shale Basins and the U.S. Pipeline Grid
Source: American Clean Skies Foundation.
Shale gas and Alaska production offset declines in supply to meet consumption growth and lower import needs TCU
History
25
Projections Alaska
20
Shale gas Coalbed methane
15
Non-associated onshore
10
Non-associated offshore
5
Associated with oil
0 1990
Net imports
1995
2000
Richard Newell, SAIS, December 14, 2009
2005
2010
2015
2020
2025
2030
Source: Annual Energy Outlook 2010
2035
U.S. Natural Gas Pipeline Infrastructure 2009
Additions to U.S. Natural Gas Pipeline Infrastructure (2007-2011) (Bcf/d) Added Capacity
($ Billions) Estimated Cost
Miles
2007
14.9
4.3
1,663
2008
44.6
11.4
3,893
2009 (est.)
31.9
11.9
3,643
2010 (est.)
24.6
5.8
2,070
2011 (est.)
37.4
15.7
4,528
Source: Expansion of U.S. Natural Gas Pipeline Network: Additions in 2008 and projects through 2011, Energy Information Administration, September 2009.
20
U.S. LNG IMPORT CAPACITY 2009 Everett, MA
1.035 Bcfd
Cove Point, MD
1.800 Bcfd
Elba Island, GA
1.200 Bcfd
Lake Charles, LA
2.100 Bcfd
Gulf Gateway, LA
0.500 Bcfd
Northeast Gateway, MA
0.800 Bcfd
Freeport, TX
1.500 Bcfd
Sabine, LA
2.600 Bcfd
Hackberry, LA
1.800 Bcfd
Total
13.335 Bcfd Source: Federal Energy Regulatory Commission
Net U.S. Natural Gas Imports from Canada January 1- December 31, 2009 10.0 9.0 8.0
6.0 5.0 4.0 3.0 2.0 1.0
11 21 1-May-09 11 21 31 10 20 30 10 20 30 Aug 9 19 29 8 18 28 8 18 28 7 17 27 Dec 7 17 27
0.0 Jan 1 11 21 31 10 20 Mar 2 12 22
Buff per day
7.0
Source: Benter Energy LLC, December 31, 2009.
22
Key Themes • Transformative Forces - Shift in Natural Gas Supply Picture - Climate Change
• ‘Common Sense’ Policy Approach
Natural Gas Direct Use in the Home Solar Thermal Panel
Venting Innovations
Smart Energy Grid Gas Heat Pump
Real-time Energy Monitor
NGV Filling Station
Radiant Tubing 24
Tankless/Solar Hybrid Water Heater
MicroCHP
Natural Gas Direct Use in Businesses Smart Energy Grid
Solar Thermal Panel Radiant Heating
CHP Systems
Waste Heat Chiller/Heater High Efficiency Boilers
Humidity Control
25
Solar Hybrid Water Heating
NGV Filling Station
Commercial Food Service
Residential Natural Gas Customers Are Growing, But Their Greenhouse Gas Emissions Have Declined 70
RESIDENTIAL CUSTOMERS
300
250
65.3 268.2
262.4
50 200 40 150 30
38.1
100 20
50
10
0
0 1970
2008
1970-1979
2000-2008
Source: U.S. Environmental Protection Agency, U.S. Energy Information Administration and American Gas Association.
MILLIONS OF TONS/YR.
MILLIONS OF CUSTOMERS
60
GREENHOUSE GAS EMISSIONS
MMBtu/Year
CONSUMPTION PER RESIDENTIAL NATURAL GAS CUSTOMER
Source: U.S. Energy Information Administration and American Gas Association. NOTE: Data is “weather normalized” or adjusted to reduce the impact of abnormally warm or cold weather.
U.S. Energy / Environmental Legislation Cap-and-Trade Energy Security
Energy Efficiency
Greenhouse Gas Emissions
Technology Development Incentives and Taxes
28
“… the Commission’s recommendations reflect the view that tapping our nation’s rich endowment of indigenous energy resources is not only compatible with a clean energy agenda, but vital to its long-term success.”
The National Commission on Energy Policy, Bipartisan Energy Center, March 2010. 29
Christopher B. McGill Managing Director, Policy Analysis [email protected]
