Energy 2050: The Future of Natural Gas
The Future of Natural Gas
Wednesday, July 13, 2005
Senate Energy and Natural Resources Committee Room
Dirksen Senate Office Building
Because of its relative abundance worldwide and the fact that it is less polluting than other fossil fuels such as coal and petroleum, natural gas has become the popular fuel of choice in industrial, commercial, and residential applications, as well as in electricity generation. Moreover, it will be a driver for the hydrogen economy of the future. Rising prices for the resource reflect a growth in demand that is outpacing immediately available supply. Options for slowing that price climb, including increased efficiency and conservation, development of new domestic reserves, and the construction of new liquefied natural gas terminals are all important considerations occupying the minds of policymakers today.
With this situation in mind, Resources for the Future, GLOBE USA (Global Legislators Organization for a Balanced Environment USA) and the Henry M. Jackson Foundation convene a briefing, bringing together legislators, scholars, and representatives from the corporate and private sectors.
Video of the briefing and commentary follows below.
Video of the Briefing
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Frank Loy - Introduction
Incoming Chairman,
Resources for the Future Board of Directors
Frank Loy was Undersecretary of State for Global Affairs, (1998-2001), and president of the German Marshall Fund (1981-1995). He also served as director of the Department of State's Bureau of Refugee Programs. He previously was president of Penn Central Transportation Company; senior vice president for international and regulatory affairs, Pan American World Airways; and Deputy Assistant Secretary of State for Economic Affairs. He is chair or former chair of Environmental Defense, Foundation for a Civil Society, and the League of Conservation Voters. He received his B.A. from UCLA and his LL.B from Harvard Law School.
Hillard Huntington
Stanford University Energy Modeling Forum
Hill Huntington is the Executive Director of the Energy Modeling Forum (EMF) at Stanford University. The EMF was established in 1976 to provide a structured forum within which energy experts from government, industry, universities, and other research organizations could meet to study important energy and environmental issues of common interest. The Forum seeks to harness the collective capabilities of participating experts, explain the strengths and limitations of competing analytical approaches, and identify high priority directions for future research.
Presentation Slides
(Printer-friendly PDF format)
EMF studies emphasize the important insights for energy planning and policy that are learned from a comparison of alternative modeling approaches. Operating through ad hoc working groups focusing on a particular topic, each study seeks to summarize and synthesize the truly key findings from modeling and related analysis that can better inform policymaking and business strategy. Current studies focus on global climate change stabilization scenarios and world natural gas markets and trade.
Robert Fri
Visiting Scholar,
Resources for the Future
Robert Fri is the former president of Resources for the Future. He has also served as director of the National Museum of Natural History and deputy administrator of both the U.S. Environmental Protection Agency and the Energy Research and Development Administration. Currently, Fri is a member of the Board of Directors of the American Electric Power Company and of the Electric Power Research Institute. He is also a member of the National Petroleum Council and is vice chair of the Board on Energy and Environmental Systems of the National Research Council.
Deborah M. Estes - Congressional Host
Senate Energy and Natural Resources Committee
On behalf of Senator Jeff Bingaman (D-NM)
Deborah Estes is a Minority Counsel for the Senate Energy and Natural Resources Committee. Senator Jeff Bingaman (D-New Mexico) is the ranking member of the committee. She joined the committee staff in April 2001 and is primarily responsible for legislation dealing with energy efficiency and natural gas. Previously, Ms. Estes was Managing Director of Government Relations for the American Gas Association (representing natural gas utilities and pipeline companies) and served in the Senate as a Legislative Assistant to Senator Dale Bumpers (D-Arkansas). She is a graduate of Smith College and Georgetown University Law Center.
Briefing Summary
Predicting Natural Gas Prices:
The Old Rules No Longer Apply
Not so long ago, natural gas was seen as a panacea for many of America's energy demands. It had none of the environmental problems associated with petroleum; domestic reserves were available, if not abundant; and the price was certainly right. Today, all of that has changed. The price of natural gas is now roughly as high as oil when calculated in equivalent units of energy.
Handout:
Natural Gas Facts
"The price of natural gas is now primarily an oil problem," said Hillard Huntington, executive director of the Energy Modeling Forum at Stanford University. Global efforts to address climate change, and domestic efforts to deal with the potential security threats posed by our dependence on Middle East oil, are putting comparable pressures on the natural gas market, he said.
Huntington spoke at a July 13 Energy 2050 briefing on Capitol Hill, sponsored by RFF, GLOBE USA (Global Legislators Organization for a Balanced Environment USA), and the Henry M. Jackson Foundation.
While the two fuels are basically not interchangeable, Huntington said, the correlation in price stems in part from the similar cost factors involved in exploration, production, and transport from offshore sources. The reasons for this are two-fold: U.S. natural gas reserves are dwindling and the bulk of the world's proven resources lie in politically sensitive regions, including Iran, Iraq, and Russia. Moreover, intense state and local opposition to the siting of new production and transport facilities, both on and offshore, further complicate the process.
Huntington suggested that an organization like RFF with extensive experience in resource valuation studies could take on the question of western gas reserves and evaluate the trade-offs between exploration, exploitation, environmental costs, and economic benefits.
Existing federal and state regulations also are keeping the price of natural gas high, thereby driving up electricity costs, Huntington said. "What we need to do is improve market efficiency without causing long-term harm." Power generators need to have greater flexibility in meeting peak demand requirements and substituting other fuel sources as needed, he said. And much more effort needs to go toward providing states and local communities with appropriate incentives to allow new facilities to come online.
Robert Fri, an RFF visiting fellow and former president, said, "The best way to encourage a well-functioning power market will be to adapt to changing circumstances." Global climate change and national security issues are only going to grow in importance over the next 10 to 20 years, thereby increasing demand and keeping prices high, he said. Many utilities and big companies are already planning for eventual domestic greenhouse gas controls.
