American Gas - March 2010 - (Page 9)

perspective). But while total U.s. energy demand is expected to increase, eiA projects natural gas demand will remain relatively flat over the same time period at 23 Tcf/y. more specifically, in the key power generation sector where natural gas competes with other fuels, demand for coal, nuclear and renewables is expected to increase between 2009 and 2020 while natural gas usage is expected to fall. in fact, while U.s. gas resource estimates have been steadily increasing over the past five years, projections for future gas demand have been steadily decreasing (see chart). The climate change policy debate drives further to the heart of the issue. The Waxman-markey bill passed by the House in June 2009 clearly highlights a risk of natural gas being marginalized as the forgotten fuel and big loser relative to the proposed incentives for coal and renewables in the power generation sector. Alternative fuels clearly have an important role to play, but realistic expectations are just as important. Unattainable goals for alternatives risk rendering the entire effort politically and economically unsustainable. As we seek to diversify our energy portfolio, we can’t forget basic facts: except for the 9 percent of U.s. energy that is generated by nuclear power and the 7 percent that comes from hydro and renewables, the U.s. economy runs on fossil-based fuels. A clearer road map is desperately needed to attain the country’s energy goals. in the near term—the next 5–10 years or so—our energy path for power and heat needs to consider the following: 1 > new electricity capacity should be met by renewable energy sources developed at a pace that is technologically and economically sensible—aided by transitional incentives and natural gas; 2 > The oldest, lowest efficiency coal plants should be substituted or replaced by natural gas-fired, modern combined-cycle plants. Over the medium- to longer-term, the electricity/heat demand mix should be met by: 1 > renewables and alternatives; 2 > natural gas; 3 > nuclear; 4 > coal with carbon capture and sequestration (ccs) technology. U.s. electric utilities historically have favored coal over natural gas, and with good reason. compared with coal, natural gas has often been both more expensive and more volatile. The recent low price of gas has increased its market share of power generation. With a growing supply base, natural gas should be competitively and environmentally advantaged to sustain such growing market share. To capitalize on this advantage and compete with coal, natural gas will need to address price volatility. end users will need to have access to all the tools necessary to hedge price risk and volatility. regulated utilities especially must be able to hedge against price uncertainty using available market-based mechanisms with regulators ensuring a level playing field with financial products and contracting practices. With the proper risk-management tools, a producer can bridge low price cycles and consistently attract the required capital investment to reliably bring U.s. gas supply to market and balance demand at competitive energy prices. residential and commercial customers, meanwhile, also are further insulated from periodic fluctuations in wholesale supply and demand. Our new abundance of domestic gas resources should give the power industry, gas utilities and their regulators the confidence to discuss longer term supply arrangements—while consistent demand gives producers the confidence that such arrangements can be sustainable and profitable. Using existing technology, greater use of natural gas can provide us with the quickest, most realistic path to meaningful emissions reductions at the lowest cost. it is no longer a “bridge fuel” but a “destination fuel”—a fundamental fuel in a lower carbon world. natural gas is here. it’s now. it’s cleaner. it’s more affordable. What are we waiting for? Contact Us Today for All of Your Pipeline Service Needs: › › › › Engineering Project Management Internal Inspection Field Services HollandEngineering.com AmericanGas_mech.indd 1 AmericAn GAs March 2010 9 4/20/09 9:43:38 AM http://www.HollandEngineering.com http://www.HollandEngineering.com

Table of Contents for the Digital Edition of American Gas - March 2010

American Gas - March 2010
President’s Message
In the Know
Contents
Industry News
Safety First
To Be the Best
It All Computes
From Volatile to Variable
Vendor News
Advertisers' Index
Places to Be
Marketplace
Jobline
Noteworthies
Facts on Gas

American Gas - March 2010