CERA Week 2010 - An Overview

IHS' 29^th Executive Conference, CERA Week 2010, took place last week in Houston, Texas. The Conference is a forum that offers insight to the energy future.  This year U.S. Secretary of Energy Steven Chu and Lawrence Summers, Assistant to the President for Economic Policy and Director of the National Economic Council, were keynote speakers.  Reports coming out of the conference are encouraging for natural gas. 

Secretary Chu talked about the promise of natural gas, which can be used for power generation.  He discussed the role of natural gas because it burns cleaner than coal and can be used as a bridge fuel that can play a role in the transition to other fuels in the future. White House Economics Advisor Lawrence Summers also acknowledged the role natural gas should play in future energy policy commenting on the remarkable opportunities created by all the natural gas that was not available five years ago.

At the Conference IHS Cambridge Energy Research Associates presented a special report titled "Fueling North America's Energy Future."  Key Findings in the special report include:

• North American discovered natural gas resources have increased by more than 1,800 trillion cubic feet (Tcf) over the past three years, bringing the total natural gas resource base to more than 3,000 Tcf, a level that could supply current consumption for well over 100 years
• Development of this expanded resource may be able to meet significantly increased levels of demand without significant increases in prices.
• Domestic natural gas supplies reduce the need for LNG imports into North America-which become a matter of choice rather than necessity.
• Natural gas has a lower carbon footprint-about half that of coal-and results in negligible emissions of sulfur dioxide (SO2), nitrogen oxides (NOx), mercury, and particulates in contrast to other fossil fuels.
• The newfound expansion of unconventional gas, combined with the expansion of LNG import facilities in the United States and Canada and increased storage, has introduced new supply shock absorbers to respond to disruptions and market imbalances.
• The major source for rapid growth in natural gas demand is the electric power sector. Power demand growth is extremely likely as new uses for electricity (possibly including electric vehicles) overcome the effects of energy efficiency and conservation.
• Much of any electricity demand growth will be met by gas-fired generation. Natural gas demand from the US power sector could grow from roughly 19 Bcf per day today to as much as 35 Bcf per day by 2030.
• Natural gas-fired power plants have cost, timing, and emissions advantages compared to coal-fired plants. However, natural gas use for power generation over the long term depends on how strict GHG emissions targets will be and how other competing or complementary technologies (nuclear, CCS, and renewables) develop over time.
• LNG exports from either British Columbia or Alaska (already an LNG exporter) may be competitive into high priced oil-linked Asian markets, but significant exports from the US Lower 48 are problematic.
• The abundance of new natural gas will increase the share of natural gas-fired generation in the North American power sector.
• It will expand the role of natural gas-fired generation technologies to back up renewable power resources-a new role for natural gas.
• Natural gas-fired generation consumed 3 Bcf per day more natural gas in 2009 than in 2008 when adjusted for the impact of the Great Recession. Displacement of coal-fired generation contributed significantly to this number. But there is a limited pool of "spare" gas-fired capacity that prevents wholesale displacement of coal with natural gas.
• In addition to this fuel switching, the power sector can reduce near-term CO2 emissions by replacing existing coal-fired plants with new gas-fired plants and converting existing coal fired plants to burning gas. This would require substantial investment and would result in growth of natural gas use. But power companies would be concerned about longer-term requirements to further reduce CO2, which would also affect gas-fired facilities.
• The power industry has a multiple-decade planning horizon. If the goals include cutting carbon emissions substantially over the long term, such as the often-cited 80 percent reduction by midcentury, aggressive development and deployment of zero-carbon technologies, including nuclear and CCS, will need to take place today.

Alaska has 35 trillion cubic feet of identified gas reserves, with average estimates of another 227 tcf of technically recoverable undiscovered gas. Alaska's natural gas needs to be part of nation's energy policy for the future.

Sources:  IHSCERA.com and Houston Chronicle