Three weeks ago, the National Petroleum Council (NPC) has released their new report Prudent Development: Realizing the Potential of North America’s Natural Gas and Oil Resources. AGA staff and 14 natural gas utility members were actively involved in the development of the report.
One half of the primary energy used in the residential sector is energy lost. The NPC recommends full fuel cycle as a means to comprehensively evaluate impacts of energy choices to increase efficiency and reduce emissions.
This was my first NPC report in which I was involved in the development, and I am happy to say I am proud of it. I thought I would share some of the findings and recommendations from the report, and also my thoughts about how this process ended up.
First of all, the findings in this new study are a significant turn-around from the Hard Truths report NPC released in 2007. There the NPC presented a view of accumulating risks to continuing expansion of natural gas production, and global challenges to meet rising energy demand. True, there are still challenges. But recent innovations in natural gas production, in particular shale gas extraction, have fundamentally changed the resource picture here in the United States. These changes prompted the Secretary of Energy Steven Chu to request the NPC conduct a comprehensive study to assess our North American resource potential and the contribution that natural gas can make in a transition to a lower carbon energy portfolio. The 18-month study was compiled into a final report that was released on September 15.
First and foremost, the study finds that there is a lot more natural gas than previously thought. Advances in technology have made economically accessible North America’s massive natural gas resources. The study estimates over 100 years of supply at today’s consumption rates. That’s a lot of gas, and a lot more than what was assessed in 2007. Prudent Development estimates the range of recoverable resources between 1,500 Tcf to over 3,700 Tcf. This view of abundance is also shared by the Potential Gas Committee, which is associated with the Colorado School of Mines, and the U.S. Energy Information Administration. Both organizations have completed assessments and also report significant increases in our gas resources.
However, the NPC study also points out the need to produce this resource responsibly, and it supports recommendations for the prudent development and regulation of natural gas and oil resources. For example, the NPC recommends the establishment of regional councils of excellence to promote environmental, health, and safety best practices among companies. The prudent, environmentally responsible natural gas production from shale and other resources is critical to effectively realize the benefits of natural gas. This message echoes AGA’s own position on responsible resource development.
There are many environmental and economic benefits to this gas resource, the NPC notes. And the study explores the ways that existing natural gas technologies can help reduce greenhouse gas emissions, such as through fuel switching opportunities in the residential and commercial sector, noting a generally low degree of difficult for implementation. The report also explored and recommended removing barriers for technologies such as combined heat and power that can utilize gas efficiently and maximize energy efficiency and emissions reductions.
The study also noted the importance of the full fuel cycle. Noting that nearly half of all energy in the residential and commercial sectors is lost to electricity-related generation and distribution losses, the study acknowledges the importance of understanding and evaluating all energy sources along their entire energy value chain – an energy source’s full fuel cycle. It’s not enough to look at the point-of-use of an energy source if there is energy consumed and greenhouse gas emissions that occur before the end-use energy is finally consumed. So the NPC recommends that a full fuel cycle analysis should be used to enhance the evaluation of the environmental impact of energy choices; that “a full fuel cycle (FFC) analysis is a tool that can help inform choices about end-use technologies, such as a natural gas versus electric water heater.” If we are to use our natural gas resources efficiently, and weigh our options to utilize all our resources optimally, then full fuel cycle analyses, which capture the energy and emissions from the production, processing, generation (electricity), transmission, and final consumption of an energy source, is the most comprehensive method for evaluating these decisions.
Times are tough, and in these strained economic conditions the competitiveness of American industries has been challenged. The NPC also points to the importance of continuing investment in research and development for the United States to maintain its leadership position in energy innovation. Such innovation has brought about the shale revolution and the immense growth in North American natural gas resources over just the past few years. This innovation – and the consequent jobs and economic growth that follows from it – needs to continue.
The experience of being a part of the study’s development was new for me. But it was a great experience (although long at times!). AGA and many of our utility member companies contributed to the residential and commercial portion of the Demand chapter, and I am especially pleased and thankful for all the hard work that everyone put into this report. The collaboration and effort paid off.
Looking at the final report, it reflects to me a significant centering of the industry conversation. The study’s approach seemed to balance benefits with potential costs, and also how to mitigate risks in order to maximize the benefits of this energy resource, one that, if produced responsibly and utilized effectively, does bring about economic and environmental benefits and energy security. This is an important report, one that will help move forward the conversation about our nation’s natural gas and oil resources, how we produce them, and how we use them effectively.