Tight Gas Supplies, High Prices Could Continue, Report Finds

Growing demand for natural gas, shrinking supplies and low storage injections will continue to plague California unless old, inefficient power plants are retired and renewable supplies and conservation measures are increased, concludes a new report. "Risky Diet 2003, Natural Gas; The Next Energy Crisis," by the Center for Energy Efficiency and Renewable Technologies, points out that the state of the natural gas industry is much like that of the oil industry in the 1970s, when production kept falling in spite of increased drilling. Efforts to boost supplies, including importing natural gas via liquefied natural gas facilities and drilling in the Artic National Wildlife Refuge are not silver bullets, according to the report. LNG facilities are estimated to add up to $4.50/MMBtu to the cost of gas. According to a comparative study of recently constructed LNG liquefactions facilities, the cost of building one to supply 1 trillion cubic feet of gas per year would likely cost $5 billion. Several LNG proposals are in the works. On September 10, the Federal Energy Regulatory Commission approved the first LNG import facility in two decades. Sempra Energy?s Cameron LNG project will be built near Hackberry, Louisiana, and was previously a Dynegy proposal. In Baja California, Mexico, alone, there are five proposals. Others on the drawing board include one in Indonesia pitched by Sempra Energy and BP, and a floating LNG terminal near the City of Oxnard proposed by an Australian firm. Two controversial pipeline projects at ANWR are projected to cost $22 billion, but meet only about four years of increased demand, noted the report. The pipelines could be very profitable if prices remain at the current level of $5/MMBtu but the ?financial community has to face the risk that prices will not stay high,? Rich Ferguson, CEERT research director, said. According to Ferguson, drilling more holes in the ground around the country, along with the Bush Administration?s easing of accompanying regulations, have or will do little to boost gas supplies. In the meantime, low levels of gas storage and fears of shortages have driven prices up, costing consumers more than $100 billion, according to the study released September 8. Gas supplies fell from a record high of 3.17 trillion cubic feet last October to 0.62 tcf the following April. And contrary to the common belief, the serious crimp in supplies was not a result of an unprecedented spike in demand, according to Ferguson. The report urges broadening the focus of gas supplies beyond drilling and imports to include getting a grip on gas guzzling buildings and aging power plants. About 13 percent of the state?s projected consumption could be met through efficiency measures and retiring old, inefficient plants, which would also reduce air pollution. Also needed to stave off avoidable blackouts is an increase in renewable supplies, but far more than investments in new green power projects are needed. Hindering green power suppliers growth is the investor-owned ?utility culture? which throws up ?road blocks,? including denying access to transmission or charging astronomical prices to send the renewable power over the grid, Ferguson states. He predicts it will be several years before supplies may counteract rising and volatile prices. And unless there is a change in utility culture and political will, consumers will continue to pay dearly for their natural gas use. Rising gas demand fueled in large part by new power plants will drive prices sky high and possibly lead to ?economic chaos and catastrophe,? unless steps are taken to reduce wasteful gas use and increase solar, wind, biomass and geothermal energy supplies, warned Ferguson. For a copy of the report, visit www.ceert.org.

Over 11K Stories!

| Independently Powered Energy News

Tight Gas Supplies, High Prices Could Continue, Report Finds

vdharadmin

Related Posts

CPUC Chops Solar Rooftop Payments & Adds Battery Incentives, Few are Happy

Natural Gas Prices are Soaring

Glick May Lose Position at FERC

SMUD, Santa Clara Projects Get CEC Go-Ahead