1. Truman National Security Project

2. What is Natural Gas Used For?
Who uses it?
Top consuming states (2010):
 Texas
 California
 Louisiana
 New York
 Florida
 Illinois
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3. Natural Gas vs. Coal Gas cheaper
 The price of natural gas is at a 10 year low and has
recently dropped below the price of coal (EIA 2011)
 Natural gas power generation costs have also fallen
 For power generation, natural gas has
environmental advantages over coal
 Natural gas produces lower quantities of nitrogen
oxides and carbon dioxide (CO2) than coal
 Emissions of sulfur dioxide and mercury compounds
are negligible
 Despite environmental benefits of natural gas
power generation, over 600 coal fired plants
producing between 45% of our electricity (vs. 23%
for gas)
 Natural gas power generation demand outlook is
mixed
 Demand for natural gas power generation may
increase if policies to place a price on CO2 emissions
are adopted
 But renewable energy generation resources may
reduce natural gas demand for electric power
generation
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4. Natural Gas
Conventional vs. Unconventional Sources
CONVENTIONAL SOURCES
 “Free gas”
 Easier to produce.
 Accounts for about 94 percent of the
gas produced in the U.S.
UNCONVENTIONAL SOURCES
 The increasing availability of Shale
gas (which is natural gas trapped in
shale formations) has raised its
profile among unconventional
sources.
 Other sources include Deep Natural
Gas, Tight Natural Gas, Coalbed
Methane, Geopressurized Zones, and
Methane Hydrates.
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5. Natural Gas: Where’s the Gas?
 Conventional Sources  Shale Gas
-- Approximately three-tenths of total U.S. natural gas production occurs in Texas,
making it the Nation’s leading natural gas producer.
-- As of 2009, nearly 92 percent of shale gas production came from Texas,
Arkansas, Oklahoma and Louisiana.
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6. Natural Gas: Extraction Technologies
Technologies like hydraulic fracturing (aka “fracking”)
has helped produce a shale gas boom…
…BUT, there are also environmental concerns.
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7. Natural Gas Production Expected to
Increase Globally
 Natural gas production expected to increase
 But depends on
 Environmental concerns, particularly
regarding fracking
 Climate policy (carbon pricing, renewable
energy requirements for power generation)
 Fuel price relationships, which can be
altered by technology and policy, affect long
term demand trends
 Upstream costs
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8. Energy (and Environmental) Security
Implications
 Development of U.S. shale gas resources has significantly reduced need for
the U.S. to import LNG for at least two to three decades, thereby reducing
negative energy-related stress on the U.S. trade deficit and economy.
 Rising shale gas supply has led to lower domestic natural gas prices, which
lowers the costs to average Americans of reducing greenhouse gases as the
country moves to lower carbon/non-oil based fuels (e.g., electricity,
compressed natural gas).
 Potential increase in demand for natural gas which can displace high carbon
fuels.
 Increased production by U.S. and other countries weakens ability of long-term
potential monopoly power of a “gas OPEC” or a single producer (such as
Russia) to use energy resources as a tool for political gain.
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