Leveraging Natural Gas
Supply for Maximum Benefit
Restructuring Roundtable
Jim Robb/Bob Coates
April 30, 2010
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Key Messages
1.
We believe that shale gas will significantly transform North
America gas supply into a new era
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2.
Key policy question – what’s our objective?
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3.
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Adequate supplies
Advantaged pricing versus fuel oil (price and volatility)
Lower CO2 emissions per BTU than competing fossil fuels
Reduce CO2 emissions (overall or from power sector?)
Reduce dependence on foreign oil
Provide total energy solution for our customers
We believe policies which encourage the use of incremental
gas supplies in space heating applications represent the best
environmental and economic policy for New England.
Three fourths of New England’s carbon emissions are
concentrated in three sectors
Carbon Emissions in New England
250
Millions of tons of CO2 per year
Millions of tons of CO2 per year
225
210
15
200
27%
16
175
25
150
34
125
100
44
75
50
Convert oil-based heating to
natural gas or electric heating
73%
i) Reduce traditional electricity consumption
ii) Displace fossil generation with low carbon
generation
75
25
0
Transportation
Power
Generation
Residential
Heating
Industrial
Successfully commercialize electric vehicles
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Source: Environment Northeast.
Commercial
Waste
Total
Overall, New England’s power generation fleet is one
of the “cleanest” in the United States.
Average CO2 Emissions rate
(Lbs CO2/mwh) generated
FRCC
MROW
ERCOT
RFCM
NWPP
RFCE
NPCC-NE
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Source Data: www.EPA.gov/egrid
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500
1000
1500
2000
New England’s low CO2 emissions profile driven by fuel
mix (40% gas and 45% non emitting fuels)
New England Generation Mix
1.
New England already has
substantial dependence on
natural gas as a generation
fuel
2.
New England has little
need for additional
generation for reliability
purposes
3.
New capacity additions for
New England really should
focus on development of
renewables to meet state
mandates
Coal
Oil
Renew.
Gas
Hydro
Nuclear
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However, emissions from space heating is high in New
England due to our dependence on fuel oil
Emissions from Residential Fuel Oil per Capita
3.06
Census Division
Tons CO2 / Capita
5% 4%
New England
Middle Atlantic
South Atlantic
East North Central
14%
1.99
1.78
1.64
1.62
1.42
77%
0.81
0.80
0.55
0.34
ME CT NH VT
0.24
0.20
0.16
0.12
RI MA PA NY NJ MD VA WI MN NC OH
Source: EIA data from 2003.
Note: Excludes emissions from fuel delivery trucks.
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0.32
Converting fuel oil customers to gas could reduce CO2 emissions
by 30-40%; fuel cost savings could be over $1800/year for an
average homeowner
CO2 emissions
25,000
CO2 lbs for a standard 2,300 sq. ft home
20,000
27% reduction
38% reduction
15,000
23,034
10,000
16,893
14,159
5,000
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Oil forced air and standard AC
High efficiency gas and standard AC
Total kWh
consumption
3,382
2,836
2,561
Other fuel
consumption
867
gallons of oil
1,164
therms of gas
959
therms of gas
$ 3010/year
$1545/year
$1342/year
Total Fuel Cost
per year
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Gas furnace
An incremental BTU of gas is better utilized in space heating than in
power generation
CO2 Savings from Fuel/Technology Switching
Space
Heating*
Using incremental gas
in space heating would
reduce carbon
emissions more than in
power generation and
would reduce
petroleum usage as
well -- a better
environmental,
economic, and fuel
security result!
38%
Power Gen:
Peaking**
23%
Power Gen:
Baseload**
17%
0%
10%
20%
30%
40%
*Fuel Oil conversion to natural gas for residential heating
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**Considers improved combustion efficiency only; savings potentially offset
by higher utilization
What we believe needs to happen
Natural gas should be embraced as a reliable, domestically
available fuel supply
> Fundamentals suggest gas priced advantageously to
petroleum in the future with lower volatility than we have
recently experienced
> Given New England’s relatively clean power generation mix
and relatively “dirty” space heating fuel mix, encouraging
the expansion of gas availability to homeowners makes
good policy sense from both environmental and economic
perspectives
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