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Implications of Greater Reliance on Natural Gas for Electricity Generation

Implications of Greater Reliance on Natural Gas for Electricity Generation. Study Identifies Challenges from Large Switch to Gas by Electric Utilities. Natural Gas Demand & Supply Level Unprecedented Infrastructure Requirements: Interregional Pipeline & Underground Gas Storage

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Implications of Greater Reliance on Natural Gas for Electricity Generation

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  1. Implications of Greater Reliance on Natural Gas for Electricity Generation

  2. Study Identifies Challenges from Large Switch to Gas by Electric Utilities • Natural Gas Demand & Supply Level Unprecedented • Infrastructure Requirements: Interregional Pipeline & Underground Gas Storage • Operational Challenges • Retrofitting Means Replacement • Permitting challenges • What’s It All Cost? • Download Complete Study at: https://appanet.cms-plus.com/files/PDFs/ImplicationsOfGreaterRelianceOnNGforElectricityGeneration.pdf Implications of Greater Reliance on Natural Gas

  3. Many Rules Driving Electric Utilities to Gas Implications of Greater Reliance on Natural Gas

  4. Gas Demand Varies Depending on Resource Mix, BUT More Gas Required Implications of Greater Reliance on Natural Gas

  5. How Much Gas Would We Need & Is there Sufficient Supply? • To Convert Existing Coal-Fired Capacity to Natural Gas: 14.1 Tcf per year • Is There Enough Supply? • Not without Shale-deposited supply and/or much higher prices • Even with Record-level proved reserve additions in 2007, there were not many new discoveries • Objections to hydraulic fracturing create uncertainty • Uses lots of water • Contamination concern if fracing liquids migrate • Seismic activity • Claims that emissions may be higher Implications of Greater Reliance on Natural Gas

  6. Additional Natural Gas Pipeline Capacity Needed if all Existing Coal Generation Switched to Natural Gas Implications of Greater Reliance on Natural Gas

  7. Infrastructure: Pipelines Not Evenly Distributed & Each Pipeline has Different Delivery Capacity Implications of Greater Reliance on Natural Gas

  8. Natural Gas Storage: Geography Matters • Storage needed due to large variation in Electric Generation load and therefore Natural Gas burn • Must take all gas ordered from pipeline & gas must be ordered the day prior to use • Best storage is salt cavern because it can be filled and emptied multiple times (“high deliverability”) • Adding storage is not easy due to geology requirements and other factors Implications of Greater Reliance on Natural Gas

  9. Not Every State has Access to Natural Gas Storage Implications of Greater Reliance on Natural Gas

  10. Total Cost Close to $750 Billion Excludes higher commodity costs to expand gas supply, or local pipeline and LDC expansion or higher MDQ costs. Implications of Greater Reliance on Natural Gas

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