Indiana’s Natural Gas R&D Needs

>Ron EdelsteinGas Technology InstituteGas Technology Institute

Indiana Utility Regulatory CommissionIndianapolis IndianaIndianapolis, IndianaAugust 2008

Environmental Issue: Environmental Issue: Greenhouse Gases

Projected Greenhouse Gas Projected Greenhouse Gas Emissions by Sector and Fuel

Ref: EIA 2008 AEO

Lieberman Warner Bill –Lieberman Warner Bill S. 2191

C % f S G G> Covers 87% of the total U.S. GHG emissions reported by EIA (except for non-CO2 agricultural sources, emissions from coal mines and landfills, and HCFC’s), )

> Cap and trade system

> GHG caps drop from:> GHG caps drop from: – 5,775 MM tonnes in 2012 (7% reduction)– To 3,860 MM T in 2030 (39% reduction)– To 1,732 MMT in 2050 (76% reduction)

Impact of S 2191 on Impact of S. 2191 on Electricity Generation

Ref: http://www.eia.doe.gov/oiaf/servicerpt/s2191/pdf/sroiaf(2008)01.pdf

Energy Consumption by Fuel Energy Consumption by Fuel Type, Impact of S. 2191

Ref: http://www eia doe gov/oiaf/servicerpt/s2191/pdf/sroiaf(2008)01 pdfRef: http://www.eia.doe.gov/oiaf/servicerpt/s2191/pdf/sroiaf(2008)01.pdf

Why Full Fuel Cycle Analysis is I t tImportant

> For every Btu of energy of coal in the mine, only y gy , y0.26–0.38 Btu of that energy gets delivered to the end-use customer through the electric grid.

> For every Btu of natural gas in the well, only 0.26–0.51 Btu of that energy gets delivered to the end-use customer through the electric gridthe end-use customer through the electric grid.

> For every Btu of natural gas in the well, 0.91 Btu is delivered to the end-use customer throughis delivered to the end use customer through the gas lines.

Full Fuel Cycle CO2 Emissions

Full Fuel Cycle CO2 Emissions for Residential Heating

8.7

Full Fuel Cycle CO2 Emissions for Residential Heating

3.6 3.3 3.3 3.0

Electric Fully 9.0 HSPF Fully Fully Resistance

HeatingCondensing Oil

FurnaceElectric Heat

PumpCondensing

Propane Furnace

Condensing Gas Furnace

Note: Based on BACT, and heating output of 40 MMBtu/yr

Natural Gas AppliancesThe most environmental and economical use of energy for space or water heating or for cooking is the direct useof natural gas in the home

Consumers need to be informed that natural gas appliances can provide protection from time of day electricity prices while giving them the most y p g genvironmental alternative to meeting the household and family needs.

When consumers with electric cooking, water and space heating appliances realize they should make a lifestyle change natural gas will be the way to gochange, natural gas will be the way to go.

OpportunityOpportunity> Optimizing how the U.S. uses energy has the potential

to reduce CO2 emissions by 430 – 645 million metric tons per year

E ffi i i i f ll f l l l i> Energy efficiency gains, using full fuel cycle analysis, are about 4.3 quads per year

Strategy> In the near term, aggressive deployment of high-

efficiency natural gas equipment in the nation’s homes, y g q p ,offices, and industries can achieve substantial CO2

savings

> In the midterm, additional GHG savings by reducing methane leakage from the nation’s natural gas production, transmission, and distribution systems

> In the long term, renewables-based gas can be fed into the pipelines to create a sustainable, zero-carbon option

Three-Phase Strategy21% reduction in CO2 emissions

below 1990 levelsMilli f t i tNatural Gas CO2 Emissions Reduction Strategy

(MM metric tons CO2e)

below 1990 levelsMillions of metric tons

1,2001,4001,600

600800

1,000

Long Term StrategyMid Term Strategy

0200400

Mid Term StrategyNear Term StrategyNet CO2 Emissions

1990 1995 2000 2005 2010 2015 2020 2025 2030

Costs of Selected CO2Ab t t O tiAbatement Options

Natural Gas Supply and PricesNatural Gas Supply and Prices

U S Energy Production by U.S. Energy Production by Fuel Type

Ref: EIA 2008 Annual Energy Outlook (AEO)

Natural Gas U S Production Natural Gas U.S. Production by Source

Ref: EIA 2008 AEO

Net U S Imports of Natural Net U.S. Imports of Natural Gas, by Source

Ref: EIA 2008 AEO

Indiana Natural Gas Prices

Indiana Gas Price History ($/Mcf)

12

14

8

10

12

4

6

8Residential

Commercial

Industrial

0

2

Ref: http://tonto.eia.doe.gov/dnav/ng/ng_pri_sum_dcu_SIN_a.htm

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Energy Price Projections

Ref: EIA 2008 AEO

Natural Gas Price Sensitivity

Ref: EIA 2008 AEO

Natural Gas Price Natural Gas Price Projections, by Sector

Ref: EIA 2008 AEO

End User Needs

U S Energy Consumption by U.S. Energy Consumption by Fuel Type

Ref: EIA 2008 AEO

Natural Gas Consumption Natural Gas Consumption Projections, by Sector

Ref: EIA 2008 AEO

CO2 Emissions Projections

Ref: EIA 2008 AEO

Residential Delivered Energy Residential Delivered Energy Consumption

Ref: EIA 2008 AEO

Impact of Advanced Technology – Residential Sector

Ref: EIA 2008 AEO

Impact of Efficiency Gains by Impact of Efficiency Gains by Appliance, Residential

Ref: EIA 2008 AEO

Impact of Efficiency Gains by Impact of Efficiency Gains, by Appliance, Commercial

Ref: EIA 2008 AEO

Commercial Sector Energy Commercial Sector Energy Consumption Projections

Ref: EIA 2008 AEO

Industrial Energy Demand Industrial Energy Demand Projections

Ref: EIA 2008 AEO

Indiana Natural Gas Demand (Bcf/yr) has been Relatively Constant Power has been Relatively Constant, Power Gen Load is Negligible

500

600

300

400

Industrial

Commercial

100

200

Residential

Power Gen

0

100

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Ref: EIA

Indiana Needs Advanced Technology to Continue Residential Consumer Gains!

120

140

160

80

100

120

20

40

60

01970 1975 1980 1985 1990 1995 2000 2005 2010

Ref: A.G.A. Gas Facts, 2006 DataNote: Uncorrected for weather

Utilization Technology Utilization Technology Development (UTD)

> UTD is a stand alone not-for-profit LDC-controlled> UTD is a stand alone, not-for-profit, LDC-controlled organization

> UTD formed Spring 2004U o ed Sp g 00

> 8 member companies

> Focus on utilization of natural gas> Focus on utilization of natural gas- Safety- Efficiencyy- Emissions

Utilization Technology Utilization Technology Development (UTD) Projects

Super Boiler Transport Membrane C d

Cummins DG/CHP SystemCondenser System

Di t FlResidential Gas Heat Pump

Residential Dehumidifier

Direct Flame Impingement

Emerging Technology Sustaining Membership Program (SMP)

> Founded in 1985, the objective of SMP is to build a natural gas technology base for SMP companies and their customers

SMP i hi hl l d f d id t l> SMP is a highly leveraged program focused on mid- to long-term R&D – Gas operations – Increased-efficiency end use – Environmental science & forensic chemistry

> Focus is on “Proof of Concept” verification

> 24 members

Sustaining Membership Sustaining Membership Program (SMP) Projects

Hybrid Optimized Tankless (HOT) WaterTankless (HOT) Water

HeaterNext Generation

Melter

Distribution Operations

Delivery Costs still Represent an Important Component of Natural Gas Winter Prices

I di G M iIndiana Gas Mains

Bare Steel,

UnprotectCoated Steel

Indiana Gas Mains

Bare Steel, Unprotected

Unprotect-ed, 1,012

Steel, Unprotect-ed, 185

Cast Iron, 438

Bare Steel, Protected

Coated Steel, Unprotected

Coated Steel, Prot-

ected, 17,572

Plastic, 19,669

Coated Steel, Protected

Plastic

Total: 38 885miles

Cast Iron

Ref: AGA 2004 Gas Facts

Total: 38,885miles

Operations Technology p gyDevelopment (OTD)> OTD is a stand alone, not-for-profit, LDC-controlledOTD is a stand alone, not for profit, LDC controlled

organization

> OTD formed Spring 2003

> 17 member companies

> Focus on operationsFocus on operations- Safety- Infrastructure integrity- O&M cost reduction

Operations Technology Operations Technology Development (OTD) Projects

Remote Vehicle-Based Leak Survey Using

Lasers Handheld Plastic

Obstacle Detection for Horizontal Boring using Ground Penetrating RadarPipe Locator Ground Penetrating Radar

Ult i I tiNon-Interrupted Meter Change out Kit

50-Year Steel Pipe Coating Material

Ultrasonic Inspection of Plastic Pipe Joints

GTI CustomersGTI Customers

> Natural Gas Utilities and their Customers

(through PUC approval)GTI leverages funding, capabilities

> U.S. Federal Government

– DOE, DOT, DOD

ities and programs between sponsors

> State Energy Agencies

> Municipalities

> Industrial Companies

State Delta Recovery Mapy p(as of 2/21/08)

P iti G i D i i (01/07)

> Approved States = 22

Positive Generic Decision (01/07)

22

> Total Available Funding = g$23.8 MM

Company and Regulatory Approval

Filing in Progress

Conclusion -- GTI’s R&D can:Conclusion GTI s R&D can:

> Reduce the demand for natural gas ffby providing increased-efficiency

equipment

> Reduce emissions through advanced> Reduce emissions through advanced burner technologies

> Enhance the integrity of the natural> Enhance the integrity of the natural gas system

> Enhance public and gas consumerEnhance public and gas consumer safety

> Reduce the costs of maintaining the gaging gas T&D infrastructure

Developing Solutionsp g

D li i R ltDelivering Results