Natural Gas Applications: Technology and Policy

NCSL - Natural Gas Policy Institute - August 28, 2019Mike Rutkowski – Senior Vice President of Research Operations, GTI

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Today’s Discussion

• About GTI

• US Natural Gas Demand by Sector

• Combined Heat and Power (CHP)

• Renewable Natural Gas

• Reducing GHG emissions

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75-year History of Turning Raw Technology into Practical Energy Solutions

SUPPLY CONVERSION DELIVERY UTILIZATION

FOR A BETTER ECONOMY AND A BETTER ENVIRONMENT

World-class piloting

facilities headquartered

in Chicago area

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U.S. Energy Situational Assessment

• U.S. energy picture fundamentally shifted starting around 2005

– Revolutionary shift to natural gas shale resources, growing wind & solar generation

– Coal & Oil Primary Energy share fell below 50% for first time in 2018

• Shale gas is a major benefit to the nation and natural gas consumers

– Over $50 billion annual energy savings → more spending power

• World-leading CO2 reductions (offset coal); 28% reduction in power sector emissions

Ongoing shift towards lower carbon/zero carbon energy options

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Natural gas demand grew in

all end use markets from

2005 to 2018, with an overall

33% increase (6.8 trillion

cubic feet).

The majority of growth was in

power generation (69%),

followed by industrial (22%),

commercial and residential

(9%), and transportation (i.e.,

natural gas vehicles). About 6

million new U.S. homes were

connected to the natural gas

system – including new

homes and conversions (e.g.,

from fuel oil).

Source: DOE-EIA; GTI analysis

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Coal’s decline continues, with

market share dropping from 50% in

2005 to 27% in 2018.

Natural gas power generation

contributed to about 63% of new

generation since 2005 – helping

displace coal and oil. Provided

about 35% of total power output in

2018 (up from 18.8% in 2005).

Wind and solar continue to grow,

comprising 34% of new generation

since 2005 and 10% of the 2018

power generation resource mix (up

from 2.2% in 2005).

2005-2018

Percent of New

Generation

Natural Gas 63%

Wind 23%

Solar 9%

Nuclear,

Hydro, Other5%

Source: DOE-EIA; GTI analysis

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U.S. Industrial RenaissanceFueled By Natural Gas

“Offshoring” ended a decade ago with shale gas. Robust industrial rebound & manufacturing growth.

American Chemistry Council

“Offshoring” &

Demand Destruction

“Industrial Renaissance”

& Growth

https://www.mckinsey.com/featured-insights/americas/making-it-in-america-revitalizing-us-manufacturing

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Natural Gas Feedstock Chemicals – Consumer Products

TransportationTiresAnti-freezeMolded PlasticsGasoline AdditivesBelts and HosesCar SealsWiper FluidBumpers

Health and HygienePlastic EyeglassesCosmeticsDetergentsPharmaceuticalsSuntan LotionMedical, Dental ProductsDisinfectantAspirin

HousingPaintsResinsSidingFiberglass InsulationCementsCoatings, VarnishesFlame RetardantsAdhesives

RecreationAthletic FootwearProtective EquipmentBicycle Parts, TiresCamera and FilmWet SuitsTapes and CDsGolf EquipmentCamping Gear

CommunicationsMolded PlasticsComputerPhone CasingsOptical Fiber CoatingsLiquid Crystal DisplaysPens, PencilsInksDyesPaper Products

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What is Combined Heat and Power (CHP)

CHP combines power and thermally activated technologies to provide customers both power and thermal energy from the power generation process.

> Reduces cost of electricity and thermal energy

> Increases overall system efficiency

‒ up to 97% system efficiency

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Combined Heat and Power (CHP) Drivers

> Sustained low gas prices

> Rising electricity prices

> Sufficient “Spark Spread”

> Long Operating Hours

> Coincidental Thermal and Electric

Loads

─ Good CHP Economics (lowering the cost

of electricity and thermal energy)

> Need for resilience

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CHP Market Trends

Source: DOE/ICF CHP Database

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Natural Gas CHP System Power Efficiency

lb CO2/MMBTU

Coal 205

Natural Gas 117

% Lower 43%

Together, technical & fuel

factors result in a 55-63%

reduction in carbon dioxide

emissions per kWh

produced with natural gas in

place of coal.

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FACT: Replacing 1 traditional diesel-burning heavy-duty truck with 1 new

Ultra Low-NOx natural gas heavy-duty truck is the emissions equivalent of

removing 119 traditional combustion engine cars off our roads.

Driving Down Emissions with Compressed Natural Gas (CNG) to Power Vehicles

GHG BenefitsNOx Benefits

Source: University of

California – Riverside

Source: CARB Low

Carbon Fuel Standard

Source: https://greet.es.anl.gov/afleet_tool

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What is Renewable Natural Gas?

• The same molecular make-up as natural gas (methane)

– 4 hydrogen atoms and 1 carbon atom

• Cleaned and processed to pipeline quality

• Carbon footprint is lower than natural gas and can be dramatically lower than zero (negative)

• Most often it is derived from biogas that has been processed to remove carbon dioxide and other trace constituents,

– resulting gas is typically >92% methane

• RNG produced from digesters

– Animal manure (dairy cows, swine)

– Waste water treatment facilities

– Food processing plants

• RNG from Landfills

• RNG can also be produced from thermal chemical processes like gasification utilizing renewable feed-stocks including wood and agricultural wastes.

A Substitute for Natural Gas Derived from Renewable Sources

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Source: NGVAmerica and Coalition for Renewable Natural Gas

Growth of Renewable Natural Gas for Transportation

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RNG for California

beats building electrification

Annual G

HG

em

issio

ns

(mill

ion m

tC

O2 p

er

year)

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18

16

14

12

10

8

6

2017 2018 2019 2020 2021 20232022 2024 2025 2026 2027 2028 2029 2030

Baseline

Normal Replacement (25%)

Normal Replacement (50%)

Normal Replacement (100%)

Overnight Conversion

Proportion of RG required to achieve the

same GHG emission savings by 2030

As a % of buildings

gas use

As a % of total gas

throughput*

0% 0%

12% 4%

23% 8%

46% 16%

63% 22%

*Calculated from % of buildings gas use,

assuming that building consumption

represents 34% of SoCalGas’s total gas

throughput in 2030

Source: Navigant Consulting, “Gas Strategies for a Low-Carbon California Future,” 2018 16

Source: Navigant Consulting, “Gas Strategies for a Low-Carbon California Future,” 2018

Meet CA’s 2030 GHG goals in the

building sector by switching to

5% RNG

Achieve the same GHG

reductions as overhauling

100% of CA’s buildings to all

electricity with

16% RNG

Reduce short-lived climate

pollutants and achieve

40%capture of methane from CA waste streams (SB1383)

Source: Navigant Consulting, “Gas Strategies for a Low-Carbon California Future,” 2018

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18Source: GTI analysis of DOE EIA data (nominal). Based on underground gas storage and pumped hydro storage data; estimated battery performance assuming 1 GW installed capacity and 25% annual capacity factor.

Natural gas storage is over 50 times larger than

electricity storage.

The substantial size of natural gas storage is

due to the intense demand requirements of

seasonal space heating loads. Can meet about

16% of total natural gas demand from

underground gas storage (added capacity from

LNG and propane/air systems).

Electricity storage meets about 0.7% of typical

annual electricity demand. Over 90% is from

pumped hydro systems which have ability to

address seasonal loads. Battery storage

capacity is growing, but lacks ability to address

seasonal space conditioning loads.

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Turning Raw Technology into Practical Solutions

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