C.T. CARLEY : Natural gas debate fires exploration of energy future

By C.T. Carley

Debate is beginning to heat up over whether or not energy companies should be allowed to export natural gas produced in the United States.
Proponents cite record low domestic prices for the fuel and the huge market demand for American gas in Europe and Asia. Critics fear that exporting gas will weaken energy security and drive up its price to the point that it undercuts the nation’s manufacturing resurgence and hurts consumers who are increasingly dependent on natural gas to provide heat and electricity to their homes.
The debate over liquified natural gas (LNV) exports is symbolic of the current dangerously singular focus we have on natural gas as America’s fuel of the future. Despite rhetoric over building an “all–of–the–above” energy equation, we seem to be putting all of our eggs in one basket.
While the shale gas revolution has opened up considerable new production and reserves of gas, over–enthusiasm for the fuel could jeopardize development of other energy sources, particularly nuclear power.
If we could predict future gas prices, we could plan our energy strategy in detail. Right now, gas prices are extremely low – in fact so low that Energy Secretary Steven Chu cited that as a reason to consider exporting up to 18 percent of U.S. production. That would ramp up the price of gas, thereby providing a financial incentive to continue and increase drilling. But natural gas has a history of price volatility – less than 10 years ago, it was selling for $15 per million BTU instead of the $2.57 today. The price has rapidly dropped to this level. Only 2.5 months it was $3.53. Instead of talking about exporting gas 10 years ago, we were actually importing LNG from the Middle East.
Of course, there is a reason why natural gas is the dominant fuel of the moment. It’s flexible, clean and cheap. Here in Mississippi it accounts for almost half of our electricity generation, compared to 22 percent for nuclear power and 26 percent for coal.
Where there is plastic there was once was natural gas. And there is proposed legislation in Congress to encourage trucks and buses to burn natural gas instead of fuel from oil. However, the main driver for he surge in popularity of gas is its rock–bottom price.
Gas prices began to drop when demand for gas declined as a result of the economic slump. That, combined with the extraordinary increase in shale–gas production has greatly benefited consumers.
Despite the major bump in unconventional gas production, there’s no guarantee that gas will remain plentiful and cheap.
If we’re smart, we will hedge our bets and pursue an “all–of–the–above” energy strategy that fosters supply flexibility and energy security.
Our reactor fleet is aging and while a license has been issued for construction of two AP1000 reactors in Georgia – the first new nuclear plants in many years – nuclear’s share will begin to decline unless more reactors are built around the country.
We may be living in the golden age of American natural gas production, but it would be a serious mistake to become overly focused on one energy source to the detriment of our security and economic well–being. We need to stay the course with renewable sources and nuclear power. And the supply of natural gas in currently large enough to permit limited export of LNG to markets in Europe and Asia.
C.T. Carley, Ph.D., P.E., is Professor Emeritus of Mechanical Engineering at Mississippi State University. Contact him at ctcarley@bellsouth.net.