Driving Innovation ♦ Delivering Results BLUE OPTION White space is filled with one or more photos An Industrial Resurgence The Dynamic Energy Landscape 33rd USAEE/IAEE North American Conference Peter C. Balash, Ph.D. Senior Economist, NETL October 27, 2015 National Energy Technology Laboratory Acknowledgement The author thanks Justin Adder and Gavin Pickenpaugh for their able assistance in composing this presentation Any opinion expressed is that of the author and does not represent the views of the Department of Energy or the National Energy Technology Laboratory National Energy Technology Laboratory 2 Historic Natural Gas & Oil Prices Figure: WTI Spot Price and Henry Hub Spot Price Diverge 25 $/MMBtu (2015$) 20 West Texas Intermediate 15 10 5 Henry Hub Natural Gas 0 National Energy Technology Laboratory Source: EIA, Short Term Energy Outlook, Data through 2015Q2 3 Natural Gas Production Shifts Figure: U.S. Natural Gas Production in Jan. 2005, Bcf/d 5.34 Bcf/d 11.13 Bcf/d 4.64 Bcf/d 4.46 Bcf/d 15.90 Bcf/d 10.50 Bcf/d 3.66 10.00 Bcf/d National Energy Technology Laboratory Source: EIA, Annual Energy Outlook 2012 and Monthly Natural Gas and Petroleum Report, July 31, 2012 4 Natural Gas Production Shifts Figure: U.S. Natural Gas Production, Jan. 2005 compared to Jan. 2015, Bcf/d 205% 1% 5.34 Bcf/d 5.36 Bcf/d The 26.01 Bcf/d increase from 2005 to 2015 can be attributed to increased production in the Marcellus/Utica and Texas. 9.41 Bcf/d 24.31 Bcf/d 3.66 5.25 Bcf/d 43% 53% 3.34 44% 4.46 Bcf/d 6.43 Bcf/d 33.97 Bcf/d 3.57 Bcf/d National Energy Technology Laboratory Source: EIA, January Monthly Natural Gas and Petroleum Report, Released February 2015 5 Natural Gas Pipeline Miles and Capacity Figure: Annual Addition of Natural Gas Pipeline Miles and Capacity, Northeast Region vs. Total U.S. (2000–2018) *Announced 5,000 50 45 40 35 4,000 30 3,000 25 20 2,000 15 10 1,000 5 Northeast Miles Total U.S. Miles Northeast Capacity 2015 2016 2017 2018 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 0 Capacity Added (Bcf/d) Miles of Pipeline Added 6,000 Total U.S. Capacity *(Not all announced pipelines will be built) National Energy Technology Laboratory Source: EIA, http://www.eia.gov/naturalgas/data.cfm#pipelines 6 Natural Gas Consumption Figure: Natural Gas Consumption through 2040 (Reference, High Resource & High Economic Cases) History 45.00 Trillion Cubic Feet 40.00 35.00 Projections Favorable economic conditions could enable an increase of 4.46 tcf in industrial utilization of natural gas from 2014 - 2040 30.00 27.12 29.58 26.93 26.14 25.00 9.41 20.00 39.53 31.85 29.70 Industrial* 10.88 9.93 Electric Power 15.00 8.22 10.00 5.00 7.61 0.90 3.45 0.89 3.21 1.63 3.61 Transportation** Commercial 5.14 4.50 4.20 Residential 2014 2020 2040 0.00 2005 *Includes combined heat-and-power and lease and plant fuel **Includes pipeline fuel National Energy Technology Laboratory 9.38 Reference Reference + High Economic Reference + High Economic + High Resource Source: U.S. Energy Information Administration, http://www.eia.gov/naturalgas/data.cfm and Annual Energy Outlook 2015 7 How Natural Gas Liquids are Used Table: Applications and End Use Products for Natural Gas Liquids National Energy Technology Laboratory Source: EIA, Today in Energy, “What are natural gas liquids and how are the used?” April 20, 2012 8 U.S. Production of Natural Gas Liquids Figure: Total U.S. Field Production of Natural Gas Liquids, Monthly, Mb/d 3,500 3,300 3,100 2,900 The growth in production since 2009 can be attributed to two main factors: higher overall natural gas production and the migration of production from drier plays to more liquids-rich plays. April 2015 = 3,313 Mb/d 2,700 2,500 79% 2,300 2,100 1,900 ‘05- ‘10 Avg. = 1,856 1,700 1,500 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 National Energy Technology Laboratory Source: EIA, Field Production of Natural Gas Plant Liquids, Reported Monthly through June 2015 9 Natural Gas Liquids Price Figure: U.S. NGL Price at Mont Belvieu (Weekly) Dollars per Gallon $3.00 $2.50 $2.00 $1.50 Natural Gasoline $1.00 Iso-Butane Normal Butane Propane Ethane E/P Mix $0.50 $0.00 National Energy Technology Laboratory Source: Bentek Energy, NGL Monitor Weekly, Prices through September 22, 2015 10 Trends in Natural Gas Consumption Figure: Sector Trends in Natural Gas Consumption and Reliance on Imports (1997-2016 Projections) 35 30 All Other Consumption Bcf/d 25 20 Electric Power Industrial 15 Net Imports 10 5 0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 STEO STEO 2015 2016 Industrial National Energy Technology Laboratory Electric Net Imports Other Consumption Source: EIA, Short Term Energy Outlook 11 Trends in Natural Gas Consumption Figure: Sector Trends in Natural Gas Consumption and Reliance on Imports (1997-2016 Projections) 35 30 $10 All Other Consumption $8 Bcf/d 25 20 Industrial 15 Electric Power $6 $4 10 HH Gas Price 5 $2 Net Imports 0 $0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 STEO STEO 2015 2016 Industrial Electric Net Imports Other Consumption HH Price ($/mmbtu, 2014$) National Energy Technology Laboratory Source: EIA, Short Term Energy Outlook 12 Gas and Electricity Consumption Table: Gas and Electricity Consumption of Energy-Intensive Industries (2010) Top 7 energy-intensive mfg sectors NG NAICS Consumption (Bcf) % of U.S. Mfg. Total NG Cons. % of all U.S. total NG consumption Net % of U.S. % of U.S. Electricity Mfg Total total kWh (million kWh Cons. Cons. kWh) Chemicals 325 2,192 39.4% 9.1% 131,932 18.5% 3.4% Nonmetallic Mineral Products 327 266 4.8% 1.1% 32,576 4.6% 0.8% Paper 322 390 7.0% 1.6% 60,497 8.5% 1.6% Petroleum & Coal Products 324 892 16.0% 3.7% 47,014 6.6% 1.2% Primary Metals 331 550 9.9% 2.3% 117,284 16.4% 3.0% Textile Mills 313 31 0.6% 0.1% 13,240 1.9% 0.3% Wood Products 321 34 0.6% 0.1% 15,323 2.1% 0.4% Energy-intensive mfg. totals 4,355 78.3% 18.1% 417,866 58.5% 10.8% 2010 U.S. Manufacturing Total 5,564 714,166 2010 U.S. Total Consumption 24,087 3,886,752 Chemical and Primary Metal Products most sensitive to natural gas and electricity cost National Energy Technology Laboratory Sources: EIA, Manufacturing Energy Consumption Survey (MECS), Table 1.1 and Table 6.1; EIA, Monthly Energy Review. Note: Energy Intensity Defined as ratio of energy consumption per dollar of GDP 13 Gas and Electricity Consumption Table: Gas and Electricity Consumption of Highest Energy Consuming Industries (2010) Top 9 energy-consuming mfg sectors NG NAICS Consumption (Bcf) % of U.S. Mfg. Total NG Cons. % of all U.S. total NG consumption Net % of U.S. % of U.S. Electricity Mfg Total total kWh (million kWh Cons. Cons. kWh) Chemicals 325 2,192 39.4% 9.1% 131,932 18.5% 3.4% Fabricated Metal Products 332 159 2.9% 0.7% 37,206 5.2% 1.0% Food 311 567 10.2% 2.4% 75,407 10.6% 1.9% Nonmetallic Mineral Products 327 266 4.8% 1.1% 32,576 4.6% 0.8% Paper 322 390 7.0% 1.6% 60,497 8.5% 1.6% Petroleum & Coal Products 324 892 16.0% 3.7% 47,014 6.6% 1.2% Primary Metals 331 550 9.9% 2.3% 117,284 16.4% 3.0% Transportation Equipment 336 125 2.2% 0.5% 38,832 5.4% 1.0% Wood Products 321 34 0.6% 0.1% 15,323 2.1% 0.4% Large energy using mfg. totals 5,175 93.0% 21.5% 556,071 77.9% 14.3% 2010 U.S. Manufacturing Total 5,564 714,166 2010 U.S. Total Consumption 24,087 3,886,752 Chemical and Primary Metal Products most sensitive to natural gas and electricity cost National Energy Technology Laboratory Sources: EIA, Manufacturing Energy Consumption Survey (MECS), Table 1.1 and Table 6.1; EIA, Monthly Energy Review. 14 Farm Belt Linkage Figure: Henry Hub versus Anhydrous Ammonia prices, and Ammonia supply (1997-2014) Ammonia Net Imports (Nitrogen tonnage) NG Henry Hub (2014$/mmbtu) Anhydrous Ammonia (2014$/ton, FOB Gulf Coast) 18 16 $/ton ammonia (2014$) ¢/mmbtu NG ($2014) 1,000 14 800 12 10 600 8 400 6 4 200 2 0 0 National Energy Technology Laboratory Ammonia Supply (million metric tons of nitrogen) 1,200 Ammonia Production (Nitrogen tonnage) Sources: EIA, Natural Gas; BEA, GDP Deflator; USGS, Minerals Commodity Summary; Minerals Yearbook 15 Manufacturing Expenditures Figure: Manufacturing Coal, Natural Gas and Electricity Expenditures, by Region 40 35 Billion Dollars 30 25 20 15 10 5 0 Northeast Midwest Primary Natural Gas National Energy Technology Laboratory South Electricity West Primary Coal Source: EIA, 2010 Manufacturing Energy Consumption Survey, Table 7.9 16 Energy-Intensive Industry and GDP Figure: Energy-Intensive Industry and GDP (2013) Energy-Intensive share of GDP 14% 12% 10% 8% 6% 4% 2% 0% U.S. OH IL MO PA KY WV TX IN PA, KY, WV, TX and IN exceed U.S. Average for energy-intensive manufacturing Note: Top Seven Energy Intensive Manufacturing Industries: Chemical, Fabricated Metal Products, Petroleum and Coal Products, Primary Metal Products, Non-metallic Mineral Products, Wood Products, and Paper Manufacturing National Energy Technology Laboratory Sources: EIA, Manufacturing Energy Consumption Survey; BEA, Regional Data, GDP by State 17 Manufacturing and GDP Figure: Manufacturing and GDP (2014) Manufacturing share of GDP 35% 30% 25% 20% 15% 10% 5% 0% U.S. WV PA MO IL TX OH KY IN MO, IL, TX, OH, KY, and IN exceed U.S. Average for manufacturing share of GDP National Energy Technology Laboratory Source: BEA, Regional Data, GDP by State 18 Top States Energy Consumption Figure: Top States by Industrial Electricity , Coal and Natural Gas Energy Consumption (2013) 100% 2.5 80% 2.0 70% 60% 1.5 50% 40% 1.0 30% 20% Quadrillion BTUs Coal share of Generation 90% 0.5 10% 0% 0.0 KY IN OH Primary Natural Gas National Energy Technology Laboratory IA MI Primary Coal IL PA TX Electricity Sales GA AL LA CA Coal Share of Generation Sources: EIA, State Energy Data System, Table C7; Electric Power Monthly, Tables 1.6b, 1.7b., and 1.10b 19 Top States Energy Consumption Figure: Top States by Industrial Electricity , Coal and Natural Gas Energy Consumption (2013) 100% 2.5 80% 2.0 70% 60% 1.5 50% 40% 1.0 30% 20% Quadrillion BTUs Coal share of Generation Gas Share of Generation 90% 0.5 10% 0% 0.0 KY IN OH Primary Natural Gas Coal Share of Generation National Energy Technology Laboratory IA MI IL PA TX Primary Coal Gas Share of Generation GA AL LA CA Electricity Sales Sources: EIA, State Energy Data System, Table C7; Electric Power Monthly, Tables 1.6b, 1.7b., and 1.10b 20 New Chemical Plants Boost Usage Figure: Major Proposed Methanol and Ammonia-based Fertilizer Plants (2015-2018) Methanol plants and ammonia- or urea-based fertilizer plants are among the most natural gas-intensive industrial end users, with many using 100 million cubic feet per day or more. Marcellus Ammonia/Urea/Fertilizer Methanol National Energy Technology Laboratory Source: EIA Natural Gas Monthly, May 2015 21 Natural Gas Infrastructure Development Figure: Major Natural Gas Pipeline Capacity Additions in the Northeast ~30 Bcf/d of new natural gas pipeline takeaway capacity from 40+ pipeline builds, expansions and reversals to move gas out of the Appalachian basin by 2018. Midwest National Energy Technology Laboratory East Source: RBN Energy and EIA 22 NGL Takeaway Capacity Figure: Proposed Natural Gas Liquid Pipeline Takeaway Capacity New natural gas liquid pipeline capacity will allow for 4,000+ Mb/d of takeaway capacity out of the Appalachian basin by 2018. National Energy Technology Laboratory Source: RBN Energy and EIA 23 Natural Gas Capacity Additions Figure: Delivered Natural Gas Price vs. Net Natural Gas Capacity Additions (1990-2014) 300 10 Cumulative Natural Gas Capacity Additions (GWs) 250 8 200 6 150 4 100 2 50 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 cumulative additions National Energy Technology Laboratory Average real delivered NG price ($/Mcf, 2014$) 2015 delivered price of gas projected ~$1.25 lower than 2014 0 real delivered price Sources: EIA, Electric Power Annual 4.2A (2003 to 2013 capacity data); AEO’15 (2014 capacity data); Annual Energy Review, Table 8.11a (1989 to 2003 capacity data); Monthly Energy Review, Table 9.10; BEA, NIPA Table 1.1.9 24 Thank you For More Information, Contact NETL the ENERGY lab Delivering Yesterday and Preparing for Tomorrow National Energy Technology Laboratory 25 Gross Natural Gas Withdrawals by State Figure: Natural Gas Withdrawals by State, Bcf/d 40 Other States production continues to increase. This increment can be partially explained by new wells being brought online in the Marcellus & Utica shale plays and gains in Colorado. 35 Bcf/d 30 25 20 15 10 5 0 Texas New Mexico National Energy Technology Laboratory Federal GOM Louisiana Wyoming Oklahoma Other States (excluding Alaska) Source: EIA, Monthly Natural Gas Gross Production Report, March 31, 2015 26 Natural Gas Consumption Figure: U.S. Natural Gas Consumption by Sector through 2040 (Reference Case) Projections History 35 Trillion Cubic Feet 30 Natural gas consumption growth is driven by increased use in all sectors except residential Industrial* 25 10.88 9.41 20 Electric Power 15 10 8.22 9.38 0.90 3.45 1.63 Transportation** 3.61 Commercial 5.14 4.20 Residential 5 0 2005 2014 National Energy Technology Laboratory 2020 2025 2030 2035 2040 *Includes combined heat-and-power and lease and plant fuel **Includes pipeline fuel Source: U.S. Energy Information Administration, http://www.eia.gov/naturalgas/data.cfm and Annual Energy Outlook 2015 27 Natural Gas Consumption - High Case Figure: U.S. Natural Gas Consumption through 2040 (Reference vs. High Resource Case) 40.00 Trillion Cubic Feet 35.00 Projections History 6 Tcf more of consumption by Electric Power and Industry should natural gas remain plentiful 12.92 30.00 25.00 Industrial* 10.88 9.41 20.00 15.00 10.00 5.00 13.89 Electric Power 8.22 9.38 0.90 3.45 1.63 3.61 2.16 Transportation** 4.00 Commercial 5.14 4.20 4.40 Residential 2040 2040 0.00 2005 2014 *Includes combined heat-and-power and lease and plant fuel **Includes pipeline fuel National Energy Technology Laboratory 2020 Reference High Resource Source: U.S. Energy Information Administration, http://www.eia.gov/naturalgas/data.cfm and Annual Energy Outlook 2015 28 Regional Natural Gas Spot Prices Figure: Select Daily Spot Prices Since May 2015 ($/MMBtu) with Sept. Avg. Mapped $5 $/MMBtu $4 $3 $2 $1 $0 National Energy Technology Laboratory Source: SNL Energy, Spot Natural Gas Prices 29