Increasing Use of Natural Gas May Lead to Infrastructure Issues

Natural Gas Pipeline

Inexpensive natural gas is affecting the traditionally favorable cost of coal-fired power plants. With increased shale production, estimates of recoverable domestic gas reserves have surged in recent years.

Natural gas should continue to increase its use in power plants as the EPA creates greenhouse gas regulations for new power generation that will “effectively ban new coal-fired power plants,” ScottMadden said.

“The electric industry is beginning to adjust its generation complement accordingly, as the shale gas boom makes gas-fired power compelling for new generation, at least for the moment,” the firm said.

The nuclear power industry is also facing new concerns as the Nuclear Regulatory Commission moves forward with new requirements move than a year after the Fukushima Dai-ichi meltdown in Japan.

The natural gas industry faces its own concerns, however, These concerns range from public pushback over fracking, to the need to address “aging pipes,” according to the consultant’s report.

Potential unknowns facing the natural gas industry include regulation of expanded exports of liquefied natural gas (LNG). With so many of its nuclear plants closed post-Fukushima, Japan is seen as a growing market for LNG. Meanwhile, back in the United States, there is the potential for natural gas to play a growing role in transportation fuel for motor vehicles.

Pipeline flow capacity constraints are emerging issues for the natural gas and power sectors. To meet a possible doubling of natural gas demand, an additional 24,000 miles of pipeline could be required in the new future. Gas companies will be major players in this future build-out of transportation infrastructure for power generation.