Implications of Natural Gas Shortage For Industrial Demand and the Environment (original) (raw)
Energy Economics, 2007
This study develops a statistical model of industrial US natural gas consumption based upon historical data for the 1958-2003 period. The model specifically addresses interfuel substitution possibilities and changes in the industrial economic base. Using a relatively simple approach, the framework can be simulated repeatedly with little effort over a range of different conditions. It may also provide a valuable input into larger modeling exercises where an organization wants to determine long-run natural gas prices based upon supply and demand conditions.
Estimating Industrial Natural Gas Demand Elasticities in Selected OECD Countries
Energy Economics Letters, 2019
Contribution/Originality: This documents contribution to provide recommendations on energy policy in Indonesia with several energy policy references in other countries. The recommendation is to limiting the use of subsidized fuel with direct and closed distribution (learning from India), adjusting subsidized retail prices, and in line with affordable public transportation. 1. INTRODUCTION It is, of course, necessary to implement an environmental policy to save lives, but we need to look at this prospect from the perspective of the history of human civilization by using economic considerations. High-quality environmental demands are increasingly pushing the economy to play a role in policies on new standards, licensing, and taxation systems. Building arguments require coherent data and accurate information to predict the impact of an environmental policy. Thus, any environmental policy that has shown little tangible benefits will be increasingly difficult to replace (Hahn, 2000). Developing a policy takes a long time because it involves the use of various instruments relating to the field of environment and a cost-effectiveness analysis or cost-benefit analysis (Morgenstern and Landy, 1997). Decision
MAKARA of Technology Series, 2011
The petroleum fuels (PF) subsidy has long burdens the government spending, and discourages less expensive energy usage such as natural gas (NG). Exporting NG and importing the more expensive PF products cause financial losses to Indonesia. The lack of NG infrastructure is the main hurdle in maximizing domestic NG usage and so does the perception of its high investment costs burdening government spending and pushing the NG transportation cost up. This study calculates the required NG infrastructure and its investments for several levels of PF substitutions up to 2030. To balance the NG demands, the supply from each field and its corresponding infrastructures needed was calculated and optimized using non-linear programming with generalized reduced gradient method to calculate the lowest transportation cost for the consumers. The study shows with a favorable return on investments attractive to private investors, the NG prices can still be put much lower than PF prices, allowing subsidy, import and production cost savings in many sectors. Furthermore, the highest level of substitution scenario needs only US$ 2.07 billion a year investment, very low compare to the current US$ 14.17 billion a year PF and electricity subsidy.
How is demand for natural gas determined across European industrial sectors?
Energy Policy, 2011
This paper estimates the response of manufacturing sectors' natural gas demand to price and output changes. The average response to future changes in absolute and relative prices of the manufacturing industry in an OECD country depends on the mix of manufacturing industries, particularly with respect to energy intensity and substitution opportunities in production. We estimate short and long run demand elasticities using a shrinkage estimator, which allows heterogeneous demand responses across industries for each country. Our results show that price and output elasticities are heterogeneous within the same manufacturing sector across countries. Furthermore, an output contraction due to e.g. demand shocks will generally have larger negative effects on gas demand than increases in natural gas prices.
Energy Economics, 2016
With advances in natural gas extraction technologies, there is an increase in the availability of domestic natural gas, and natural gas is gaining a larger share of use as a fuel in electricity production. At the power plant, natural gas is a cleaner burning fuel than coal, but uncertainties exist in the amount of methane leakage occurring upstream in the extraction and production of natural gas. At higher leakage levels, the additional methane emissions could offset the carbon dioxide emissions reduction benefit of switching from coal to natural gas. This analysis uses the MARKAL linear optimization model to compare the carbon emissions profiles and system-wide global warming potential of the U.S. energy system over a series of model runs in which the power sector is required to meet a specific carbon dioxide reduction target across a number of scenarios in which the availability of natural gas changes. Scenarios are run with carbon dioxide emissions and a range of upstream methane emission leakage rates from natural gas production along with upstream methane and carbon dioxide emissions associated with production of coal and oil. While the system carbon dioxide emissions are reduced in most scenarios, total carbon dioxide equivalent emissions show an increase in scenarios in which natural gas prices remain low and, simultaneously, methane emissions from natural gas production are higher.
Natural Gas: The Green Fuel of the Future
Canadian Unconventional Resources and International Petroleum Conference, 2010
As populations and economies continue to grow globally, energy demand will grow proportionally. Extensive work by Peter Tertzakian (2006, 2009) has shown crude oil supplies may not keep pace with this increased demand. The shortfall must be met by other energy sources. Only two current energy sources have the global capacity to, by themselves, address increased energy demand in a timely manner. These are natural gas and coal. Traditionally, the major use of crude oil has been for processing into transportation fuels, with lesser amounts being used for petro-chemicals and home heating. Natural gas and coal have been used primarily for electrical generation and heating. A pivotal transition will likely occur in which natural gas and coal begin to see increased use as transportation fuels. A battle for market share between primary fuels will likely ensue. The objective of this paper is to present data comparing the environmental impact of using methane vs. coal. A compelling case for t...
Analysis of Worldwide Natural Gas Production
Natural gas is an increasingly important source of the world’s energy. Estimating future supplies of this valuable commodity is an important economic and strategic endeavor. This paper analyses historical natural gas production trends for the 53 countries that produce virtually all of the world’s natural gas. Using a multicyclic Hubbert method, we forecast the world’s future supply of natural gas to the year 2050. Our analysis showed that the world ultimate reserves of conventional natural gas will be around 10,000 Tcf, of which about 7,900 Tcf of gas reserves remains to be recovered at the end of 1997. The world production of natural gas is expected to peak by 2014 at a production rate extending from 2012 until 2017 of approximately 99 Tcf/yr. Based on the 1997 world gas production and the results of this study, the world supply of conventional natural gas will continue for 96 years with reserves depletion rate of 1%/yr. In his 1956, and later 1980, predictions of U.S. natural gas production, M. King Hubbert1-4 used one complete production cycle to forecast production and estimate ultimate recovery of natural gas for the United States. Several authors have shown that Hubbert’s model with one production cycle is generally adequate for predicting crude oil production. However, this study shows that, in the case of natural gas production, most countries exhibit two or more Hubbert-type production cycles. These additional cycles apparently result from changing exploration technology, regulations, and economic and/or political events. Using a Hubbert model with a single production cycle did not allow for these factors. We found that most of the 53 countries apparently exhibit multicyclic gas production. To account for additional production cycles we used a modified version of the Hubbert model which is referred to as the “multicyclic Hubbert” model. A nonlinear least-squares regression was used to determine the parameters of the multicyclic model for each country. Exploration data, when available, were used to calibrate country models with production data. We also present a mathematical analysis of the Hubbert model by deriving equations for determining the production rates at inflection points and their time of occurrence on the Hubbert curve. We will demonstrate a graphical technique to verify the results.
The World Gas Market in 2030: Development Scenarios Using the World Gas Model
SSRN Electronic Journal, 2000
In this paper, we discuss potential developments of the world natural gas industry at the horizon of 2030. We use the World Gas Model (WGM), a dynamic, strategic representation of world natural gas production, trade, and consumption between 2005 and 2030. We specify a "base case" which defines the business-as-usual assumptions based on forecasts of the world energy markets. We then analyze the sensitivity of the world natural gas system with scenarios: i) the emergence of large volumes of unconventional North American natural gas reserves, such as shale gas; ii) on the contrary, tightly constrained reserves of conventional natural gas reserves in the world; and iii) the impact of CO 2 -constraints and the emergence of a competing environmental friendly "backstop technology". Regional scenarios that have a global impact are: iv) the full halt of Russian and Caspian natural gas exports to Western Europe; v) sharply constrained production and export activities in the Arab Gulf; vi) heavily increasing demand for natural gas in China and India; and finally vii) constraints on liquefied natural gas (LNG) infrastructure development on the US Pacific Coast. Our results show considerable changes in production, consumption, traded volumes, and prices between the scenarios. Investments in pipelines, LNG terminals and storage are also affected. However, overall the world natural gas industry is resilient to local disturbances and can compensate local supply disruptions with natural gas from other sources. Long-term supply security does not seem to be at risk.