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SUMMARY OF ~ WORKSHOP OH U.~. HDTURDL CHS D[M0HD SUPPLY DUD Tt(~HOLOCY boor NC TOWARD Tht FUTURE Committee on U.S. Natural Gas Demand and Supply Projections: A Workshop Committee on Earth Resources Board on Earth Sciences and Resources Division on Earth and Life Studies NATIONAL RESEARCH COUNCIL OF THE NATIONAL ACADEMIES THE NATIONAL ACADEMIES PRESS Washington, D.C. www.nap.eclu

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THE NATIONAL ACADEMIES PRESS 500 Fifth Street, N.W., Washington, DC 20001 NOTICE: The project that is the subject of this report was approved by the Governing Board of the National Research Council, whose members are drawn from the councils of the Na- tional Academy of Sciences, the National Academy of Engineering, and the Institute of Medi- cine. The members of the committee responsible for the report were chosen for their special competences and with regard for appropriate balance. This study was supported by the U.S. Department of Energy, Minerals Management Ser- vice, and the U.S. Geological Survey. Any opinions, findings, conclusions, or recommenda- tions expressed in this publication are those of the authorts) and do not necessarily reflect the views of the organizations or agencies that provided support for the project. International Standard Book Number 0-309-08964-6 (Book) International Standard Book Number 0-309-5264-0 (PDF) Additional copies of this report are available from the National Academies Press, 500 Fifth Street, N.W., Lockbox 285, Washington, DC 20055; (800) 624-6242 or (202) 334-3313 (in the Washington metropolitan area); Internet, http://www.nap.edu Copyright 2003 by the National Academy of Sciences. All rights reserved. Printed in the United States of America

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THE NATIONAL ACADEMIES Advisers to the Nation on Science, Engineering, and Medicine The National Academy of Sciences is a private, nonprofit, self-perpetuating society of dis- tinguished scholars engaged in scientific and engineering research, dedicated to the further- ance of science and technology and to their use for the general welfare. Upon the authority of the charter granted to it by the Congress in 1863, the Academy has a mandate that re- quires it to advise the federal government on scientific and technical matters. Dr. Bruce M. Alberts is president of the National Academy of Sciences. The National Academy of Engineering was established in 1964, under the charter of the National Academy of Sciences, as a parallel organization of outstanding engineers. It is au- tonomous in its administration and in the selection of its members, sharing with the Na- tional Academy of Sciences the responsibility for advising the federal government. The Na- tional Academy of Engineering also sponsors engineering programs aimed at meeting national needs, encourages education and research, and recognizes the superior achieve- ments of engineers. Dr. Wm. A. Wulf is president of the National Academy of Engineering. The Institute of Medicine was established in 1970 by the National Academy of Sciences to secure the services of eminent members of appropriate professions in the examination of policy matters pertaining to the health of the public. The Institute acts under the responsibil- ity given to the National Academy of Sciences by its congressional charter to be an adviser to the federal government and, upon its own initiative, to identify issues of medical care, re- search, and education. Dr. Harvey V. Fineberg is president of the Institute of Medicine. The National Research Council was organized by the National Academy of Sciences in 1916 to associate the broad community of science and technology with the Academy's purposes of furthering knowledge and advising the federal government. Functioning in accordance with general policies determined by the Academy, the Council has become the principal operating agency of both the National Academy of Sciences and the National Academy of Engineering in providing services to the government, the public, and the scientific and engi- neering communities. The Council is administered jointly by both Academies and the Insti- tute of Medicine. Dr. Bruce M. Alberts and Dr. Wm. A. Wulf are chairman and vice chair- man, respectively, of the National Research Council. www. nationa l-academies.org . . .

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COMMITTEE ON U.S. NATURAL GAS DEMAND AND SUPPLY PROJECTIONS: A WORKSHOP SCOTT W. TINKER, Chair, The University of Texas at Austin rOHN B. CURTIS, Colorado School of Mines, Golden TAMES I. EMME, Anadarko Petroleum Corporation, The Woodlands, Texas VELLO A. KUUSKRAA, Advanced Resources International, Arlington, Virginia DIANNE R. NIELSON, Utah Department of Environmental Quality, Salt Lake City National Research Council Staff TAMARA L. DICKINSON, Study Director MONICA R. LIPSCOMB, Research Assistant KAREN L. IMHOF, Senior Project Assistant V 20634 NCHRP Report 498

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20634 NCHRP Report 498 COMMITTEE ON EARTH RESOURCES SUSAN M. LANDON, Chair, Thomasson Partner Associates, Denver, Colorado TAMES C. COBB, University of Kentucky, Lexington VICKI COWART, Consulting Geologist, Denver, Colorado PATRICK CUMMINS, Western Governors' Association, Denver, Colorado THOMAS V. FALKIE, Berwind Natural Resources Corporation, Philadelphia, Pennsylvania MURRAY W. HITZMAN, Colorado School of Mines, Golden MICHAEL L. MENGE, U.S. Senate Committee for Energy and Natural Resources (retired), Dover, Arkansas . rOHN N. MURPHY, University of Pittsburgh, Pennsylvania DONALD L. PAUL, ChevronTexaco Corporation, San Ramon, California MARK C. ROBERTS, Michigan Technological University, Houghton, Michigan rOAQUIN RUIZ, University of Arizona, Tucson RUSSELL E. STANDS-OVER-BULL, Arrow Creek Resources, Inc., Pryor, Montana R. BRUCE TIPPIN, North Carolina State University, Asheville LAWRENCE P. WILDING, Texas A&M University, College Station P. MICHAEL WRIGHT, Idaho National Engineering and Environmental Laboratory, Idaho Falls National Research Council Staff TAMARA L. DICKINSON, Senior Program Officer MONICA R. LIPSCOMB, Research Assistant KAREN L. IMHOF, Senior Project Assistant v

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BOARD ON EARTH SCIENCES AND RESOURCES GEORGE M. HORNBERGER, Chair, University of Virginia, Charlottesville TILL BANFIELD, University of California, Berkeley STEVEN R. BOHLEN, Joint Oceanographic Institutions, Washington, D.C. VICKI COWART, Consulting Geologist, Denver, Colorado DAVID L. DILCHER, University of Florida, Gainesville ADAM M. DZIEWONSKI, Harvard University, Cambridge, Massachusetts WILLIAM L. GRAF, University of South Carolina, Columbia RHEA GRAHAM, New Mexico Interstate Stream Commission, Albuquerque V. RAMA MURTHY, University of Minnesota, Minneapolis DIANNE R. NIELSON, Utah Department of Environmental Quality, Salt Lake City RAYMOND A. PRICE, Queen's University, Kingston, Ontario MARK SCHAEFER, NatureServe, Arlington, Virginia BILLIE L. TURNER II, Clark University, Worcester, Massachusetts THOMAS I. WILBANKS, Oak Ridge National Laboratory, Oak Ridge, . . ennessee National Research Council Staff ANTHONY R. DE SOUZA, Director PAUL M. CUTLER, Senior Program Officer TAMARA L. DICKINSON, Senior Program Officer DAVID A. FEARY, Senior Program Officer ANNE M. LINN, Senior Program Officer KRISTEN L. KRAPF, Program Officer LISA M. VANDEMARK, Program Officer RONALD F. ABLER, Senior Scholar YVONNE P. FORSBERGH, Research Assistant MONICA R. LIPSCOMB, Research Assistant VERNA I. BOWEN, Administrative Associate rENNIFER T. ESTEP, Administrative Associate RADHIKA S. CHARI, Senior Project Assistant KAREN L. IMHOF, Senior Project Assistant TERESIA K. WILMORE, Project Assistant WINFIELD SWANSON, Editor vim

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Acknowledgments This workshop summary has been reviewed by individuals chosen for their diverse perspectives and technical expertise in accordance with procedures approved by the National Research Council's (NRC) Report Review Committee. The purpose of this independent re- view is to provide candid and critical comments that will assist the au- thors and the NRC in making their published summary as sound as pos- sible and to ensure that the summary meets institutional standards for objectivity, evidence, and responsiveness to the study charge. The con- tent of the review comments and the draft manuscript remain confiden- tial to protect the integrity of the deliberative process. We wish to thank the following individuals for their participation in the review of this summary: Tom Bates, Lime Rock Partners lames T lensen, lensen Associates Richard Nehring, NRG Associates Greg Stringham, Canadian Association of Petroleum Producers Robert T. Weimer, Colorado School of Mines (emeritus) Although the individuals listed above provided many constructive comments and suggestions, they did not see the final summary before its release. The review of this summary was overseen by David L. Bodde, Henry W. Block School of Business, University of Missouri. Appointed by the NRC, he was responsible for making certain that an independent ex- . . via

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vIll ACKNOWLEDGMENTS amination of this summary was carried out in accordance with institu- tional procedures and that all review comments were carefully consid- ered. Responsibility for the final content of the summary rests entirely with the authoring committee and the NRC.

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Preface Committee members John Curtis, lames Emme, Vello Kuuskraa, and Dianne Nielson and National Research Council staff mem- bers Tammy Dickinson, Monica Lipscomb, and Karen Imhof were fundamental in developing the workshop agenda, identifying speakers, running the workshop, and writing this report. It was a great team effort. My thanks to each of them. For 150 years, U.S. energy consumption trends have led global energy consumption trends. Those trends indicate that the future of energy is most likely a hydrogen and solar future utilizing technology that today may not even exist. As we transition toward the future, a mix of known energy sources coal, oil, natural gas, nuclear, hydra, and other renewables will be required over the next 100 years to meet global en- ergy demands. Certainly there is a global supply of coal for the next cen- tury that can be burned for electricity and gasified for transportation fuel if policy so directs. Similarly, there is a global supply of cleaner and more efficient natural gas for the next 100 years, which in addition to being burned as a direct energy source could provide feedstock for hydrogen if policy so supports. Recognizing that fossil fuels supply 85 percent of the world's energy needs today, that the world has been steadily progressing away from solid and liquid forms of fossil energy toward natural gas, nuclear, and renew- able energy, and that all fossil fuels are only an energy bridge to the next century, it is important to determine the best mix of fossil energy sources for the economy, health, and well-being of our planet during the present Six

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x PREFACE century. In that context, energy and the environment should be conjunc- tive terms, and reasonable compromises guided by good science and good application of technology should be made to transition sensibly toward the 22nd century. Scott W. Tinker, Chair

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Contents SUMMARY 1 INTRODUCTION Study and Report, 10 2 U.S. NATURAL GAS DEMAND Projecting Natural Gas Demand, 15 Outlook for U.S. Natural Gas Demand, 17 Outlook for Canadian and Mexican Natural Gas Demand, 24 Sensitivity Analyses, 26 Summary, 33 3 NORTH AMERICAN NATURAL GAS SUPPLY Gas Resource Estimates, 35 North American Supply Going Forward, 47 4 MEETING U.S. NATURAL GAS DEMAND U.S. Production and Storage Trends, 49 U.S. Sources of Natural Gas, 53 External Sources of Natural Gas, 65 Summary Observations and Issues, 75 5 SUMMARY AND OVERARCHING ISSUES Demand, 78 Supply, 78 x~ 1 6 13 34 49 77

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X11 Meeting U.S. Demand, 79 Overarching Issues, 81 A Look Ahead, 82 REFERENCES APPENDIXES CONTENTS 83 A BIOGRAPHICAL SKETCHES OF COMMITTEE MEMBERS 89 B WORKSHOP AGENDA 93