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FIGURE 5-2 U.S. natural gas production. SOURCE: EIA (2013a).

ing causes much less surface disruption than conventional drilling—for example, Apache Corporation’s Horn River Development uses a drill pad of just 6.3 acres to recover gas from approximately 5,000 acres. However, this means that local pollution (e.g., particulate matter, volatile organic compounds, and nitrogen oxides [NOx]) may be more concentrated. In addition, NG largely consists of methane, which is a powerful GHG. Leakage, most of which is estimated to come from gas production activities, could negate the hoped-for climate benefits of reducing CO2 emissions by replacing other fossil fuels with NG. Methane has a shorter lifetime in the atmosphere than carbon dioxide, but its higher radiative forcing—that is, its ability to redirect heat that would otherwise escape the atmosphere—means that over 100 years it has 20 times the GHG impact of CO2. One analysis concluded that after taking into account current estimates of leakage, converting heavy-duty diesel trucks would have a net negative effect on climate change for centuries.4 One estimate of gas leakage, based on measurements at 190 onshore gas production sites, is 0.42 percent of the total gas production (Allen et al., 2013). Note that this leakage exceeds the amount of NG currently used in transportation. Other estimates of fugitive emissions have been significantly higher (e.g., Howarth et al., 2011).

Water contamination is a widely discussed concern about hydraulic fracturing. This can be divided into two main issues: (1) underground contamination related to well integrity and (2) disposal of wastewater from the hydraulic fracturing process.5 At the surface, an integrated management plan is needed to address the supply, handling, reuse, and disposal of the fracking fluid to ensure sustainability throughout the production cycle.

In the electric power sector, the low price of NG has directly caused the closure of coal plants, as it has become more economical to use combined-cycle NG plants (with thermal efficiencies up to 65 percent) for electricity production. However, fuel price is the dominant contributor to the cost of electricity (55 percent). One analysis concluded that the break-even fuel price is between $4 and $6 per million British thermal units (mmBTUs).6

In the heavy-duty transportation sector, price has a less direct effect on the use of NG as a fuel because delivering and compressing (or liquefying) the fuel account for a large share of the price at the pump. The break-even price of NG relative to diesel fuel is around $6 per million BTU (predelivery, not at the pump). If the costs of NG vehicles themselves come down relative to the costs of their diesel counterparts (discussed in the next section), the break-even value could be as high as $9 to $12 per million BTU. If, as projected by the Energy Information Administration (EIA), the price of NG in 2035 is about $7 per million BTU (EIA, 2013a), its use in the transportation sector will likely depend in part on future technological improvements.

Currently, the biggest obstacles to NG use for freight transportation are (1) the lack of widespread and dependable infrastructure, (2) the substantial increase in weight and cost of the fuel tanks compared to diesel tanks, and (3) the availability of NG vehicles, although almost all MHDV manufacturers now offer a NG engine. More detailed discussion of infrastructure and technology follows in a later section of this chapter. Pipeline and infrastructure investment in the United States and Canada is likely to exceed $200 billion over the next 25 years (see footnote 2).

EIA expects increased production, lower imports, higher exports, and higher prices, as shown in Table 5-1.

NATURAL GAS ENGINES AND VEHICLES

Technology

Overview

NG internal combustion engines are a well-developed and established technology. There are over 11 million NG vehicles worldwide, including passenger vehicles. In the United States, NG-fueled MHDVs, especially transit buses,

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4 Steven Hamburg, Environmental Defense Fund, “Methane leakage from natural gas production, transport and use—Implications for the climate,” Presentation to the Board on Energy and Environmental Systems, September 11, 2012.

5 Mark Boling, Southwestern Energy, “Forum on Unconventional Natural Gas Issues: Water Quality,” Presentation to the Board on Energy and Environmental Systems, September 11, 2012.

6 Revis James, Electric Power Research Institute, “The Role of Natural Gas in the Electricity Sector,” Presentation to the Board on Energy and Environmental Systems, September 11, 2012.



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