Marcellus Shale Gas Rig. Ruhrfisch photo.

The Vail Global Energy Forum, March 1 to 3, was dominated by discussions of what Colorado Governor John Hickenlooper called “the unbelievable surfeit of natural gas.” Hickenlooper, along with many gas advocates, believes that the United States has enough economically-viable gas reserves to last a century.

One pay-off: old, inefficient coal plants are closing, cutting off their high carbon emissions. Oil-stocks financial analyst Tom Petrie predicts that by 2025, the American transportation sector will be driven largely by natural gas, either directly as a motor fuel or indirectly through electric batteries charged by natural gas power stations. “That will back us out of $1 million a day of oil imports,” he said, with profound benefits to the economy. In addition, he said, as natural gas replaces coal, the United States will gradually come to meet Kyoto Protocol goals. New geopolitical alliances will emerge, as Russian and Iranian gas supplant Saudi petroleum in the Chinese and Indian markets.

Other voices say that gas may be a bubble. Last year, with natural gas selling at $2.50 per thousand cubic feet, drilling companies lost money. A report published by the Post Carbon Institute this month suggests that the half-life of a typical well is about two years ― a typical shale-gas well production rate drops about 70 percent in the first year, and 50 percent each year thereafter. According to J. David Hughes, author of “Drill, Baby, Drill: Can Unconventional Fuels User in a New Era of Energy Abundance?”, maintaining today’s level production rate will cost about $42 billion a year to drill 7,000 new wells a year ― and in 2012 existing wells produced gas worth just $32.5 billion. (To download the Hughes report, go to http://www.postcarbon.org/drill-baby-drill/report.)  The price has since risen to $3.50, and will have to go higher to keep shale-gas drilling profitable.

Jim Brown, president/western hemisphere at Halliburton, told the Vail audience that shale gas has increased proven U.S. gas reserves by 66 percent. Still, that’s finite resource, said Mark Zoback, professor of geophysics at Stanford. “If  we do replace coal and oil with natural gas, the gas reserve comes down to about 30 years, not a century,” he said. “The short term is rosy, and we’re in a better position than we were five years ago. But it won’t last forever.”

The lesson: Gas is still a bridge fuel to a grid powered by large-scale renewable sources, and if fully exploited it’s a short bridge. The news this week that a Japanese research team has succeeded in extracting methane from an undersea methane hydrate formation suggests that the world may have enough natural gas to cook the atmosphere many times over.

That fact makes it even more urgent to drive the costs of wind, solar, geothermal and biofuels down below the cost of natural gas.

Texas Gas Rig. Photo: David R. Tribble

Just a few years ago renewable technologies seemed poised to carve out a significant foothold in the energy production market. Conventional energy prices had skyrocketed and Congress and the president had begun to craft laws and policies to accelerate large-scale applications.

But like a looming hurricane, frightful storm clouds have appeared on the renewable market horizon. Vertical and horizontal hydraulic fracturing (called fracking) has allowed vast reserves of natural gas and oil to be extracted from previously impervious layers of rock-hard shale.

In fracking a drill bit is guided into fossil fuel-laden rock. Water and chemicals are explosively forced into the well fracturing the rock and releasing gas and oil. Horizontal drilling technology allows the driller to guide the bit horizontally, thus enabling a single well to be used to drill radially underground, exploiting a large area.

Natural gas has many environmental problems. For example, a study by the National Energy Technology Lab (NETL) suggests that the environmental impact of the fugitive losses of gas during extraction and transport is significantly greater than those of coal. Fracking is also suspected of contaminating ground water and causing ground tremors, both of which degrade property values and imperil human health.

In response, the Environmental Protection Agency recently issued the first comprehensive regulations for fracking, the most important of which would force the capture of fugitive emissions and spills. But implementation is delayed until January of 2015.

However, natural gas will be on the scene for years to come. The Energy Information Administration (EIA) reported that U.S. gas production has recently skyrocketed, driving down prices, which today are less than $2/MMBTU, 80 percent lower than just a few years ago and about the same level as 1998. And they continue to fall. What’s more, the US production rate of around 24 trillion cubic feet (Tcf) per year meets the existing domestic demand with some to spare. The EIA says that the nation has a 90 year domestic supply of gas at current consumption rates.

The benefits of low-cost gas are rippling through the economy. A NETL study found that emissions from gas combustion are about 45 to 60 percent those of coal. Some consumers are seeing reductions in their utility bills as electric utilities convert their coal plants to gas. NSTAR, a Boston-based utility that has been doing conversions, recently notified its commercial customers of a 34 percent electricity rate reduction. Residential rate reductions will follow.

All this good news is not so good news for many renewable technologies, especially those that compete with gas directly, such as solar hot water, solar pools, and concentrating solar power (troughs and power towers). These technologies generally displace gas-generated heat for domestic, commercial and industrial applications. An array of federal and state incentive programs have been leveling the playing field for these renewable technologies by reducing both the upfront costs of installations as well as production costs, creating attractive payback periods. This low-priced domestic gas will roil the solar thermal technology markets. Photovoltaic technologies too will feel the pinch, as they will be competing with cheaper electricity.

Gas will be on the scene for the foreseeable future. It is reducing consumers’ energy costs and producing jobs for a nation slowly crawling out of recession. President Obama mentioned his administration’s commitment to it in his recent State of the Union address.

But that ought not imply that renewables should be discarded and progress abandoned. Government incentives need to be maintained and research programs should be continued or enhanced. One day gas and oil will be fully depleted and renewable technology must be available as the nation’s final and most sustainable energy solution.

Dave Menicucci is a retired researcher from Sandia Labs. He owns and operates a New Mexico energy consulting and investing corporation. He is also a member of the engineering research faculty at the University of New Mexico.

Also see Natural Gas Coming to a Power Plant Near You?

To learn more about the interface of renewable energy and natural gas, register today for the World Renewable Energy Forum in Denver, May 13-17.

Folks in the gas industry claim they can provide cheap fuel here for a century. Factories that use a lot of heat (for making metals and glass, for instance) can now run more profitably in the United States than in countries with higher energy costs.

Natural gas pipeline in Switzerland. Energy-intensive factories can now operate more profitably in the U.S. than in countries with higher energy costs.

The implications for renewable-energy development in North America are vast, but not necessarily as ominous as some media reports would have it.

For context, consider that a million Btu (10 therms) has a theoretical heat value equivalent to 292 kilowatt-hours of electricity. But the world’s best combined-cycle heat-recovery gas turbine plants can hit 60-percent efficiency, and most existing plants run at 35 to 40 percent. On average, at $2.50, gas costs 2.1 cents per kilowatt-hour. That’s in the ballpark with coal.

The EPA says that compared to coal, natural gas produces half as much carbon dioxide, less than a third as much nitrogen oxides, and one percent as much sulphur oxides at the power plant. And so, faced with the costs of retrofitting a filthy old coal plant, it makes sense to turn it into a natural gas plant.

Sounds easy. But the utility business has the same problem the trucking companies do. They’d love to burn gas but it may not be readily available where they need it. The pipeline infrastructure doesn’t cover the country, and is expensive to install.

Greg Ebel, president of the gas-pipeline company Spectra, on March 4 told an audience at the Vail Global Energy Forum that he can cut the cost of natural gas in northern New Jersey and New York City by 75 percent, just by building a 16-mile pipeline. And 100 old coal plants lie close enough to his main routes to convert to gas.

But that’s 100 plants out of roughly 1500 coal-fired generating plants in the United States. In effect, natural gas faces some of the same transmission issues as utility-scale solar and wind power. And after the San Bruno explosion, new gas pipelines  ― even the renovation of old gas pipelines ― may face the same local resistance as any new above-ground high-voltage electric line.

Most important, those of us concerned about the future of the climate are aware that natural gas isn’t a solution to the carbon emissions problem. A report from the National Center for Atmospheric Research last fall pointed out that converting from coal to gas won’t be enough to halt or reverse global warming. Only carbon-free power sources can do that.

To learn more about the interface of renewable energy and natural gas, register today for the World Renewable Energy Forum in Denver, May 13-17.