The current expansion of natural gas (NG) development in the United States requires an understanding of how this change will affect the natural gas industry, downstream consumers, and economic growth in order to promote effective planning and policy development. The impact of this expansion may propagate through the NG system and US economy via changes in manufacturing, electric power generation, transportation, commerce, and increased exports of liquefied natural gas. We conceptualize this problem as supply shock propagation that pushes the NG system and the economy away from its current state of infrastructure development and level of natural gas use. To illustrate this, the project developed two core modeling approaches. The first is an Agent-Based Modeling (ABM) approach which addresses shock propagation throughout the existing natural gas distribution system. The second approach uses a System Dynamics-based model to illustrate the feedback mechanisms related to finding new supplies of natural gas - notably shale gas - and how those mechanisms affect exploration investments in the natural gas market with respect to proven reserves. The ABM illustrates several stylized scenarios of large liquefied natural gas (LNG) exports from the U.S. The ABM preliminary results demonstrate that such scenario is likely to have substantial effects on NG prices and on pipeline capacity utilization. Our preliminary results indicate that the price of natural gas in the U.S. may rise by about 50% when the LNG exports represent 15% of the system-wide demand. The main findings of the System Dynamics model indicate that proven reserves for coalbed methane, conventional gas and now shale gas can be adequately modeled based on a combination of geologic, economic and technology-based variables. A base case scenario matches historical proven reserves data for these three types of natural gas. An environmental scenario, based on implementing a $50/tonne CO 2 tax results in less proven reserves being developed in the coming years while demand may decrease in the absence of acceptable substitutes, incentives or changes in consumer behavior. An increase in demand of 25% increases proven reserves being developed by a very small amount by the end of the forecast period of 2025.
The Water, Energy, and Carbon Sequestration Simulation Model (WECSsim) is a national dynamic simulation model that calculates and assesses capturing, transporting, and storing CO2 in deep saline formations from all coal and natural gas-fired power plants in the U.S. An overarching capability of WECSsim is to also account for simultaneous CO2 injection and water extraction within the same geological saline formation. Extracting, treating, and using these saline waters to cool the power plant is one way to develop more value from using saline formations as CO2 storage locations. WECSsim allows for both one-to-one comparisons of a single power plant to a single saline formation along with the ability to develop a national CO2 storage supply curve and related national assessments for these formations. This report summarizes the scope, structure, and methodology of WECSsim along with a few key results. Developing WECSsim from a small scoping study to the full national-scale modeling effort took approximately 5 years. This report represents the culmination of that effort. The key findings from the WECSsim model indicate the U.S. has several decades' worth of storage for CO2 in saline formations when managed appropriately. Competition for subsurface storage capacity, intrastate flows of CO2 and water, and a supportive regulatory environment all play a key role as to the performance and cost profile across the range from a single power plant to all coal and natural gas-based plants' ability to store CO2. The overall system's cost to capture, transport, and store CO2 for the national assessment range from $74 to $208 / tonne stored ($96 to 272 / tonne avoided) for the first 25 to 50% of the 1126 power plants to between $1,585 to well beyond $2,000 / tonne stored ($2,040 to well beyond $2,000 / tonne avoided) for the remaining 75 to 100% of the plants. The latter range, while extremely large, includes all natural gas power plants in the U.S., many of which have an extremely low capacity factor and therefore relatively high system's cost to capture and store CO2.
The U.S. Department of Energy (DOE) has an interest in large scale hydrogen geostorage, which could offer substantial buffer capacity to meet possible disruptions in supply or changing seasonal demands. The geostorage site options being considered are salt caverns, depleted oil/gas reservoirs, aquifers and hard rock caverns. The DOE has an interest in assessing the geological, geomechanical and economic viability for these types of geologic hydrogen storage options. This study has developed an economic analysis methodology and subsequent spreadsheet analysis to address costs entailed in developing and operating an underground geologic storage facility. This year the tool was updated specifically to (1) incorporate more site-specific model input assumptions for the wells and storage site modules, (2) develop a version that matches the general format of the HDSAM model developed and maintained by Argonne National Laboratory, and (3) incorporate specific demand scenarios illustrating the model's capability. Four general types of underground storage were analyzed: salt caverns, depleted oil/gas reservoirs, aquifers, and hard rock caverns/other custom sites. Due to the substantial lessons learned from the geological storage of natural gas already employed, these options present a potentially sizable storage option. Understanding and including these various geologic storage types in the analysis physical and economic framework will help identify what geologic option would be best suited for the storage of hydrogen. It is important to note, however, that existing natural gas options may not translate to a hydrogen system where substantial engineering obstacles may be encountered. There are only three locations worldwide that currently store hydrogen underground and they are all in salt caverns. Two locations are in the U.S. (Texas), and are managed by ConocoPhillips and Praxair (Leighty, 2007). The third is in Teeside, U.K., managed by Sabic Petrochemicals (Crotogino et al., 2008; Panfilov et al., 2006). These existing H{sub 2} facilities are quite small by natural gas storage standards. The second stage of the analysis involved providing ANL with estimated geostorage costs of hydrogen within salt caverns for various market penetrations for four representative cities (Houston, Detroit, Pittsburgh and Los Angeles). Using these demand levels, the scale and cost of hydrogen storage necessary to meet 10%, 25% and 100% of vehicle summer demands was calculated.
The National Water, Energy and Carbon Sequestration simulation model (WECSsim) is being developed to address the question, 'Where in the current and future U.S. fossil fuel based electricity generation fleet are there opportunities to couple CO{sub 2} storage and extracted water use, and what are the economic and water demand-related impacts of these systems compared to traditional power systems?' The WECSsim collaborative team initially applied this framework to a test case region in the San Juan Basin, New Mexico. Recently, the model has been expanded to incorporate the lower 48 states of the U.S. Significant effort has been spent characterizing locations throughout the U.S. where CO{sub 2} might be stored in saline formations including substantial data collection and analysis efforts to supplement the incomplete brine data offered in the NatCarb database. WECSsim calculates costs associated with CO{sub 2} capture and storage (CCS) for the power plant to saline formation combinations including parasitic energy costs of CO{sub 2} capture, CO{sub 2} pipelines, water treatment options, and the net benefit of water treatment for power plant cooling. Currently, the model can identify the least-cost deep saline formation CO{sub 2} storage option for any current or proposed coal or natural gas-fired power plant in the lower 48 states. Initial results suggest that additional, cumulative water withdrawals resulting from national scale CCS may range from 676 million gallons per day (MGD) to 30,155 MGD depending on the makeup power and cooling technologies being utilized. These demands represent 0.20% to 8.7% of the U.S. total fresh water withdrawals in the year 2000, respectively. These regional and ultimately nation-wide, bottom-up scenarios coupling power plants and saline formations throughout the U.S. can be used to support state or national energy development plans and strategies.