************ Day 2 ************ ************ Session 2, Session 3 11:45 and 1:45 ************

Transcription

1 Natural Gas Value Chain: Discussion Questions ************ Day 2 ************ ************ Session 2, Session 3 11:45 and 1:45 ************ Electric Generation What other generation fuels are in the mix? Characteristics of different types of generation Which are growing and which are being phased out? Why? o What are the alternatives for new generation? o What dual-fuel capabilities? What is the ownership of generation? Where would generation be located? o Given value considerations above, would you locate near wellhead? Near load? Will gas-fired generation be served through the same pipeline and distribution systems as other customers? o What competing uses? o How do the peaks align? o How much firm usage do generators require? How is firm defined? o Can other uses be added to a dedicated generation gas system at a later time? Who is responsible for forecasting? o For electric load? o For gas load? o How reliable are the forecasts? o Who will coordinate reliability between the gas and electric systems? 1

2 How does the gas system rely on electricity? How much can the electricity system depend on natural gas Would using gas for electric generation drive prices up or down for other users? Purposes of regulation Price? Quality? Access? Security? Possible Public Interest Objectives o Investment o Profit Control o Rate Control o Universal Service o Rate Fairness o Quality of Service o Reliability o Safety o Use of Public Land o Taking of Private Land o Complaints o Energy Efficiency o Economic Development What public policy is in the Law? What job description does the Law give regulators? What regulatory tools does the regulator have? 2

3 Natural Gas Market Overview: Spot Gas Prices Federal Energy Regulatory Commission Market Oversight Average Spot Gas Prices, 211 ($MMBtu) NW Sumas $ %.7.27 AECO Hub $ %.44 Malin $ % PG&E Citygate $ % SoCal Border $ %.6.24 Pricing Point Black current price Green increase/previous year Red decrease/previous year Basis Kern River Opal $ % El Paso San Juan $ % Waha Hub $ % El Paso Permian $ %.4 Tennessee Zone $3.9-9.% Northern Ventura $ % Panhandle Tex-Okla $ %.8.25 Chicago Citygate $ %.12 Tetco M-1 $ % Columbia Mainline. $ %.1.5 Katy Hub $ % Henry Hub $ %.26 Dawn $ % Columbia TCO $4.7-1.% FGT-Z3 $ %.1 Transco Z6-NY $ % Algonquin Citygate $ % Source: Derived from Platts data. Updated: March 13,

4 Natural Gas Overview: World LNG Prices Federal Energy Regulatory Commission Market Oversight World LNG Estimated December 212 Landed Prices Altamira $4.6 $3.8 $4.57 Cove Point Cove Point UK UK UK UK $8.75 $1.11 $8.75 $4.5 $4.3 $4.4 Spain Spain $9.5 Lake Lake Charles $11.5 $9.15 $3.96 $3.23 $3.93 Belgium Belgium $8.84 $9.78 $8.99 India India $11.55 Korea $12.4 Korea $14.1 $13.1 China $13.7 Japan Japan $12.4 $14.1 $13.1 Rio de Janeiro $11.9 Bahia Blanca $12.75 Source: Waterborne Energy, Inc. Data in $US/MMBtu Updated: November 8,

5 Integrated Natural Gas Value Chain and Developing Tariffs William H. Smith Jr. Organization of MISO States November 28-3, 212

6 Natural Gas Value Chain: Wellhead / Production Market characteristics Role of price information Production conditions Producer risks Goals of regulation Regulatory tools 2

7 Natural Gas Value Chain: Gas Processing Current processing facilities Extracted products Costs and values of processing and products Regulatory objectives and methods Competitive potential 3

8 Natural Gas Value Chain: Pipelines Current pipeline facilities Geographic markets Pipeline services Development of new facilities Service to new markets Pricing pipeline service Regulatory objectives 4

9 Natural Gas Value Chain: Distribution Market and corporate structures Customer types and usage patterns Distribution cost characteristics Pricing distribution service Regulatory objectives 5

10 Natural Gas Value Chain: Electric Generation Alternatives for Electric Generation Consequences of fuel choices Criteria for locating electric generation Gas pipeline service for generation Coordination of retail gas service and electric service 6

11 Purposes of regulation Investment Profit Control Rate Control Universal Service Rate Fairness Quality of Service Reliability Safety Use of Public Land Taking of Private Land Complaints Energy Efficiency Economic Development 1

12 Figure 1. Energy Flow, 211 (Quadrillion Btu) 1 Includes lease condensate. 2 Natural gas plant liquids. 3 Conventional hydroelectric power, biomass, geothermal, solar/photovoltaic, and wind. 4 Crude oil and petroleum products. Includes imports into the Strategic Petroleum Reserve. 5 Natural gas, coal, coal coke, biofuels, and electricity. 6 Adjustments, losses, and unaccounted for. 7 Natural gas only; excludes supplemental gaseous fuels. 8 Petroleum products, including natural gas plant liquids, and crude oil burned as fuel. 9 Includes.1 quadrillion Btu of coal coke net imports. 1 Includes.13 quadrillion Btu of electricity net imports. 11 Total energy consumption, which is the sum of primary energy consumption, electricity retail sales, and electrical system energy losses. Losses are allocated to the end-use sectors in proportion to each sector s share of total electricity retail sales. See Note, Electrical Systems Energy Losses, at end of Section 2. Notes: Data are preliminary. Values are derived from source data prior to rounding for publication. Totals may not equal sum of components due to independent rounding. Sources: Tables 1.1, 1.2, 1.3, 1.4, and 2.1a. U.S. Energy Information Administration / Annual Energy Review 211 3

13 Figure 2. Primary Energy Consumption by Source and Sector, 211 (Quadrillion Btu) 1 Does not include biofuels that have been blended with petroleum biofuels are included in Renewable Energy." 2 Excludes supplemental gaseous fuels. 3 Includes less than.1 quadrillion Btu of coal coke net imports. 4 Conventional hydroelectric power, geothermal, solar/photovoltaic, wind, and biomass. 5 Includes industrial combined-heat-and-power (CHP) and industrial electricity-only plants. 6 Includes commercial combined-heat-and-power (CHP) and commercial electricity-only plants. 7 Electricity-only and combined-heat-and-power (CHP) plants whose primary business is to sell electricity, or electricity and heat, to the public. Includes.1 quadrillion Btu of electricity net imports not shown under Source. Notes: Primary energy in the form that it is first accounted for in a statistical energy balance, before any transformation to secondary or tertiary forms of energy (for example, coal is used to generate electricity). Sum of components may not equal total due to independent rounding. Sources: U.S. Energy Information Administration, Annual Energy Review 211, Tables 1.3, 2.1b-2.1f, 1.3, and 1.4. U.S. Energy Information Administration / Annual Energy Review

14 Figure 3.4 Consumer Price Estimates for Energy by End-Use Sector, 21 By Sector Residential Sector by Major Source Dollars¹ per Million Btu Dollars¹ per Million Btu Residential Transportation Commercial Industrial Retail Petroleum Natural Electricity Gas Commercial Sector by Major Source Industrial Sector by Major Source Dollars¹ per Million Btu Dollars¹ per Million Btu Retail Petroleum Natural Retail Petroleum Natural Coal Biomass² Electricity Gas Electricity Gas 1 Prices are not adjusted for inflation. See Nominal Dollars in Glossary. 2 Wood and wood-derived fuels, and biomass waste; excludes fuel ethanol and biodiesel. Notes: Consumer prices are intended to represent prices paid by consumers. As such they include taxes where data are available. There are no direct fuel costs for hydroelectric, geothermal, wind, or solar energy. Source: Table U.S. Energy Information Administration / Annual Energy Review 211

15 Figure 5.1 Natural Gas Plant Liquids Production Total, By Product, 211 2,5 1, 99 2, 1,5 1, Thousand Barrels per Day Thousand Barrels per Day Ethane Propane Pentanes Isobutane Normal Plus Butane By Selected Product, , Isobutane Ethane Propane Pentanes Plus Thousand Barrels per Day Normal Butane Source: Table U.S. Energy Information Administration / Annual Energy Review 211

16 Figure 6. Natural Gas Flow, 211 (Trillion Cubic Feet) 1 Includes natural gas gross withdrawals from coalbed wells and shale gas wells. 2 Quantities lost and imbalances in data due to differences among data sources. 3 Lease and plant fuel, and other industrial. 4 Natural gas consumed in the operation of pipelines (primarily in compressors), and as fuel in the delivery of natural gas to consumers; plus a small quantity used as vehicle fuel. Notes: Data are preliminary. Values are derived from source data prior to rounding for publication. Totals may not equal sum of components due to independent rounding. Sources: Tables 6.1, 6.2, and 6.5. U.S. Energy Information Administration / Annual Energy Review

17 Figure 6.8 Natural Gas Prices by Sector Nominal¹ Prices, 211 Real 6 Prices, Indexed, Index: 198= Residential² Commercial³ Industrial 4 Electric Power 5.5 Residential Commercial Industrial Electric Power Nominal¹ Dollars per Thousand Cubic Feet Real 6 Prices, Residential Commercial Vehicle Fuel Industrial Electric Power Real (25) 6 Dollars per Thousand Cubic Feet 1 See Nominal Dollars in Glossary. 2 Based on 95.7 percent of volume delivered. 3 Based on 62.3 percent of volume delivered. 4 Based on 16. percent of volume delivered. 5 Based on 11.2 percent of volume delivered. For an explanation of values over 1 percent, see Table 6.8, footnote 8. 6 In chained (25) dollars, calculated by using gross domestic product implicit price deflators in Table D1. See Chained Dollars in Glossary. Source: Table U.S. Energy Information Administration / Annual Energy Review 211

18 Figure 8. Electricity Flow, 211 (Quadrillion Btu) 1 Blast furnace gas, propane gas, and other manufactured and waste gases derived from fossil fuels. 2 Batteries, chemicals, hydrogen, pitch, purchased steam, sulfur, miscellaneous technologies, and non-renewable waste (municipal solid waste from non-biogenic sources, and tire-derived fuels). 3 Data collection frame differences and nonsampling error. Derived for the diagram by subtracting the T & D Losses estimate from T & D Losses and Unaccounted for derived from Table Electric energy used in the operation of power plants. 5 Transmission and distribution losses (electricity losses that occur between the point of generation and delivery to the customer) are estimated as 7 percent of gross generation. 6 Use of electricity that is 1) self-generated, 2) produced by either the same entity that consumes the power or an affiliate, and 3) used in direct support of a service or industrial process located within the same facility or group of facilities that house the generating equipment. Direct use is exclusive of station use. Notes: Data are preliminary. See Note, Electrical System Energy Losses, at the end of Section 2. Net generation of electricity includes pumped storage facility production minus energy used for pumping. Values are derived from source data prior to rounding for publication. Totals may not equal sum of components due to independent rounding. Sources: Tables 8.1, 8.4a, 8.9, A6 (column 7), and U.S. Energy Information Administration, Form EIA-923, "Power Plant Operations Report." U.S. Energy Information Administration / Annual Energy Review

19 Figure 8.1 Electricity Overview Overview, 211 Electricity Trade, ,5 3,955 3, Imports 3, 1,5 4 3 Exports 2 Billion Kilowatthours Billion Kilowatthours Electric Com- Indus- Imports Exports Retail Direct Power¹ mercial trial Sales² Use³ Net Generation Trade End Use Net-Generation-to-End-Use Flow, 211 (Billion Kilowatthours) 1 Electricity-only and combined-heat-and-power plants within the NAICS 22 category whose primary business is to sell electricity, or electricity and heat, to the public. 2 Electricity retail sales to ultimate customers reported by electric utilities and other energy service providers. 3 See Table 8.1, footnote 8. 4 Transmission and distribution losses (electricity losses that occur between the point of generation and delivery to the customer). See Note, Electrical System Energy Losses, at the end of Section 2. 5 Data collection frame differences and nonsampling error. Sources: Tables 8.1 and U.S. Energy Information Administration / Annual Energy Review 211

20 Figure F1. Primary Energy Consumption and Delivered Total Energy, 21 (Quadrillion Btu) Primary Energy Consumption Delivered Total Energy by Source 1 by Sector 8 1 Includes electricity net imports, not shown separately. 2 Does not include biofuels that have been blended with petroleum biofuels are included in Renewable Energy. 3 Excludes supplemental gaseous fuels. 4 Includes less than.1 quadrillion Btu of coal coke net exports. 5 Conventional hydroelectric power, geothermal, solar/pv, wind, and biomass. 6 Electricity-only and combined-heat-and-power (CHP) plants whose primary business is to sell electricity, or electricity and heat, to the public. 7 Calculated as the primary energy consumed by the electric power sector minus the energy content of electricity retail sales. See Note, Electrical System Energy Losses, at end of Section 2. 8 Includes transformation losses other than electrical system energy losses. For example, see notes 9 and 1 on this page. 9 Includes industrial combined-heat-and-power (CHP) and industrial electricity-only plants. 1 Includes commercial combined-heat-and-power (CHP) and commercial electricity-only plants. Note: Sum of components may not equal total due to independent rounding. Sources: U.S. Energy Information Administration, Annual Energy Review 21, Tables 1.3, 2.1b-f, 1.3, and 1.4. U.S. Energy Information Administration / Annual Energy Review