NGA Issue Brief: Increasing Access to Natural Gas with Distribution System Growth
- Natural gas use is rising in the Northeast region.
- Natural gas has consistent benefits over other fuels: cost, supply, and lower emissions.
- Natural gas utilities have programs in place to help their customers increase natural gas options-and advice on ways that people and businesses not currently using natural gas can convert their existing systems.
- There are several initiatives underway in states in the region to increase access to natural gas, through infrastructure expansion and distribution system growth.
Natural Gas is the Optimum Choice for the Northeast U.S.
Natural gas is the best choice for homeowners and businesses in the Northeast region. It is the leading home heating fuel in the U.S. In the Northeast, it fuels 75% of New Jersey homes, 58% of New York's, 51% of Pennsylvania's, and 39% of New England's. It is the leading single fuel for electric power generation throughout the region, and increasingly looked to as a key alternate fuel transportation option - especially for buses, trucks and heavy-duty vehicles.
Why is natural gas use on the rise in the region? Simply put: supply, price and environmental benefits.
This issue brief by the Northeast Gas Association (NGA) outlines some recent market developments on natural gas-and provides insight on how you can gain further information on ways you can access natural gas.
Natural Gas is the Lower Cost Option for Consumers
With the rise in U.S. natural gas production in recent years, the commodity price of natural gas has declined.
The commodity cost of both natural gas and oil has declined considerably in recent years. Even with the sharp drop in world oil prices, oil remains higher-priced than natural gas for home heating (see chart below from recent U.S. EIA projections for the winter of 2016-17).
In recent years, U.S. production of natural gas has grown robustly, thanks especially to the application of technology to access what was traditionally called "unconventional gas." In April 2015, the Potential Gas Committee at the Colorado School of Mines estimated total reserves at over 2,500 trillion cubic feet (Tcf) - essentially 100 years of supply at current domestic consumption levels. The strong domestic production means jobs here in the U.S., a positive supply outlook for natural gas, and a stable price outlook according to government and economic forecasters.
|This chart from the Potential Gas Committee (PGC) shows the rise in estimates of the total U.S. natural gas supply. In recent years, thanks to the rise in shale gas production (shown in red stripe), the supply outlook has increased considerably. There may be as much as 100 years of supply for the U.S. market in domestic fields alone.
Within the home or business, natural gas has lower environmental impacts.
Natural gas is the cleanest fossil fuel, with lower air emissions than oil and coal.
Natural gas has been the leading fuel for new power generation, along with renewables, in the U.S. and the region. Air emissions from power plants have declined substantially in the Northeast in the last decade, thanks in large part to the use of natural gas.
Another area receiving renewed attention recently has been the natural gas vehicle (NGV). NGVs remain a very competitive alternative fuel option, especially for certain key markets such as fleets, bus systems, and a range of heavy-duty vehicles, including refuse trucks.
System Extensions to Meet Regional Demand
The benefits of natural gas - lower price, lower emissions, domestic supply, etc. - are leading to continued customer conversions from alternate fuels and new customer development. Multiple states and municipalities are looking to natural gas as a way to help consumers and local economies, and to help meet air and health quality standards.
Some examples include:
- Connecticut: In February 2013, Governor Malloy issued a comprehensive state energy strategy with a key role identified for natural gas expansion. In November 2013, the state's 3 investor-owned utilities received approval from the state regulatory authority to implement expansion plans that will add as many as 280,000 customers in the next 10 years in the state.
- Maine: Maine wants to expand the reach of natural gas service to help businesses from paper mills to hospitals achieve lower costs - and offer more optionality to home heating customers. In June 2013, the Maine Legislature enacted an energy bill that includes a provision for the State to purchase gas transmission capacity - up to 200 million feet of gas per day - to "facilitate energy cost reductions."
- Massachusetts: In June 2014, the Massachusetts Legislature approved and the Governor signed H. 4164, a natural gas bill that includes a provision on natural gas expansion.
- New York City: In 2007, the city unveiled PlaNYC, which introduced a plan to phase out the use of #4 and #6 oil in city buildings in coming years and convert the systems to cleaner fuels. Both Con Edison and National Grid are recording new customers as many city buildings in their service areas switch to natural gas.
- New York State: In November 2012, the New York Public Service Commission initiated a proceeding to examine policies in the state regarding the expansion of natural gas service, "and consider whether we should take steps to foster its use through expansion of the natural gas delivery system or otherwise." The state has held technical conferences to examine current policies and opportunities.
- Pennsylvania: Pennsylvania is the 2nd-largest natural gas producing state in the nation and has encouraged greater use of natural gas in end-uses, including alternate fuel transportation.
Against this backdrop, natural gas utilities in the region report increases in new customers and customer conversions from other fuels. Since 2008, over 1 million new household customers in the region have chosen natural gas as the primary heating fuel.