Renewable Energy or Natural Gas - Which Has More Potential?

Norm Shade Published:

A sizeable portion of the 2009-2010 economic stimulus went toward development of renewable energy. There is no shortage of spin promoting renewable energy as the perfect solution that can eliminate the country's dependency on imported oil. But an objective look at the facts proves that this is not a realistic expectation anytime in the foreseeable future. Capturing and using renewable energy requires major investments in capital equipment and infrastructure.

2010 figures from the U.S. Department of Energy (DOE) show that 37% of the country's energy came from oil, most of it (80%) imported. Natural gas provided 25%, growing from 21% in 2008. Coal's share fell to 21%, due to stiffer environmental restrictions. Nuclear made up 9%, and renewable energy sources accounted for just 8% of total energy needs. Renewables would have to increase to five times 2010 levels in order to eliminate oil imports.

The 8% renewable contribution is made up of 3% from hydroelectric, 4% from wood and biomass (including ethanol), slightly less than 1% from wind, and less than 0.1% from solar. Most of the hydroelectric projects were completed decades ago. Building more dams and flooding more land are unpopular and therefore limit hydroelectric growth potential. Biofuels use waste and plant matter. Raw materials, such as corn for ethanol, compete with food production, driving up prices and making this an unlikely growth source either.

Wind and solar, which together provide about 1% of U.S. energy, have potential, but expectations must be realistic. The equipment required for capturing solar energy is very expensive and solar energy is only produced when the sun shines, not necessarily when energy demand is highest. Cloudy days limit its potential and it's not useful for transportation fuel, which is the largest energy need. Winds are also unpredictable - sometimes weak, sometimes too strong - only productive about 30% of the time. Energy storage technology is inefficient and currently limited. Wind and solar contributions are so small that government advocacy over the past several years has hardly made a dent toward reducing oil imports.

Looking ahead, DOE's projections show that renewable energy, in all forms, will grow to only 15% of the country's needs by 2035, even factoring in a forecast reduction in overall energy demand due to efficiency gains and reduced manufacturing. Fortunately, there is more time for development of technology to increase the amount, reliability and cost-effectiveness of renewable energy.

The reason is that domestic natural gas resources are abundant due to shale, where technological advances are spurring development. High reserves per well make shale gas deliverability respond quickly to development activity, growing to 32% of all gas production by the end of 2011. Bountiful supplies and low prices have increased the use of natural gas by electric utilities, switching from coal to meet tightening EPA air quality regulations. Increasingly too, gas is catching on as a low cost fuel for vehicles.

DOE estimates domestic natural gas reserves of 284 trillion cubic feet (TCF), but gas industry experts think that total developable U.S. reserves will reach 1,200 to 2,100 TCF as technology increases. That is 50 to as many as 90 years of supply.

Regionally, the U.S. Geological Survey's (USGS) first estimate of Utica Shale reserves pegs them at 38 TCF of recoverable natural gas, 940 million barrels of oil and 9 million barrels of natural gas liquids like ethane and propane. The Utica lies beneath the Marcellus Shale, which is viewed as one of the richest natural gas reserves in the world. USGS estimates tend to be highly variable and subject to revision. For example, USGS last year estimated that the eight-state Marcellus play contains some 84 TCF of undiscovered, recoverable gas, far more than its 2002 estimate of just 2 TCF. Drilling has really just begun in the Utica, and it is likely that its reserves will also increase as more wells demonstrate high production rates.

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