SEDS Gas and Coal Modules SEDS Review Walter

SEDS Gas and Coal Modules SEDS Review Walter Short For Don Remson of NETL 5/7/09 NREL is a national laboratory of the U. S. Department of Energy Office of Energy Efficiency and Renewable Energy operated by the Alliance for Sustainable Energy, LLC

Gas and Coal in Context of SEDS Macroeconomics Primary Energy Converted Energy Biomass Biofuels Buildings Coal Electricity Heavy Transportation Natural Gas Hydrogen Industry Oil Liquid Fuels Light Vehicles End-Use Macroeconomics

Coal and Gas Data Flow Outgoing Data Incoming Data Oil Price Electricity Coal Demand Hydrogen Coal Price by Customer Type Hydrogen Liquid Fuels Buildings Heavy Transportation Natural Gas Demand Natural Gas Price by Customer Type Heavy Transportation Industry Light Vehicles

Major Components of Natural Gas Module Domestic Supply Curve Annual Demand NETL MARKAL/ NEMS Year ANGTS opens* Canada Imports S C Arctic S C Recoverable Reserves Finding rates Initial year of recovery Proven reserves R/P ratio Production rate Methane Hydrate S C Re. Gas plant approval rate* Re. Gas plant capacity Capacity utilization limits* LNG price floor LNG Supply *Correlated to oil prices Combined Supply Curve Oil Price Sector-specific Gas Price** **Function of oil prices

Direct Relationship between Oil and Gas Prices Baseline Oil Price Ratio N. G. Price Adjustment Oil Price Correlated (*Negative Correlation) Alaska Supply Parameters Year ANGTS Pipeline Opens* Maximum New LNG Regas Capacity Permitting and Building Lag Time* Re. Gas Plant Approval Rate LNG Supply Parameters Re. Gas Average Plant Capacity Annual Utilization Rate Adjustment Minimum Capacity Utilization Maximum Capacity Utilization Natural Gas Price

Gas Annual Supply Curves 2007$/MMBtu Quads/year

Uncertainty in Gas Prices Over Time 2007$/MMBtu Technology, fuel price, and policy uncertainty are included in this graph. The prices shown do not include the cost of carbon.

Uncertainty in Gas Prices Over Time 2007$/MMBtu Technology, fuel price, and policy uncertainty are included in this graph. The prices shown do not include the cost of carbon.

Gas Issues and Future Work • Update Domestic Supply Curves • Ensure shale gas is captured • Refine oil/gas price relationship • Update hydrate and LNG data as it becomes available

Major Components of Coal Module Annual Demand AEO cases Annual Supply Curve Sector-specific Coal Price

Coal Annual Supply Curves 2007$/Short Ton 2007$/MMBtu Million Short Tons/Year

Uncertainty in Coal Prices Over Time 2007$/MMBtu 2007$/short ton Technology, fuel price, and policy uncertainty are included in this graph. The prices shown do not include the cost of carbon.

Uncertainty in Coal Prices Over Time 2007$/MMBtu 2007$/short ton Technology, fuel price, and policy uncertainty are included in this graph. The prices shown do not include the cost of carbon.

Sources of Data • Gas – Markal 2007 Supply curves for domestic gas, Canadian imports, and Arctic gas. – NETL Hydrate estimates (Don Remson) – NETL LNG estimates (Don Remson) • Coal – Annual supply curves based on regressions from AEO 2007

Coal Issues and Future Work • Ensure market prices – past, present and future - are covered by the range of uncertainty • Add volatility and increasing uncertainty over time • Add correlation to oil and gas prices

Backup

Historical Coal Prices (EIA) Business Week Ended April 17, 2009