Natural gas pricing

X 10 GJ (436 x 10 BTU) of methane was processed into 15, 200 x 10 kg of ammonia (9) and 924 X 10 kg of methanol (3) in the United States in 1990. Natural gas prices generally foUow cmde oil prices in the United States because they compete in energy markets, but natural gas prices exhibit less volatiHty and have been lower in cost on a fuel basis. Historical natural gas and cmde oil prices are shown in Eigure 4. 

The level of benefits from tax credits and favorable power purchase terms that helped give these installations their start has diminished in recent years. Nevertheless, with the remaining tax credits available and given current (ca 1995) natural gas prices, solar-thermal technology can deUver power at 8—12 /kW-h and an installed cost of 2500— 3000/kW. 

In the future, if the criterion for selecting new generating capacity was solely fuel cost, coal will be the number one choice. But the much greater costs of coal-fired plants (primarily to meet local and federal emission standards), as well as the potential of tighter standards, will make gas more attractive in many cases. And although natural gas prices may rise, the fuel costs per kilowatt-hour for gas-fired power plants should remain unchanged as efficiency gains offset the rise in fuel prices. 

The major advantage of Fischer Tropsch diesel, compared to natural gas, lies in its liquid nature. It does not need special infrastructure and compression like CNG does, and unlike LNG, once converted, it is a liquid fuel that can be treated like any other liquid fuel. However, because the GTL process is more complex than traditional refining, it requires low-cost natural gas priced at less than 1 per million BTUs to remain cost-competitive. Without stranded gas, sources sold at a large discount compared to crude oil, GTL diesel would be considerably more expensive than traditionally refined diesel fuel. 

A microturbine with heat recovery was one of the measures modeled. It has not been included in any of the measure sets. A more comprehensive analysis was done that took account of the different treatments of electricity and thermal energy and the effects of varying electricity and natural gas prices. This analysis is available in a separate report [6],... 

Subsequent rocketing oil and natural gas prices along with the concomitant action of venture capitalists changed all that. The price of energy and of traditional raw materials suddenly multiplied by a factor three or more. The route to innovative companies in the chemical industry is now open again. 

Estimates of capital costs of GTL plants display a wide range while the EIA (2006) indicates capital costs at US 25 000 45 000 per barrel of daily capacity, depending on production scale and site selection, the IEA (2006) reports capital costs of GTL plants currently completed or under construction with US 84 000 per barrel. By comparison, the costs of a conventional refinery are around 15 000 per barrel per day. Gas-to-liquid is assumed profitable when crude oil prices exceed 25 per barrel and natural gas prices are in the range of 0.5-1.0/GJ (EIA, 2006). The economics of GTL are extremely sensitive to the cost of natural gas. 

For instance, in March 2008, oil prices were above 16/GJ, natural gas prices at around 9/GJ and some hard coal import prices exceeded 4/GJ (e.g., FOB ARA coal prices from South Africa were close to 100/t). 

The Reference scenario ( REF ) is, among others, based on the distributed users scenario for the geographical distribution of hydrogen demand, a fuelling-station strategy tailored to meeting demand only ( FS demand ) and a late road network it is further characterised by high natural gas prices and a stabilisation objective for C02... 

See Reference scenario See Reference scenario See Reference scenario 50% renewable H2 from 2020 on See Reference scenario Low natural gas price... 

Owing to uncertainties in the developments of the oil and gas markets, an alternative gas-price scenario is defined with a lower gas-price forecast than the ( REF ) scenario, referred to as a low natural gas price scenario ( LNGP ). 

For the economic evaluation, this price is compared with the costs of cheaper hydrogen production options, like natural gas reforming. With an operating time of 6750 h and a natural gas price of 2.35 ct/kWh, hydrogen costs are at 5.3 ct/kWh. This is much lower than the surplus wind pathway, if an electricity price of 4 ct/kWh is assumed. Further calculations have been performed, to show at what natural gas price natural gas reforming would reach hydrogen costs from surplus wind electricity the hydrogen price of surplus wind electricity is only reached at a natural gas price of 5.5 ct/kWh. If a carbon tax of 20/t is introduced, the necessary natural gas price is 5 ct/kWh (compare Fig. 16.10). 

Figure 16.10. Cost comparison hydrogen from surplus wind electricity and from natural gas reforming at different natural gas prices and with and without carbon taxes.

While hydrogen is emission-free at final use, it is evident that if hydrogen is produced from coal without CCS, no overall C02 reduction in the energy system is achievable. Given that coal will become the most economic feedstock in the medium to long term as natural gas prices increase, CCS becomes an inevitable prerequisite for the supply of hydrogen. 

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