Q&A: Shortages amidst abundance: The paradox of natural gas

The United States has an overabundance of cheap natural gas. Prices are so low and supplies so plentiful that many oil producers find it more economical to burn, or flare, the surplus than to sell it to new customers.

While millions of cubic feet of natural gas are vented or flared in oil-producing states like Texas and North Dakota, other parts of the country, particularly the Northeast, face seasonal gas shortages. The primary reason: not enough pipelines to meet the consumer demand.

Across New England and New York, gas prices routinely spike during cold winters, as the overworked pipeline network strains to keep up with demands for heating and electricity. During one cold snap in January 2018, the spot price of natural gas in New York state reached $140 per million British thermal units, compared with an average price of $4 per MMBtu the previous six weeks.

Natural gas is used throughout the Northeast for generating electricity and residential heating. Yet proposals to build new gas pipelines have met with stiff opposition, primarily over concerns about the impact of gas leaks on water quality and the climate. Burning natural gas produces far less carbon dioxide than heating oil or coal, but studies show that non-combusted methane, the main component of natural gas, is 84 times more potent as a greenhouse gas than CO₂ in the first 20 years after release.

In May, the state of New York turned down a proposal to build a $1 billion, 23-mile natural gas pipeline, citing concerns over water contamination. That decision led a major utility to declare a moratorium on new natural gas installations. The utility said that without the pipeline, it could not guarantee service to new customers. The moratorium led to the cancellation of several major construction projects in and around New York City.

A month later, New York passed sweeping legislation to eliminate net greenhouse gas emissions statewide by 2050. Other states, including California, have enacted similar laws that could substantially reduce the use of natural gas and other fossil fuels by mid-century. Yet the demand for natural gas continues to grow.

To explain the apparent ambivalence many Americans have toward natural gas, we spoke with professors Sally Benson and Arun Majumdar, co-directors of the Stanford Precourt Institute for Energy, and Mark Zoback, director of the Stanford Natural Gas Initiative.

Natural gas production is at an all-time high in the United States. So why are some parts of the country experiencing gas shortages?

BENSON: The fundamental reason is that certain areas, like New York and New England, don’t have enough pipeline capacity. Why? Because people are resistant to building infrastructure in places where they feel personally affected by it. At the same time, there is an ideological resistance to more gas pipelines from some environmental groups that say, "not a drop more fossil fuel." These groups actively contribute to resistance on local projects.

ZOBACK: It’s very short-sighted to see an infrastructure investment as a step backward, simply because it’s related to a fossil fuel. It’s a manifestation of the knee-jerk reaction people have toward all fossil fuel industries – treating them the same, when, in fact, on a global basis, the best possible thing we can do for the environment, public health and the climate is to move away from coal and toward natural gas as quickly as possible.

MAJUMDAR: Many people are opposed to natural gas pipelines because burning natural gas emits carbon dioxide. But then the question is, what are the alternatives? In the Northeast, about 20 percent of households still use heating oil for heating, even though natural gas is more affordable than heating oil and emits significantly less carbon dioxide when burned. There is an incentive to convert from heating oil to natural gas, but it will not happen without new pipelines.

Natural gas: Not an endpoint, a waypoint

Some people say that instead of spending $1 billion on a new gas pipeline, it would be better to invest in cleaner, renewable sources of energy. 

ZOBACK: The reaction against the natural gas infrastructure, because it represents the perpetuation of fossil fuels, is a mischaracterization. Natural gas is the perfect complement and backup for renewable wind and solar systems. However, natural gas is not the endpoint, it’s a waypoint. As time goes on we’ll need to move away from natural gas to even cleaner fuels as they become available.

MAJUMDAR: Looking to the future, you could design natural gas pipelines that also carry carbon-free hydrogen fuel or carbon-neutral biogas made from food waste. About 30 to 40 percent of our food in the U.S. is wasted, mostly at the consumer end. What fraction of that do we actually use for biogas? Not very much.

There have been studies at Stanford and elsewhere about the leaky natural gas infrastructure contributing to climate change and putting urban residents at risk. Some say that until you deal with those issues, don’t talk about building new pipelines. Is that a valid argument?

MAJUMDAR: I don’t quite agree with that, because many of those leakages are from old infrastructure in cities like Boston, which haven’t had an upgrade for decades. If you build new infrastructure, one can certainly make sure that it is up to code in terms of leakages.

BENSON: Pipelines aren’t the bad actors. If you look at natural gas leakage from the point of production all the way through to the point of use, the biggest leaks are in places with a lot of valves or compression stations, but there aren’t that many of them. But that’s not the perception. People perceive that the gas infrastructure is poor quality. In fact, we have about 3 million miles of natural gas pipelines in the United States. It’s gigantic, but we need to build more tactically in certain locations. More to the the point, the newer the infrastructure, the less likely it is to leak.

Incentives Needed

In July, Berkeley, Calif., became the first U.S. city to ban natural gas in new construction starting in 2020. What's your perspective on that?

ZOBACK: The Berkeley moratorium says that you won’t get your new building approved if it uses natural gas. The building has to be all-electric, even though a lot of Berkeley’s electricity comes from power plants that run on natural gas. We’re all committed to decarbonization, but pretending that we can do without fossil fuels when we have choices like natural gas in the short term that are far better than the alternatives only makes the problem worse.

MAJUMDAR: Berkeley is not exactly Boston in terms of how cold it can get in winter. It rarely goes below freezing, so heating issues are much less stringent in Berkeley. There are two things that Berkeley can do. One is to provide incentives to really insulate your home. Most of the issues are about leakage of heat. Second, provide incentives to install heat pumps for new construction so that it’s affordable to, not just to the top 1 percent but to average-income households. Heat pumps are expensive, but over time, they can be more efficient and affordable than heating with natural gas, if the electricity prices are low. However, we are witnessing retail electricity prices increase in California.

BENSON: The city of Palo Alto, Calif., is trying to move past natural gas by promoting an initiative for homeowners to replace gas heaters with electrical heat pump water heaters. That’s important, because if you install a heat pump when you build a new house, it’s no big deal. But if you go with an off-the-shelf technology to retrofit a home, a heat pump can be expensive and complicated to install.

Focus on Fuels

Is there any way to overcome people’s resistance to pipelines and other infrastructure projects?

BENSON: Education is important and more constructive ways of engaging people long in advance of a proposed pipeline project. Too often people feel like these projects are being pushed down their throats and they don’t have any option. For example, they really need more electricity in New York City, but people there don’t want to build new high-voltage transmission lines. The city is trying to figure out what to do, but it’s very difficult in a place where the population density is so high to have locally sourced renewables.

ZOBACK: People need access to energy – cooking, heating, cooling, manufacturing, transportation. We’re building up renewables as fast as we can, but we have to look at all the ways that energy is being used, and what’s the cleanest thing we can do in the short and long term. We’ve set on a path of decarbonization, and natural gas is a first step. But we simply cannot move away from fossil fuels at an arbitrarily rapid rate without the complete destruction of the global energy system.

MAJUMDAR: We have to transition to a decarbonized economy, but I suspect we’ll be using fuel in 2045. It will not be all-electricity, and frankly all-electricity would be risky, because we’d be dependent on just one infrastructure. If something happens to that infrastructure, whether it’s cyber or natural, we will need some alternatives. Having new pipelines is not a bad thing, especially in cold winters. The question is, can you have a fueling infrastructure and still be carbon neutral? The infrastructure isn’t at fault. It’s the fuel you put in there.

Sally Benson is a professor of energy resources engineering and Mark Zoback is the Benjamin M. Page Professor of Geophysics in the Stanford School of Earth, Energy & Environmental Sciences. Arun Majumdar is the Jay Precourt Provostial Professor in the Stanford School of Engineering.

The Stanford Natural Gas Initiative is a joint program of the Stanford Precourt Institute for Energy and the Stanford School of Earth, Energy & Environmental Sciences.

Media Contacts

Sally Benson
Stanford Precourt Institute for Energy
smbenson@stanford.edu, (650) 725-0358

Arun Majumdar
Stanford Precourt Institute for Energy
amajumdar@stanford.edu, (650) 725-4016

Mark Zoback
Stanford Natural Gas Initiative
zoback@stanford.edu, (650) 725-9295

Danielle T. Tucker
School of Earth, Energy & Environmental Sciences
dttucker@stanford.edu, 650-497-9541