The United Kingdom recently took a major step toward developing a national energy grid.

Nick Winser, senior vice president of National Grid USA, informed me that parent company National Grid U.K. — which of course already provides bulk electric transmission — merged with Lattice, the U.K. natural gas pipeline company. Consequently, today the United Kingdom has one combined electric and gas grid operator. Upgrades to the electric and gas transportation system can proceed, taking into account the synergies between the two.

Let's reflect on the natural gas price spikes of late 2000 and early 2001. The increase in gas-fired generation combined with load growth in gas consumption created a temporary gas shortage. Consumers not only faced high heating bills, but worse, found that with so much electric generation tied to natural gas prices, electric prices went up as well. This event confirmed my opinion that we need a diversified energy source that includes coal and nuclear to alleviate our reliance on natural gas and to reduce the potential for price spikes.

Of course, whenever I reach a conclusion, someone comes along to challenge it. In this instance, it is Ron Oligney, an oil man and adjunct professor and director of engineering research development at the University of Houston. I met Oligney at a regional IEEE-sponsored distributed generation conference held in Kansas City, Missouri, U.S., earlier this year. His presentation centered around The Color of Oil, a book he co-authored with Michael Economedes.

Quoting U.S. Department of Energy statistics, Oligney informed us that the world consumes 88 trillion standard cubic feet of natural gas per year, with a projected increase of 3.3% a year. Oligney predicts a cumulative natural gas production of about 2900 trillion standard cubic feet over the next 20 years, with gas becoming the primary fuel in the coming century.

Assuming Oligney is correct, coal and nuclear will be trumped near term. But what about volatile gas price swings? He predicts that, “Depending on seasonal weather variations, regional if not widespread natural gas shortages will be almost inevitable during the next few years of transition.”

While Oligney foresees these gas shortages causing power outages and brownouts, he also sees a solution. In the United States, Oligney envisions a “Japan-sized” liquid natural gas industry that will enable utilities to import natural gas close to load centers. Combine this source with coal gasification, the exploitation of massive global sources of natural gas and existing gas reserves in the Alaskan and Canadian Arctic, and we could delay the threat of a U.S. energy shortage for centuries.

Let's assume that Oligney is right about natural gas becoming the fuel de jour. We will leverage the ability to convert gas to electricity wherever it makes the most economic sense. This will increasingly take place at or near customer sites, particularly for those customers with sensitive electrical loads or significant heat loads.

More Independent Transmission on the Way

Jeff Donahue, vice president of TransEnergie U.S., sells sophisticated ac and dc turnkey transmission projects designed to carry large amounts of power across constrained transmission interfaces.

Donahue's competition is not typically other transmission line constructors but gas pipelines, distributed generation and demand side management. With the advent of high-efficiency, dual-cycle turbines, transporters of electrons now must compete head to head with transporters of natural gas. Donahue sees the energy industry searching for the lowest cost solution to reduce congestion and “de-bottleneck” the transmission system.”

Utilities are looking to local generation to reduce grid bottlenecks and generate revenue. Roberta Brown, Conectiv vice president for business development, is searching for locations to place mid-sized generation. States Brown, “The facility must be sited near both an electric transmission line and a major gas pipeline, but generating units also need water, as well as a positive regulatory environment and community support, reducing opportunities for siting these facilities.”

Oligney presents a compelling case for the bright future of natural gas. Assuming his vision is correct, expect to see more gas pipelines constructed as utilities place generation closer to the load, which will reduce the need for new electric transmission. We expect to see increased investments in both gas and electric grids. Utilities are willing to construct transmission facilities if they have assurance that they will recoup their investments. This will require Congress and state regulators to develop clear comprehensive strategies that promote investment in the energy grid. By focusing on the transport of both gas and electricity, we have the opportunity to build an energy infrastructure that will stand the test of time.