Natural gas is generally found in deposits trapped within highly porous sedimentary rock at depths less than 15,000 feet. Once the rock is drilled through, gas can be pumped out, treated and piped through thousands of miles of tubes throughout the country. (Energy Law, 190.) Traditionally, power generation from "gas" has consisted of combusting gas in a boiler to produce steam, which turns a turbine to generate electricity. Now, the more common approach is to burn the gas directly within a combustion turbine. But the technology that has allowed natural gas to climb to national prominence as a cheap and efficient source of power is the "combined cycle." Gas is combusted in a turbine and heat exhaust is reused to fuel a steam turbine, thereby conserving energy.

Gas-fired generation is ideal for supplying peak power as these plants take minimal time to activate, and so long as there is adequate supply of gas, problems of intermittency pose little risk. These facilities may also be used for baseload, though the increases in the price of gas tend to discourage such usage.

Compared with the significant sunken costs involved in building a new nuclear power plant or even a coal plant, constructing a new gas plant is inexpensive, simple, and fast: it takes approximately one year from sourcing gas to extracting it. (Weissman) Gas also avoids many of the transactional costs that nuclear and other centralized and cost-intensive generation systems face. The policy climate for gas improved when the Public Utilities Regulatory Policies Act opened access to the transmission system and required utilities to purchase power from non-utility generators (NUGs) operating cogeneration systems with at least 5 percent of energy production serving the industrial host. Since the PURPA passage in 1978, gas-fired power generation has tripled. (NCEP, 8) With over 1200 gas distribution companies and 500 pipeline companies in the United States, minimal vertical integration and ease of market entry make the natural gas industry highly competitive and at low risk for monopolization. (Energy Law, 196)

The foundation for a gas-fired electrical grid has been laid. Over 220,000 MW of new generating capacity was constructed in the United States between 2000 and 2005, virtually all of which is gas-fired. (Weissman, 28) However, the supply of readily accessible domestic gas is dwindling and the cost of storing natural gas is thus far too high to compile a strategic reserve. Consequently, the Energy Information Administration estimates that over the next 20 years, total annual imports of imported liquid natural gas will increase 881%. (Id.)

Depending on countries like Venezuela, Nigeria and Qatar, which shares its large gas field with Iran, will expose the American economy to geopolitical instability and will further exacerbate the trade deficit. Imported LNG also has serious national security implications due to safety issues of transport and delivery. Many of the ships that transport LNG have non-fire-resistive ship tank insulation and consequently, two major risks are potential boiling liquid expanding vapor explosions (BLEVEs) or vaporization. (Havens)

The environmental costs of natural gas-fired generation are less than other hydrocarbon alternatives with an average 1135 lbs of carbon dioxide emitted per MWh. (Energy Law, 218) These have plagued sighting proposals for onshore terminals located near urban centers, like the Long Beach Harbor plan that has been suspended. An increasing number of proposals site offshore locations to widen exclusion zones around population centers. (Havens)

Compared to the average air emissions from coal-fired generation, natural gas produces half as much carbon dioxide (1135 lbs CO2/MWh), and one percent as much sulfur. (Energy Law, 196) However, the life cycle of the fuel tells a different story. Extraction, treatment, and transport are typically not factored in. For example, BHP Billinton's EIR for an offshore terminal in southern California concluded that the project's emissions of greenhouse gases were "insignificant" and "represent less than 0.06 percent of the ... emissions produced in California in 2002." (Heede Report) Independent studies indicate a full life cycle estimate add as much as 40% to the carbon total. (Id.)

Sources:
Energy Law, Tomain & Cudahy, West Group (2004),

Heede, LNG Supply Chain Greenhouse Gas Emissions for the Cabrillo Deepwater Port: Natural
Gas from Australia to California, Climate Mitigation Services (17 May 2006).

National Council on Electric Policy - A Comprehensive Review of Electric Restructuring, pp.8-9.

Prepared Direct Testimony of Jerry Havens, California Public Utilities Commission, pp 1-17.

Weissman, The Critical Need to Examine More Carefully the Role of Liquefied Natural Gas (LNG) in Meeting Future U.S Energy Needs, Energy Ventures Group, LLP (2005), pp. 27-30 ("Conclusion").