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for Sustainable Energy, LLC, on behalf of the U.S. Department of Energy’s 

National Renewable Energy Laboratory, the University of Colorado-Boulder, 

the Colorado School of Mines, the Colorado State University, the 

Massachusetts Institute of Technology, and Stanford University.

Contract No. DE-AC36-08GO28308

Natural Gas and the 

Transformation of the U.S. 

Energy Sector: 

A Program Studying Multi-sector 

Opportunities and Impacts

Scott Gossett

National Renewable Energy Laboratory

Workshop Summary

NREL/TP-6A50-57726

January 2013
The Joint Institute for Strategic Energy Analysis is operated by the Alliance 

for Sustainable Energy, LLC, on behalf of the U.S. Department of Energy’s 

National Renewable Energy Laboratory, the University of Colorado-Boulder, 

the Colorado School of Mines, the Colorado State University, the 

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303-275-3000 • www.jisea.org Contract No. DE-AC36-08GO28308

Natural Gas and the 

Transformation of the U.S. 

Energy Sector: 

A Program Studying Multi-sector 

Opportunities and Impacts

Scott Gossett

National Renewable Energy Laboratory

Prepared under Task No. 6A50.1025

Workshop Summary

NREL/TP-6A50-57726

January 2013
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Executive Summary

In recognition of the major transitions occurring within the U.S. energy economy, the Joint Institute 

for Strategic Energy Analysis (JISEA) and Stanford University’s Precourt Institute for Energy (PIE)

engaged diverse energy system stakeholders in a discussion about robust, objective, and timely 

research priorities relating to natural gas. Held December 10-11, 2012 on the Golden, Colorado 

campus of the National Renewable Energy Laboratory (NREL), the workshop provided invited 

experts from government, industry, academia, and the environmental community an opportunity to 

describe the state of current knowledge in defined topic areas, and to suggest analytic priorities for 

ongoing research. Following discussion, stakeholders prioritized research questions through an 

interactive voting process. 

This record of proceedings is not a comprehensive recording of the event; rather, it focuses on key 

issues raised. To encourage honest and open discussion, session notes were recorded without 

attribution. Where appropriate, the report summarizes the key matters of discussion, and attempts to 

provide a sense of areas of consensus and divergence among the workshop participants. 

About JISEA

The Joint Institute for Strategic Energy Analysis (JISEA) conducts interdisciplinary research—

realized through teams drawn from the founding partners and a network of national and global 

affiliates—and provides objective and credible data, tools, and analysis to guide global energy 

investment and policy decisions. JISEA is focused on providing leading analysis; guiding decisions 

on energy, investment, and policy; and answering questions that enable a cost-effective transition to 

sustainable energy at significant speed and scale, while minimizing unintended impacts. 

JISEA is operated by the Alliance for Sustainable Energy, LLC, on behalf of the U.S. Department 

of Energy's National Renewable Energy Laboratory (NREL), the University of Colorado-Boulder, 

the Colorado School of Mines, the Colorado State University, the Massachusetts Institute of 

Technology, and Stanford University. Each institution brings a unique set of capabilities to the 

partnership. 

Learn more at JISEA.org. 

About PIE

The Precourt Institute for Energy serves as the hub of energy research and education at Stanford 

University. Established in 2009, the Precourt Institute seeks to transform energy by supporting 

cutting-edge research and facilitating collaboration. We also help develop energy-literate leaders 

and communities through educational programs and the dissemination of research results. 

Stanford’s broad network of world-class researchers working on energy-related problems spans 

more than 200 faculty members working in 22 academic departments and more than two dozen 

independent labs and programs. By creating formal and informal links, the Precourt Institute fosters 

opportunities for scientists, engineers, social scientists, and legal and business scholars to solve the 

world’s energy problems. 

Learn more at Energy.Stanford.edu. 
ii

Table of Contents

Executive Summary ..................................................................................................................................... i

About JISEA............................................................................................................................................ i

About PIE ................................................................................................................................................ i

1 Introduction: Why Natural Gas?.......................................................................................................... 1

2 Informing a Research Agenda............................................................................................................. 2

2.1 Dynamics of Natural Gas in the United States and Globally........................................................... 2

2.2 Multiple Pathways: U.S. Markets ................................................................................................... 2

2.3 Production and Distribution Issues: Environment and Infrastructure .............................................. 3

2.4 JISEA Natural Gas Power Sector Study and Insights from the Field .............................................. 3

2.5 Metrics: A Broad Look Across Impacts.......................................................................................... 4

2.6 Opportunities and Challenges in the Transportation Sector............................................................. 5

2.7 Opportunities and Challenges in the Industrial Sector..................................................................... 5

2.8 Opportunities and Challenges in the Buildings Sector..................................................................... 5

3 Conclusions .......................................................................................................................................... 7

Appendix: Participating Organizations..................................................................................................... 8

Appendix: Meeting Agenda........................................................................................................................ 9
1 

1 Introduction: Why Natural Gas?

The United States is experiencing a shale gas revolution. Advances in drilling and recovery methods 

allow access to reserves and resources inaccessible just a few years ago. As recently as 2007, the 

U.S. Department of Energy was studying how to meet demand for natural gas imports. Today, U.S. 

energy policy makers find themselves trying to understand the domestic and global implications of 

a booming U.S. natural gas market, including the potential for U.S. exports. 

Figure 1 depicts the very rapid rise in U.S. shale gas production beginning in around 2007. In an 

early release of its 2013 Annual Energy Outlook (AEO), the U.S. Energy Information 

Administration (EIA) projects that shale gas production will continue to grow, and comprise more 

than 40% of overall U.S. gas production by 2040. This change of events could lead to cheaper fuels, 

greater energy security, and lower greenhouse gas (GHG) emissions. However, near-term choices 

about how to use this new resource could result in more long-term harm than good. 

Figure 1: U.S. dry natural gas production by source 1990-2040 (TCF) (AEO 2013)

In recognition of the importance of the shale gas revolution on the U.S. energy economy, the 

sponsors engaged energy system stakeholders from government, industry, academia, and the 

environmental community on natural gas research priorities. The natural gas revolution has opened 

up new questions for both public and private sector stakeholders. 

Some of these questions center on the extent to which the circumstances driving the shale gas 

revolution are perhaps uniquely American. Private ownership of mineral rights is almost unique to 

the United States, as is development on private lands. These circumstances may confine the boom in 

shale gas production largely to the United States, but the effects of that boom will be felt globally. 

Gas that had been slated for use in the United States could find a use elsewhere. Already, this is 

leading to gas-on-gas competition in Western Europe, and spurring more trading on spot markets 

rather than long term (25 year) contracts. Production companies are forced to meet the market, and 

that trend (based on oil market experience) may be difficult to reverse. 
2 

2 Informing a Research Agenda 

At the workshop, invited experts described the current state of knowledge in eight defined topic 

areas, and suggested analytic research priorities for each. During presentation of each topic area, an 

assigned commentator summarized key themes and posed probing questions to spur discussion. 

All stakeholders contributed potential research questions for each topic during two broad discussion 

sessions. Stakeholders then discussed prioritization of the topics, geared toward formulating a 

research agenda that will allow resilient decisions in the face of market and policy uncertainty. 

The exact prioritized research agenda identified by stakeholders is not presented in detail here, 

although may be requested by interested parties by contacting JISEA.

2.1 Dynamics of Natural Gas in the United States and Globally

This session described the hot topics, issues, and projections for global natural gas, with particular 

focus on the North American market. 

The shale gas revolution affects four major economic sectors – industrial, transportation, 

residential/commercial, and power generation—with the greatest potential impacts, as currently 

understood, in the last. In Organization for Economic Cooperation and Development (OECD) 

countries, demand for gas is forecast to grow to 200 billion cubic feet per day (bcf/d) by 2040, 

about one third higher than today’s demand. This could result in lower costs for electricity and 

increased environmental benefits, such as lower emissions of SOx, NOx, and greenhouse gasses

compared to coal, provided methane emissions are controlled. 

To meet projected production of natural gas, the United States could see 100,000 new wells and 1 

million fractures in the next 10 years. Despite potential GHG emissions benefits of natural gas, 

shale gas production is not without environmental concerns, including safety of the drilling process; 

water use required for hydraulic fracturing process; potential for contamination of ground and 

surface waters; and possible fugitive methane emissions. 

Selected illustrative research questions identified by stakeholders in this session included:

• Will the shale gas production boom go global? When? Where? Impacts? 

• What are the economic impacts of using natural gas across multiple sectors—power 

generation, export, industrial, and transportation? 

• What are economic and climate impacts of using domestic natural gas in the industrial sector 

compared to exporting liquefied natural gas?

2.2 Multiple Pathways: U.S. Markets

This session provided an overview of natural gas uses in different U.S. market sectors, and 

participants examined various modeling activities and techniques. 

EIA’s Annual Energy Outlook (AEO) models projections based on current law and policy. Thus, it 

does not predict potential or hypothetical developments, such as implementation of a carbon tax. 

According to AEO2012, U.S. natural gas production grows robustly, driven by the advent of shale 

gas. AEO2012 projects that the United States will become a net exporter of natural gas by 2020, 
3 

two years earlier than the prior report. Many of these exports will be to Canada and Mexico, and 

will displace some coal production and consumption. 

EIA also foresees increased use of natural gas in the manufacturing sector, and discussion addressed 

the need to understand if the overall economic impact of natural gas-fueled manufacturing 

outweighs that of natural gas exports. 

Discussion suggested looking more closely at modeling inputs, such as pricing and supply curves, 

and addressed several topics regarding current models, such as factors in models that make it more 

advantageous to export natural gas rather than use it to offset domestic coal use, and whether 

models accurately forecast natural gas penetration in the transportation sector.

Selected illustrative research questions identified by stakeholders in this session included:

• Is it more beneficial to use natural gas directly to support renewable energy or indirectly as 

energy storage? 

• How might “black swans,” tipping points, disruptive innovation and other unknowns impact 

the role of natural gas?

• What is the long term outlook for natural gas production and penetration based on resource 

cost curves?

2.3 Production and Distribution Issues: Environment and Infrastructure 

This session addressed important production and distribution issues, including concerns about water 

use and fugitive emissions. In public perception, hydraulic fracturing (or fracking) has become an 

all-encompassing term that incorporates all environmental concerns related to shale gas production. 

In reality, fracking is one small part of the production process, and perhaps not the most important 

part from an environmental perspective. Well construction and well integrity are considered more 

important to preventing environmental damage during shale gas production. 

Panelists suggested that better framing and defining the early debate around fracking and shale gas 

production could have led to important and different outcomes regarding actual risk versus 

perceived risk. It was suggested that, due to current public perceptions, enforcement of existing 

regulations may not be sufficient to ensure a “social license” to operate, and more effort at outreach 

and engagement with local communities may be necessary. 

Selected research questions identified by stakeholders in this session included:

• How do GHG emissions vary by well-specific gas composition, equipment, production and 

estimated ultimate recovery?

• What are the sources of fugitive methane emissions and methane leaks during the different 

stages of production, transmission, and distribution, and options to reduce them? 

2.4 JISEA Natural Gas Power Sector Study and Insights from the Field

In this session, participants explored key findings from JISEA’s November 2012 study, Natural Gas 

and the Transformation of the U.S. Energy Sector: Electricity. The study provides a new approach 

to and evaluation of shale gas lifecycle GHG for power; an analysis of legal and regulatory 

frameworks associated with shale gas; and an evaluation of scenarios for power sector evolution. 
4 

The complete study is available at JISEA.org/natural_gas.cfm. Using actual 2009 emissions data 

from the Barnett Shale Play in Texas, JISEA analysts found that life cycle GHG emissions from 

shale gas production were equivalent to unconventional and conventional natural gas production 

elsewhere. Follow up research could focus on expanding the study to see if findings are the same in 

other areas where data are available. 

In discussion, participants cautioned that the United States cannot continue to see expanding natural 

gas use and reach the 80% reduction in emissions believed necessary to prevent the most damaging 

aspects of climate change unless CCS is available. Discussion also focused on how China’s actions 

play into the global emissions picture, with a range of opinion on whether China will expand or 

reduce its use of coal going forward. 

Some discussion focused on the need to make economic models more robust, so that they capture 

noneconomic factors that play into fuel choices. For example, Europe has an abundance of cheap 

coal and two sources of relatively expensive natural gas. But carbon mandates are driving use of 

more gas, which may be considered an un-economic outcome. 

Selected research questions identified by stakeholders in this session included:

• What are the best market structures to encourage use of natural gas for balancing 

intermittent renewable energy generation?

• How do we best combine natural gas, renewables, energy efficiency, and demand response 

to provide low- or zero-carbon energy services to customers? 

2.5 Metrics: A Broad Look Across Impacts 

This session discussed ideas for the best quantitative metrics (including externalities) that can be 

used to evaluate production, transport, storage, and usage of natural gas, and the environmental and 

economic options available in various markets. The discussion included the relevancy of different

metrics to different stakeholders, and the status and issues related to collecting, analyzing, and 

publishing the metrics and underlying data. 

In discussion, participants voiced belief that the importance of choice of metrics is matched by the 

importance of clearly communicating results and meaning of analysis. Ideal metrics must be 

relevant to multiple stakeholders, cover a systems and local level, be quantifiable, and link to 

impacts. Understanding how to put indicators or importance into action is also essential. Monetizing 

metrics is one way of doing this. For example, can CO2 and non-CO2 emissions of natural gas be 

incorporated into a carbon tax or cap and trade scenario? 

Discussion also recommended moving away from a “predict then act” method of modeling, and 

instead looking for ways to construct and choose near-term actions that shape the desired future. For 

example, is it possible to incentivize combinations of natural gas and renewable energy rather than 

scenarios where natural gas displaces renewables? 

Selected research questions identified by stakeholders in this session included:

• What are the best metrics to measure societal benefits? 

• How can we collect and share data to support engineering, economic, and policy analysis? 
5 

2.6 Opportunities and Challenges in the Transportation Sector 

This session addressed current and projected demand for natural gas in the transportation sector. 

Related issues included competition between compressed natural gas (CNG) and other nonpetroleum fuels, such as electricity, and considerations like fuel distribution and infrastructure. 

In the case of the U.S. shale gas production boom, market forces (shale gas revolution) and policy 

goals (reducing petroleum dependence) seem to align. Across the country, CNG is cheaper than 

conventional gasoline on a gallon of gas equivalent basis wherever both are offered at the pump. 

Despite this, the United States deploys only 1% of the global fleet of natural gas vehicles (NGVs), 

and the U.S. NGVs are primarily medium- and heavy-duty vehicles rather than passenger vehicles. 

New corporate average fuel efficiency (CAFE) standards might encourage adoption of NGVs, as 

new rules give them the same incentive multiplier as plug-in hybrids. At the same time, increasing 

fuel efficiency may offset any increased use of natural gas as a vehicle fuel, muting the effect of any 

increase in NGV use on the overall market for natural gas. Methane emissions were mentioned as

an issue for natural gas in transportation, because the distributed support infrastructure also 

distributes leakage opportunities. 

In discussion, participants questioned whether the cost and difficulty of infrastructure installation 

might make a multi-fuel transportation sector more conceptually appealing than pragmatic.

Selected research questions identified by stakeholders in this session included: 

• How do we compare transport/mobility options using multi-metric indicators?

• What drives decision-making among vehicle purchasers? 

2.7 Opportunities and Challenges in the Industrial Sector 

This session examined the current and projected demand and uses of natural gas in the industrial 

sector (e.g., heating fuel vs. chemical feedstock), competition with other energy sources in that 

sector, and important issues in that sector. Discussion centered on a potential once-in-a-lifetime 

competitive advantage that low-cost natural gas has given U.S. manufacturing. Because 

manufacturing tends to have a high multiplier effect, such that every $1 investment in 

manufacturing may create $5 – $20 of impact in the economy, some made the case that using 

natural gas for manufacturing might benefit the U.S. economy more than natural gas exports or use 

for transportation or elsewhere. 

Selected research questions identified by stakeholders in this session included:

• How can we better attract investments to commercialize recovery of low-cost natural gas 

associated with shale oil production in North Dakota and elsewhere, in order to reduce 

flaring? 

• What are the market impacts of international LNG trade in regional markets? 

2.8 Opportunities and Challenges in the Buildings Sector 

This session addressed the current and projected demand for natural gas in the buildings sector as 

well as competition with other energy sources in that sector. Compared to discussion projections of

natural gas use in other sectors, the forecast for natural gas in the buildings sector seemed 

restrained. In the residential/commercial sector, natural gas use has remained flat for 40 years due to 
6 

steady improvements in building and appliance efficiency. Some forecasts show a decline of natural 

gas use in residential/commercial sector due to continuing efficiency improvements. 

Selected research questions identified by stakeholders in this session included:

• How do we most efficiently integrate electricity and natural gas systems to maximize

delivery of low-carbon energy to end-users?

• What are the best options for advancing combined cooling heat and power (CCHP) or heatdriven cooling (desiccants, absorption, and other cycles) to leverage CCHP? 
7 

3 Conclusions

The U.S. shale gas revolution has sparked new, cross-cutting discussion and raised important 

questions regarding impacts on economies and energy markets across the globe, both short and long

term. Dialogue among a diverse stakeholder audience identified many of the emerging and 

interconnected questions raised by the dynamics of natural gas within the U.S. and global energy 

economy, spanning production and infrastructure, uses across all sectors and the environment. A 

robust research agenda emerged to help answer questions that business, civil society, investors and 

policymakers are asking. 
8 

Appendix: Participating Organizations

American Gas Association

Carbon Management Center (CMC) at the University of Colorado 

Center for Climate and Energy Solutions (C2ES) 

Center for Strategic and International Studies

Center for the New Energy Economy 

Chrysler Group LLC 

Colorado Collaboratory

Colorado Energy Office 

Colorado Oil & Gas Association 

Colorado School of Mines

Colorado State University 

The Dow Chemical Company 

Drive Natural Gas Initiative/AGA

Electric Power Research Institute (EPRI)

Enbridge Inc. 

Encana Natural Gas

Environmental Defense Fund

Exxon Mobil Corporation 

Gas Technology Institute (GTI) 

GE Power & Water

General Electric Global Research Center

IBM

IHS CERA

Joint Institute for Strategic Energy Analysis (JISEA)

Keystone Center

National Renewable Energy Laboratory (NREL) 

Pacific Gas and Electric Company

Renewable and Sustainable Energy Institute (RASEI) at the University of Colorado

Sempra Energy 

Southwestern Energy Company 

Stanford University

Stanford University Precourt Institute for Energy (PIE)

Stanford University, Energy Modeling Forum 

U.S. DOE, Office of Fossil Energy 

U.S. DOE, Office of Energy Efficiency and Renewable Energy 

U.S. Energy Information Administration (EIA), U.S. DOE 

University of Colorado-Boulder 

Westport Innovations 

Xcel Energy
9 

Appendix: Meeting Agenda

Stanford Precourt 

Institute for Energy

NATURAL GAS AND THE TRANSFORMATION OF THE U.S. ENERGY SECTOR: 

A PROGRAM STUDYING MULTI-SECTOR OPPORTUNITIES AND IMPACTS

SCOPING WORKSHOP

December 10-11, 2012

National Renewable Energy Laboratory: Golden, Colorado

Monday, December 10, 2012

8:30 AM Welcome – Bobi Garrett, Deputy Laboratory Director, Strategic Programs & Partnerships, NREL

Overview – Doug Arent, Executive Director, JISEA; and Sally Benson, Director, Global Climate & 

Energy Project, and Acting Director, PIE

U.S. Perspectives – Christopher Smith, Deputy Assistant Secretary for Oil & Natural Gas in the Office 

of Fossil Energy, U.S. Department of Energy

9:00 AM Session 1 Setting the Scene: Dynamics of Natural Gas 

Robert E. Gardner III, Manager, Corporate Strategic Planning, Energy and Economics, 

ExxonMobil Corporation

Lynn Orr, Director, PIE

Commentator: Morgan Bazilian, Deputy Director, JISEA

10:45 AM Session 2 Multiple Pathways: U.S. Markets

Hill Huntington, Executive Director, Stanford University’s Energy Modeling Forum 

John Conti, Assistant Administrator for Energy Analysis, U.S. Energy Information 

Administration, U.S. Department of Energy

 Commentator: Joel Swisher, Associate Professor, Stanford University

12:15 PM Luncheon Keynote Speaker – Edward Chow, Senior Fellow in the Energy and 

National Security Program, Center for Strategic and International Studies (CSIS)

1:45 PM Session 3 Production and Distribution Issues: Environment and Infrastructure 

Mark Boling, President of V+ Development Solutions, Southwestern Energy Company

Mark Brownstein, Deputy Director, Environmental Defense Fund, Energy Program 

Commentator: Elizabeth Paranhos, J.D., Senior Research Fellow, University of Colorado Law 

School 

3:30 PM Session 4 Summary of the JISEA Natural Gas Power Sector Study and Insights from the Field

Jeff Logan, Senior Energy Analyst, NREL

Bryan Hannegan, VP Environment and Renewables, EPRI 

Commentator: Janet Peace, VP Markets and Business Strategy, Center for Climate and 

Energy Solutions (C2ES)

4:30 PM Session 5 Metrics: A Broad Look Across Impacts 

Margaret Mann, Group Manager, Technology Sustainability and Systems Analysis, NREL 
10 

Adam Brandt, Assistant Professor in the Department of Energy Resources Engineering at 

Stanford University

Commentator: Sally Benson, Acting Director, PIE; Professor of Energy Resources 

Engineering, Stanford University; and Director of Global Climate Energy Project (GCEP)

6:00 PM Reception 

6:30 PM Reception Speaker — The Honorable Bill Ritter, Jr., former Governor of Colorado, Director of the 

Center for the New Energy Economy 

8:00 PM Adjourn

Tuesday, December 11, 2012

8:30 AM Session 6 Discussion of Prioritization of First Day’s Key Research Questions 

9:15 AM Session 7 Opportunities and Challenges in the Transportation Sector 

 Kathryn Clay, Executive Director, Drive Natural Gas Initiative

 Commentator: Margo Melendez, Technology Deployment Manager, NREL

10:15 AM Session 8 Opportunities and Challenges in the Industrial Sector 

George Biltz, Vice President, Energy and Climate Change, The Dow Chemical Company 

Commentator: Dag Nummedal, Director, Colorado Energy Research Institute, Colorado 

School of Mines

11:00 AM Session 9 Opportunities and Challenges in the Buildings Sector 

Steve Malnight, Vice President, Customer Energy Solutions, Pacific Gas & Electric 

Jack Lewnard, Vice President and Chief Technology Officer, Gas Technology Institute

Commentator: Paula Gant, Senior Vice President, Policy and Planning, American Gas 

Association

12:00 PM Session 10 Key Scenarios and Next Steps (Working Lunch)

1:45 PM Optional tour of NREL Research Support Facility (RSF)