American Oil and Gas Reporter - March 2024 - 42

SpecialReport: Repurposing Natural Gas
Stepping back and looking at the
bigger picture, the reality is that the
Lower 48 power grid has not undergone
major changes in design or functionality
in a long while. The source of generation
has shifted and capacity has been added,
but the general principle remains the
same: a source-be it a nuclear reactor,
coal-powered steam turbine, gas-powered
turbine, wind turbine, hydraulic turbine
or photovoltaic cells-generates electricity,
which is sent directly to the distribution
grid and consumed. Because it is incredibly
difficult to store power for later use, the
grid must maintain a significant backup
of reserve capacity to activate as demand
dictates.
As it has since July 13, 1895, when
the Folsom Powerhouse in California
used hydroelectric AC generators to produce
high-voltage electricity and transmit
it 35 kilometers to Sacramento, the American
power grid is based on a " use it or
lose it " scenario. Electricity production
and consumption both occur in real time
without a storage capacity to buffer either
unplanned supply outages or demand
surges. At any point in time, the grid
only can consume what is being produced,
and can really only produce what is being
consumed.
That means that despite all the massive
technological advances made over the
past 130 years, the electricity generated
by a power plant still has to be immediately
transmitted and consumed or it will be
lost. This issue is exacerbated by alternative
fuel sources because they have a limited
timeframe in which to generate power.
After all, a wind turbine only produces
power when the wind blows. This issue
is universally recognized, of course, and
many companies are pursuing more efficient
battery solutions to address the fact
that peak load times do not necessarily
correspond with peak generation times.
In contrast, natural gas can be directly
and efficiently converted to electricity at
any time of day or night to align peak
generation with peak demand. However,
a long-term vision of how a natural gascentered
solution ultimately can play out
is lacking. It is time to truly think outside
the box. Instead of building large cen42
THE AMERICAN OIL & GAS REPORTER
tralized power plants and complex, interconnected
grids to generate and transmit
electricity, what if the entire system were
redistributed into smaller parts that act
more independently? Rather than building
a single massive 300-megawatt gas-fired
facility connected to a maze of gas
pipelines and electric transmission lines,
what if that same capacity can be added
in multiple small plants located close to
well sites and securely connected to an
ultrareliable fuel source?
Distributed Generation
While the concept of " distributed generation "
powered by natural gas has been
around for some time, in practice, it represents
a very small slice of
the total domestic power generation
pie. The security and
reliability of the national power
grid will be dramatically
enhanced by placing mobile
microgeneration facilities on
well sites to convert produced
gas into electricity that then
can be delivered to local market
areas, or delivered through
existing transmission lines to
wherever needed. It will reduce
the need for expensive new construction
pipeline and power line infrastructure
projects, and the generated electricity
will be available on call to meet
dynamic demand loads.
The reliability of the national power grid will
be dramatically enhanced by placing mobile
microgeneration facilities on well sites to convert
produced gas into electricity that then can be delivered
to local market areas, or delivered through
existing transmission lines to wherever needed.
Microgeneration is a viable potential
solution, but it is not a panacea. The
small-scale generators used in a distributed
system are not inexpensive, but they can
be selectively sized based on the forecast
amount of available gas supply on site.
The downside is that, like any electricity
source, a generator only earns revenue
when it is generating power. The fact is
that the economics of microgeneration
do not work if well site facilities are only
utilized temporarily for emergency or
peak power loading. Mobile generators
need to be the primary source of power
for this solution to work economically,
with the existing centralized facilities on
which the grid now relies moving to
emergency backup sources.
Therein lies the rub. Transitioning to
American Oil and Gas Reporter - March 2024

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