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Natural Gas

Natural gas is used primarily to generate electricity, to assist industrial processes and to provide home heating. It also can be used to power vehicles, to assist enhanced oil recovery efforts and as a chemical feedstock. Texas is the nation’s largest producer and consumer of natural gas, providing one-fourth of U.S. supplies and consuming a fifth, primarily in the industrial and electricity generation sectors.46

Natural gas was used to produce 48.9 percent of the electricity generated in Texas in 2006, making it the most common fuel used for electricity generation in the state.47 It has fewer harmful emissions than coal, Texas’ next-leading source of electricity generation. Natural gas is, however, more expensive than coal per Btu and its price is relatively volatile compared to coal, renewables and nuclear fuel.

The largest issue involving natural gas is supply. Demand is expected to keep growing. Natural gas is produced domestically or imported from Canada or Mexico. By chilling natural gas to a liquid state to create liquefied natural gas (LNG), the gas can be transported overseas economically. The U.S. imports LNG from Algeria and Nigeria, with other sources available in a few years. In Texas, new technology is expected to allow us to produce from ever-deeper and more unconventional reserves.


Per million Btu (2005) Direct use: $8.08;48 Electricity: $7.9049
Per Gallon $1.47 (January 2008)50
Per Gallon of Gasoline Equivalent $1.93 (January 2008)51
Direct Subsidy Share of Total Consumer Spending Federal: 0.5 percent (oil and gas combined); State and Local: 1.5 percent (oil and gas combined).52
Notes Transportation costs of natural gas include pipeline construction and maintenance. Electricity generation includes transmission costs.

Economic Impact and Viability

Wages and Jobs In 2006, more than 312,000 Texans, or 3.1 percent of the state workforce, were employed in the oil and natural gas industry combined, which accounted for more than $159.3 billion, or 14.9 percent of Texas’ gross state product. Oil and gas industry wages totaled $30.6 billion in that year, or about 6.9 percent of all wages in Texas.53
Regulatory Climate Natural gas-fired electricity generation plants are required to obtain air and wastewater permits from TCEQ, a process that usually takes about one year. Drilling, operating and related environmental permits are required by the Railroad Commission of Texas.54
Texas Competitive Advantage Texas is the nation’s largest producer and consumer of natural gas, with more miles of natural gas pipeline than any other state.
Notes Unlike other coastal states that own their offshore lands out to three nautical miles, Texas and Florida (in the latter case, only on its Gulf Coast side) own their offshore lands out to 10.3 nautical miles, greatly increasing their potential for economic benefits from natural gas exploration and production.55

Availability and Current Infrastructure

Estimated Resources in Texas Approximately 63,753 trillion Btu, including state-owned offshore reserves (2006)56
Current Fuel Production Approximately 6,487 trillion Btu (2006)57
Consumption in Texas Approximately 3,540 trillion Btu (2006)58
Number of Fueling Stations in Texas Texas has 15 natural gas fueling stations, but none of these stations is open to the public.59
Vehicle Availability 4,500 fleet vehicles and buses.60
Notes Currently, natural gas exploration and production are strong in the Barnett Shale natural gas deposits found in and around Tarrant County.

Environment, Health and Safety

Greenhouse Gas Emissions The combustion of natural gas to produce electricity produces an average of 332.7 pounds of CO2 per million Btu of heat energy produced.61
Air Pollution (Non-Greenhouse Gas) The combustion of natural gas produces an average of 0.5 pounds of NOX and 0.03 pounds of SO2 per million Btu of heat energy produced.62
Solid Waste None.
Land Use Natural gas extraction and power plant construction can harm plant and animal habitat. Natural gas production can cause erosion, loss of soil productivity and landslides. Most land use impacts are temporary, however.63
Water Withdrawal Depending upon the generation plant type, electricity generation from natural gas requires from zero to 5,863 gallons of water per million Btu of heat energy produced.64
Water Consumption Power generation with natural gas requires between 2 and 56 gallons of water per million Btu of heat energy produced, depending upon plant type.65
Water Quality Natural gas power plants discharge heated water that may contain pollutants, potentially harming aquatic life and reducing water quality.66 TCEQ regulates and permits these discharges.
Notes Combined-cycle natural gas power plants are growing in popularity. These plants use combustion turbine exhaust to drive a steam turbine, in effect using the fuel twice, resulting in higher efficiency.

Fuel Characteristics

Energy Content 1,031 Btu per cubic foot.67
Renewability Generally speaking, natural gas is a fossil fuel and is not renewable. The main component of natural gas, however – methane – is produced by the decomposition of organic material of any age above or below ground and as such may be considered renewable in some instances.
Notes Natural gas is readily transported via pipeline with little processing. Pipeline-quality natural gas has predictable heat values regardless of the source.

Other Issues

Dependence on Foreign Suppliers Texas supplies the nation with 28 percent of its natural gas.68 The U.S. imports 19 percent of its natural gas, primarily from Canada and Mexico.69 Liquefied natural gas (LNG) offers access to overseas supplies of natural gas, but LNG imports are highly dependent on price, availability, transportation and producing countries’ limited ability to create and export LNG.
Price and Supply Risks Factors that may influence prices locally are supply, regulation, transportation and weather.
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