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Show Industrial natural gas consumption progressively increases through 2000 because real output growth in the sector overcomes the reduction in gas consumption per dollar of output. Between 1984 and 2000 real industrial output is expected to ~row by 3.2 percent per year. Industrial gas consumption grows from 7.4 quads in 1984 to 8.4 quads in 2000 (Figures 2 and 3). This is an average rate of 0.8 percent growth per year. l' 1985 GRI BASELINE PROJECTION OF GAS DEMAND BY SECTOR (Quads) Actual 1914a 1990 2000 ~-Resldentlal 4.5b 4.3 3.9 Commen:lalc 2.4b 2.8 3.7 ,1nduatrlarc 7.4 8.2 8.4 Electric Generatlond 3.2 2.5 2.1 ll'anaportatione 0.5 0.6 0.9 Total' 18.0 18.4 19.0 2010 3.6 4.5 6.1 2.0 1.1 17.3 a The March 1985 OOE/EIA Monthly Energy Review (MER, published June 1985) is used as the source of 1984 historical data. Subsequent MERs included a -'gnificant shift in gas consumption 'rom the Industrial to the residential/commercial sectors. However, total gas consumption showed almost no change. The 1985 GRI Baseline Prolection was based on history and reflects the unrevlsed data. As a result, the 1984 historical information presented In the tables reflects the earlier estimate of historical data. b Historical Energy Information Administration (EIA) statistics for 1984 do not dlsaggregate data for the residential and commercial sectors. c Includes gas ' consumed In commercial and Industrial cogeneration. d Includes only gas consumed In the utility generation of electricity. e Includes 0.3 and 0.5 quad of demand by methane vehicles In 2000 and 2010, respectively. Includes 0.1, 0.3, and 0.8 quad of synthetic gas from petroleum and coal In 1990, 2000, and 2010, respectively. Figure 2 A substantial portion of the increased industrial gas consumption will be in gas-fired cogeneration. Consumption for industrial cogeneration grows from 0.3 quad in 1984 to 1.2 quads in 2000. After the year 2000, as shown by the broken lines in Figure 3, gas consumption for industrial needs would be supply constrained to about 6.1 quads in 2010 in the absence of advanced supply technologies. Advanced technologies for the projection of gas from less permeable or "tight" and other unconventional resources could provide the necessary gas at prices competitive with alternative fuels to sustain industrial demand at 7.7 quads. 9 INDUSTRIAL ENERGY CONSUMPTION Quads 35 r-----------~----T-----------------~ 30 25 20 15 10 5 GAS U~---· ..• , o ~ ____ ~ ________ L-~ ___ ~ _________ ~ ______ ~ 1960 1970 1980 1990 2000 2010 1985 GRI Baseline Projection Figure 3 GAS SUPPLY Two critical factors used as strategic inputs for planning GRI's program are the availability of gas supply and associated prices. The lower-48 natural gas supply and price trends used in the baseline projection are developed using the GRI Hydrocarbon Model. The model includes a highly detailed, field-size description of the lower-48 hydrocarbon resource base (including both oil and gas). The model simulates producers' exploration and development decisions based upon the statistical probability of success and a required revenue for the products to ensure a reasonable return on investment. Figure 4 illustrates the projected mix of lower-48 natural gas and supplemental gas supplies over the projection period. Introduction of advanced technologies for production from tight formations and other cost-competitive unconventional resources results in deferral of high-priced supplements and slower depletion of the 10wer-48 resource base. In the absence of advanced technology, 10wer-48 supplies would decline at an increasing rate after 1990, and projected gas demand at the price levels of alternative fuels would exceed the available supply beginning around 2000. The dashed line in Exhibit 4 represents a supply constraint on projected gas consumption without benefit of advanced supply technologies. The cross-hatched quantity, beginning in 1990, represents the portion of 10wer-48 production contributed by unconventional gas, mainly from tight formations, that is attributable to research resulting in the availability of advanced extraction technologies beyond the |