natural gas

Physical and Financial Hedging of Natural Gas

Natural Gas and Oil Markets

Natural gas utilities and gas-fired power generators cannot afford to be caught in a green vortex and rely too much on intermittent renewable energy. Physical and financial hedging of natural gas continues to be important in managing risks and is required as countries continue to accelerate their decarbonization efforts. Such efforts are crucial to manage natural gas and price risks especially if prolonged water and wind droughts,  colder winters, and hotter summers continue to  limit renewable energy production in future years.

Decarbonization efforts should not only entail increasing the installed capacity of wind and solar, and battery storage. Decarbonization must also embrace carbon capture, storage, and utilization, blending hydrogen in natural gas grids. Also, the US, EU and China must accelerate efforts to reduce methane and carbon dioxide (CO2)in their oil and natural gas supply chains and from landfills, livestock farms, and other methane sources. Finally, the role that nuclear power can play in the transition must be considered by each country.

Some countries may want to establsih a Strategic Gas Reserve as a backstop to supplement the private sector's efforts to hedge price volatility, especially if governments continue to transition away from the use of coal power plants and continue to retire nuclear power plants. Download the entire article published in the Climate & Energy Journal

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Comments on FERC's Certification of New Interstate Natural Gas Facilities

US Natural Gas Pipelines

Russo on Energy LLC (RoE) filed comments on FERC's Notice of Inquiry on whether, and if so how, it should revised its current policy on whether interstate gas facilities are in the public interest. RoE's views were based on its independent research and did not represent any of the current stakeholders in Docket No. PL18-1-000. RoE comments can be summarized as follows:

  1. FERC should not second guess the markets nor abandon precedent agreements entirely as a determination of need. Instead, the Commission should supplement its needs analysis with official comments from state energy agencies and public utility commissions, especially when affiliate companies are involved;
  2. FERC should use it new Office of Public Participation and existing Dispute Resolution Service to facilitate settlements among gas facility applicants and landowner, EJ communities and other stakeholders including state agencies;
  3. FERC should condition certificates to implement technologically feasible mitigation measures to reduce intended and unintended methane and CO2 emissions or require the development of such plans during the life of the project;
  4. FERC should increase oversight and enforcement of conditions to mitigate environmental impacts during construction and ensure restoration of land;
  5. FERC should require on the ground surveys to identify environmental justice communities and not rely solely on census data;
  6. FERC should use the 4 As of energy security (availability, accessibility, affordability and acceptability) as a framework to determine whether or not a project is in the public interest;
  7. FERC should revise it Pipeline Policy to communicate to interstate natural gas pipeline applicants that it values mitigation measures that reduce intended and unintended methane and CO2 emissions on proposed facilities; and
  8. FERC's revised policy statement should also communicate the natural gas and oil industry how it values decarbonization efforts being developed using Responsibly Sourced Gas, Renewable Natural Gas and Blending of Hydrogen in natural gas pipelines.

Download the official comments here. Read more

Responsibly Sourced Natural Gas: Time to Change the Natural Gas Industry’s Narrative

Benefits of Responsibly Sourced Natural Gas

The majority of companies in the natural gas and liquefied natural gas (LNG) industry seem fixated on promoting natural gas as the clean “bridge fuel” to further deployment of renewable energy technologies. While natural gas emits far less carbon dioxide (CO2) than coal or oil used to generate power and heat, , it still is a “fossil fuel” that contributes to the adverse effects on climate. Fossil-fuel opponents are increasingly skeptical of the climate benefits reported by the US natural gas and LNG industry. These opponents often cite a  study released in April 2020 that showed methane emissions from the Permian basin of West Texas and New Mexico, one of the largest oil-producing regions in the world, are more than two times higher than federal government estimates.  

The time has come for the natural gas and LNG industry to recognize that the “bridge” for natural gas may be much shorter than previously thought.

            This author believes the time has come for the natural gas and LNG industry to recognize that the “bridge” for natural gas may be much shorter than previously thought. It’s time for the industries and individual companies to shelve slogans and take action to distinguish US natural gas from other global sources by embracing a narrative of “Responsibly Sourced Gas (RSG).” To do otherwise, increases the risk that natural gas and LNG will fall victim to the growing movement to decarbonize the heating, power and transportation sectors via an all electrification strategy. Federal and state policy makers, regulators and lawmakers could begin questioning whether US natural gas and LNG industries could even play a role in the clean energy economy envisioned by the incoming Biden Administration and evidenced by the Biden-Sanders Climate Action Plan. Read more by downloading the entire article [PDF] from the Climate & Energy Journal. Read more

Hydrogen: Hype or a Glide Path to Decarbonizing Natural Gas – Part 2


We continue the analysis of hydrogen which began in Part 1. This time we cover the following topics:

  • The status of efforts to blend hydrogen in the U.S. grid,
  • What hydrogen blending means for decarbonizing natural gas,
  • Regional opportunities to increase hydrogen in the U.S. and to serve Fuel-Cell Electric Vehicles (FCEV), and
  • The Disconnect between hydrogen policy and green hydrogen production shortages

Hydrogen: Hype or a Glide Path to Decarbonizing Natural Gas – Part 1

Existing technologies that produce blue hydrogen with carbon capture, use, and storage (CCUS) could be a bridge to widespread production of green H2, which is produced with renewable energy without carbon dioxide (CO2) emissions. By incentivizing and encouraging higher production of blue H2, which primarily uses natural gas, and green H2, the transportation sector could be decarbonized to combat the adverse effects of climate change. Read more

Regulatory Challenges Facing Renewable Natural Gas

Why aren't state regulators getting behind renewable natural gas as they have for wind, solar and other renewable energy projects? The answer may be a one-size fits all mindset where electrification is viewed as the only solution to a successful energy transition. I'm not so sure that this is the case. The conventional wisdom is that RNG is the domain of state regulators, but a closer look at the challenges that RNG projects face shows that the FERC could reduce the costs of RNG projects wishing to interconnect to interstate natural gas pipelines. Read more

A U.S. Ban on Fracking: Implications on U.S. and Global Energy Security

Winners, Losers, and Impacts If a US Fracking Ban Is Enacted

Leading Democratic presidential nominees want to ban fracking “everywhere.” However, the ban may do more harm than good and adversely affect U.S. and global energy security. A U.S. fracking ban will incentivize emerging economies and high carbon emitters like China, India, and other Asian countries to turn even more to coal and heating oil to meet their power generation, heating, and cooking needs. Also, the ban will increase the costs of wind and solar projects since their components come from natural gas liquids and liquid petroleum gas derived from oil and natural gas. Read more

Will NAFTA Renegotiation Stop Greening of Mexico’s Power Sector?

Mexico decouples CO2 emissions with electricity generation

Today trade representatives from Canada, Mexico and the United States are meeting in Washington DC to begin renegotiating the North American Free Trade Agreement (NAFTA). Everyone is focused on jobs, competitiveness and modernizing the agreement. Few people are tuned into the environmenal side of things at this time, but they should be because of the environmental benefits. Read more

Use of Natural Gas Indices

How Natural Gas was priced in 2016

Recently the FERC held a technical conference on Natural Gas Indices. Back in March 2017, I was asked by the the Natural Gas & Electricity Journal to write about natural gas indices. I hope the article below will provide a good overview of the issues and stimulate discussion.

"Russo, T. (2017, August). Using natural gas price indices. Natural Gas & Electricity 34/1, ©2017 Wiley Periodicals, Inc., a Wiley company."  Read more


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