Editorial: Innovation Trumps High Energy Costs
According to U.S. DOE's Energy Information Administration (EIA) statistics, the U.S. consumes around 25% of natural gas produced in the world, and U.S. industry consumes nearly 40% of natural gas energy. Industrial consumption of natural gas is projected to increase from 8.1 trillion cubic feet in 2003 to 10.3 trillion cubic feet in 2025.
Natural-gas spot price averaged over $7.30 per thousand cubic feet (mcf) in April 2005 compared with $5.88 per mcf in April 2004. The large boost in spot prices for natural gas to levels above $7.00 per mcf are said to be due to high crude oil prices and unusually cold March weather. While spot prices for natural gas have been falling recently due to milder weather and declining crude oil prices and might continue to ease somewhat during the spring and summer, natural gas supply conditions are expected to remain tight over the same period and spot prices are likely to remain in the range of $6.50 to $7.00 per mcf through the summer according to EIA. Also, although natural gas storage remains above the five-year average, high world oil prices, continued strength in the economy, the expectation that Pacific Northwest hydroelectric resources will be well below normal through mid-summer, and limited prospects for growth in domestic natural gas production all support the natural gas price projections. Spot price averages of over $7.00 per mcf in 2005 and 2006 are projected.
Despite the actions that are planned to address and alleviate the projected increase in use of natural gas, today's higher natural gas prices are forcing industry to evaluate new energy saving technology or revisit known techniques that until now could not be justified. There are many new technologies available to the process heat user. Many have been available for years, but reasonable energy costs made it easier to ignore them. However, sustained increases in natural gas prices now justifies implementing such technologies.
One example of new-found justification of implementing energy cost cutting measures is the use of oxy/fuel or oxy/air/fuel combustion in the aluminum scrap melting furnaces (see page 29, "Oxygen-Enhanced Combustion Provides Advantages in Al-Melting Furnaces"). With "low" natural gas prices, use of oxygen in aluminum melting with an accompanying increase in net melt energy cost might be justified only if higher productivity was the target. However, with higher natural gas prices, melt shops can justify the use of oxygen in aluminum melting, which usually results in an overall decrease in net melt energy cost, with or without a productivity increase.
Most likely, there will not be a reprieve after a short period of high prices, which will bring the prices for energy back in line, as there has been in the past. The point is that management must get serious about efficiency, and move quickly. IH