Under the continuance of current gas price regulations, pro-
duction might decrease as much as 30 percent by 1985.

SRI's long-range study indicates that the outlook for gas supplied from Canada is extremely promising since its reserves are estimated at 2-1/2 times larger than those of the United States.

The demand for natural gas will be limited by a combination of higher prices, availability of alternative fuels, and anticipated enduse controls. The consumption increase rate of more than 5 percent per year between 1960 and 1971 is expected to drop to an annual increase rate of about 1 percent between 1971 and 1990.

Coal

The historical trend of U.S. coal consumption in Btu has been flat in specific numerical terms and has been declining as a percentage of total energy consumption for the last 50 to 60 years. The declining proportion of coal has been accelerated by government actions such as the stimulation of nuclear electric power, the elimination of oil import quotas, and the implementation of environmental legislation. Since the beginning of the century, coal production has remained almost constant. In 1973 about two-thirds of the domestic production was used for electric power generation.

For the past five years, surface mining productivity rates have remained constant (about 31 pounds per man-day). Because of the Mine, Health, and Safety Act provisions, difficulties in labor management relations and an influx of untrained workers, productivity in underground mines has decreased from 50.9 tons to 11 tons per man-day.

With environmental emphasis, use of low-sulfur content coals is increasing rapidly. This type of coal is found mostly west of the Mississippi; accordingly, production in that area has increased substantially. In total, U.S. coal reserves are enough to last more than 800 years at 1973 use levels. Although these reserves are split about evenly between west and east, on a Btu basis somewhat more is located east of the Mississippi because the Btu content of western coal is lower.

About 50 percent of the underground and 10 percent of surface minable coal cannot be recovered by conventional mining methods. The principal constraints to coal production are those of sulfur content, difficulty in recovery under current methods, requirements for heavy capital outlays, and environmental standards in the use of coal. In fact, the Project Independence group found that the coal industry can

satisfy almost any foreseeable demand by 1985 at prices near 1972-73 levels. (See Table 8.) Other factors that will influence coal demand are the price and availability of oil and natural gas and the rate of increase in the consumption of electricity.

SRI research indicates that future coal mining emphasis will be on large, low-cost operations that deliver their output to one or a few major consumers. Although mining and transportation are the most significant costs of coal, land reclamation and health and safety compliance costs are expected to be increasingly important. Virtually an unlimited potential supply of coal exists in North America, and it can be mined in sufficient quantities to be a major factor in interfuel price competition. Other constraints could include equipment shortages, railroad transportation shortages, government edicts and environmental restrictions, and labor problems.

Nuclear Fuels

Uranium ore, which is the source of nuclear electric power, is a depletable commodity of finite size. Current estimates indicate that the production rate of the industry will not be able to meet uranium fuel requirements for the accelerated case beyond 1985, unless the rate of exploration and mine/mill facility construction are increased in the near future. Nuclear generating plant construction programs have recently been deferred or cancelled, which could postpone or reduce capacity currently projected for 1985.

Constraints to the expansion of nuclear power include:

• Uranium resources and exploration.

• Uranium mining and milling capacity.

• Uranium enrichment capacity.

• Spent fuel reprocessing capacity.

Uncertainties regarding the schedule for bringing additional
nuclear generating capacity on line.

The Project Independence report indicates that, to meet demand, an investment of almost $2 billion dollars, with 15 to 20 new milling plants may be required. Additional capacity for the isotopic enrichment of uranium will require expansions estimated to cost $1.5 billion, including about 30 percent for meeting foreign requirements. Other factors that

may deter the necessary expansion include difficulties in raising investment

capital for utilities, equipment and manpower limitations, and some delay of public acceptance of nuclear power.

Electricity

Existing and projected electrical power generating capacity by type of generation is shown in Table 9.

The projection of electricity requirements is subject to many uncertainties--whether reductions in electrical demand will continue, alternative fuel price and availability, difficulty in raising capital, and power plant siting problems because of environmental restrictions or public discontent. Also, there may be construction delays due to engineering, manpower, and equipment difficulties as well as questions of reliability of operation, particularly in nuclear plants.

While considerable development is expected for existing technologies (such as low-Btu gas from coal in combined cycle systems), it is not anticipated that a substantial production of electricity will be achieved during the period to 1990 from such revolutionary technologies as the breeder reactor, fusion power, or solar energy.

Shale Oil

The use of shale oil in production of petroleum is currently only experimental, and substantial investments of time and capital will be required to make this technique commercially useful. Production in commercial quantities is projected to begin only in 1980. The rate of development of the oil shale technique depends on a number of factors-availability of capital, environmental restrictions, availability of water for processing, and incentives such as depreciation allowances and accelerated depreciation. A highly coordinated federal-state-local program must evolve if the use of shale oil is to be successful.

Synthetic Fuels

This energy source entails the conversion of coal through chemical processing to eliminate impurities and produce a clean gas or liquid fuel. The constraints are meeting the higher costs, availability of new technology and water, and transportation costs. The study concludes that synthetic fuels can supply only a very small amount of the U.S. gas and oil requirements by 1985, with the real potential in the latter 1980s or 1990s. Figures 5 and 6 present the estimated capacity potentials between start-up at or near 1980 and the year 2000.

**

Beginning of year projections (nuclear at end of year would be 234 and 275 for BAU and AD, respectively.

Without conservation.

Accelerated nuclear construction schedules.

The demand management projection includes conversion of about 16,500 megawatts of existing oil-fired generation capacity to coal.

These figures reflect projected increased market penetration of intermediate load combined cycle plants and continued use of gas turbine peaking plants.

Source: Project Independence