Since record-high oil and gas prices began falling again late last year, is it still a good idea to assess and improve your manufacturing plant's energy efficiency? We believe that it is.
Energy assessments, energy-efficient technologies and industrial best practices could be among the wisest investments your company can make. Operating more energy efficiently increases your bottom line, freeing up funds for other pressing needs. It also benefits your community and the environment as a whole by conserving natural resources and reducing harmful emissions. And, energy efficiency can be an important part of a successful long-term strategy for savings.
Potential to save both energy and money
When hurricanes devastated the Gulf Coast region in 2005, domestic oil and gas supplies were severely disrupted and costs rapidly shot upward. By the end of the year, natural gas prices had risen to $16 per million Btu in some U.S. spot markets, according to the Federal Energy Regulatory Commission — more than double the average price in May of that year.
As part of its response to the crisis, the federal government released some valuable oil reserves. Plants that relied on natural gas, however, had little choice but to look for every opportunity for savings. One result was that hundreds of plant managers applied for a U.S.Department of Energy (DOE) Energy Savings Assessment (ESA) of their steam or process heating systems in 2006. Hundreds more requested other assistance from DOE, such as training in the use of the DOE Industrial Technologies Program (ITP) assessment software tools, in order to start trimming energy use and costs as quickly as possible.
Many plants discovered opportunities to use best practices in energy management in their key process energy systems. Others found that an equipment upgrade designed to increase the efficiency of an industrial system can pay for itself through energy cost savings in a relatively short time.
Marc Montemayor, a system engineer at Texas Instruments, says, "DOE provided an extremely professional and knowledgeable (ESA Energy Expert) who brought a fresh perspective, new ideas and energy savings opportunities that applied to our system."
Results tallied for the first 200 ESAs conducted in 2006 show that the ESA Energy Experts and participating plants identified opportunities to save a total of about 52 trillion Btu of natural gas per year. That's as much as about 723,000 typical U.S. households would use in a year, and it represents nearly $485 million in potential annual energy cost savings.
Reducing demand and emissions
Even in efficient manufacturing plants like Eastman Kodak's in Rochester, N.Y., assessments reveal good opportunities for savings. Kodak's 2006 ESA identified near-term, no- and low-cost opportunities that added up to an 11 percent potential reduction in annual natural gas usage. Efficiency measures included reducing the plant's steam demand through boiler improvements and modifying the feedwater heat recovery system.
Another steam system ESA conducted at General Motors' assembly plant in Flint, Mich., identified opportunities to reduce annual natural gas usage by approximately 8 percent. Recommendations included decommissioning unused air supply houses (ASH), ensuring that dampers operate properly on ASH units in use, implementing a new steam trap maintenance program and reducing boiler blowdown.
And, an ESA conducted at a Kraft Foods plant in Campbell, N.Y., uncovered opportunities toreduce natural gas costs by more than 13 percent per year. These savings could be realized by improving boiler efficiency and reducing steam demand through such measures as installing direct-contact water heaters and using No. 2 fuel oil for backup to obtain a more favorable utility rate.
In all, nearly $200 million in energy-saving projects were either completed, under way, or in the planning stages at more than 115 plants by early 2007.
Steve Schultz of 3M Corporation says his plant's assessment "helped us identify opportunities. Had we not done the assessment, I don't think we would be aware of them ... and we wouldn't be working toward implementing them."
These energy and cost savings are not the whole story, however. If U.S. industries implement the recommendations coming out of the ESAs, they will reduce the total annual growth in carbon dioxide emissions in this country by at least 7 percent.
The outlook for natural gas
It can be tricky to predict changes in energy prices, because the reasons for these fluctuations are many and complex. Some analysts say that the drop in natural gas prices in late 2006 was caused in part by milder than usual weather conditions, particularly during the hurricane season, which reduced demand and helped the nation build up reserves again. Other analysts note that even small disruptions in supplies can lead to huge swings in prices. They see a future upward trend as inevitable.
Atmospheric scientists at Colorado State University and elsewhere are forecasting that at least one major hurricane will strike the southeastern United States in 2007. If this is correct and supplies are disrupted again, oil and natural gas prices could climb. Even in mild hurricane seasons, however, there are upward pressures on prices.
The U.S. Energy Information Administration ( EIA) foresees gradual but steady increases in prices between 2016 and 2030. In his statement to the U.S. Senate Committee on Energy and Natural Resources in February 2006, EIA administrator Guy Caruso said that in the long term, "growth in liquefied natural gas imports, Alaskan production, and lower-48 production from unconventional sources are not expected to increase sufficiently to offset the impacts of resource depletion and increased demand in the lower-48 states."
Future price fluctuations seem to be virtually assured. Plants that use energy efficiently will be ahead of the game when those swings occur.
Start saving today
How can your plant be one of the winners? ITP BestPractices resources can help. These resources can assist you in formulating the long-term strategies that allow your company to thrive in the face of constantly changing energy costs.
In addition, small- to medium-sized plants can contact a regional Industrial Assessment Centerfor information and assistance. And ITP training in the use of assessment tools is available to plants of any size, as are all ITP BestPractices resources.
You can also find many good ways to reduce your energy use and costs on DOE's latest Save Energy Now CD-ROM. This CD brings together a wealth of energy-saving tips, case studies, technical manuals, and software tools — all in one package — that help you assess the best opportunities for savings at your site.
Alexander Karsner, DOE assistant secretary for energy efficiency and renewable energy, says, "These Energy Department CD-ROMs, packed with energy-saving information, offer valuable information and energy-saving tools to enable plant managers to reduce their energy costs and alleviate price pressures nationally."
Options like these will allow your company to stay productive, prosper and weather any storm.