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Implications of Shale GasDevelopment for Climate Change
Richard G. Newell Director, Duke University Energy Initiative and Gendell Professor of Energy and Environmental Economics,
Nicholas School of the Environment, Duke University
Workshop on Risks of Unconventional Shale Gas Development, National Academy of Sciences May 31, 2013 | Washington, D.C.
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Context
Richard Newell, NAS Shale Gas Workshop, May31, 2013 2
This presentation is part of larger workshop on the risks ofshale gas development, covering issues relating to water, air,
health, ecology, community, climate, and other impacts. This presentation focuses only on the greenhouse gas
impacts of shale gas development.
Comprehensive analysis should consider the array of risksrelative to other energy sources, as well as the benefits ofshale gas development.
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What questions are at play?
Richard Newell, NAS Shale Gas Workshop, May31, 2013 3
Greenhouse gas (GHG) accounting Aggregate level. What are the total lifecycle GHG emissions of natural gas
use, including both combustion and upstream non-combustion emissions?
Sectoral technology level. What are the relative GHG impacts oftechnologies that use natural gas for electricity generation, transportation, andbuildings, compared to competing technologies?
Decisions by producers, policymakers, equipment
manufacturers, and corporate and individual purchasers Which technologies are advantageous to promote/develop/market/purchase
taking into account GHG impacts?
What issues need to be addressed to improve the GHG profile of technologiesbased on natural gas?
How does natural gas abundance change the baseline outlook for GHGemissions and domestic and international policy responses?
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Overview
Richard Newell, NAS Shale Gas Workshop, May31, 2013 4
U.S. natural gas use and shale gas development
Understanding the potential implications of increased natural
gas use on the climate Aggregate effects on U.S. energy and economy
Non-combustion GHG emissions from natural gas
Sectoral impacts: electricity, residential and commercialbuildings, transportation, and industry
International implications
Policy interactions and implications
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Relevant existing evidence
Richard Newell, NAS Shale Gas Workshop, May31, 2013 5
Baseline statistics Emissions accounting (EPA, industry, academia, NGOs)
Energy data (U.S. Energy Information Administration (EIA), industry)
Technology lifecycle analysis Various studies (source list at close of presentation)
Energy modeling projections EIA Annual Energy Outlook 2013
Reference case: current policies High oil and gas resource case (note also increases oil) Low oil and gas resource case (note also decreases oil)
International Energy Agency World Energy Outlook 2011 and 2012 New Policies case Golden Age of Gas case
Other modeling studies
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U.S. natural gas use and shale gasdevelopment
Richard Newell, NAS Shale Gas Workshop, May31, 2013 6
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Image source: U.S. Energy Information Administration, Annual Energy Review 2012.
Richard Newell, NAS Shale Gas Workshop, May31, 2013
trillion cubic feet in 2011
U.S. natural gas production, distribution, and use
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Natural gas was about 26% of total CO 2 and
CH 4 emissions from U.S. fossil energy in 2011
8
Data source: U.S. EPA Greenhouse Gas Inventory 2013.
Richard Newell, NAS Shale Gas Workshop, May31, 2013
US GDP
Energy8%
CH4 4%
Oil CO239%
Coal CO 233%
Natural gas CO 224%
2011 fossil energyCO 2 and CH 4
emissions5,553 Tg CO 2e
Natural gasCO 2 and CH 4
1,469 Tg CO 2e(26%)
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Shale gas is a globally distributed and abundant
resource
9
Image source: U.S. Energy Information Administration.
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North America has thus far been the focus
for shale gas production
Image source: U.S. Energy Information Administration.
10Richard Newell, NAS Shale Gas Workshop, May31, 2013
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0
5
10
15
20
25
30
35
1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040
Alaska 1%
U.S. shale gas production has surged and is
expected to growth further U.S. natural gas productiontrillion cubic feet per year
Data source: U.S. Energy Information Administration, Annual Energy Outlook 2013, Reference case.
Non-associated offshore
EIA Projection
Associated with oilCoalbed methane
Non-associated onshore
Shale gas
2012
10%5%
7% 6%
16%
34%
7%
6%
6%
50%
4%
Tight gas24% 22%
11Richard Newell, NAS Shale Gas Workshop, May31, 2013
History
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Current and projected U.S. natural gas prices have
declined Henry Hub spot price2010 dollars per million Btu
Data source: U.S. Energy Information Administration, Annual Energy Outlook 2008 and 2013, Reference case.
12Richard Newell, NAS Shale Gas Workshop, May31, 2013
0
1
2
3
45
6
7
8
9
10
1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040
2008 EIA projection
2013 EIA projection
Historical prices
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Understanding the potentialimplications of increased natural gasuse on the climate
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Natural gas abundance has both direct and
indirect effects on GHG emissions and climate
Richard Newell, NAS Shale Gas Workshop, May31, 2013 14
Increasednatural gasresources
andproduction
Lowernatural gas
prices
Lower overallenergy prices
Netclimateimpact( +/- ?)
Decreasedrenewables & nuclear
consumption (-)
Decreased oilconsumption (-)
Increased natural gasconsumption (+)
Fuelsubstitution
Increased
overall energyconsumption(+)
Policy
Decreased coalconsumption (-) CO 2
CH4
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Aggregate effects on U.S. energyeconomy
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Natural gas is an important energy source, but is only
13% of all U.S. energy expenditures and 1% of GDP
16
Data source: U.S. Energy Information Administration Annual Energy Review 2012.
Richard Newell, NAS Shale Gas Workshop, May31, 2013
US GDP
Energy8%
Natural gas 1%
2010 US GDP $15 Trillion
Energyexpenditures $1.2 Trillion
Natural gasexpenditures $159 Billion
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Effects related to fuel substitution are likely to
dominate effects on aggregate energy demand
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Aggregate energy demand is driven primarily by Population growth
Overall economic growth and stage of economic development Composition of GDP (e.g., share of services, manufacturing)
Price changes have much bigger effects on fuel substitutionthan overall energy demand
Economists summarize this responsiveness through demand elasticitiesmeasuring the % increase in consumption with respect to a % decrease in price
EIA modeling, e.g., which embodies numerous such relationships has:
very low elasticity of aggregate energy demand with respect to natural gasprice changes (
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Greater U.S. shale gas leads to lower gas prices,
more energy use, slightly higher GDP, and slightlylower GHG emissions in EIA projections
18Richard Newell, NAS Shale Gas Workshop, May31, 2013
Scenario(for 2040)
Natural gasprice
$2011 at Henry Hub
Total energyuse
Quadrillion Btu
GDPTril lion $2005
Cumulativeemissions2010-2040*
billion tonnes CO 2e
Reference 7.83$/mmBtu
108 $27.3 179
Percent difference relative to Reference case
High oil/gasresource -45% +3% +1% -0.4%
Low oil/gasresource +32% -1% -0.1% -0.8%
Data source: U.S. Energy Information Administration, 2013 Annual Energy Outlook.Notes: *CO 2e emissions computed by augmenting EIA CO 2 emission estimates for coal, oil, and natural gas by3.3%,1.5%, and 12.7% respectively to account for non-combustion CO 2 and CH 4 emissions, based on EPAGreenhouse Gas Inventory 2013.
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Non-combustion GHG emissions fromnatural gas
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0
20
40
60
80100
120
140
160
180
200
1990 2005 2007 2008 2009 2010 2011
Non-combustion emissions from natural gas are
variable, but have fallen in the past several years
21
Data source: U.S. EPA Greenhouse Gas Inventory 2013.
Richard Newell, NAS Shale Gas Workshop, May31, 2013
million tonnes CO 2e
Field processing
Processing
Transmission/storage
Distribution
CH4
CH4
CH4
CH4
CO 2CO 2
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0
2
4
6
8
10
12
01
2
3
4
5
6
7
8
9
10
1990 2005 2007 2008 2009 2010 2011
Upstream non-combustion GHG emissions have
fallen per unit of natural gas production
22
Data source: U.S. EPA Greenhouse Gas Inventory 2013 and U.S. Energy Information Administration.
Richard Newell, NAS Shale Gas Workshop, May31, 2013
tonnes non-combustion CO 2e per million cubic feet of gross withdrawals
-11%
grams CO 2e per megajoule
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0
50
100
150
200
250
1990 1995 2000 2005 2006 2007 2008 2009 2010 2011
EPA estimates of methane emissions from natural
gas systems have changed over timemillion tonnes CO 2e per year
2010 inventory
2011 inventory 2012 inventory
2013 inventory+120%
-33%
Data source: EPA Greenhouse Gas Inventories 2010, 2011, 2012, and 2013.
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Electricity sector
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0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6conventional
unconventional
Most estimates have 40%-50% lower lifecycle GHG
emissions for electricity from natural gas than coal
26Richard Newell, NAS Shale Gas Workshop, May31, 2013
life-cycle emissions for power generationratio of CO 2e emission estimates for electricity generation from natural gas relative to coal
Lower per kWh emissions than coal
Higher per kWh emissions than coal
Data source: Listed authors. Notes: 100-year global warming potential (GWP) used unless otherwise indicated. *Howarth doesnot account for differences in combustion efficiency of coal versus gas.
Skone et al(NETL 2011)
Fulton et al(2011)
Alvarez et al(2011)
Burnham et al(2011)
Howarth et al(2011)*
Howarth et al(20 Yr. GWP)*
CO 2
CO 2CH4
CH4
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0
500
1,000
1,500
2,000
Coal Natural gas Nuclear Renewables Petroleum liquids
+470 GWh
2005
2012
+138 GWh
-87 GWh
-12 GWh
-496 GWh
U.S. electric- sector CO 2 emissions have declined
16% since 2005 due to fuel switching
27Richard Newell, NAS Shale Gas Workshop, May31, 2013
annual net generation, 2005 and 2012gigawatt hours Total net electricity generation
(all sources, gigawatt hours)
2005 4,055
2012 4,054
Data source: U.S. Energy Information Administration.
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Greater shale gas leads to lower prices, fuel switching to gas,
and lower electricity GHG emissions in EIA projections
28Richard Newell, NAS Shale Gas Workshop, May31, 2013
Scenario
(for 2040)
Naturalgas prices
(deliveredfor elec.)
Averageelectricity
prices
Electricityconsumption
Natural gasconsumptionfor electricity
Coalconsumptionfor electrici ty
Nuclear andrenewables
consumption
Cumulativeelectricity
CO 2eemissions*
2010-2040
Reference 8.55$/mmBtu
10.8/kWh
5,200GWh
1,600GWh
1,800GWh
1,800GWh
71billiontonnes
Percent and absolute difference relative to Reference case
High oiland gas -39% -14%
+4.2%(+200 GWh)
+49%(+800 GWh)
-21%(-400 GWh)
-9%(-200 GWh) -5%
Low oiland gas +26% +7%
-2.4%(-100 GWh)
-34%(-500 GWh)
+4%(+100 GWh)
+19%(+300 GWh) +0.2%
Data source: U.S. Energy Information Administration, 2013 Annual Energy Outlook. Notes: *CO 2e emissions computedby augmenting EIA CO 2 emission estimates for coal, oil, and natural gas by 3.3%,1.5%, and 12.7% respectively toaccount for non-combustion CO 2 and CH 4 emissions, based on EPA Greenhouse Gas Inventory 2013.
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Residential and commercial buildingssector
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Greater shale gas leads to lower prices, more energy use, and
lower GHG emissions in EIA residential and commercial projections
31Richard Newell, NAS Shale Gas Workshop, May31, 2013
Scenario
(for 2040)
Naturalgas prices
(avg. res/comm price)
Electricityprices
(avg. res/comm price)
Aggregateres/comm
energy*consumption
Natural gasconsumptionfor res/comm
Electricity*consumptionfor res/comm
Cumulativeres/comm
CO 2eemissions**2010-2040
Reference 15.13$/mmBtu
11.7/kWh
21.8QBtu
7.9QBtu
11.8QBtu
67billiontonnes
Percent and absolute difference relative to Reference case
High oiland gas -22% -13%
+5%(+1.1 QBtu)
+7%(+0.6 QBtu)
+4%(+0.5 QBtu) -3%
Low oil
and gas+18% +7% -3%
(-0.6 QBtu)
-4%
(-0.3 Qbtu)
-2%
(-0.2 QBtu)-0.2%
Data source: U.S. Energy Information Administration, 2013 Annual Energy Outlook. Notes: *Does not includeelectricity-related losses. **CO2e emissions computed by augmenting EIA CO 2 emission estimates for coal, oil, andnatural gas by 3.3%,1.5%, and 12.7% respectively to account for non-combustion CO 2 and CH 4 emissions, based onEPA Greenhouse Gas Inventory 2013.
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Transportation sector
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0.0
0.2
0.4
0.6
0.8
1.0
1.2
TIAX (2007 for CA) Alvarez et al (2012) AEA (for EU 2011) Burnham et al (2012) Venkatesh et al (2011)
Natural gas passenger vehicles reduce
emissions by 10%-30% relative to gasoline
33
Data source: Listed authors.
Richard Newell, NAS Shale Gas Workshop, May31, 2013
life cycle emissions for passenger vehiclesratio of CO 2e emission estimates for CNG relative to gasoline vehicles
Lower emissions per km than gasolineHigher emissions per km than gasoline
CO 2CH4
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0.0
0.2
0.4
0.6
0.8
1.0
1.2
Rose et al(2013)
TIAX (2007 for CA)
TIAX (2007 for CA)
Burnham et al(2012)
Alvarez et al(2012)*
Venkatesh et al(2011)
Climate benefits from natural-gas powered
heavy vehicles are less clear
34
Data source: Listed authors.
Richard Newell, NAS Shale Gas Workshop, May31, 2013
life cycle emissions for transit busesratio of CO 2e emission estimates for natural gas buses relative to diesel
Lower emissions per km than dieselHigher emissions per km than diesel
*in heavy-duty trucks
LNG
CO 2CH4
CO 2
CNG
Up-stream
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Industrial sector
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Greater shale gas leads to more industrial energy use
and slightly higher GHG emissions in EIA projections
36Richard Newell, NAS Shale Gas Workshop, May31, 2013
Scenario
(for 2040)
Industrialnatural gas
prices
Aggregateindustrialenergy*
consumption
Natural gasconsumptionby industry
Coalconsumptionby industry
Electricity*consumptionby industry
Cumulativeindustrial
CO 2eemissions**2010-2040
Reference 9.09$/mmBtu
28.7QBtu
10.4QBtu
1.6QBtu
3.9QBtu
52billiontonnes
Percent and absolute difference relative to reference scenario
High oiland gas -39%
+7%(+2.1 QBtu)
+18%(+1.8 QBtu)
-3%(-0.05 QBtu)
+2%(+0.1 QBtu) +0.3%
Low oiland gas +28%
-4%(-1.1 QBtu)
-8%(-0.9 QBtu)
-5%(-0.1 QBtu)
-1%(-0.02 QBtu) -1.4%
Data source: U.S. Energy Information Administration, 2013 Annual Energy Outlook. Notes: *Does not includeelectricity-related losses. **CO 2e emissions computed by augmenting EIA CO 2 emission estimates for coal, oil, andnatural gas by 3.3%,1.5%, and 12.7% respectively to account for non-combustion CO 2 and CH 4 emissions, based onEPA Greenhouse Gas Inventory 2013.
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3,000
3,500
4,000
4,500
5,000
5,500
2010 2015 2020 2025 2030 2035
Projections for global natural gas use are rising
38
Data source: International Energy Agency 2011 and 2012 World Energy Outlook and 2011 Golden Age of Gas report.
Richard Newell, NAS Shale Gas Workshop, May31, 2013
primary global natural gas demandbillion cubic meters
2011 Golden Age of Gas scenario
2012 New Policies scenario
2011 New Policies scenario
3% lower CO 2 emissions
than 2011 New Policiesscenario in 2035
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Greater shale gas resources lead to lower U.S. coal production
and negligible effects on coal exports in EIA projections
40
Data source: U.S. Energy Information Administration 2013 Annual Energy Outlook.
Richard Newell, NAS Shale Gas Workshop, May31, 2013
U.S. coal production and gross exportsmillion short tons
0
200
400
600
800
1,000
1,200
2010 2015 2020 2025 2030 2035 2040
Reference case production
High oil/gas case production
Reference case exports
High oil/gas case exports
-159M tons
+14M tons
LNG tends to ha e higher GHGs than domestic
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0.0
0.2
0.4
0.6
0.8
1.0
1.2
Skone et al (2011 NETL) Venkatesh et al (2011) Jaramillo et al (2007)
NG LNG
LNG tends to have higher GHGs than domestic
natural gas for electricity, but still lower than coal
41
Data source: Listed authors.
Richard Newell, NAS Shale Gas Workshop, May31, 2013
life cycle emissions for electricity generationratio of CO 2e emission estimates for electricity from natural gas relative to coal
Lower emissions per kWh than coal
Higher emissions per kWh than coal
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Policy interactions and implications
Richard Newell, NAS Shale Gas Workshop, May31, 2013 42
H d b d l i i h
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How does abundant natural gas interact with
and affect climate/energy policy?
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Lower natural gas prices make the cost of some policies lowerand other policies higher
lowering the cost of options with relatively low GHG intensity will tend to makeachievement of climate goals less costly
e.g., in current baseline scenarios no new US coal power is built in part dueto low natural gas prices; as a result, regulations that would regulate newcoal plant GHG emissions have no apparent impact
e.g., under an emissions constraint, lower natural prices lower the cost ofmeeting emission targets and (by design) do not affect emissions (e.g., EIA AEO 2013, Jacoby et al. 2011, Brown and Krupnick 2010)
in the context of renewable energy standards, however, lower gas prices will tendto increase the incremental cost of maintaining those standards
With substantial long-term GHG reductions, natural gas wouldneed to incorporate carbon capture and storage at reasonablecost to continue as a competitive option
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Sources
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Sources
Richard Newell, NAS Shale Gas Workshop, May31, 2013 46
Jaramillo, P., Griffin, Michael W., Matthews, Scott H., 2007. Comparative life-cycle air emissions of coal, domestic natural gas, LNG,and SNG for electricity generation. Environmental Science and Technology 41, 6290-6296.
Lu, X., Salovaara, J., McElroy, M.B., 2012. Implications of the Recent Reductions in Natural Gas Prices for Emissions of CO2 fromthe US Power Sector. Environmental Science & Technology 46, 3014-3021.
National Energy Technology Laboratory, 2011. Life cycle greenhouse gas inventory of natural gas extraction, delivery, and electricityproduction. DOE/NETL-2011/1522.
Paltsev, S., Jacoby, H.D., Reilly, J.M., Ejaz, Q.J., Morris, J., OSullivan, F., Rausch, S., Winchester, N., Kragha, O., 2011. The futureof U.S. natural gas production, use, and trade. Energy Policy 39, 5309-5321.
Rose, L., Hussain, M., Ahmed, S., Malek, K., Costanzo, R., Kjeang, E., 2013. A comparative life cycle assessment of diesel andcompressed natural gas powered refuse collection vehicles in a Canadian city. Energy Policy 52, 453-461.
TIAX LLC, 2007. Full fuel cycle assessment: well-to-wheels energy inputs, emissions, and water impacts. Consultant report forCalifornia Energy Commission.
U.S. Energy Information Administration, 2011. World Shale Gas Resources: An Initial Assessment of 14 Regions Outside the UnitedStates.
U.S. Energy Information Administration, 2012. Annual Energy Review. DOE/EIA-0384(2011).U.S. Energy Information Administration, 2013. Annual Energy Outlook. DOE/EIA-0383ER(2013.)
U.S. Environmental Protection Agency, 2013. Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-2011. Washington, D.C.EPA 430-R-13-001.
Venkatesh, A., Jaramillo, P., Griffin, W.M., Matthews, H.S., 2012. Implications of changing natural gas prices in the United Stateselectricity sector for SO2, NOx and life cycle GHG emissions. Environmental Research Letters 7.
Venkatesh, A., Jaramillo, P., Griffin, W.M., Matthews, H.S., 2011. Uncertainty in life cycle greenhouse gas emissions from UnitedStates natural gas end-uses and its effect on policy. Environmental Science and Technology 45, 8182-8189.
Weber, C.L., Clavin, C., 2012. Life Cycle Carbon Footprint of Shale Gas: Review of Evidence and Implications. EnvironmentalScience & Technology 46, 5688-5695.
World Coal Association, 2013. Coal Statistics. URL http://www.worldcoal.org/resources/coal-statistics/ .
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For more information
Richard Newell, NAS Shale Gas Workshop, May31, 2013 47
Duke University Energy Initiative
www.energy.duke.edu
energyinitiative@duke.edu
919-613-1305
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