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Texas NatGas: Burnin' And Chillin' More Than Ever

Keeping Texans cool under the blazing summer sun has been driving electricity consumption in the Lone Star State to record levels and doing the same for natural gas consumption used to fuel power generators. Meanwhile nationwide, natural gas recently bested coal in the power generation arena, the U.S. Energy Information Administration (EIA) said.

"Consumption of natural gas for power generation (power burn) in Texas is at a record high, according to data from Bentek Energy," EIA said recently. "Daily consumption in 2015, through Aug. 11, has averaged 4.5 Bcf/d. The next-highest level was 4.4 Bcf/d, for the same period in 2012. Over the whole year in 2012, generation averaged 4.2 Bcf/d."

Texas consumes more gas for power generation than any other state in the country. In 2014, for example, Texas consumed 3.9 Bcf/d of gas for power generation (18% of total U.S. power generation), according to EIA data. Florida was a distant second, at 2.9 Bcf/d.

The Electricity Reliability Council of Texas (ERCOT), which manages most of Texas's electric grid, recently reported that hourly peak demand for power had exceeded 69,000 MW for the first time on Aug. 10, between 3 and 4 p.m. CDT and again between 4 and 5 p.m. Hot temperatures and high demand have led to spikes in day-ahead power prices in Texas.

Earlier this year, an ERCOT assessment projected relatively high reserve margins for the summer. While the Texas summer has not been mild, additional natural gas and wind generating capacity has come online this year. In May, Panda Power Funds brought online a 717-MW gas-fired facility in Temple, TX. Additionally, ERCOT reported that an additional 152 MW of summer peak average capacity of wind generation would come online during the season.

Nationwide in April, typically the month when total electricity demand is lowest, U.S. generation fueled by natural gas exceeded coal-fired generation for the first time since the start of EIA's monthly generation data in 1973. However, coal generation took the lead again in May. Total generation from coal and natural gas in May increased 14% from its April level, with increased coal generation accounting for 65% of the combined increase.

In April 2012, the last time monthly natural gas generation came close to surpassing coal-fired generation, spot prices for natural gas were near $2/MMBtu on a monthly average before returning to about $3.50/MMBtu in the last months of 2012.

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