Even with a continuing slow recovery in the regional economy, natural gas demand is expected to grow steadily at just under 1% annually during the next 10 years, with gas used for power generation expected to lead the growth, according to the 2012 Gas Outlook released Saturday by the Northwest Gas Association (NWGA).
Citing "unprecedented change" in the gas industry during the past few years," NWGA's latest 10-year look forward sees demand growth averaging 0.9%, cumulatively hitting 8.1% during the upcoming decade through 2021. The role of gas as a power generation fuel is called a key element in the 2012 outlook.
"This clean and abundant energy resource will increasingly contribute to and enable the economic and environmental interests of the region," said Dan Kirschner, NWGA executive director. The industry includes more than 48,000 miles of transmission and distribution pipelines and 3.5 million gas customers in three states (Idaho, Oregon and Washington) and part of a fourth (western Montana).
NWGA emphasized the sharp change during the past 15 years in the natural gas load profile. In 1996, more than half of the gas consumed went to large industrial customers (51%) with electricity generation representing a relative paltry 3%. At the end of 2010, all of this had reversed -- power generation accounted for more than a quarter (27%) of the gas use, while industrial use slipped to 31%.
"This is important because industrial load is generally constant, year-around, regardless of weather conditions," NWGA's Outlook said. "Conversely, gas-fired generation -- a load that can be quite variable depending on weather and other market conditions -- once only represented a small portion of gas demand."
The report points out that in addition to unknowns concerning "the magnitude and nature" of the growing use of gas for power generation, the continued low natural gas prices could spur more new industrial loads using gas, along with more use of natural gas in transportation.
NWGA sees prices staying relatively low, meaning below the average prices in 2008 at the $9/MMBtu level. "Depending on the pace economic recovery and supply-demand growth, most forecasts project prices to average between $4 and $7/MMBtu through 2021 when adjusted for inflation," the report said.
Pipeline and storage capacities are adequate now but could need expansion some time during the next 10 years, said NWGA's report, noting the system could be stressed by peak-day demand under both base and high-demand scenarios. Added pipeline and storage capacities could be needed in the next 10 years depending on how much new gas-fired generation capacity gets built as the result older coal-fired plant closures and for balancing intermittent renewable power supplies.
With underground and peak-load storage facilities, the Pacific Northwest system is capable of delivering more than 6.5 million Dth/d at peak capacity, the association outlook said.
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