EIA: Gas Takes Bigger Share Long-Term
A higher rate of economic growth will lead to a greater
expansion in natural gas use than previously forecast over the next
20 years --- to 34.7 Tcf/ year in 2020, up from 31.5 Tcf --- and a
10% increase in projected prices --- from $2.81/Mcf to $3.13,
according to the Energy Information Administration's latest report.
EIA's Annual Energy Outlook 2001 (AEO2001) released last week
projects U.S. economic growth at an average rate of 3% a year over
the next 20 years, up from its previous estimate of 2.1% per year.
The economic growth will boost overall U.S. energy demand from 96
quadrillion Btu in 1999 to 127 quads in 2020, up from the 121
energy quads projected by EIA one year ago. The increase in the
projection for natural gas demand by 2020 of slightly over 3 Tcf
(loosely equal to 3 quads) is responsible for about half the change
in energy projections.
EIA says the 62% increase in gas demand from 21.4 Tcf in 1999 to
34.7 Tcf in 2020, will be spurred by a tripling of gas use for
power generation. During the next 20 years 89% of new power
generation units will be fueled by natural gas. Gas prices are
expected to decline within two years from current highs. "In the
longer term, technology improvements in the exploration and
production of oil and natural gas are expected to moderate price
increases even as demand for these fuels grows."
EIA projects world oil prices will reach $22.41/barrel (in 1999
dollars) in 2020, up just slightly from the $22.04 in last year's
The federal bean counters see a 1.8% average annual increase in
power demand over the next 20 years, compared to the 1.3% they
predicted last year. Prices will decline from the current 6.7 cents
per kWh, but not as much as predicted last year due to the higher
projected gas prices. Instead of 5.8 cents per kWh in 2020, EIA's
AEO2001 sees electric rates holding at 6.0 cents per kWh.
Power to be provided by nuclear generation jumped 34% from the
forecast last year "due to lower estimated costs for extending the
life of current nuclear plants and higher projected natural gas
prices, although total nuclear generation still declines as some
existing plants retire."
Coal will still be the primary fuel for power generation, but
its share will dwindle from 51% to 44% of the generating total.
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