The closest thing to a sponge that would soak up some of the market’s excess natural gas is more gas-fired power generating capacity. And according to Bentek Energy LLC, producers have something to look forward to in that regard.
“Some 12.5 GW [gigawatts] of gas-fired electric power generation is under construction with in-service dates ranging from between May 1, 2012 and Dec. 31, 2013,” the Evergreen, CO-based analytics firm said in a note Thursday. “This new gas-fired capacity equals gas demand estimated by Bentek at more than 1.1 Bcf/d.”
At the beginning of March, so far this year 1.6 GW of new gas-fired capacity has come online in the United States, according to Bentek. From May through the end of the year another nearly 5 GW is expected to enter service. Gas-fired units expected to enter service this year could add nearly 600 MMcf/d of gas demand, assuming 50% utilization and a heat rate of 7.5, Bentek said.
Last year more than 9.2 GW of gas-fired capacity came online, burning an estimated 830 MMcf/d.
Just last week at about the same time Consol Energy was announcing it would be curtailing some of its West Virginia coal mining operations because of competition from low-priced natural gas, Dominion Virginia Power said it would be replacing some older coal-fired power plants in neighboring Virginia with a $1 billion, 1,300 MW combined-cycle natural gas power plant to meet clean air standards.
The gas-fired generation gift to producers would be sweetened if the country were to enact a modest carbon tax, researchers at Harvard University said in a recent report (see Daily GPI, Feb. 29). Their emphasis was on reduction of carbon dioxide emissions achieved through coal-fired plant retirements. Between June and May 2015, two independent power producers are expected to close a total of 4 GW of coal-fired capacity from Illinois to New Jersey, Bentek said.
Coal retirements are mainly driven by the cost of retrofitting old plants to meet more stringent emissions standards, but cheap natural gas has certainly not escaped the power sector’s notice.
Speaking at the recent Jefferies 2012 Global Clean Technology Conference in New York City, NRG Energy Inc. CEO David Crane said the entire industry would be impacted by low natural gas prices (see Daily GPI, Feb. 24). “I call it the ‘tyranny of natural gas,'” he said. “The extraordinary price of natural gas these days is steam rolling everything in front of it, and right now its major impact is being felt by coal-fired plants.”
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