Much of the 60,000 MW of dual-fuel power generation in the United States will be burning natural gas this winter rather than heavy fuel oil in contrast to last winter when record high gas prices compelled generators to burn anything but gas, consulting firm Energy Security Analysis Inc. (ESAI) said in its latest Natural Gas Stockwatch.

“We expect that some of the power plant natural gas demand which deserted last winter will return, and that with adequate supplies of natural gas this winter, the price of natural gas — particularly in the Northeast — might be mitigated by the prices of low-sulfur fuel oil,” said Mary Menino, manager of ESAI’s natural gas practice.

ESAI estimates that the extent of “true” dual fuel capacity in the United States stands at about 60,000 MW. ESAI distinguishes “true” dual-fired capacity from plants that use residential fuel capability as simply an emergency backup rather than a means to optimize fuel costs. About two-thirds of this capacity is still owned by public utilities and one third is owned by non-utilities, ESAI said.

Last winter as gas prices topped $10/MMBtu while fuel oil prices averaged just over $4, there was a significant incentive to switch to fuel oil. ESAI estimates that dual fuel generators burned an additional 7 million bbl/month of fuel oil. This year, the situation is much different with gas prices projected to average $4 at Transco Zone 6 New York, according to ESAI, and New York Harbor 1% fuel oil prices during the peak winter months expected to be at $3-$3.30.

For more information about ESAI, visit the firm’s web site at https://www.esai.com/index.html.

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