Natural gas, driven by a 100-year supply, will be the dominant fuel in the next 20 years, Calpine Corp. CEO Jack Fusco told an investor conference Wednesday in Houston.
Noting the future “is on us today,” Fusco, whose company maintains the nation’s largest fleet of gas-fired combined-cycle power generation facilities, said there is a “transformative, secular shift underway today in the U.S. power sector” — namely, that gas-fired generation, which is “the preferred solution” for the industry.
“Shale gas is here to stay, and we’re blessed in America to have what by all accounts is at least 100 years of gas supply.” Fusco also said the gas pipeline sector is stepping up to build more infrastructure.
As a result, Calpine’s analysis calls for U.S. natural gas prices to remain between $3.00-$5.00/Mcf over the longterm.
“This is going to make it extremely hard for other forms of power generation to compete, such as nuclear, coal, solar or wind,” Fusco told analysts in the half-day briefing.
To further support his argument for a dominant gas-fired power sector, the United States is facing “an aging, technically obsolete and environmentally challenged power generation industry.” Calpine’s calculations are calling for “staggering” future investment in new generation infrastructure, said Fusco, who estimated that it will take the equivalent of 10 new Calpine fleets during the next 20 years.
Calpine has a fleet of 92 plants totaling 27,000 MW, mostly all gas-fired plants.
“Calpine only needs to have a small percentage of the new generation market share to have a big impact on our top line growth,” he said, adding the caveat that the company would not “make the mistakes of the past.” No new generation is to be built without the correct economic, legislative and regulatory reforms in place. (Calpine is currently struggling in California and elsewhere to replace contracts that have expired or will in the next year or two.)
In response to criticism about “the secular shift to natural gas,” Fusco said there is data that “debunks” these myths.
According to U.S. Energy Information Administration data, domestic gas-fired generation has amounted to 30% of the power sector capacity during the last decade, he said. “Second, the U.S. pipeline industry is responding with significant investment [$46 billion during the past decade] in new infrastructure to support natural gas demand. There have been two dozen new gathering systems brought on line over the past two years.”
Finally, over the next 30 years, the U.S. power generation sector will be characterized by “balanced and diversified fuel sources.” And “abundant, affordable” gas supplies will be a key part of the mix.
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