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Power Generators to Stick with Gas
With natural gas price spikes finally seeming to ease after asix-month-long roller coaster ride, U.S. electricity generatorshave taken the experience as a warning, but vow to stick withnatural gas as their go-to plant-firing source.
“Although we are looking at other sources of fuel, all of thegeneration that we are developing right now is gas-fired,” saidCharlie Chambers, vice president of business development forCalpine Natural Gas. “At the end of 2005, we just announced that weintend to have 70,000 MW of generation, which would include ourcurrent production, plants in construction and the ones that areunder development. The significance of it is that it will requireCalpine to have fuel in its plants exceeding 9-to-10 Bcfd. That’sover 10% of all U.S.’s deliverability today of natural gas.”
Chambers said that while he believes there will be adequate gassupply in the future, Calpine is also looking into alternativefuels such as liquefied natural gas (LNG).
Calpine’s portfolio is expected to include 60,000 MW of baseload capacity and 10,000 MW of peaking generation, the companysaid. Calpine has sealed its commitment to gas by placing an orderfor 183 gas turbines, representing more than 45,000 MW ofelectricity when operating in a combined-cycle configuration.
Calpine spokeswoman Katherine Potter said that Calpine’s naturalgas program is in charge of acquiring equity interests in gasreserves to alleviate reliance on outside parties. “What we wouldlike to see is a mix of 25% of Calpine owned and controlled naturalgas reserves to help fuel our fleet, and the remainder under avariety of contracts,” stated Potter.
Taking into account that natural gas as a clean-burning fuel isstill relatively cheaper than its alternatives and gas plants areless expensive to build than alternative fuel plants, natural gascontinues to get the nod from power producers nationwide.
“Natural gas is a major part of our generation portfolio,” saidJaimie Stephenson, spokeswoman for Mirant Corp. “Although we dohave other plants that are oil-fired and coal-fired to balance theportfolio, we mostly use natural gas because it is the cleanest,most efficient fuel.” Stephenson said that even though the markethas been pretty volatile, it has not wavered the company’s stanceon gas. “As far as prices are concerned, our marketers areconstantly in a position in the market so that we can get the bestprices,” Stephenson said.
Mirant, formerly known as Southern Energy, owns more than 17,900MW of electric generating capacity around the world, includingabout 12,500 MW in the United States, with another 7,000 MW underadvanced development. Mirant is 80% owned by Southern.
Cinergy Corp. also said it plans to stick with natural gas,regardless of the current volatility. We look at natural gas as avery good peaking fuel,” said Steve Brash, spokesman for Cinergy.Brash said the company was currently developing numerous projectsand even reworking some of its old coal-fired plants to run onnatural gas.
Cinergy is studying alternative fuels as well, he added, butnatural gas is currently the company’s primary fuel source.Cinergy’s energy merchant segment owns or operates nearly 21,000 MWof electric and combined heat plant generation that is eitheroperational or under development domestically and internationally.
Reliant Energy also said that all of its current projects wouldbe natural gas-fired. Richard Wheatley, a spokesman for Reliant,said that his company was not concerned by the market’s recentvolatility. “At some point it’s (gas prices) going to have to fallback,” said Wheatley. “They are going to have to correct themselvesconcerning price levels, but we are still planning all the newplants as gas-fired. There are too many benefits with natural gasin terms of where you site them and operate them, versus anotherfuel like coal.”
Reliant has nearly 27,000 MW of power generation in operation inthe U.S. and Western Europe and has announced acquisitions anddevelopment projects that will add nearly 4,000 MW.
The question becomes, is there enough gas? Arlington, VA-basedEnergy and Environmntal Analysis, Inc (EEA) in its February MonthlyGas Update said that production levels are on the rise, with largeincreases in drill rigs in the ground over 1999. “With continuedincrease in productive capacity, gas prices could declinesubstantially and re-couple with residual oil prices by early summer,”said Kevin Petak, director of Energy Modeling and Forecasting for EEA(see Daily GPI, Feb. 6).
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