Analysts: Gas to Continue to Replace Coal for Power Generation - State Journal - STATEJOURNAL.com
Electric power producers will continue to switch from coal to natural gas, according to a recent analysis from energy investment firm Tudor Pickering Holt.
Power generation demand for gas could be 27 billion cubic feet per day, or bcf/d, by 2017, the June 1 analysis forecasts, up from about 20 bcf/d in 2010.
Three drivers are pushing power companies nationwide to switch, according to the report.
Primary among them: an overbuild of gas-fired generation in the decade following 1998. The nation’s 230 gigawatts, or GW, of modern gas-fired generation capacity has run at 30 to 40 percent of its capacity for most of the time since it was built — meaning there’s a lot of gas-fired capacity ready to fire up at a moment’s notice.
Second, cheap, abundant gas — a phenomenon that those living in a shale gas–producing region are familiar with. From wellhead prices in the $6-per-thousand-cubic-feet range and spiking up from there in the mid-2000s, before the shale gas boom really hit, prices now hover closer to $4.
Finally, expensive coal.
“Eastern coal prices have risen largely due to continued operating cost pressure in Appalachia,” reads the analysis — again, a phenomenon familiar in West Virginia. “Marginal cost of production sits at $70+/ton … and environmental and regulatory pressures add to costs.”