Kristin Schrader Marcell Will low natural gas prices lead to natural-gas fired plants

Yesterday the Wall Street Journal ran a story about how new supplies of natural gas, combined with reduced demand for electricity, have decreased natural gas prices to less than $4 per million British thermal units, which some say could prompt power companies to invest billions of dollars in natural-gas fired plants.

Specifically in the article “Lower Natural-Gas Price Leaves Coal Out in Cold,” Rebecca Smith and Ben Casselman reported that coal now accounts for about half of the nation’s electricity, compared with about 21 percent from natural gas. However, they stated that “natural-gas plants can be built more quickly and inexpensively than coal plants, and they release about half as much carbon dioxide as coal to produce similar amounts of electricity. That could be a big advantage if Congress passes a climate-change bill that would cap such carbon emissions.”

2834477223_0833a21746

Natural-gas plants can be built more quickly and inexpensively than coal plants, and they release about half as much carbon dioxide as coal to produce similar amounts of electricity.

Additionally, new natural-gas discoveries in Texas, Louisiana, Pennsylvania and elsewhere, have created a large natural gas supply abundance that has changed the view of U.S. gas supplies and fuel outlooks for the near future. In fact, according to a research report released June 1, 2009 by Merrill Lynch & Co, ‘in parts of the U.S. where there are daily electricity auctions, gas generators are chipping away at coal market share with lower prices. Coal-to-gas switching has created incremental gas demand of three billion cubic feet a day, and ‘further switching potential is still large, in our view.'”

This article is very timely since the American Gas Association and the Potential Gas Committee are hosting a press conference this Thursday, June 18, 2009 at 10:00am in Washington, DC to announce the unprecedented abundance of U.S. natural gas supply, as well as future consumer impacts. With climate change and energy proposals being considered on Capitol Hill this summer, we think that that these new natural gas discoveries are changing the national debate on energy and future domestic energy supplies. After reading this article, what do you think?

This entry was posted in energy, Natural Gas and tagged . Bookmark the permalink.