Natural gas demand in the U.S. is poised to grow strongly over the next two decades, and there’s no mystery where all that gas will be going.
Analysts at the recent LDC Mid-Continent Gas Forum in Chicago agreed that the biggest growth potential—as much as 15 Bcf/d—is in gas-fired power.
“It’s clear the majority of this growth comes in the power generation sector,” said Frank Casey, gas sales lead for XTO Energy. “Natural gas demand [for power generation] is expected to grow by about 90% by 2040.”
Though the country will need a diversity of generation resources, Casey said, “natural gas has a unique opportunity to grab a large share of the demand.”
Jack Weixel, Bentek’s director of energy analysis, agreed. Though gas prices have ticked up from historic lows last year, he believes long term improvements in efficiencies, and continued competition from cheap coal, will keep gas prices in the $3 to $4 range, which means continued long-term coal-to-gas switching.
Weixel pointed out that around 19 GW of gas-fired capacity is currently under construction, representing about 1.7 Bcf/d of demand by 2017. Including proposed projects, there could be up to 5.9 Bcf/d of new demand. The situation is even more dramatic in Mexico, where up to 28 GW of new generation is likely to be added by 2026.
The key driver of these changes is the enormous new supplies of shale gas, said Paul Smith, senior director for infrastructure for America’s Natural Gas Alliance. “What we see with the shale gas revolution is an elimination of volatility.” He noted that the annual hurricane season, which once caused large fluctuations in prices, has had relatively little effect the past few years. “That means a sustainable range of around $4 to $6 about as far out as you can see.”
The Energy Information Agency’s demand projections have grown 21% since 2010 yet expected prices have fallen 34%. That’s made gas highly competitive against other resources, Smith argued. When reviewing projected additions through 2040, “You can see that natural gas is getting the lion’s share” of new capacity, he said.
—Thomas W. Overton, JD, gas technology editor (@thomas_overton, @POWERmagazine)