EIA: Gas-Fired Generation Falls from 2013 Levels But Still High

The Energy Information Administration (EIA) reported Wednesday that although natural gas use for power generation through the first seven months of 2013 is down 14% from historic highs last year, it remains above the 2009–2011 average across the U.S. The drop is the result of higher gas prices relative to coal compared to 2012.

However, the trends are different across different regions of the country because, while the price of gas is relatively uniform, delivered costs of coal vary widely. Gas use for power generation in the Northeast and Mid-Atlantic states is down only slightly from 2012 levels because ample supplies of gas from the Marcellus shale play remain highly competitive with relatively expensive Central and Northern Appalachian coal.

Gas suffered more substantial drops this year in the Southeast and Midwest. The Southeast essentially experienced a rebound from enormous coal-to-gas switching last year, while less expensive coal in the Midwest has regained some competitiveness this year.

Gas use for power generation in Texas has not declined meaningfully from last year, but this is because that region saw the least amount of coal-to-gas switching in 2012 due to much lower delivered coal costs. The gas burn for 2013 remains above recent Texas levels, however.

Source: EIA

—Thomas W. Overton, JD, gas technology editor (@thomas_overton, @POWERmagazine)