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Public Power article charts the rise of natural gas


From the October 15, 2013 issue of Public Power Daily

Originally published October 15, 2013

Natural gas is on the ascendency as a result of the convergence of highly efficient combined-cycle plants and the low-cost, abundant supplies of gas made available through shale development, writes Brent Barker in an article for Public Power magazine. 

If the boom is not upended by exports, environmental concerns over fracking or disappointing production, gas is poised to dominate power generation for decades to come. 

Thirty-five years ago, forecasters and investors envisioned natural gas as a shortage fuel, one in permanent decline in the United States. Production peaked in 1972 at 22 trillion cubic feet, or tcf, then went down, and, by 1978, with passage of the Powerplant and Industrial Fuel Use Act, natural gas was prohibited for use in new power plants. Coal and coal-derived fuels were the beneficiaries. Today, with natural gas prices down, shale natural gas supplies booming and coal facing strong headwinds of environmental regulation, their fortunes have reversed. Natural gas is up, coal is down, or so they say. 

But if power generation planners have learned one thing, it is to be careful of a good thing. Remembering the historic volatility of prices, they are not eager to put all of their eggs in the natural gas basket. In the late 1990s gas prices were low, spurring a construction boom in gas-fired combined-cycle units. When gas prices spiked more than four-fold around the turn of the century, many combined-cycle plants became too expensive to run. Once burned, utilities have become more cautious in making long-term investment decisions based on rosy predictions.

"It’s hard to see the immediate future," said Theresa Pugh, director of environmental services at the American Public Power Association. "Ten years from now we may be largely natural gas, but right now the transition pathway is unclear. Our members wonder when or if their commercial and industrial loads are coming back; whether to switch to gas, or run with coal, or purchase power on the open market after April 2015, to see how much natural gas price stability remains." 

Read more about the past, present and future of natural gas production and generation in the United States in the article, "The Ascendency of Natural Gas," on publicpower.org.

Subscriptions to the electronic and print editions of Public Power and all other APPA periodicals are free to all employees and governing board members of APPA member utilities and associate members. An online subscription signup form is on publicpower.org.

 

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