State of energy: Natural gas dominates 2012 discussion

Cheap domestic natural gas dominated discussion by trade group leaders during the U.S. Energy Association’s 8th annual “State of the Energy Industry” forum Jan. 18 in Washington, D.C.

Edison Electric Institute (EEI) president and CEO Thomas Kuhn said that power companies will form a partnership with the natural gas industry in order to meet generating capacity needs through more use of the inexpensive fuel; National Mining Association (NMA) president and CEO Hal Quinn Jr. suggested that $2.50/mmBtu is an unsustainably low gas price and Nuclear Energy Institute (NEI) president and CEO Marvin Fertel said soft gas prices have had as much to do with lowered expectations for new nuclear units as has the Fukushima disaster in Japan.

American Petroleum Institute (API) chief Jack Gerard criticized the Obama administration for apparently contradicting itself by pinning much of its energy hopes on cheap natural gas while simultaneously moving toward greater oversight of hydraulic fracturing or “fracking.” The technology has been credited with tapping vast new domestic shale gas supplies in recent years.

“You cannot be for natural gas and against hydraulic fracturing,” Gerard said.

Gerard addressed the gathering shortly after learning the Obama administration had decided to reject the Keystone XL Pipeline from Canada into the United States.

“You cannot be for natural gas and against hydraulic fracturing,” Gerard said.

Gerard addressed the gathering shortly after learning the Obama administration had decided to reject the Keystone XL Pipeline from Canada into the United States. The oil lobbying said it was disappointing to see the administration reject the nation’s largest “shovel ready project” at a time of economic hard times.

EEI’s Kuhn pointed to growing capital spending by investor-owned utilities in recent years – going from $43bn in 2003 to more than $83bn in 2011. The capital spending level is expected to remain above $82bn through 2013.

In addition to electric transmission, infrastructure like new generation and retrofitting old coal plants are driving the increased spending, Kuhn said. Like NMA’s Quinn, Kuhn endorsed giving existing coal plants additional time to build pollution controls needed to comply with new EPA rules.

While coal is facing headwinds in the United States, the global demand for coal is expanding dramatically – especially in places like India and China. “Rolling all of this up globally,the 400 GW of new coal generation expected over the next five years will require about 1.4 billion tons of new annual coal supply,” Quinn said.

While U.S. coal retirements get most of the headlines, 17,000 MW of new coal-fired capacity is expected to come online by 2014.

On the nuclear front, NEI’s Fertel expects Southern Co.’s (NYSE: SO) new Vogtle reactor units to be licensed by the U.S. Nuclear Regulatory Commission (NRC) any day now. A group led by Southern’s Georgia Power utility subsidiary is developing the new Vogtle units, which would be the first new nuclear power plant units licensed in the United States in decades.

 

About Wayne Barber 4201 Articles
Wayne Barber, Chief Analyst for the GenerationHub, has been covering power generation, energy and natural resources issues at national publications for more than 20 years. Prior to joining PennWell he was editor of Generation Markets Week at SNL Financial for nine years. He has also worked as a business journalist at both McGraw-Hill and Financial Times Energy. Wayne also worked as a newspaper reporter for several years. During his career has visited nuclear reactors and coal mines as well as coal and natural gas power plants. Wayne can be reached at wayneb@pennwell.com.