From the Casper Star-Tribune
Natural gas use is projected to hit near record highs as people crank the air conditioning over the hot summer months, while coal’s share of the electricity mix will remain stagnant.
Gas could provide up to 37 percent of electricity demand for June through August, according to the Energy Information Administration, an independent federal agency that compiles and assesses energy data. Coal will be the second largest fuel provider at about 30 percent, followed by nuclear and renewable power sources.
As the sixth highest producer of natural gas in the country, Wyoming should be well-placed to benefit from the boost in demand. But the health of Wyoming’s gas industry isn’t solely driven by the demand for electricity.
“Generally speaking more gas consumption is better for price,” said Brian Jeffries, executive director of the Wyoming Pipeline Authority. “Just like any commodity, more demand is better for price.”
But gas operators are working with the same challenge they’ve had for years now. There’s too much gas out there and the oversupply is clear in price trends. The average natural gas price of $3.16 per million British thermal units between 2015 and 2017 is about half what it was between 2006 and 2008.
What more demand for natural gas this summer will do is somewhat improve the balance of supply and demand of natural gas in the short term, Jeffries said.
“While you’ve got an increase in demand occasioned by power plant demand, you’ve also got an (consistent) increase in supply,” he said. “You’re affecting both sides of the ledger.”
Gas is unique among Wyoming’s fossil fuel sectors. Wyoming’s coal is wholly dependent on power plants continuing to choose coal over other resources, since nearly 100 percent of the rock is burned for electricity use. Oil is more dynamic, given global price fluctuations, but it’s also tied closely to a few sector for use, namely transportation and manufacturing. Nearly half of U.S. crude production in 2016 became gasoline and another 20 percent was converted into other fuels like diesel.
But, when it comes to natural gas, just 36 percent went to electricity in 2016. The rest served a variety of purposes from fertilizer to chemical feedstock to heating homes.
The news that gas usage in the electricity sector will hit record highs this summer as people turn up the central air doesn’t mean as much for oil and gas firms focusing on natural gas in Wyoming.
It does mean something for coal.
Gas plants are like a jet engine, said Jeffries. They can turn on and off, ramp up and down easily. Coal not so much. Coal units are giant boilers used to heat water in pipes.
“If you try to run a coal-fired power plant up and down a lot … you put a lot of extra wear and tear on the plant,” Jeffries said. “It just ages the plant a little faster.”
So when you have a need for air conditioning from midday to sundown, that’s a demand that can be well met by natural gas, he said. Coal is better suited to run steady 24 hours a day.
Wyoming feeds about 40 percent of national coal demand, but the fuel’s hold on the electricity market has weakened substantially in recent years, a trend that may continue.
Over the course of 2018, power producers are expected to add about 20 gigawatts of new natural gas generation to their systems. Solar and wind additions should equal about 12 GW. Coal, meanwhile, has lost about 10 GW over the last year.
