By the OGJ Online Staff
HOUSTON, Apr.5�Gas consumption by central station electricity generating plants will more than double over the next 20 years, but the increase may be 1 quad less than projected by some forecasters, the American Gas Association said in a new analysis.
Natural gas remains the dominant fuel for new generating capacity, although the analysis also projected some new coal-based capacity will be added after 2010. In addition, distributed generation in the form of reciprocating engines, microturbines, and fuel cells are expected to account for roughly 20% of all new electricity generating capacity.
Gas consumption by central station electricity generating plants, including electric utility plants and independent power producers, is currently 3.3 quads/year. The AGA�s accelerated projection which assumes elimination of regulatory barriers to resources development, continued deregulation, government support of gas research, and moderating prices, indicates consumption will more than double by 2020 to 6.7 quads/year.
Although this exceeds historic levels of growth, AGA said the total is somewhat less than recent expectations of 7.8 quads, and significantly less than the 9.2 quads forecast by the US Energy Information Administration in its 1999 energy outlook.
While the accelerated projection includes a very high penetration rate for gas in new generating facilities, the AGA is forecasting "somewhat" limited capacity additions. Compared to previous forecasts, the AGA is now assuming the use of existing coal and nuclear plants will be extended.
About 100 Gw of nuclear generating capacity are operating in the US today, providing 20% of the country's electricity. By 2020, the operating licenses of half of all nuclear generating plants will expire, but there is a strong likelihood not all these plants will be closed. Owners of many nuclear plants are filing for extensions to operate another 15-20 years.
If no operating licenses are extended, nuclear generating capacity would be cut in half by 2020, the AGA study found. But it now expects two-thirds of the nuclear units scheduled to retire will be granted license extensions.
The AGA forecast coal�s share of the market to remain relatively stable, but actual consumption is expected to rise to 1.1 billion tons from 900 million today thanks to a growing market. Environmental concerns will limit development of new hydropower capacity, but the AGA forecast renewable energy will account for 15% of electricity by 2020, up from 12% today.
"At first glance, this growth appears somewhat modest," the authors said. But in reality, "the nonhydro renewable growth is impressive, more than doubling over the next 20 years."
To achieve the forecasted growth in gas consumption, the AGA said the number of oil and gas wells drilled each year may have to double from today's level to about 50,000 wells � still well below the peak levels experienced in the mid-1980s when 70,000-90,000 wells/year were drilled.
While gas demand is expected to exert a bit more pressure on prices than the demand levels in other forecasts, the AGA study projected wellhead prices will remain in the mid-$2 range, and gas prices to consumers will be relatively constant, in real dollars.
Technological advances related to finding, producing, and delivering gas are expected to continue, it said.