Washington (Platts)--15Aug2014/301 pm EDT/1901 GMT

The power generation sector's annual use of natural gas in the contiguous United States will increase to 1,600 million MWh by 2040, an average annual increase of 1.3%, the US Energy Information Administration said Friday.

Total US gas production is expected to increase 56% to 37.54 Tcf/year over that same period from 24.06 Tcf/year in 2012, largely because of the development of shale gas, tight gas, and offshore natural gas resources, the EIA said.

The three regions with the highest growth in the use of gas for electricity generation are set to be SERC Reliability Corp, Reliability First Corp. and Western Electricity Coordinating Council, EIA said. The three regions also have the highest overall amounts of coal-fired generation.

SERC covers many of the states in the Southeast, Mid-Atlantic, and Midwest. The RFC covers 13 Midwest and Eastern states and the District of Columbia. The WECC region encompasses the Rocky Mountains, Pacific Northwest and southwestern United States.

In both SERC and RFC, gas-fired generation is expected to fall in 2014 in response to higher gas prices, and will then regain market share in 2015 and 2016 as a result of coal-fired plant retirements.

An increase in gas prices will see gas-fired generation in SERC decline through 2019, with coal-fired generation increasing, while gas-fired generation will increase in RFC, EIA said.

Gas-fired generation in SERC and RFC is expected to rise in response to higher production in both regions after 2020, surpassing nuclear generation by 2035, the agency added.

Gas-fired generators' annual output in WECC is set to rise by nearly 105 million MWh to 311.6 million MWh by 2040, the second-largest increase in the US, it said.

--Rodney White, rodney.white@platts.com
--Edited by Keiron Greenhalgh, keiron.greenhalgh@platts.com

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