Is natural gas the next coal?
July 16, 2015 | By
Jaclyn Brandt
With a focus on clean power, coal is being retired. But what will take its place as the leading source of electricity in the United States? It turns out -- something already has.
As natural gas sources are increased in the United States, it makes a good case for being the next coal. Two things may help natural gas become the leader in energy: additional found sources under the Marcellus Shale, and a new pipeline that will transport the gas from the area. According to a new study, natural gas has now surpassed coal as the leading source of electricity in the United States. The study, conducted by West Virginia University, found that there may be more natural gas in the Utica Shale than previously thought. The study found that the Utica play, which covers West Virginia, Pennsylvania, Kentucky, Ohio and New York, is much larger than expected and could be be comparable to Marcellus, which is the largest shale oil and gas reserve in the country. The study was conducted over two years by the Appalachian Oil and Natural Gas Research Consortium, a program of the National Research Center for Coal and Energy at WVU, and found that the majority of the Utica Shale play lies beneath the Marcellus Shale play. A 2012 study by the U.S. Geological Survey estimated that technically recoverable resources -- those that are recoverable with current technology -- in the Utica were 38 trillion cubic feet (Tcf) of gas and an additional 940 million barrels of oil (MMbo). The new study found that Utica play contains technically recoverable resources of 782 Tcf of gas and 1,960 MMbo. "The revised resource numbers are impressive, comparable to the numbers for the more established Marcellus Shale play, and a little surprising based on our Utica estimates of just a year ago which were lower," said Douglas Patchen, director of the consortium and well-known expert on the Appalachian Basin, in a statement. "But this is why we continued to work on the resource estimates after the project officially ended a year ago. The more wells that are drilled, the more the play area may expand, and another year of production from the wells enables researchers to make better estimates." Utilities are working to migrate away from coal, and an increased resource of natural gas may be the answer. Since 2011, Duke Energy has retired 40 of its coal units -- or more than half of their coal fleet -- and replaced them with seven natural gas plants. "These highly efficient facilities have dramatically lowered emissions, allowing the company to meet stringent federal environmental rules. Natural gas facilities also have superior performance and megawatt output over the older coal-fired facilities," Duke Energy spokesperson Lisa Mitchell Parrish told FierceEnergy. "Duke Energy has spent $9 billion to modernize its fleet and retire older, less efficient coal units that lacked advanced pollution control equipment." Florida Power & Light (FPL) is also planning to invest in natural gas, as several if their older generating units are also phased out. In 2019, the utility plans for a new natural gas plant to come online in northeastern Okeechobee County, Florida. The addition of the new plant will coincide with the end of longterm power purchase agreements (PPA) expected to expire in mid-2019, which total more than 1,300 megawatts (MW) of capacity. It also plans to purchase the 250 MW Cedar Bay Generating coal-generating plant in Jacksonville, and reduce the plant's operations by 90 percent. "The expiring contracts contributed -- in part -- to our decision to pursue new generation, along with recent and planned retirements of older, inefficient power generating facilities," FPL spokesperson David McDermitt told FierceEnergy. "As we have done in recent years with our power plants in Fort Lauderdale and Riviera Beach, we continue to retire older, inefficient plants and make smart investments in clean, high-efficiency energy facilities fueled by natural gas, solar and nuclear." McDermitt said the utility is constantly looking for the best forms of energy to serve their customers, within their boundaries. As technologies increase, they are able to constantly look at available options. "Large-scale hydro-electric and wind generation are not viable options due to Florida's location and topography," he said. "Also, because of current technology limitations, we will not add coal to our fleet of power generation plants. U.S.-produced natural gas is one of the lowest-cost resources to ensure an affordable, diverse supply of clean energy for our customers. Also, the U.S. has an abundant, more than 100-year supply of domestic natural gas." Because of their investments in natural gas, since 2001, FPL has cut their use of foreign oil by 99 percent -- from more than 40 million barrels a year to fewer than 1 million barrel a year, McDermitt said, saving FPL customers more than $7.5 billion on fuel and prevented more than 85 million tons of carbon emissions. All utilities use what is around them, but a growing number of transmission lines -- and pipelines -- are allowing the companies to use resources outside their service area. Part of Duke's forward-thinking goals are to utilize the Utica and Marcellus Shales -- by investing in the Atlantic Coast Pipeline (ACP). Parrish said the pipeline is "an essential public utility project designed to meet urgent energy needs in Virginia and North Carolina. "The purpose of the Atlantic Coast Pipeline (ACP) is to move abundant natural gas from the Marcellus and Utica shale basins of Ohio, West Virginia and Pennsylvania to markets requesting access to this low-cost energy supply," Parrish told FierceEnergy. "The benefits of natural gas are clear. The newfound abundance of domestic supplies has made it a low-cost energy source that is decreasing the nation's dependence on foreign imports." ACP will provide Duke Energy with natural gas across their service area. Parrish said it will also provide a dependable supply of natural gas for electric utilities in the region, and save customers and businesses in Virginia and North Carolina around $377 million each year in lowered energy costs. However, Duke Energy continues to generate power from numerous sources, and Parrish added that, "While Duke Energy's generation mix has seen a decrease in coal and an increase in natural gas, it is still important that we have a diverse fuel mix. That mix includes renewable energy like solar, nuclear energy, hydro, natural gas and coal. We need all of these fuels to help us meet our obligation to provide affordable, reliable, and increasingly clean electricity to our customers." For more: © 2015 FierceMarkets, a division of Questex, LLC. All rights reserved. http://www.fierceenergy.com/story/natural-gas-next-coal/2015-07-16 |