Oil drillers and oilfield service…
With Rex Tillerson on the…
Thanks to increased production of North American gas and new regulations limiting the use of coal, electric power generation in the United States now relies more on gas than on coal for the first time ever.
A recent report by the research firm SNL Energy, based on information from the Energy Information Administration, says gas generated about 31 percent of electric power in April, a small but historic one percent more than was generated by coal. Nuclear power accounted for only about 20 percent, the report says.
Hydraulic fracturing since 2008 has increased the output of gas in the United States by 30 percent, making the country the world’s most prolific producer of oil and gas combined. The procedure, also known as fracking, allows drillers to extract huge amounts of oil and gas trapped in underground shale that would not be accessible to conventional drilling.
Related: Historic Deal With Iran Opens Up Oil Industry
This shale boom has contributed to a global oversupply of both fuels that peaked about a year ago, driving down their prices. The price of gas alone is now about one-third of what it was a decade ago. As a result, many electric utilities have been making some existing coal-fired generators more versatile by equipping them with gas turbines. Some have even retired older coal generators altogether.
Such adaptations have been accelerated by federal regulations issued in June 2014, which aim at a reduction in greenhouse gas emissions from coal-fired power plants by 30 percent below 2005 levels by 2030.
Related: OPEC, Get Ready For The Second U.S. Oil Boom
Republicans in Congress say they plan to block Obama’s carbon, and several Republican state governors say they will ignore it.
Nevertheless, gas apparently is becoming the fuel of choice for generating electricity. It is not an entirely clean fuel, discharging both carbon dioxide and nitrogen oxides, but it emits far less of these gases than coal does.
Federal usage data show that the use of gas to generate electricity has been steadily growing during the past five years, while the use of coal has been declining. In April 2010, the SNL Energy report says, 44 percent of U.S. electric power came from coal-fired plants, while only 22 percent came from gas.
Related: LNG Glut To Get A Lot Worse This Year
But by April 2015, the report said, the volume of electricity generated by coal fell by 19 percent from a year earlier, while the amount generated by gas rose by 21 percent.
The SNL Energy report stressed, however, that the proportions of coal and gas used in generating electric power will continue to vary in coming years as prices fluctuate.
By Andy Tully Of Oilprice.com
More Top Reads From Oilprice.com:
Andy Tully is a veteran news reporter who is now the news editor for Oilprice.com