Natural gas production in the United States has skyrocketed over the past five years, making the carbon-light fossil fuel cheaper to access and plentiful for export, according to a new report by the Energy Information Administration.
Production in the Appalachia region alone has seen a jump of 14 billion cubic feet per day since 2012, driving the bulk of output growth in recent years and giving the region a 2016 output of 22.1 billion cubic feet per day.
National output soared to 72.3 billion cubic feet per day last year– that’s more than Russia, Africa, Iran and Qatar – the latter being the world’s most prolific liquefied natural gas exporter. The Appalachian basin alone produced more natural gas than any nation except for Russia.
But a decline is on the horizon, according to data emerging from new wells. The average production from freshly drilled sites has fallen in the Appalachia, Haynesville and Eagle Ford basins. The three used to be the nation’s largest natural gas producing basins, until the dip in Eagle Ford output gave Niobrara a chance to nab the third-place spot.
Still, ‘natural gas production growth has outpaced demand,” Robert Rapier, director of engineering for ZHRO power wrote in a recent column for Forbes. “This caused natural gas inventories to swell, which kept downward pressure on natural gas prices. A decade ago, natural gas prices were still regularly spiking above $10/million BTU (MMBtu). Over the past three years, high inventories have mostly kept prices below $3/MMBtu.”
The shale revolution actually started with natural gas production, which turned upward in about 2006. Oil production began to rise in 2009, but along with it came associated natural gas, which is extracted before drillers hit their prized and profitable oil reservoirs. Just as the surge of shale oil production contributed to the collapse of oil prices, the surge of natural gas production – both from dedicated natural gas drilling and from associated gas production – collapsed natural gas prices three years ago. Related: Why Isn't Wall St. Backing The Next Shale Boom?
This price drop is the reason the U.S. electricity industry plans to raise natural gas-fired generating capacity by 8 percent in 2018 compared to existing capacity as of the end of 2016, according to an EIA report from January. The plan will to increase natural gas-fired generating capacity by 11.2 gigawatts (GW) this year and 25.4 GW next year.
The planned increases of natural gas-fired power generating capacity come after five years of net reductions of coal-fired electricity generating capacity. Between the end of 2011 and end-2016, available U.S. coal-fired generating capacity dropped by an estimated 47.2 GW, or by 15 percent.
The end of coal demand—and the doomed future of miners in coal country—propelled U.S. presidential candidate Donald Trump to a victory back in 2016. Now, to reverse the gasification trend at American power plants, Trump plans to subsidize coal plants to lower their costs.
“In light of threats to grid reliability and resiliency it is the Commission’s immediate responsibility to take action…” the Department of Energy directive on coal plants from September states to justify the subsidies. This position actually pits one fossil fuel, natural gas, against another, coal, in exchange for votes in swing states.
Coal mining will not survive past oil’s expected demise. The logistical hurdles of transporting the solid cross country are numerous and wasteful. In contrast, oil and natural gas flow to their final destination, and certain renewables can be installed right onto homes and businesses. Plus, the free market prefers natural gas over coal on price point and general availability. The path forward is clear, despite brazen politicking in Washington.
By Zainab Calcuttawala for Oilprice.com
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There are no subsidies. What the Trump administration did was confirm what the Supreme Court ruled. The Obama Administration broke the law by imposing expensive regulations on coal fired power plants.
According to the bio, the author of this article lives in Morocco. She might want to refrain from making such a "typical liberal leftist" inference about a Republican/Trump policy decision.
The impact on coal resulting from fracking is quite clear. But what everyone needs to know is that you simply can not remove a coal fired power plant without causing significant issues to the Grid. The US has thousands of power plants--nuclear, natgas, coal, hydro. Plus thousands of wind mills and solar panels. But all these plants are connected to a grid. Most of the grid was built with Nuclear and Coal in mind. By taking lots of coal plants offline, you increase the risk of black outs and brown outs from a single power plant failure.
Otherwise, the overall conclusion of your article is accurate. You really did not need to get down in the weeds and start talking about "subsidies". Especially when you imply that an Administration is politically motivated. Clearly Obama had a political motivation. Trump does as well. In this case, the law established well before the 1980's set the stage for the legal process. Obama overstepped his bounds and he really did not need to do so. Because fracking clearing made natgas far more useful in the production of electricity.
From the Finicial Times article:
"Mr. Perry has given FERC 60 days to come up with plans for payments at a “just and reasonable rate” for power plants that meet certain criteria, including having a 90-day fuel supply on site.
That requirement would be achievable for coal plants, but not generally possible for gas-fired plants."
This is a "politically motivated" action as it makes no sense economically or technically. The canard that it helps grid reliability overlooks that:
"Grid operators have said they are facing no difficulty in managing an increasingly diverse set of resources, he added. Research conducted by the California Independent System Operator, mid-Atlantic grid operator PJM, and ERCOT in Texas bear this out."
The author's (who has shown excellent competence on her articles) summary statement is correct.
" Plus, the free market prefers natural gas over coal on price point and general availability. The path forward is clear, despite brazen politicking in Washington."
These subsidies are simply to prolong the life of outdated, expensive coal (and nuclear) power plants that simply can't compete in an open market place. Unfortunately, coal miners need to begin to find other forms of employment. If Grid Stability is the issue, then spending tax money to subsidize outdated coal and nuclear is not the best economical/technical solution.
Coal production won't be dead for a while. It is still the most flexible energy source. Mines are able to ramp up and scale back easily. The mines only require men to mine and trucks or rail to haul. It is not perfect but the science on clean burning coal is available and can be put in place long before the fights over the permits for pipelines are out of the court system.