Coal-fired power plants in the U.S. were the main beneficiaries from higher gas prices, increasing their electricity generation by almost 7 percent.
Source: Thompson Reuters
The U.S. natural gas market has rebalanced with higher prices steadying production while reducing demand from electricity generators and making room for increased exports.
Higher prices have averted the stock crunch many analysts feared in 2017 as a result of rising exports and the start up of a large number of new gas-fired combined cycle power plants.
During the first six months of 2017, prices for next-month delivery at Henry Hub were almost $1 per million British thermal units or 46 percent higher than in the first half of 2016.
Gas prices paid by electricity producers were up $1 per million British thermal units or 39 percent in the first four months of the year, according to the U.S. Energy Information Administration.
Power producers generated 349 Terawatt-hours of electricity from natural gas between January and April and used 2,611 billion cubic feet of gas in the process (“Electric Power Monthly”, EIA, June 2017).
But gas-fired generation was down 15 percent compared with the same period in 2016 while the volume of gas consumed fell by 14 percent.
By contrast, total electricity generation from all sources was down by less than 2 percent compared with the prior year.
Coal-fired power plants were the main beneficiaries from higher gas prices, increasing their electricity generation by almost 7 percent.
Coal-fired plants operated at an average of 49 percent of their maximum output between January and April compared with 44 percent in the same period in 2016.
By contrast, gas-fired combined-cycle units operated at 48 percent of their maximum output, down from 53 percent in 2016.