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Sweltering US temperatures promise fresh demand records for gas generation

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Sweltering US temperatures promise fresh demand records for gas generation

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Power burn forecast at record 48.6 Bcf/d on July 21

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Limits on coal generation lift baseline gas demand

  • Autor/a
  • J Robinson
  • Editor/a
  • Richard Rubin
  • Materia prima
  • Carbón Gas natural
  • Etiquetas
  • United States

US natural gas-fired power generators are bracing for record-setting demand this week as temperatures in states stretching from Texas to Kansas and Mississippi to Missouri top 100 degrees Fahrenheit.

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On July 21, the US power burn is forecast to average 48.6 Bcf/d in what would be a new single-day demand record, according to data from Platts Analytics. Assuming the forecast is accurate, the new high would outpace the prior single-day record from July 2020 by over 500 MMcf/d, or about 1%.

Already this month, generator gas demand has trended a record-breaking pace for July of 44 Bcf/d. Compared with July 2020, when low prices made gas a go-to fuel for power generators, demand is up about 650 MMcf/d, month to date. Compared with July 2021, generator demand is up by a brow-raising 6 Bcf/d or almost 16%, this month, data from S&P Global Commodity Insights shows.

Sweltering temperatures and limits on fuel switching are giving gas a leg up in the US power generation stack this summer. Over the next several days at least, toasty temperatures will be the key driver behind what-appear-to-be looming demand records.

Across the south-central US most major population centers are under now under excessive heat warnings or heat advisories issued by the National Weather Service. In cities like Dallas, Oklahoma City, Wichita, St. Louis, Memphis and Little Rock highs are expected to top 100 F this week.

Over the balance of summer, limits on gas-to-coal switching are also promising to boost baseline demand for gas, regardless of how high temperatures go.

Fuel switching

Over the past year, the US power industry has retired some 34 coal-fired power plants with a total estimated capacity of nearly 12.9 GW, Platts Analytics data shows.

The recent plant closures add to even larger waves of coal-plant retirements in prior years. As US coal generating capacity continues to dwindle, gas has increasingly become the US' dominate thermal power source, leaving power generators more reliant on the fuel – regardless of its price.

Constraints on thermal coal supply this year have further limited the fuel's use for power generation this year. As of end-March 2022, US consumer coal stocks were estimated at 116.8 million st, up only marginally from a more-than 20-year low at 108.6 million st in the quarter ending Sept. 30, 2021, recent data from the US Energy Information Administration shows.

Coal production, meanwhile, has failed to stage a meaningful recovery from its pandemic-fueled decline. In 2022, weekly US coal production has averaged just under 11.2 million st, or about 12% below the prior five-year average of 12.75 million st, EIA data shows.