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New gas-fired generation to boost Appalachia gas demand

Highlights

26 gas-fired power projects planned for region

Gas likely to become most-used fuel for power generation in PJM

Houston — With about 21,000 MW of new gas-fired power generation planned in the Appalachian Basin, demand for gas is expected to rise as it overtakes coal in power generation market share.

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Twenty-six combined-cycle gas-turbine power plant projects are likely to be built in the states of Pennsylvania, West Virginia and Ohio over the next several years, according to S&P Global Market Intelligence data.

Analysis: Permian Basin gas constraints on track to ease in 2019

The majority of the generation projects are slated to be built in Pennsylvania, where 15 projects, contributing 14,730 MW of capacity, are likely.

In Ohio, the eight projects listed as planned would add 7,695 MW of capacity, according to Market Intelligence.

Three gas-fired power projects have been proposed for West Virginia, representing more than 2,000 MW of capacity. But all three are opposed by interests thought to be allied with the state's coal lobby and have been delayed in the state permitting process.

The proposed projects range in size from the large -- such as Apex Power Group's Guernsey Power Station in Ohio, with a projected capacity of 1,650 MW -- to the small -- an Ohio State University Cogeneration Plant, owned by Axium Infrastructure, with a 60 MW capacity.

Proposed power generation in the three states that is expected to come on line in the 2018-2020 time frame is expected to add about 1.16 Bcf/d of gas demand, assuming a 70% capacity factor and 6,500/Btu/kWh heat rate, according to S&P Global Platts Analytics data.

This increased demand for gas is likely to be met with gas produced from the Marcellus and Utica shales, which currently produce about 29 Bcf/d, according to the US Energy Information Administration.

GAS TO OVERTAKE COAL

Construction of new gas-fired generation in the Appalachian region reflects a trend for gas to eventually overtake coal as the top fuel for power generation in the PJM Interconnection, despite attempts by the Trump administration to retain coal-fired plants slated for retirement.

Driven by the rapid growth of gas production from the Marcellus and Utica shale plays, gas has increased its share of the power generation market in PJM over the better part of the past decade. In January 2012, gas comprised only 17% of generation compared with coal, which captured 43%, according to Platts Analytics data. In April, gas exceeded coal in its share of the PJM market, with gas accounting for 30%, versus coal, which had a 28% share. Platts Analytics forecasts that gas will retain a slightly larger share of the market in the region compared with coal through the end of 2020.

Other recent reports point to the continuing shift to gas-fired power generation in PJM.

EIA Wednesday reported that the average annual capacity factor for gas-fired generators in the PJM region have increased in recent years, reflecting a greater use of gas for power generation in the region.

The increase in PJM's capacity factors for gas-fired generators is the largest of any regional transmission organization in the country in the past five years, EIA found.

"Normally as winter approaches, coal generation picks up to match or beat natural gas generation as the heating degree days ... start to climb. So far this year, coal has not stepped up as usual and natural gas has delivered the incremental megawatt," a report Morningstar issued said Wednesday.

Planned Appalachian Basin Power Projects
Ohio
Name Owner Capacity (MW)
Guernsey Power Station Apex Power Group 1650
Rolling Hills Generating CC Eastern Generation LLC 1414
South Field Energy Advanced Power AG 1132
Cadiz Combined Cycle Plant Ember Partners LP 1050
Lucas Energy Station Clean Energy Future 964
Trumbull Energy Center Clean Energy Future 940
Hannibal Port Power Project Fortress Transportation 485
Ohio State Univ. Cogeneration CHP Axium Infrastructure US 60
Total 7695
Pennsylvania
Hill Top Energy Center Hilltop Energy Center 1156
Renaissance Energy Center American Power Ventures 1140
Hickory Run Energy Station Kansai Electric Power Co 1059
CPV Fairview Energy Center Competitive Power Ventures 1050
Beech Hollow CC Plant Robinso Power Co. LLC 1025
Renovo Energy Center Bechtel Development Co. 950
Westmoreland Generating Station Diamond Generating Corp. 925
ESC Tioga County Power Plant Energy Solutions Consortium LC 893
York 2 Energy Center Calpine Corp. 874
Allegheny Energy Center Invenergy LLC 550
Birdsboro Combined Cycle Plant Ares EIF Management LLC 488
Archibald Energy Project DCO Energy LLC 485
Franklin Project Hecate Energy 300
Shell Chemical Appalachia Cogen Shell Chemical Appalachia 251
Towanda Township Gas Plant Gateway Green Energy Holdings 165
Total 11311
West Virginia
ESC Brooke County Power I Energy Solutions Consotium 830
Moundsville Power Project Quantum Utility Generation LLC 673
Harrison County Project Energy Solutions Consotium 579
Total 3082
Regional total 21088
Source: S&P Global Market Intelligence

-- Jim Magill, jim.magill@spglobal.com

-- Edited by Valarie Jackson, newsdesk@spglobal.com