Energize Weekly, August 14, 2019
A record for daily U.S. natural gas consumption – 44.5 billion cubic feet (Bcf) – was set on July 15 as a heat wave took hold of the Midwest and Eastern Seaboard, according to S&P Global Platts.
The previous record of 43.1 Bcf was set on July 16, 2018. During this summer’s heat wave, from July 15 to July 22, the 2018 record was surpassed on five days.
“Higher-than-normal temperatures and relatively low natural gas prices contributed to increased natural gas consumption by electric generators,” the federal Energy Information Administration (EIA) said. Electricity demand for air conditioning drove the natural gas consumption.
Only July 19, the highest peak demand for electricity in two years, 704 gigawatts (GW), was also set. From July 16 through July 21, the average maximum temperature exceeded 85 degrees Fahrenheit in most parts of the country.
Despite the increased demand for natural gas, prices remained relatively low with the spot price at the Henry Hub in Louisiana averaging $2.33 per million British thermal units (BTUs) from July 16 to July 21. For the summer, Henry Hub prices have averaged $2.31 per million BTUs –19 percent lower than at the same time last year.
At the Chicago Citygate, the benchmark for the Midwest region, the average spot price has been 19 cents per million BTUs lower than the Henry Hub price. In the Northeast, spot prices have been as much as 30 cents per million BTU below the Henry Hub price.
Natural gas has become the largest single source for electricity generation in the country, accounting for 35 percent of generation in 2018, followed by coal with 27 percent. In 2016, natural gas overtook coal as the prime fuel for electricity generation.
In 2018, an estimated 20 GW of new natural gas-fired capacity came on online, the largest annual increase in natural gas capacity since 2004, according to the EIA.
More than 12 GW of that capacity came online since the beginning of 2018 in the PJM Interconnection, the nation’s largest grid covering all or parts of 13 mid-Atlantic and Midwestern states, as well as the District of Columbia.
On July 19, in the hour ending 6 p.m., PJM dispatched a total of 155 GW of electricity with natural gas accounting for 43 percent of the power and coal accounting for 28 percent of the electricity.
