Majority capacity additions are near shale reserves
As we discussed in the previous part, natural gas is expected to surpass coal generation this year due to various reasons. The principal reason behind this is the lower price fo natural gas over the past couple of years. Also, increased coal power plant retirements have led to the increase in gas-fired generation capacity.
According to the EIA (US Energy Information Administration), 18.7 gigawatts of new natural-gas-fired capacity is likely to come into service in the next three years. All of these capacity additions are being developed in the Mid-Atlantic, Florida, and Texas regions where there is vast access to shale reserves.
The Atlantic Coast Pipeline
Natural gas capacity additions are concentrated in the Mid-Atlantic region, particularly in the Marcellus and Utica shale regions. States like Pennsylvania, Ohio, and West Virginia have been the frontrunners in natural gas production over the past several years. There have also been remarkable investments in the infrastructure for natural gas transportation along Atlantic Coast. The Atlantic Coast Pipeline, for example, will be jointly shared by Duke Energy (DUK), Dominion resources (D), and Southern Company’s (SO) AGL Resources (GAS).
According to the EIA, 6 billion cubic feet (Bcf) per day of new pipeline takeaway capacity in the Northeast was commissioned to transport natural gas to the east, south, and west of the Marcellus and Utica shales in 2015. In 2016, 2.2 Bcf per day of new pipeline capacity is currently under construction and scheduled to come online in the Northeast.
Meanwhile, Florida has the largest cumulative natural-gas-fired (UNG) capacity additions under construction. The retirement or replacement of old or less efficient coal (KOL) power plants has forced midstream to bring more natural gas to Florida, despite its zero production of shale gas.
Continue to the next part for a closer look at what’s been happening with coal.