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Power sector drives development in US natural gas need: Maguire

The power sector is the only major consumer of gas that has actually revealed consistent need growth in recent years, and has ended up being the driving force behind natural gas need in the United States as consumption from other sectors declines.

Gas usage by power generators has broadened by around 3.5% a year over the previous three years, and is by far the biggest single source of gas use in the U.S., information from LSEG programs.

However by volume, development in natural gas usage by the power sector was surpassed by decreases in others. Average gas usage by power firms grew by 70 billion cubic feet daily in 2023, while average combined intake by market, families and industrial users fell by 114 billion cf/day.

Power companies accounted for around 44.4% of total domestic gas use in 2023, compared to around 29% by market, 15.5% by families and 11% by commercial users.

Commercial gas demand has actually declined by around 0.3% a year over the previous three years, while property and commercial gas demand has shrunk by around 0.5% and 0.7% yearly respectively, according to LSEG's gas demand designs.

The growing concentration of gas usage within the power sector poses a possible threat to the U.S. gas production sector, as further quick decarbonization of power systems might activate a. swift decline in gas demand for power while other major. intake sources are already in decrease.

ELECTRIC PUSH

A broad push to electrify specific heating and power systems. across homes and organizations has represented much of the cuts. to gas use outside power generation.

Electricity-powered heat pumps and boilers have replaced. gas-fired furnaces in scores of homes and services in current. years, although the speed of heat pump sales has actually slowed due to. high electricity rates and interest rates.

A record 4.3 million heat pumps were offered in the United. States in 2022, which was the very first year that heatpump sales. surpassed sales of gas-powered heaters in the nation,. according to the Air-Conditioning, Heating, and Refrigeration. Institute (AHRI).

Heatpump sales slowed to 3.6 million in 2023, and through. May of 2024 totalled 1.564 million units compared to 1.643. million units throughout the exact same months of 2023, AHRI information shows.

Regardless of the slowing sales pace, the cumulative effect of the. set up pumps on gas need has expanded, as each unit has. displaced some amount of direct gas intake.

POWER SWITCH

Estimates on the exact volumes of gas displacement. by heatpump are little, as many assessments made by industry. tend to be in terms of cost savings instead of in regards to the. volume of nonrenewable fuel source consumption that is cut.

Additional complicating the gas-impact calculus is the fact. that lots of heatpump setups typically replace one kind of. energy intake for another - from the direct burning of gas. in on-site boilers to electricity supplied by power firms.

And as that extra amount of electrical power must in turn. be created generally by power companies, the net impact on overall. gas usage in the United States remains difficult to determine.

That said, high-level need data expose clear trends.

Total U.S. natural gas usage during the very first half of. 2024 was up 2.3% from the exact same months in 2023.

Gas demand from power manufacturers was up 5.2% from the first. half of in 2015, while need from all other major gas users. was up just 0.5%, LSEG data programs.

Amongst non-power usages, gas need was 3.1% higher amongst. industrial users throughout the very first half of 2024 from the very same. period in 2015, however down 2.5% amongst residences and 1.2% lower. among commercial users.

That large divergence in use trends suggests that gas. consumption may be close to peaking among non-power users, while. continuing to broaden in the power generation sector.

GAS DEVELOPMENT

A consistent increase over the previous 5 years in the percentage. of electrical power generated from gas further illustrates. the importance of the power sector to the gas industry.

Natural gas produced 42.41% of utility-scale electrical energy. production in 2023, according to energy think tank Ember.

That share compares to 35% in 2018 and 24% in 2010, and. exposes how power firms have actually beefed up their dependence on natural. gas for electrical energy generation while gradually minimizing. generation from coal.

Coal's share of U.S. electrical energy generation was 16% in 2023,

down from 27% in 2018 and 45% in 2010, Coal information shows.

Electrical energy generation from solar and wind farms was 15.6%. in 2023, compared to 9% in 2018 and 2.3% in 2010.

A further constant expansion in eco-friendly electrical power. generation is anticipated over the coming years, which might help. power firms make further cuts to output from coal-fired plants. as part of emissions decrease objectives.

However power manufacturers look set to stay heavy users of. gas for electrical power generation, as gas plants can be. easily throttled up and down to match the ebbs and flows of. power need needs and to plug any generation shortfalls throughout. durations of low output from eco-friendly sources.

DEMAND PATTERN

Overall U.S. electrical power demand looks set to expand as more. energy end-uses become amazed and as total power. intake climbs from data centres and due to artificial. intelligence calculations.

Over the close to medium term, that higher power demand. outlook bodes well for the natural gas production sector, even. if direct gas usage in homes and commercial structures. continues to contract.

However over the longer run, the continuing concentration of gas. demand among the power sector positions a possible danger for the gas. industry.

A number of utility systems have plans to phase out gas-fired. generation and replace that power with a mix of. renewable resource generation along with battery storage systems. that can keep surplus sustainable power for later use.

Over the coming years, battery systems look set to stay. far too little to position any considerable danger to gas need.

But if utility-scale battery systems continue their current. quick development while dropping in expense, goals for wholesale. renewables + battery systems might come true and begin to. capture out gas from power systems in a years or two.

And if that occurs while other sources of gas demand likewise. shrink, a major gas supply surplus might emerge. << The opinions revealed here are those of the author, a. columnist .>

(source: Reuters)