Intelligence brief: Philadelphia report urges pipeline expansion; Combined-cycle utilization hits new heights

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Greater Philadelphia will benefit significantly from expanded natural-gas pipeline infrastructure, a new report predicts (Creative Commons / Fletcher6)

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Philadelphians stand to gain almost $1 billion per year from pipeline expansion

A proposed expansion of Greater Philadelphia’s pipeline infrastructure would save residents and businesses $888 million each year and support 5,250 jobs with $234 million in earnings, according to a report by the Greater Philadelphia Chamber of Commerce (GPCC) and partners.

The Energy Hub, a strategy being developed by a consortium of more than 80 energy industry, public sector, labor and academic leaders, would generate savings primarily by providing customers in Philadelphia with access to lower-cost natural gas from the Marcellus and Utica reserves, the report said. This natural gas consistently trades at lower prices than the gas produced along the Gulf Coast, it noted.

The GPCC report based its estimates on analysis undertaken by Concentric Energy on behalf of the proposed PennEast Pipeline project. That analysis estimated the customer savings an additional 1 billion cubic feet-per-day of pipeline capacity would have generated over a recent one-year period in eastern Pennsylvania and New Jersey. It identified four avenues for savings: gas-fired power generation, oil-fired generation displacement, industrial-transport customer savings, and natural-gas distribution.

The gas reserves of the Marcellus and Utica shales are so vast that their remaining life is measured in centuries rather than in years, the report said. But it argued that these resources cannot be extracted at the ideal volume without negatively impacting the unit value.

It explained: “The markets to which those fields are connected, through transcontinental natural gas pipelines to the Gulf Coast and to New England, have inadequate pipeline capacity to allow for substantial increases in gas production. Only within the past several years has the transport infrastructure started to be developed to access markets with great potential to take advantage of abundant and stable priced natural gas and NGLs [natural gas liquids].

“Presently, the incremental Marcellus production is transported by interstate pipelines to the Gulf Coast in severe price competition with regional Gulf gas supplies, forcing a downward price/value spiral for the Marcellus gas.”

The Marcellus region has surged ahead of all competitors for dry shale gas production (Source: Greater Philadelphia Chamber of Commerce; Energy Information Administration)

Combined-cycle utilized more than coal for first time last year

Natural gas combined-cycle plants recorded a higher average capacity factor than coal-fired plants in the United States in 2015, marking the first time this has happened.

The capacity factor of combined-cycle (NGCC) plants, measuring actual generation as a percentage of nameplate capacity, reached 56.3%, edging out coal’s 54.6%, according to the Energy Information Administration. NGCC capacity factors averaged 48.2% and 48.3% in 2013 and 2014 respectively, after reaching to slightly more than 50% for the first time in 2012.

In 2005, combined-cycle units commonly operated at capacity factors of less than 30%. In 2015 the majority operated at capacity factors of more than 50%, with around 20 operating in the 90-100% range and almost 50 in the 80-90% range. The story of coal is almost a polar opposite. Nearly half of all coal plants ran at capacity factors above 70% in 2005, according to the EIA. Since 2012, they have faced much more competition from NGCC units for supplying baseload demand, and in 2015 less than one-fifth of all coal plants operated at capacity factors of more than 70%.

When natural gas prices exceeded coal prices by a large margin, as was typically the case over the 2005-08 period, electricity systems where both natural gas-fired combined-cycle and coal-fired power plants were available to serve load would typically run combined-cycle units only after making maximum use of available coal-fired generation, the EIA explained.

As natural gas prices have declined, power plant operators have found it more economical to run combined-cycle units at higher levels, it said.

Demonstration plant to test viability of emissions-free gas-powered generation

NET Power has broken ground on a 50-megawatt demonstration plant in Texas that it believes will validate a natural-gas power system that produces low-cost electricity with zero atmospheric emissions.

The plant is being built by a consortium of Exelon Generation, CB&I and 8 Rivers Capital in La Porte on the outskirts of the Houston metropolitan area. The $140 million project will aim to demonstrate NET Power’s Allam Cycle technology, which uses carbon dioxide as a working fluid to drive a combustion turbine, and “eliminates all atmospheric emissions without requiring expensive, efficiency-reducing carbon-capture equipment”. The CO2 byproduct can be used in various industrial processes, including enhanced oil recovery, NET Power noted.

Commissioning is expected to begin in late 2016 and be completed in 2017.

NET Power uses an “oxy-fuel, supercritical CO2 power cycle” to produce electricity efficiently while eliminating air emissions. The system burns natural gas with oxygen, as opposed to air, and uses high-pressure carbon dioxide, as opposed to inefficient steam like most power plants, to drive a turbine, it said.