Coal vs natural gas: the fight for North America’s power market isn’t over yet

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After falling below natural gas-fired electric generation for the first time in 2016, coal-fired electric generation will briefly retake first place in 2017 and 2018 before passing the baton for good in 2019. However, the natural gas markets have displayed rather large short-term price volatility, and that will likely continue well into the future. In this Insight, we examine the dynamics between coal and natural gas in the domestic power market. The range in coal demand resulting from a +/- US$0.50/mmbtu change to Wood Mackenzie’s 2017 natural gas price forecast from our recent long-term outlook is 101 Mst (4.5 bcfde) in 2017. This range increases to 150 Mst (6.8 bcfde) by 2019 as uncertainty grows in the future. The Powder River Basin, as the largest domestic coal-producing basin, will be most affected by natural gas price volatility. If the productive capacity of the PRB turns out to be less than we forecast, the demand for natural gas could increase by 1 bcfd in 2017. 

Table of contents

  • Executive summary
  • The dynamic natural gas environment and its effect on US coal markets
  • Natural gas and coal substitution
  • What happens if coal mining capacity is constrained?
  • Changes in natural gas demand from the power sector
  • Contracted coal prices

Tables and charts

This report includes 7 images and tables including:

  • US natural gas production balance (bcfd)
  • Natural gas versus coal generation – history and forecast (TWh)
  • Generation by fuel type (TWh)
  • 2017 incremental thermal EGU coal demand for a range of Henry Hub natural gas prices
  • 2017 – Difference in EGU coal demand by price of natural gas and coal capacity constrained (Mst)
  • Changes in 2017 EGU gas demand by Henry Hub natural gas price (bcfd)
  • 2017 Thermal EGU coal price by Henry Hub natural gas price sensitivity

What's included

This report contains:

  • Document

    Del PRISM Results CoalGas March2017.xlsx

    XLSX 220.21 KB

  • Document

    Coal vs natural gas: the fight for North America’s power market isn’t over yet

    PDF 426.97 KB