Natural Gas Intelligence
In High Crude/Gas Ratio, Fuel Switching 'Harbinger of Things to Come'

Wednesday, January 09, 2008

With oil prices hovering around $100/bbl and natural gas trading below $8/Mcf, gas deliveries to dual-fired power plants jumped last year, Bentek Energy LLC reported Wednesday.

Fuel switching increased by an average of 31% per day in 2007 over 2006, which "equates to an additional 0.5 Bcf/d of gas consumption by these switchable power plants," the Golden, CO-based energy consultant stated. Between 2005 and 2007, gas use at these plants rose by an average of 52% per day.

Managing Director Rusty Braziel said Bentek reviewed gas scheduled to be delivered daily into 460 gas-fired power generation plants.

"Recently we carved out just the 112 of this group that have fuel switching capabilities to see the level of switching going on over the past year," Braziel said. "It was a big number...Of course, this is no big surprise when oil is near $100 and gas is below $8. But it is a big shift, and probably a harbinger of things to come as the market continues to adjust to a high crude/gas ratio."

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