Dec 6 (Reuters) - The U.S. Midwest power grid operator saidFriday the region has enough natural gas to meet growing demandas the price of the fuel remains relatively cheap and coal-firedunits are forced to shut due to increasingly strictenvironmental rules.
The Midcontinent Independent System Operator (MISO), thegrid operator, forecast in a report that natural gas usage inthe Midwest will rise from 11.1 billion cubic feet per day in2013 to 13.4 bcfd in 2032.
In the report, the MISO examined gas flows on the majorinterstate pipelines in the Midwest and the ability of thosepipelines to deliver the fuel to the region's existing andplanned gas-fired plants over the next 20 years.
Currently, residential and commercial users account for mostof the gas demand in the Midwest, but MISO said power generatorsand industrial firms are slowly increasing their use of thefuel.
Gas burned in Midwest power plants is expected to rise from9 percent of the region's daily average in 2009-2013 to 14percent by 2028-2032, MISO said.
The grid operator estimated it could cost up to $1.08billion to connect new gas plants to the pipeline system.
MISO said most of the existing interstate pipelines shouldhave enough capacity to meet the region's needs, but warned afew pipelines - Northern Natural Gas north of the Ventura Hub,Northern Border and Alliance Pipeline - could suffer constraintsunder certain circumstances.
Berkshire Hathaway Inc's MidAmerican EnergyHoldings owns Northern Natural, TransCanada Corp operates Northern Border and Enbridge Inc and VeresenInc.
A few years ago, about a third of the gas that flowed intothe Midwest from Western Canada and the U.S. Rockies and SouthCentral states was destined for the U.S. Northeast and EasternCanada, the MISO said.
By 2020, growing production from U.S. Eastern shale playswill allow gas to flow into the Midwest from the Marcellus inPennsylvania and West Virginia and Utica in Ohio in addition togas from Western Canada and the U.S. Rockies and South Centralregions, MISO said.
MISO also said shale fields in the Bakken producing regionin North Dakota will displace some imports from Canada as newprocessing plants enter service at the end of 2015 and 2016.
RECORD SHALE PRODUCTION
Record shale production has kept gas and power pricesrelatively low over the past few years as generators burn moreof the relatively cheap fuel to produce electricity.
The weak power prices have made it uneconomic for generatorsto upgrade several of their older, less efficient coal plants tomeet increasingly strict federal environmental rules.
"Over the past two years, growth in shale gas production hasdramatically altered the natural gas supply landscape," JohnLawhorn, Senior Director of Policy and Economic Studies at MISOsaid in a release.
In the Midwest, MISO said generators expect to shut about12,000 megawatts of coal-fired generation in 2015 to comply withthe federal environmental regulations.
One megawatt powers about 1,000 homes.
MISO oversees the power grid in parts of 15 U.S. Midwest andSouth Central states and the Canadian province of Manitoba.
The biggest power companies in MISO include units of DukeEnergy Corp, Xcel Energy Inc, Ameren Corp, Berkshire Hathaway's MidAmerican Energy, DTE Energy Co and CMS Energy Corp.
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