PIRA: LNG taking on coal in power generation sector

PIRA: LNG taking on coal in power generation demand

NYC-based PIRA Energy Group believes that the LNG supply side seems focused squarely on challenging coal for supremacy in the race to join forces with renewable energy to meet incremental power generation demand. 

Amid the widely told (and believed) story of LNG length in markets for the foreseeable future, the supply side of the gas industry put on a brave face in Paris at the World Gas Conference, but the language of its leaders is clearly taking a feisty turn. The supply side, led by a legion of LNG players with portfolio volumes looking for end-user markets, seems focused squarely on challenging coal for supremacy in the race to join forces with renewable energy to meet incremental power generation demand. In a nutshell, key figures at the WGC are offering up a policy driven solution to solve a commercial problem.

In the United States, Thursday’s higher-than-expected storage build not only spurred the prompt month to test its late-April lows in the mid-$2.50s, but also highlighted the ongoing storage logjam in the producing region and the approach of similar risks in the consuming east region, where the 73 BCF injection was the second largest ever and matched a shale-era high set the week ended June 9, 2012.

Sometimes it’s difficult to think of European gas markets as a proving ground for the next phase in the evolution of the global gas industry. After all, this market was dragged kicking and screaming into the spot market era, and even today large portions of the market remain relatively uncompetitive by oil market standards. And yet what the European gas market has shown us is that being resistant to change in one area does not prevent change from occurring at its perimeters. PIRA said this was observed in the gas market for power generation over the past five years and the next phase of testing will occur in the form of integrating more LNG into supply mix.

Image: Tepco

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