However, according to business intelligence provider GlobalData, the cheap natural gas has persuaded power producers to switch from coal to gas and will continue to drive demand in power generation and industrial sectors over the next few years, the Oil & Gas Financial Journal reports.
At “some higher price level, perhaps nearer to $3, coal might be cheaper for some power plants, reducing natural gas demand again,” Tim Evans, an analyst with Citi Futures Perspective, said in the MarketWatch article.
Companies like Xcel Energy Inc., Calpine Corp. and Progress Energy, Inc. have announced plans to close down or convert coal-fired plants for gas generation. Dow Chemical Company and Shell Chemical, among others, also plan to increase US petrochemical capacity to take advantage of the country’s copious natural gas beds.
Meanwhile, some other companies are moving away from shale gas production. GlobalData calculates that U.S. gas production in 2012 will diminish 2.6% year-over-year, with additional declines of 0.5% to 1% in the next few years.
U.S. Natural Gas Fund
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Max Chen contributed to this article.