The latest data from the U.S. Energy Information Administration (EIA) published Dec. 10 shows five states accounted for more than 70% of record U.S. natural gas production this year and last year, which includes a period when electricity generation from natural gas also reached new summer highs. The availability of domestic natural gas, along with increased demand for electricity from data centers and other technology-related ventures, also is driving construction of new natural gas-fired power plants, with an analytics firm recently saying more than 200 gas-fired units are in development across the U.S.
That record natural gas production comes as gas-fired power plants are being used regularly to balance the power grid as more intermittent renewable energy, including wind and solar, is deployed. The EIA has said the share of U.S. power generation from natural gas during summer months increased from 29% in 2014 to 45% this year.
Officials with grid operator PJM Interconnection, which serves parts of the Northeast, mid-Atlantic, and Midwest, during a discussion Monday on load forecasts for the region said they expect summer and winter peak load will grow by 2% and 3.2% a year on average through 2045, up from 1.6% and 1.8% growth, respectively, in last year’s forecast. The increase would primarily be driven by power demand from data centers, which POWER has reported will likely drive construction of more gas-fired power generation.
Other power grid territories, particularly those in gas-producing regions, are looking at additional generation from gas-fired units. Corianna Mah, an analyst in the Power & Renewables group with Enverus, a leading energy analytics firm, told POWER: “Enverus’ market benchmarking for natural gas-fired power plants indicates that the most attractive markets for development are SPP [Southwest Power Pool], WECC [Western Electricity Coordinating Council], and ERCOT [Electric Reliability Council of Texas]. SPP stands out as the leading natural gas generation market, driven by favorable forward power prices, low gas feedstock costs, the absence of carbon pricing, higher expected price volatility, and relatively low entry costs.”
Officials in Austin, Texas, in the ERCOT territory, are set to vote Dec. 12 on plans for a new natural gas-fired plant in that city. NET Power, a Texas-based group, on Monday said it had an agreement to build about 1 GW of new gas-fired capacity in California. It said the plants would use Carbon TerraVault’s carbon capture and storage technology.
New Gas-Fired Generation and Record Gas Production
The EIA in its report published Tuesday said the U.S. has produced on average 113 billion cubic feet per day (Bcf/d) of natural gas from January through August of this year, after record output of 113.1 Bcf/d across all of 2023. The report said the Permian region in Texas and New Mexico—where gas production also is impacted by the price of crude oil—has led production this year, while shale plays in Pennsylvania and Louisiana have decreased output compared to the prior year due to lower prices for natural gas.
Domestic gas production is rising at the same time U.S. power generators continue to add more natural gas-fired capacity. Colorado-based analytics firm Yes Energy said recently that more than 200 gas-fired units were in various stages of development across the U.S., with potential to add about 86 GW of electricity output by 2032. EIA has said it expects at least 7.7 GW of new gas-fired capacity to come online this year and next, after about 8.6 GW of capacity was added last year, and 5.6 GW of new generation was brought online in 2022.
The agency said those additions included both combined-cycle gas turbine (CCGT) plants and simple-cycle gas turbine (SCGT) plants, with most of those units built near natural gas-producing areas in Gulf Coast states and the Appalachia region.
S&P Global Market Intelligence in a May 2024 report said its data shows “U.S. utilities and investors plan to add 133 new natural gas-fired power plants to the nation’s grid” over the next few years. POWER recently reported on Entergy Louisiana’s plan to build 2.2 GW of new gas-fired capacity in that state. Officials in Pennsylvania earlier this month discussed their plan to replace the state’s largest coal-fired power plant, which closed in 2023, with as much as 4 GW of gas-fired generation.
States Leading Gas Production
The EIA said Texas, New Mexico, Louisiana, West Virginia, and Pennsylvania have combined to produce about 73% of marketed U.S. natural gas this year. Those five states in 2023 produced about 72% of all U.S. marketed gas, led by Texas at 28%, followed by Pennsylvania (18%), Louisiana (10%), West Virginia (8%), and New Mexico (8%).
The Texas figures include output from offshore rigs in state waters. Texas also produces oil and natural gas from the Permian and Haynesville plays. The Permian region, which is partly in New Mexico, has shown a marked increase in output because most Permian production of natural gas is associated natural gas from oil wells. EIA wrote, “that means producers respond to changes in the crude oil price rather than the natural gas price when planning their exploration and production activities,” with higher oil prices over the past few years leading to increased production.
The EIA said that “marketed natural gas production in Louisiana, which includes offshore output from state waters, averaged 11.8 Bcf/d in 2023, an increase of 6% from 2022 and the most natural gas produced in Louisiana since 1996, despite low natural gas prices.” Louisiana’s production primarily comes from the Haynesville play, located in both Louisiana and Texas. The Haynesville supplies most of the natural gas that goes to Gulf Coast liquefied natural gas (LNG) export terminals, and the market for producers there has been supported in recent years as the U.S. has become the world’s largest LNG exporter.
The EIA in Tuesday’s report said producers in the Haynesville and Appalachia regions “curtailed production in 2024 when faced with record-low Henry Hub prices, which averaged $2.09 per million British thermal units through August 2024, and flat growth in demand from LNG export facilities.” That comes after production in Pennsylvania (20.9 Bcf/d) and West Virginia (8.9 Bcf/d) hit record highs in 2023. Those states include the Marcellus and Utica shale gas plays in the Appalachian Basin.
