Gas-fired electricity plants set to surge

By Jeff Long and Melita Marie Garza Tribune staff reporters

April 9, 2001 Plans are on the drawing board for dozens of new gas-fired power plants in Illinois, reflecting a national trend that will put even more demand on a supply that this year, at least, was so low that prices soared.

No one expects the natural gas supply to remain that low for long -- hundreds of new wells are being drilled because of higher prices -- but the boom in the gas-fired generation of electricity raises questions about whether high demand from those plants will prevent prices from sliding back to what they were a few years ago.

And as electricity becomes increasingly tied to natural gas, observers say the demands on one are more likely to change the price of the other.

"We should be concerned about it," said William Abolt, Chicago's environment commissioner. "You're getting one energy market where the decisions that are made about natural gas affect the price of electricity."

Although Abolt advocates using natural gas instead of coal to generate electricity -- "It means cleaner air," he said -- he wonders if the gas industry is prepared for growing demand on its supplies.

Generating electricity takes a lot of gas. Midwest Generation's gas-fired power plant in Morris last year burned enough to keep about 192,000 homes supplied for a year: 24 billion cubic feet. That plant generated only about 7 percent of all the electricity that Midwest produced, mostly by burning coal.

Despite the spike in gas prices during the winter, some companies planning to build gas-fired power plants said they have not changed their minds. Even if gas prices never drop to what they were a year ago, they said the new plants will still be cleaner than coal, and efficient, flexible, and profitable.

Skip Horvath, president of the Natural Gas Supply Association, said his industry is planning for the coming demand -- on paper, anyway.

"We are working flat-out to meet that demand," he said, "but we are running into constraints that are slowing us down." Among those constraints: finding workers to operate drilling rigs, finding engineers to design them and locate the supplies, getting access to land where the supplies exist.

Since 1998, 33 companies have proposed projects in Illinois that would total about 25,000 megawatts of gas-fired power. Some of those projects, accounting for about a third of the power, are being built or already operating; others are still in some stage of the permitting process.

No one expects all 25,000 megawatts to come on line. The state's total generation capacity now, by comparison, is just under 34,000 megawatts.

http://www.chicagotribune.com/news/metro/chicago/article/0,2669,ART-51055,FF.html

-- Martin Thompson (mthom1927@aol.com), April 09, 2001