Distributed Gas Power Generation - Reliability, Value and Market Coordination
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Distributed Gas Power Generation - Reliability, Value and Market Coordination
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Distributed Gas Power Generation - Reliability, Value and Market Coordination
- 1. 1 Distributed Gas Power Generation – Reliability, Value and Market Coordination Invest Northern Ireland March 22, 2017
- 2. Today’s Discussion 2 • Shale access • Market impact • Challenges • Pennsylvania focus • Market and technological changes • Policy and regulatory Impacts • Gas/Electric coordination • Pennsylvania focus • Distributed generation vs. traditional generation • Infrastructure utilization • Reciprocating engine power generation technology • Pennsylvania focus • Company background • Focus • Ownership Company Overview Natural Gas Market Considerations Electricity Market Dynamics IMG Business Model
- 3. Market Trends 3 Coal retirements Aging generation Intermittent renewables Grid security Abundance of shale gas Constrained infrastructure Nuclear uncertainty Environmental regulation Efficiency, Demand
- 4. Company Overview • IMG Midstream develops, owns and operates small-scale natural gas fired power generation projects in the PJM area. (PJM is like SONI of Northern Ireland) • Projects are strategically located to utilize existing gas and electric infrastructure. • Small-scale nature of our projects provides flexible fast-start power generation capacity to enhancing grid reliability. • IMG has four 20 MW projects in operation in Northeast Pennsylvania, with additional projects planned for 2017+ • IMG’s equity sponsor is Bregal Energy, a leading global investor in the U.S. and abroad. Confidential Material 4
- 5. IMG Advantages • Small-scale projects providing for broader market participation for fuel supply and power purchases. • Small project footprint (<2 acres) providing for greater siting flexibility and quick permitting. • Project portfolio model enhancing reliability and creating fuel, power sale, and operating risk diversification. • Scalable and repeatable project sizes using proven technology. • Use of locally produced natural gas, further stimulating local economic development. Confidential Material 25-34.5kVSub-Transmission 25-34.5kVSub-Transmission Fuel Source 20 MW Capacity Midstream Gathering System 5 20 MW Capacity Fuel Source
- 6. Natural Gas Market Considerations Confidential Material 6
- 7. Before the Shale Revolution Gas delivered to the Northeast US via long-haul pipes originating in Texas, Louisiana, Rockies, and Gulf of Mexico LNG imports on the rise, alleviating constrained areas and prices Pennsylvania was reliant on gas from distant regions Confidential Material 7
- 8. Emergence of US Shale Source: ww.eia.gov 8
- 9. Introduction of Shale Gas Last 15 Years Source: www.eia.gov 9 Marcellus approx. 16.8 Bcf/d, 40% of US Shale production
- 10. PA Shale Production 2007-2014 10 Production in 2015 exceeded 4.7 Tcf (2nd to Texas)
- 11. NYMEX Prices Since ‘00 11 $0.00 $1.00 $2.00 $3.00 $4.00 $5.00 $6.00 $7.00 $8.00 $9.00 $10.00 $11.00 $12.00 $13.00 $14.00 $15.00 Jan-00 Jul-00 Jan-01 Jul-01 Jan-02 Jul-02 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 $/MMBtu Month NYMEX Settle…
- 13. Impact of Additional Infrastructure 13
- 14. Impacts of the Shale Revolution Focus on infrastructure build out Long-haul pipes reversing flow, moving gas from the Northeast to the South and West LNG exports on the rise, more facilities proposed Gas demand on the rise especially in the power generation sector Confidential Material 14
- 15. Electricity Market Dynamics Confidential Material 15
- 16. Power Generation Supply Mix 16
- 19. Demand and Efficiency Confidential Material
- 21. Policy Considerations National – EPA Emissions Programs • Clean Power Plan • Mercury and Ozone standards – Federal Tax Credits – R&D – Procurement – Interstate Commerce – FERC Little coordination amongst Federal and State stakeholders with no comprehensive energy plan adding market uncertainty 21 State • PUC and DEP • Alternative Energy Portfolio Standards (AEPS) • Energy Efficiency and Conservation • Local Regulation
- 22. US Electric Grid
- 23. Independent System Operators Source: www.ferc.gov 23
- 25. Generation Coming Online Oct’16 to Sep’17 Source: www.eia.gov, Forms EIA-860 and EIA-860M 25
- 26. Gas Generation Additions vs. Shale Locations 26
- 27. Power Generation in PJM • Planned Generation – 82,767.7 MW of capacity in the generation request queues for construction through 2024 • Generation Retirements – 29,192 MW have been, or planned to be, retired between 2011 and 2020 – 5,014 MW planned to retire after 2016 – 381 MW in first 6 mos. of 2016 • Coal units make up 37% • First 9 months of 2016, total generation was: – 33.8% from Coal units (-7.4% from 2015) – 34% from Nuclear units (+0.2% from 2015) – 27.4% from Gas units (+24.6% from 2015) • First 9 months of 2016, marginal resources were: – 44.3% coal units (-10% from 2015) – 43.3% gas units (+10% from 2015) Source: www.monitoringanalytics.com 27
- 28. IMG Midstream Business Model Confidential Material 28
- 29. California Duck Curve Confidential Material Source: greentechmedia.com Fast-start resources that can be started multiple times intraday are needed in the market
- 30. IMG Project Attributes • Super efficient gas engines • Low emissions • Fast-start (<5 minutes) • Multi-engine configuration • Low pressure gas • Repeatable design • Remote operations Confidential Material
- 31. IMG Milan Facility 34 kV Distribution Powerline Marcellus Pipeline IMG Milan Energy, Bradford County, PA * Milan is a 3-genset configuration
- 32. IMG Roundtop Facility IMG Roundtop Energy, Susquehanna County, PA * Roundtop is a 5-genset configuration
- 33. IMG Beaver Dam Facility IMG Beaver Dam Energy, Bradford County, PA * Beaver Dam is a 5-genset configuration
- 35. Contact Information 35 IMG Midstream LLC North Shore Place I 358 North Shore Drive, Suite 201 Pittsburgh, PA 15212 www.imgmidstream.com Jeanette Oliver Vice President, Legal Cell: 412-983-1563 Jeanette.oliver@imgmidstream.com Ron J. Kiecana Chief Business Development Officer Cell: 704-996-9307 ron.kiecana@imgmidstream.com
Editor's Notes
- Abundance of low cost natural gas is driving market towards investments in new natural gas power generation Graph shows the fuel mix generation capacity making up PJM (think of as the Mid-Atlantic states), so not how much energy was produced each year, but what the mix of nameplate capacity is While contributing to planned shutdowns of existing coal and nuclear plants that are near the end of their planned or useful life
- Big spikes coincident with surge in oil commodity prices pre-recession
- Projects related to PA = 10,962 MMcf/d from 2017 through 2018 (announced or filed with FERC).
- Graph a little confusing, shows the amount of capacity added each year by fuel type, smoothed out a bit, so it’s not cumulative, just the amount coming online each year Economic growth drives electricity utilization and power generation growth through 70’s Arab oil embargos and move away from oil for power generation drives growth in 80’s Stagnant growth in 90’s (shock from cost overruns on nuclear power and uncertainty of move toward deregulation) Stagnant growth in 90’s, coupled with improvements in gas generation tech drives huge spike in gas power gen around year 2000 Overbuild leads to two things, not much growth in 2000’s and huge need for LNG imports due to anticipated domestic supply shortfalls From an environmental perspective, for several decades, increases in emissions have been coupled with economic growth Early 2000’s about 15 BCF of LNG import capacity was authorized by US gov’t Gasprom set up an office in Houston, thinking they’d be selling LNG to US utilities
- - Growth in the use of electricity has muted over last decade and expected to hover around 1% moving forward