ICF International (NASDAQ:ICFI), a leading provider of consulting services and technology solutions to government and commercial clients, has released its Integrated Energy Outlook for the second quarter of 2012. The study highlights the near- and long-term future of gas prices; the impacts of proposed U.S. federal environmental regulations; and projections on pollution control installations, coal production, and renewable energy development.
Related to federal environmental regulations, this quarter’s Energy Outlook finds that system operators must work with generators to coordinate more than 70 GW of fossil-fired capacity retirements and outages associated with 400 GW of new pollution control installations over the next four years. While these regulations could also mean coal-fired generator retirements of more than 50 GW, ICF projects that coal generation in the U.S. will remain steady through 2020. The study also finds that the U.S. Environmental Protection Agency’s recently proposed New Source Performance Standards for greenhouse gases from new generation sources, does not impact the going forward capacity build-out.
In the gas market, this past winter’s record warm weather reduced core gas demand in the residential and commercial sectors and caused gas prices to fall to $2 per million British thermal units (MMBtu). These prices are not sustainable. As projected, producers have begun to cut back gas development and redirect drilling activity to oil and natural gas liquids. As a result, gas prices have started to firm. Core demand likely will return this coming winter, as supply tightens and demand returns, with gas prices hovering in the $5 to $6 per MMBtu range in the long run.
“The Energy Outlook provides big picture insights about volatile energy markets, as well as market-specific capacity projections and price forecasts,” says Steve Fine, vice president for ICF International. “For example, the Outlook shows a significant shift toward renewables and natural gas, which will dramatically affect the wholesale power competitive landscape.”ICF’s Integrated Energy Outlook addresses a number of significant issues, including:
- How low gas prices are spurring new demand in the industrial and power sectors
- What gas prices will look like over the next five years as new demand is created by coal plant retirements and liquefied natural gas export terminals that could place additional upward pressure on prices
- Why coal prices are expected to start rebounding in 2013
- How the current regulatory and low natural gas environment is expected to cause some permanent demand destruction for coal use in the electric generation sector
- How U.S. coal will remain competitive on the export market
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