Fuel Switching Lowers Industrial Demand for Natural Gas

By Robinson, Robin | THE JOURNAL RECORD, July 28, 1987 | Go to article overview
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Fuel Switching Lowers Industrial Demand for Natural Gas


Robinson, Robin, THE JOURNAL RECORD


Industrial demand for natural gas in 1986 fell 618 billion cubic feet due to competitive oil prices causing industries capable of switching between fuel sources to do so, the American Gas Association said.

However, 308 billion cubic feet of that lost consumption could be regained at crude oil prices of $22 per barrel, according to the association.

U.S. natural gas consumption was approximately 16 trillion cubic feet in 1986, down 8.6 percent from 17.5 trillion cubic feet in 1985, said Carl Ericson, manager of the association's news bureau.

Industries began using boilers capable of fuel switching in the late 1970s, when federal regulations and the threat of natural gas shortages forced the industries to have an alternative source of fuel available.

The association received 38 member-utility companies' responses to its latest survey on fuel displacement. The companies represent all regions of the country and have varying sizes of industrial and electric generation natural gas loads.

At crude oil prices of $22 per barrel, 308 billion cubic feet of load loss would be regained, the survey forecast. Approximately 291 billion cubic feet of natural gas load would be regained from residual oil, while 10 billion cubic feet would be regained from crude oil and other fuels and 7 billion cubic feet would be regained from distillate oil.

More than half of the natural gas load loss due to fuel switching, 353 billion cubic feet, was lost to residual fuel oil, the association reported. Most of this loss, 238 billion cubic feet, occurred in the industrial market.

Coal coaxed away 123 billion cubic feet of natural gas demand, wile crude oil and other fuels took 126 billion cubic feet from the natural gas market.

Distillate oil and propane pulled 11 billion cubic feet and electricity pulled 5 billion cubic from natural gas demand, the survey found.

This year's results show that the majority of switching occurred at natural gas prices up to 20 percent higher than residual oil. Similar results were reached in past surveys.

Ted Palmer, an industrial marketing engineer for Oklahoma Natural Gas Co., said fuel switching to residual fuel oil in this part of the country is not a problem for the utility.

Since 1975, the only problem has been in specialized markets, such as the cement business, he said. Most switched to coal, which can be used in the product.

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