Xcel Energy helps drive demand for natural gas
Xcel Energy, which delivers natural gas to almost 2 million customers in 10 states and electricity to more than 3 million customers, is looking more and more to power its electricity-generating stations with gas.As a major transporter and buyer of natural gas in the state, Xcel must ride the highly volatile market and cannot pass on price hikes to its customers, said Wade Haerle, manager of community service for Xcel.Haerle spoke to a gathering of oil and gas industry representatives in Rifle last week. Natural gas wholesale prices reached $15 per British thermal unit during December’s cold snap, he said. Currently, it’s running $8 per BTU. Recently, the Minneapolis-based company announced a 21 percent drop in natural gas commodity prices in February and a 31 percent decrease in typical residential utility bills.By law, Xcel is also limited in its earnings. “We can earn up to 11 percent on investments,” he said, “and we can’t cross subsidize.” That is, the company cannot pass on costs across the state. Parachute customers can’t pay for an upgrade that goes only to Denver.Since 1998, there’s been a 48 percent increase in the demand for electricity, largely due to use of the Internet and demands from ski resorts for snowmelting, hot tubs and “heating the streets in Vail,” Haerle said. The Internet especially “is a large electricity user,” Haerle said.Also in the last eight years, the company has looked more to powering its electricity generating plants with gas. Traditionally, most of its plants have been coal-fired. Before 1998, 80 percent of its power stations were fueled by coal. Now, 50 percent are coal-fired and 40 percent natural gas, Haerle said.The greatest attraction of gas-fired power plants is their clean-burning qualities and the relative ease of obtaining federal air quality permits to build them. Natural gas plants take about six months to permit as opposed to coal, nuclear or hydro-powered plants that typically take from 10 to 20 years to permit, Haerle said.As long as gas remains the fuel of choice for Xcel, demand for gas will endure.”That means demand will continue to come to the Piceance Basin” in western Colorado, he said.Demand for power in the basin is also on the rise with the increase in natural gas development over the past few years. EnCana is set to build a central gas processing plant near Meeker and large pipelines in a 93-mile corridor that will be able to process 650 million cubic feet of gas per day and carry it to interstate pipelines.Electricity demands will also surge when oil shale development takes off in the next few years in the basin. Shell has been testing an in-place extraction technology that uses electricity to power underground heaters to liquefy the oil trapped in shale and pump it to the surface.If Xcel is to serve the need for more electricity, “it must be (using) natural gas,” he said.Xcel is also looking into the coal-gasification process that removes toxic chemicals from the coal before it’s burned. Haerle said the company would like the state to approve the use of mineral severance tax funds to pay for engineering and planning for the technology.”If it works well it would change the nature of the coal industry in Colorado,” he said, since coal would be cleaner burning and meet air quality standards.Contact Donna Gray: 945-8515, ext. email@example.com
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