Dual-fuel Steam Generation: Alive and Well

In 2007 dual-fuel steam generation plants that can burn either natural gas or residual fuel oil will remain a viable, albeit limited, source of natural gas demand flexibility. In the US Lower 48 over 70 steam generation plants have demonstrated that they are capable of burning either residual fuel oil or natural gas-meaning that although there are many such plants on the books, only a subset actually switches between fuels. Over time, as the price relationship between residual fuel oil and natural gas changes, so too does the amount of natural gas or residual fuel oil used by these plants for power generation. Dual-fuel steam generation provides a critical source of demand flexibility for the Northeast during extremely cold winter weather and for Florida when its gas supply is disrupted by hurricanes or limited by pipeline capacity.

* Demonstrated dual-fuel switching capability ranges from a low of 0.4 billion cubic feet (Bcf) per day-typically in November-to nearly 1.5 Bcf per day in the high power demand month of August. During the peak winter month of January dual-fuel switching capability is estimated at 0.9 Bcf per day.
* Switching between fuels occurs over a price continuum: the greater the price differential between natural gas and residual fuel oil, the greater the potential for fuel switching.
* Dual-fuel generation helps to keep gas, and hence power, prices in check by creating price resistance to increases in natural gas prices when they are below residual fuel oi

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