​Alberta gas demand to rise as coal conversions completed early: Peters & Co.

Image: Coal Association of Canada

Alberta’s domestic demand for natural gas is expected to accelerate over the next four years as power plants in the province transition off coal faster than required, analysts with Peters & Co. Limited wrote in a fall 2019 outlook report.

“Minimal” coal-fired power is expected in Alberta by 2023, they said.

That’s approximately seven years ahead of the 2030 phase-out deadline set by former Premier Rachel Notley in 2015.

“Since 2016, ATCO, Capital Power and TransAlta have all announced accelerated timeframes for converting their coal plants to gas-fired generation (with either full conversion or dual-fuel capability) before the end of their useful lives and well in advance of the 2030 phase-out deadline,” Peters & Co. said.

“In total, we calculate approximately 900 mmcf/d of incremental natural gas demand versus today by year-end 2023 from coal-to-gas conversions, with potential upside from further partial conversions not yet sanctioned.”

The Alberta Energy Regulator forecast this May that the province's natural gas demand will increase from approximately 6.06 bcf/d in 2018 to 7.22 bcf/d in 2028.

The AER expects electricity requirements to grow from 1.22 bcf/d in 2018 to 1.61 bcf/d in 2028 as more than 70 per cent of coal-fired power generation is removed.

The 900-mmcf/d increase of Alberta natural gas demand for electricity predicted by Peters & Co. is dominated by TransAlta operations.

The company plans to fully convert its Sundance Units 3 & 6 and Keephills Units 1-3 by 2023 versus 2026-2030 originally, increasing natural gas demand by 500 mmcf/d to 600 mmcf/d, analysts wrote.

Capital Power conversions are expected to add approximately 200 mmcf/d by spring 2021, and ATCO conversions are expected to add approximately 100 mmcf/d by mid-2022.