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Expert says N.J. unlikely to see new natural gas-fired plants

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While a national report suggests top executives at energy firms will increase investment in shale, a local expert said financing won’t be targeted at transforming or developing natural gas-fueled power plants in New Jersey, as supply continues to outpace demand in the state.

“Although energy companies believe natural gas production is increasing, they’re also predicting that usage will decrease — and if usage declines, then it doesn’t make sense to begin investing in power plants that would deliver the unwanted energy,” said John Tucci, an audit partner in the Woodbridge office of BDO USA LLP, which conducted the survey of 100 chief financial officers at U.S. oil and gas exploration companies.

However, with state legislators seeking energy infrastructure alternatives in the wake of Hurricane Sandy, and natural gas prices remaining low, Tucci said demand for shale in New Jersey could increase in the near future, which would require more power plants to process it and possibly put pressure on Gov. Chris Christie to lift his one-year moratorium on hydraulic fracturing, or fracking, in the state.

But even if natural gas demand continues to fall, as energy executives expect, Tucci said increasing federal regulation on coal-fired power plants’ emissions will, in effect, push projects toward natural gas, though that could take several years.

“The direction of energy policy and increasing regulatory compliance for coal plants —which increases their costs — was a hot-button issue in the election that President (Barack) Obama and (Mitt) Romney had opposite views on,” Tucci said. “But now it’s clear what direction it’s going, and (Obama) proposing new emission caps clearly indicates he’s pushing for natural gas, though we’re not aware of anything being put in motion yet, and it’s not clear when the big shift will happen.”

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