Prospects for oil/gas conversion to coal in the electric utility sector

Electricity consumption is growing in direct correlation with growth in United States GNP. It is difficult to make meaningful forecasts concerning either residual fuel oil or natural gas pricing. However, it would appear that there is some likelihood that upon deregulation, natural gas pricing will approach parity with residual fuel oil during the current decade. Steam coal pricing is likely to escalate within a band of uncertainty from -1 percent to +1 percent in real terms. The use of steam coal for electricity power generation is likely to grow substantially during the current decade. Furthermore, as nuclear generating capacity currently under consideration comes on line, both natural gas and residual fuel oil are likely to be displaced by it in electric power generation. We may encounter a serious crunch in electricity supply which could cause a constraint difficult to overcome in the continuation of the U.S. economic recovery. Coal gasification/combined cycle commercial scale power plants pose a cost effective environmentally clean approach for the conversion of coal to electricity and it is anticipated that this technology will become very important as a source of new generating capacity during the next ten years.