Dive Brief:
- As gas prices fluctuate and energy companies brace for U.S. Environmental Protection Agency rules that will require a cleaner fuel mix, more utilities are considering investing in natural gas production, Bloomberg reports.
- Duke Energy is looking to shale investment to smooth out commodity price spikes, and will consider asking state regulators to allow investments in gas production with a guaranteed return on the investment.
- The proposal is similar to an idea floated by NextEra Energy Inc., which wants to invest in Oklahoma gas production through its Florida Power & Light subsidiary.
Dive Insight:
Duke Energy's generation mix is split roughly into thirds between nuclear, coal and natural gas. But the EPA's proposed power plant emissions rules would likely shift that mix away from coal, and the country's largest utility is looking for ways to smooth out the peaks of natural gas pricing.
According to Bloomberg, Duke CFO Steve Young said “gas prices have some volatility and investments in gas reserves might make sense." Young said the utility would ask regulators to approve the deal and would request a steady rate of return on the investment.
The investment would be similar to FPL's idea. The utility has proposed a small gas investment and asked regulators for guidance on future, potentially larger deals. The utility wants to develop 38 shale wells in the Woodford Shale in Oklahoma.
