Coal still generates more electricity than any other fuel—45%—but that is down from its longtime level of 50%. By 2035, 33,000 MW of coal capacity will be retired and only 14,000 MW now under construction will be added, reducing coal's market share to 39%, EIA says. The organization also forecasts the addition of 85,000 MW of new gas capacity between 2010 and 2035, with market share rising to 27% from 24%.

American Electric Power Co. owns one of the largest coal fleets in the country, with 25 MW capacity. Natural gas fuels almost 10 MW more, the result mostly of acquisitions in the last 10 years, says Mark McCullough, executive vice president of generation. The utility has scheduled 5,000 MW of coal for retirement between 2015 and 2017 because of the new Mercury and Air Toxics Standard, due to take effect in August. "We would favor a strategy of balance [between fuels], but given the current environmental regulatory and economic drivers, it's pretty clear that gas is the fuel of choice in the short term," he says.

Coal makes up 40% of Duke Energy's capacity and is "integral" to the fleet. However, the utility is halfway through retirement of 3,800 MW by 2015, and does not currently plan to build more, says spokeswoman Erin Culbert. "We expect future generation needs to be met through combined cycle," she says. Utt predicts 60,000 MW of combined-cycle construction and retrofit work that could be done later in the decade in a five- to six-year time frame.

Good Chemistry

Why low gas prices should make combined-cycle power attractive is obvious: Gas is the fuel, accounting for 95% to 98% of the variable cost of a combined-cycle plant, says Stephen Thumb, principal at Energy Ventures Analysis Inc., Rosslyn, Va. After power, industrial use is the largest source of gas demand, and petrochemicals lead in that sector, he says.

Many industrial facilities use captive gas-fueled powerplants to lower their costs. For petrochemical producers, gas and natural-gas liquids also are feedstock, the raw material from which plastics are made. The price of gas accounts for 80% of the cost of fertilizer, says Thumb.

Kevin Swift, chief economist and managing director of the American Chemistry Council, says that, in 2011, the ability of U.S. petrochemicals producers to compete with those in Western Europe returned to a level that was last achieved in 1980. He expects that competitive edge to remain high over the next five years.

The results are showing in the field. "I'm seeing potential for an energy renaissance in the U.S., where there could be a degree of energy independence that we have not had before," says Chris Parker, WorleyParsons managing director for the U.S. and Caribbean region. "Industries are returning to the U.S. to take advantage of the situation."

Significant as that is, what results from it may be even more so. Products from the petrochemical plants are the feedstocks for a vast array of consumer goods (see chart). Thus, today's cheap gas could lead to a rebirth of American manufacturing, a new industrial revolution.

A boom in chemical-plant construction is only beginning. "Chemical facilities are at the very early stages," says John Moreno, vice president and general manager of PCL Industrial Construction Co., Atlanta. "A lot of the engineering houses are now full. The next wave is construction." Build-out of plants now in front-end engineering-design (FEED) will take five years, he says.