If the gas-fired sector of the power generation industry was competing in a NASCAR event, then the National Economy car's spectacular wreck has the yellow caution flags flying and the race slowed to a crawl until the debris can be pulled off the track. Just a few years ago, Team Gas was burning up the very same track, setting records given what was then strong demand for natural gas- fueled power generation. Delivery times for big pieces of equipment were a problem and supply chains were strained.

Much has changed since the economy hit the wzll and the emergency equipment rolled. Some gas- fired projects continue to move forward although others have been marking time under the yellow-flag conditions for almost 12 months. Work continues to secure necessary project permits. And some power producers are asking for additional information on their requests for proposals, said John Wilson, who heads up sales for Siemens' fossil power generation products division. Prospects are "slowly translating into orders," he said. "We're hopeful."

Orders for new natural gas-fired generation may be off by 20 to 30 percent since the recession began, said David Walls, director of energy for Navigant Consulting. Just before hard times hit the power generation industry seemed poised for a new round of construction aimed at meeting environmental requirements and replacing aging units. One question is how strongly that market returns. "Are we going to see lower growth and orders for an extended period or will orders recover to the level of 2007?," Walls asked. Answering his own question, he said "I think that remains to be seen."

The firm's analysis suggests a "real chance" exists that new unit orders will remain low for some time. "With investments in smart grid technology, renewable, energy efficiency measures and so on, many utilities and generators are reevaluating their capacity needs," Walls said. What's more, many parts of North America could see an extended period of flat demand growth. This, too, would suggest continued slow order growth.

"Gas is not as robust as it was a couple of years ago," said David Eppinger, vice president of sales, marketing and strategic planning for Fluor's power group. He said he sees "modest to good growth" in the future, but said overall the market has "reset to a lower level."

Stability and Reasonable Prices

However, reasons for optimism may exist in the natural gas- fired sector. The fossil fuel continues to enjoy favorable attention as an "environmentally friendly" fuel, given that its carbon dioxide emissions are roughly two-third those of coal. What's more, plant construction times are roughly half those of coal-fired power plants. And at least one forecast suggests that long-term natural gas supplies will be stable and reasonably priced.

The combination of a natural gas supply surge along with the expected economic recovery mean the era of sub-$4 natural gas prices is unlikely to be a long-term trend, said Robert Ineson, senior director of North American natural gas with Cambridge Energy Research Associates.