UPDATE 2-Panda seeks to build 500 MW natgas plant in Texas

(Adds details about Texas grid, ERCOt projections, paragraphs 2-4)

NEW YORK, March 11 (Reuters) - Power plant developer Panda Energy Inc on Tuesday said it wants to build a 500-megawatt natural gas-fired combined-cycle power plant in Sherman, Texas.

Texas' shrinking surplus of electric generation has companies rushing to plan new gas-fired plants which can be constructed in about two years.

The Texas grid agency is studying more than 200 requests for new generation exceeding 100,500 MW. Nearly one-third of that total for natural gas-fired generation, the Electric Reliability Council of Texas (ERCOT) said in a monthly report.

ERCOT has projected that the state's reserve margin - excess power needed to avoid blackouts - will drop to 12.1 percent in 2009, just below the agency's minimum requirement of 12.5 percent.

In December, Dallas-based Panda filed for an air permit to build a 1,000 MW combined-cycle power plant in Temple, Texas.

Panda has not yet estimated the cost of the Sherman project because it has not yet selected vendors for the major plant components, spokesman Bill Pentak told Reuters.

Electricity traders guessed the project would likely cost between $250 million and $375 million, at $500-$750 per kilowatt.

Pentak said the company issued a release Tuesday because the Sherman Economic Development Co (SEDCO) approved of the land agreement for the project on Monday. Under that agreement, Panda will pay $700,000 for the land upon financial closing and SEDCO will give Panda $2.7 million when the project enters commercial service.