Commentary: Marcellus Shale gas pipelines deliver lower energy prices

December 13, 2016

The following column is by George Stark, director of external affairs at Cabot Oil & Gas Corporation. This originally appeared in the December 13, 2016, Morning Call.

Residents across Pennsylvania take comfort. If you use natural gas or electricity (increasingly fueled by natural gas) for heating, cooking and everyday uses, Pennsylvania’s natural gas producers are ready for this winter.

At Cabot Oil & Gas, we produce over 1.5 billion cubic feet of natural gas every day from Pennsylvania’s vast shale supplies. Cabot’s development in northeast Pennsylvania helped the commonwealth become the country’s second largest natural gas producing state in 2015, as Pennsylvania’s natural gas production exceeded 4.6 trillion cubic feet.

Ascending to the country’s second highest gas producing state has meant savings for families and businesses. More and more households and commercial customers are converting to natural gas, utilities are working to build out their local delivery networks, and the state just announced $24 million in grant funding to help construct the last few miles of natural gas distribution lines to businesses, schools and municipalities.

UGI Utilities provided the details on its growth and customer savings at a luncheon in Hazleton this year. Compared to 2008, UGI estimates that residential customers are saving approximately $700 a year on average. That equates to $415 million saved in 2015 compared to 2008. Further, since 2008 UGI has converted 53,000 households and more than 70 large commercial and industrial facilities to natural gas.

The state’s other utility customers are experiencing this type of savings as well. The Pennsylvania Utility Commission shows the price utilities have paid for natural gas across the commonwealth has dropped more than 50 percent from 2008 to 2015. Lower natural gas prices mean savings on your electric bill as well; according to the PUC, the electric cost savings for the consumers from the Marcellus Shale from 2011 through the first half of 2014 were $2.1 billion.

Pennsylvania’s economy — its families and businesses — have benefited greatly from the state’s natural gas revolution. However, the often unmentioned and unseen (yes, underground) link between natural gas production and energy costs savings are pipelines.

Simply put, pipelines deliver savings.

As electric power plants shift to greater reliance on natural gas, as large manufacturers site or expand operations in the region, and as utilities seek to serve new customer demand, the pipeline transmission network has become critically constrained. We have the supply of natural gas, but need expanded and additional pipeline infrastructure to continue delivering savings to homes and businesses.

However, help is on the way. One new pipeline project that will address regional constraints is the PennEast pipeline.

Cabot is a “shipper” on this proposed project — meaning the company has contracted to use part of PennEast’s 1 billion cubic feet of natural gas per day capacity. Cabot is excited to help eastern Pennsylvania and New Jersey families and businesses have a new, direct link to Pennsylvania’s prolific natural gas reserves.

With regard to savings, had PennEast been in service in the 2013-2014 winter, Pennsylvania and New Jersey energy customers would have saved $893 million. That’s only one winter. Consider the savings had PennEast been in service in the 2014-15, 2015-16 or this winter?

Of PennEast’s projected savings during just the 2013-14 winter, $530 million would have been realized by electric customers. That savings is indicative of the growing role of natural gas in the electric sector, and reveals insufficient pipeline capacity when natural gas and electricity demand spikes.

Reliable natural gas supplies to fuel our electric grid are essential. This is especially true now, as cold temperatures remind us how important it is to have ample natural gas in the pipeline for our homes, as well as our power plants, to keep our lives moving as usual.

Whether it’s fueling our electric generators or used to power our homes, schools, and businesses, natural gas is a vital part of our clean energy future. Cabot is committed to safely and responsibly developing local natural gas, and to providing the fuel to help keep families warm. However, it’s vital to add new cost-saving pipelines, such as PennEast, to ensure natural gas is able to affordably and reliably reach local communities.