PennEast: Delivering the Energy to Fuel a Downstream Economy

November 3, 2016


On Tuesday, November 1, members of PennEast’s team participated in the Chamber of Commerce for Greater Philadelphia’s “Fueling a Downstream Economy” forum.

PennEast member company UGI Energy Services joined the Pennsylvania Department of Community and Economic Development, Deloitte Services, Braskem, Energy Transfer Partners and more than 150 attendees for a conversation on how the Greater Philadelphia region can benefit from abundant local natural gas, as well as gas liquids like propane and ethane.

Tuesday’s discussion focused on developing “downstream markets.” Meaning, how do projects like PennEast – slated to deliver 1 billion cubic feet per day of low-cost natural gas – help attract new manufacturers, spur cleaner and more efficient electric generation, enable more families to convert to natural gas, and even grow the use of natural gas as a transportation fuel.

Tony Cox of UGI Energy Services explained how originally the interstate pipeline network was built to deliver natural gas from states such as Texas and Louisiana.

“Thanks to new technology, Pennsylvania is now the country’s second largest natural gas producer,” said Cox. “No longer does the Commonwealth and Greater Philadelphia need to rely on natural gas being delivered from more than a thousand miles away.

“While Pennsylvania natural gas production has never been greater – hitting 4.6 trillion cubic feet in 2015 – there is a natural gas ‘infrastructure gap’ in eastern Pennsylvania, New Jersey, Greater Philadelphia and the broader region, including New England, that is constraining natural gas supplies and subjecting consumers to unnecessary price volatility,” explained Cox.

Cox added that this infrastructure gap is why the PennEast Pipeline was proposed. “After more than two years of regulatory review and planning, PennEast will hopefully be in service in 2018 to help close the gap thereby stabilizing and reducing natural gas and electric costs,” said Cox.

A major goal of PennEast is to help utilities procure pipeline capacity sensibly. As recently explained by Concentric Energy Advisors, many factors play a role in utilities (or local distribution companies) decisions around procuring pipeline capacity; including cost savings, supply security and reliability, supply diversity, supply flexibility, price stability, and the ability to grow and meet incremental demand.

“PennEast will prevent local utilities’ ratepayers – families and businesses – from being exposed to unnecessary costs and price volatility,” said Cox. “Utilities must balance reliability and flexibility with costs when making decisions for their customers. That’s the benefit of developing short-haul pipelines like PennEast. These projects source local supplies to benefit local communities.”

In addition to the discussion around the PennEast Pipeline, Tuesday’s event also examined the role of natural gas as an electric generation fuel.

Asked about the economic and environmental benefits of the shift towards natural gas in the power sector, Cox boiled it down to two factors: fuel cost and plant efficiency.

“With highly efficient heat recovery steam turbines, today’s natural gas power plants have state of the art efficiencies,” said Cox.

Much of the electric generation natural gas is displacing is older coal-fired plants. Discussing the two fuels, Cox gave the example that, “if coal is $2.50/MMBtu and natural gas delivered is $2.50/MMBtu – which is probably high – and a coal power plant has a heat rate of 10,500 Btu/kWh versus a natural gas plant of 7,000 Btu/kWh, it requires a third less natural gas for the same power output. The natural gas plant will win every time unless natural gas is more expensive on a Btu basis.”

With respect to environmental benefits, not only is the physical footprint required for modern natural gas plants considerably smaller (25% or less than what is required for coal), there are dramatic emissions benefits. “Unscrubbed coal power plants produce nearly twice the carbon dioxide as natural gas plants, as well as 100 percent more sulfur dioxide. Coal also produces particulate matter and mercury emissions whereas natural gas produces virtually none. These emissions can all be scrubbed from a coal plant’s exhaust stack, but it is expensive,” said Cox.

Tuesday’s event included many other energy topics, including the opportunity for a re-shoring of petrochemical businesses, the revitalization of Marcus Hook, preparing our young people for new careers stemming from low-cost energy, and much more.

PennEast and its member companies look forward to delivering many of the economic and environmental benefits discussed at Tuesday’s forum, and to providing a more secure energy future for the region.