A study from the University of Pennsylvania’s Kleinman Center for Energy Policy titled “Pennsylvania’s Gas Decade: Insights into Consumer Pricing Impacts from Shale Gas” has found that the development of the Marcellus Shale formation has likely contributed to the some positive benefits for all Pennsylvania residents during the study period of 2007 to 2016.
The study highlighted a few key items, including –
- Pennsylvania gas costs dropped faster than the national averages. Pennsylvania enjoyed declines of more than 40% compared to 34% nationally.
- Pennsylvania has become a net gas exporter and consumes only about 25% of the gas that it produces.
- The state’s 2,800% increase in gas production between 2007 and 2016 has been the largest contributor to increased annual natural gas power generation nationally.
- The discounted gas cost has helped to decrease electricity costs for certain consumers in Pennsylvania.
- Large industrial and commercial users have benefited from the decline in costs, which have declined almost 66% as compared to the decline in the Henry Hub index prices.
- However, residential prices remain above national averages, meaning that not all of the benefits have been realized by residential consumers.
- The study also aligned reductions in gas prices with a reduced $49 million in consumer gas debt and a drop of over $72.5 million in the cost of customer assistance programs.
The continued benefits of some of these discounts may erode in the future if many of the pending applications for pipelines are approved. These pipelines would make it easier for producers to get their gas to market, which would be a boon for producers, but this could hurt some of the benefits for consumers. During the period of this study, 53 pipelines with capacity of 12,939 MMcf/d were built, and during the first several months of 2017, additional pipelines with capacity of more than 50% of the prior 10 years was approved, demonstrating the continued strong interest in Pennsylvania’s vast gas reserves.
Hopefully the next 10 years will continue to generate additional benefits to Pennsylvania as producers in the state continue to expand production of natural gas from the Marcellus Shale. To learn more about our services to the energy and natural resource sectors, contact us.