After ten years of natural gas production in the shale fields, a new study from the Kleinman Center for Energy Policy at the University of Pennsylvania takes a closer look demonstrating that Pennsylvania’s residential consumers enjoy gas bills that are on average 40 percent lower (than 2007 bills) and that the electric power sector is now the nation and state’s largest gas consumer.
The study, Pennsylvania’s Gas Decade: Insights into Consumer Pricing Impacts from Shale Gas (2007-2016), documents how the infusion of low-cost shale gas into regional energy markets substantially lowered gas commodity prices compared to national prices at the Henry Hub—lowering both gas and power bills for consumers.
The study also found that demand for gas to Pennsylvania’s electric power sector increased 250 percent between 2007 and 2016. Pennsylvania’s natural gas production increased by almost 2,800 percent, which now accounts for 16 percent of national annual gas production.
“In terms of cost, shale gas has been a clear win for consumers,” said Christina Simeone, author of the report and director of policy and external affairs at the Kleinman Center.
However, gas utility delivery rates continued to rise during the past decade, and in 2016, Pennsylvania’s retail residential gas prices still remained above the national average-- despite the state’s gas commodity discount.
The report noted pipeline infrastructure capacity growth has not kept pace with production growth, leading to a local supply glut creating the Pennsylvania Gas Discount to the Henry Hub national price benchmark.
Between 2007 and 2016, Pennsylvania saw more project proposals (53 applications) to the Federal Energy Regulatory Commission for major interstate gas pipelines than any other state in the nation, almost double the amount of the second highest state-- New York, with 27 applications.
These 53 projects approved between 2007-2016 represent 12,939 MMcf/d of capacity, and another 7,292 MMcf/d of pipeline capacity impacting Pennsylvania was approved by FERC in the first few months of 2017 .
The report said not all of these pipeline projects will be built, but many that do become operational will enable increasing amounts of gas to be exported outside of Pennsylvania.
“Looking forward, an important question is how long will Pennsylvania’s gas discount last?” said Simeone. “Especially in light of the remarkable interest in building new pipeline capacity to move gas out of the state.”
Click Here for an executive summary and the complete report.
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