The Importance Of Pennsylvania’s Natural Gas Industry

Thanks to fracking in the Marcellus shale, Pennsylvania has led a U.S. natural gas revolution since 2007.

The state’s production has exploded almost 40-fold, to over 7,300 billion cubic feet, or 20% of the national total.

Pennsylvania now ranks second only to Texas on this measure and yields more gas than any other country, except Russia and Iran. The rise of shale has been critical because natural gas is easily America’s main source of electricity, at 40% of all generation.

The International Energy Agency credits the use of cleaner gas – and its displacement of much higher-emission coal – for America’s achievement in cutting CO2 emissions the most “in the history of energy.”

Experts at Wood Mackenzie and elsewhere conclude that gas demand will remain resilient, even in a policy environment that seeks to keep the human-induced rise in global temperatures to 2 degrees Celsius or less.

Pennsylvania’s shale production has helped families economically and given businesses a competitive advantage.

With Pittsburgh long eager to replace its fleeing steel industry, Allegheny County Executive Rich Fitzgerald, a Democrat and strong Joe Biden supporter, says that “fracking really saved us.”

The University of Pennsylvania’s Kleinman Center for Energy Policy reports on the economic benefits from shale development: it has led to a decline in the state’s gas and electricity prices of 40% and 80%, respectively, over the first decade alone, saving families thousands of dollars a year.

Jobs, government revenues, and royalties for landowners are among the many benefits of shale development. Current numbers tell the story: compared to over $10.00 per MMBtu in Asia, gas prices at Marcellus’s Dominion hub in mid-June were below $2.10.

Such affordable energy explains why civil rights leaders like Revs. Jesse Jackson and Al Sharpton support natural gas.

And there is much more to look forward to. The Marcellus is the largest producing field in the world, appraised at hundreds of trillions of cubic feet of supply.

Ongoing coal retirements and the closing of the Three Mile Island nuclear plant should extend gas’s current 50–55% share of Pennsylvania’s power generation. Data from the Department of Energy indicate that this shift from coal to gas has cut the state’s CO2 emission rate for electricity a staggering 75%, to 720 pounds per megawatt-hour.

Not particularly sunny or windy, Pennsylvania currently has 23,200 megawatts (MW) of gas capacity versus just 1,500 MW for wind and 90 MW for solar.

And with the state’s paltry 30 MW of battery storage capacity, it’s clear that gas will remain essential to compensate for the inherent intermittency of renewables and ensure grid reliability.

Indeed, it’s telling that the most green-leaning states, such as California, New York, and Massachusetts, are all gas-dominant.

In tandem with Shell’s coming ethane-cracker plant in Beaver County, a huge but low-cost shale resource gives Pennsylvania a chance to rival the Gulf Coast as a manufacturing hub, now strongly bolstered by Act 66.

The $6 billion Shell project is set to start operations in 2022 and create 600 permanent jobs. Politico reports that natural gas offers some of the highest-paying energy jobs in the country – paying $30.35 per hour versus $24.50 for solar, adding up to $12,000 more per year for each worker.

All this explains why Governor Tom Wolf’s plan to push Pennsylvania into the Regional Greenhouse Gas Initiative (RGGI) is so disconcerting.

The cap-and-trade scheme has snared New York and the New England states, which now have the highest electricity prices in the country, a key reason why Chief Executive magazine regularly ranks them among “the worst states for business.”

Pennsylvania would be the only major energy producer in the RGGI, with the irony being that the others are highly dependent on the Keystone State’s shale supply.

Thus, the RGGI, made worse by Wolf’s $4.5 billion proposal for a severance tax, could be a serious blow to a gas industry already burdened by the after-effects of Covid-19.

Such “shoot yourself in the foot” energy policies could also push companies to move to competing states, such as Ohio and West Virginia, doing their best to entice the industry to develop further its Marcellus and Utica shale plays.

Pennsylvania also stands to benefit from the rapid emergence of the U.S. as potentially the world’s premier exporter of liquefied natural gas (LNG). Huge amounts of American shale are being sought to help Asian coal-based economies reduce their CO2 emissions and clear hazy city skies.

Exporting a modern fuel like natural gas is not only a quick win environmentally but also a moral imperative: six of every seven human beings live in still-developing countries, where energy poverty blocks progress at every turn.

LNG exports can also combat the influence of Russia’s Gas Exporting Countries Forum, which wants OPEC-like control over the globalizing gas market.

Afraid of losing his stranglehold on Europe’s energy supply, Vladimir Putin has conducted an extensive anti-shale campaign. An LNG export terminal in the Philadelphia-New Jersey region, for instance, would help our European partners rein him in.

Finally, it often goes unmentioned that the U.S. natural gas industry continues to get cleaner and more efficient, across the entire value chain.

Data from the U.S. Environmental Protection Agency show that from 1990 to 2019, annual greenhouse gas emissions from gas distributors plunged about 70%, even as utilities added more than 788,000 miles of pipeline to serve 21 million more customers.

Pittsburgh-based EQT, the country’s largest gas producer, supports the Biden administration’s goal of regulating the industry’s methane emissions to fight climate change.

One international study credits the Marcellus gas industry as “best in class” for reducing CO2 emissions. Companies are looking to deploy carbon capture and sequestration technologies and make substantial investments in hydrogen to help meet emission-reduction goals, while also examining ways for renewables to power their operations.

In particular, European climate performance standards for natural gas should give Marcellus LNG a competitive edge.

It’s no surprise, then, that Pew Research finds that nearly three-quarters of American adults support more natural gas development. Shale supporters stand on the right side of history.

Read more at Real Clear Energy