Monday, April 30, 2012

PA Gas Production Doubles In 2011; Provided 1/3 Of Nation's Increase

While natural gas production rose 8% nationally in 2011 and reached record total levels, Pennsylvania's natural gas production more than doubled in 2011.  Pennsylvania's production reached 1.3 trillion cubic feet, according to EIA.

How important is Pennsylvania to the national gas boom and to the setting of an all-time national production record last year?  Indispensable.

The increase in Pennsylvania's production accounted for approximately one-third of the total national production increase during 2011.


  1. John,

    I recently have begun to understand New England's relationship to CNG and NG in general. I'm curious if New England's proximity to the Marcellus will begin to impact electricity rates in New England in an impactful way.

    I just moved to NH from VA and my retail rate of electricity is $0.17/kWh. I'm assuming this has a lot to do with lack of fossil resources. I'm not interested because of my home energy rate, but rather because I'm curious how burgeoning PV markets like MA, CT and NY might be impacted. I've been, for years, telling potential PV clients that conventional energy prices will rise and have felt like I had sound reasons for why this is true. Focusing only on NG prices, please provide your opinion of how the looming onslaught of fairly local NG will impact historically high NE electricity rates.

    Finally, I'm curious if the sometimes specious arguments about XL pipeline providing US oil price stabilization are akin to the notion that new Marcellus deposits will provide ng price stabilization to a local market versus a world market.

    Thanks for your great site and all that you did for my home state while you were in office!

    John Koontz

  2. Unlike oil which is priced in a global market, natural gas is priced in a North American regional market. Canadian production and demand plays a role too for natural gas's pricing here. The comparison to the XL pipeline is not apt because the commodity it transports--oil--is set largely globally, though some oil in North Dakota, Wyoming is getting a lower price because of transportation limits, restricting its ability to reach the global, higher priced market.

    The natural gas boom has slashed natural gas prices for natural gas consumers in Pennsylvania and other Northeastern states, though transportation costs for the gas create differences. A typical heating natural gas consumer in Pennsylvania is saving about $5 per thousand cubic feet or more, as a result of the shale gas boom. The electricity price in the wholesale PJM market has been cut by about 5 cents per kilowatt-hour, as a result of the lower natural gas prices. And retail electricity bills in 2012 are lower than they were in 2011, in most cases in Pennsylvania. All this would be bad news for solar if solar PV prices were not falling as much as natural gas prices have been falling. PV prices will continue to fall but natural gas prices are now at the bottom. They are likely to be in the $3 range in 2013 and the 4$ range by 2014. In other words, they will go up some from today's collapsed price scenario but will be much lower than what nearly everyone thought just 4 years ago. Some analysts find that PV is now at grid parity in 200 electricity service territories. That number will go up steadily and reach likely half of them by 2015, as a result of a combination of falling PV prices and marginal increases in grid power pricing.