June 28, 2017

Forbes: “Appalachia needs more gas infrastructure to move gas to markets”

The Appalachian Basin is playing an increasingly critical role in supplying natural gas to markets across the country – with readily available supplies of gas in the Marcellus and Utica shale formations, states such as Ohio, West Virginia, and Pennsylvania are increasingly viewed as a primary resource in meeting demand for clean-burning, domestically produced natural gas. A recent Forbes report recently underscored this fact, noting the role that midstream infrastructure like the Rover Pipeline plays in safely transporting natural gas to regional markets:

The entire nation … should be thanking Pennsylvania, West Virginia, and Ohio for supplying increasing amounts of natural gas – now our most vital source of electricity and the fuel that has led to drastic declines in CO2 emissions in the power sector, now at 30-year lows.

Being a new major gas producing region, entire Appalachia needs more gas infrastructure to move gas to markets. We keep hearing about the pushback on pipelines, but make no mistake: the buildout is on. In charge of approving interstate pipelines, FERC in 2016 approved  almost 40 major pipeline projects across the country, covering 1,200 miles, over 14 Bcf/d of new capacity (total national consumption is around 75 Bcf/d), and over $10 billion in new investment.”

The article goes to highlight the role that natural gas is playing in generating power while also lowering carbon emissions:

As natural gas continues to rise in the U.S. electric power system, doubling its market share of our power generation to 35% since 2005, more infrastructure to move gas is crucial. Again, a headline not from Fox News but from The New York Times: Shale Gas to the Climate Rescue.”  That fact is clear: more natural gas is the primary reason why the U.S. power sector is UNIQUELY lowering CO2 emissions, when compared to other sectors.

More pipelines will allow upstream gas to reach downstream markets that value it highest. U.S. gas consumers should know that our widening pipeline buildout will create more price uniformity across regions, putting your local differential more on par with benchmark Henry Hub. Supply hubs such as Dominion South for the Marcellus has traded at a significant discount (now around a $1 or so) to Henry Hub due to a mismatch between supply and demand in the region. But ultimately, remember that pipelines will expand the customer base but they also allow much more gas to come online, so the impact of them is clearly positive.

With U.S. supplies of natural gas more accessible than ever, it’s critical that midstream infrastructure like the Rover Pipeline is successfully completed. CEPI is encouraged to read coverage from Forbes on the issue, and looks forward to additional reporting on the importance of responsibly developing natural gas pipeline projects.