Kleinman report shows how natural gas has transformed Pa.

Joe Massaro

Pennsylvania natural gas development has come a long way.

This is evident in an October 2017 report from the Kleinman Center for Energy Policy, “Pennsylvania’s Gas Decade: Insights Into Consumer Pricing Impacts from Shale Gas (2007-2016).” The report acts as a Marcellus Shale baby book, showing how the state’s shale gas sector has grown from its infancy to its current stage.

Pennsylvania has come a long way since the completion of the first Marcellus Shale exploratory well in 2004. The state has transformed into the go-to energy resource for natural gas.

Here are three takeaways that show how:

Pennsylvania drove increases in national natural gas supply

It wasn’t until 2007 that the shale gas revolution really took off in the commonwealth. From 1997 to 2007, the state’s gas production accounted for less than 1 percent of the national supply. However, production grew immensely — 2,788 percent — as the benefits of shale gas development were realized. This increase was “larger than in any other major gas-producing state,” according to the report.

In 2016, Pennsylvania was responsible for more than 16 percent of the domestic natural gas supply. The report notes these gains “made Pennsylvania the biggest driver of America’s 32-percent increase in annual natural gas production.”

Pennsylvania is a net natural gas exporter

The beginnings of Marcellus Shale development were lean. Because of natural gas’ growing popularity, Pennsylvania was consuming four times more gas than it produced in 2007. This required gas to be imported from other states. The consumption deficit continued until 2011, the first year that Pennsylvania produced more gas than it consumed.

This trend has continued, and in 2016 Pennsylvania produced more than 5 trillion cubic feet of natural gas. In-state consumption held at less than 2 trillion cubic feet. In 2016, the state exported or stored 75 percent of the gas it produced. This transformed Pennsylvania into a net natural gas exporter. The report notes that the state “is expected to continue to increase net export volumes.”

Pennsylvania’s electric power prices are below the national average

Pennsylvania is no longer notorious for higher than the national average natural gas costs for power generation and retail prices. The report notes, “It is clear that Pennsylvania consumers enjoyed more significant cost reductions than national averages.”

Natural gas prices for power generation reached their pinnacle in 2008 at nearly $10/Mcf. That all changed the next year when production increases helped decrease prices to approximately $5/Mcf. Aside from slight upticks in 2013 and 2014, prices continued to decrease. In 2016 the price dropped to approximately $3/Mcf. From 2007 to 2016, Pennsylvania electricity ratepayers benefited from a 79 percent reduction in costs, and prices decreased below the national average.

The growth of the natural gas industry in Pennsylvania over the last 14 years has been amazing to watch and, relatively speaking, the industry is still going through early growing pains. We can’t wait to find out what happens next.

Joe Massaro

Joe Massaro is based in Bravo Group's Pittsburgh office and has deep energy industry expertise. He previously served as the field director for a Pennsylvania-based oil and gas industry grassroots PR firm.

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