Natural gas consumers continue to benefit from Marcellus Shale
Published: November 20, 2012
With winter approaching, the home heating season is just around the corner. Soon residents of northeastern Pennsylvania will break out the extra blankets and turn up the thermostats. For those who use natural gas to heat their homes, turning that dial will be a little easier this winter because of gas from the Marcellus Shale, according to several natural gas providers in the area.
“Marcellus Shale has had a significant impact on the price customers are paying for their energy bills,” Utilities Communications Manager for UGI Utilities Joseph Swope said. “Our typical customer’s natural gas bill is now about 40 percent less than it was four years ago. The average residential heating customer is now paying $700 less than they did in 2008 for a total savings of our residential customers of more than $350 million.”
Equitable Gas began providing gas from local wells only recently and is already realizing the savings that can be offered to customers.
“A few months ago, Equitable Gas began providing more Appalachian natural gas from both Marcellus and traditional wells to its customers,” Scott Waitlevertch, external communications and government relations manager, said. “This change will save our 260,000 customers in Pennsylvania $16 million dollars annually (about $3.90 per month for the average customer) by reducing costs associated with transporting natural gas from other regions.
“In addition, with the ample supplies from Marcellus and other shale basins in the U.S., prices have been reduced significantly over the last four years. Since 2008, the average Equitable Gas customer is saving more than $940 per year on their monthly bills,” he added.
Another provider, Columbia Gas of Pennsylvania, has noted the lowest prices in over 20 years after inflation.
“The fact that natural gas prices are near decade lows should be good news for consumers this winter heating season,” Communications & Community Relations Specialist Brynnly Mazzie said. “When adjusted for inflation, the total average residential customer bill is currently about 25 percent lower than it was in 1991.
“Competitive market forces determine the price of natural gas that all natural gas distribution companies purchase,” she continued. “Columbia passes on the cost of natural gas supplies to the customer without any markup or profit margin. By law we cannot make a profit from the gas cost.”
Valley Energy also noted a decrease in price for customers.
“By purchasing from local supply, we have eliminated some transportation costs on our interstate pipeline transport company,” President and CEO Robert Crocker said. “These entire savings are passed on to our customers.”
The Marcellus Shale has also spurred more people to switch to natural gas, with the majority of providers noting increases in their consumer base. In fact, UGI has had a record amount of conversions.
“Marcellus Shale has provided a plentiful, local supply that is ‘hurricane-proof,’” Swope said. “Because of this, there’s an expectation that there will be much less price volatility in the near future. Eliminating this uncertainty has led more and more residential, commercial and industrial customers to convert to natural gas.
“In our Fiscal Year 2012 (which ended Sept. 30), we set a new record for residential conversions to natural gas — 8,967, shattering the previous record (set in 2011) of 5,506,” he said. “We also witnessed a marked increased in commercial conversions as well.
“UGI has also received an unprecedented request for line extensions to serve new areas with natural gas,” Swope continued. “This has caused some heartache, because it’s simply not economical in some cases to reach all areas that are interested in receiving gas service. We are currently exploring alternatives that would make some line extensions possible where they are currently not feasible.”
Equitable Gas, while not yet having the same scale of growth, has received much interest from customers as natural gas prices continue to stay low.
“Our customer base has not increased significantly, but we have had about 75 customer requests on converting from another energy source to natural gas over the last two years,” Waitlevertch said. “The new customers recognize that natural gas is currently the most economical energy source for their homes. In Allegheny County — where we have about 86 percent of our customers — 87 percent of homes already use natural gas as their main heating source.”
For Valley Energy, which is based in the Sayre and Athens area of northern Bradford County, many of its new customers are from the commercial side rather than residences, because of several hotels being constructed in that area.
“The majority of our growth due to the Marcellus Shale has been the addition of commercial customers that are ancillary to the industry, including the new hotels planned and under construction,” Crocker said. “We have also taken the opportunity to purchase some local gas for our supply portfolio.”
Columbia Gas has also noted a significant increase in customers and noted that they know the responsibility they have with many people facing economic hardship.
“Columbia Gas of Pennsylvania is a natural gas distribution company providing safe, reliable and efficient natural gas service to more than 415,000 residential, commercial and industrial customers in 26 counties,” Mazzie said. “As a natural gas distribution company, Columbia’s role is to use its underground piping network to distribute gas to customers within cities and towns in Pennsylvania.
“Due to low, stable natural gas prices, residential, commercial and industrial customers are converting from alternate fuel sources to natural gas,” she continued. “Through September, Columbia has seen a 19 percent increase over 2011 in customers converting to our service.
“Despite these low costs for natural gas, we recognize that many households continue to struggle to make ends meet,” Mazzie added. “Columbia encourages its customers to use energy wisely and safely through a number of programs and initiatives, and ask that our customers call us at the first sign of difficulty in paying their natural gas bill. Columbia is not only committed to delivering safe, reliable and efficient natural gas service to our customers, but we are also committed to keeping our customers warm this winter.”
A relatively new area for natural gas suppliers is in form of using natural gas as a transportation fuel in the form of Compressed Natural Gas (CNG), which many of the companies are capitalizing on.
“(Valley Energy) has been working with various companies to explore the use of CNG,” Crocker said. “The first public CNG station on our distribution system is now being installed in North Towanda at the Dandy Mini Mart. Another station is planned for Athens in the near future. Consideration is being given to utilize CNG as a fuel for our company vehicles that will be purchased in the future.”
Equitable Gas has made significant strides in the CNG department in its local area in the form of the first Natural Gas Vehicle (NGV) fueling station in its region.
“Equitable Gas and our parent company, EQT, are at the forefront of natural gas vehicles in western Pennsylvania,” Waitlevertch said, citing an NGV Initiatives Update from the spring.
“For more than four years, Equitable Gas Company (EGC) and its parent company, EQT Corporation (EQT), have advocated the greater use of NGVs in western Pennsylvania,” the update said. “EQT/EGC built the region’s first public access NGV fueling station in western Pennsylvania in the City of Pittsburgh’s ‘Strip District’ neighborhood. The station opened in July of 2011 and was partially funded by a Department of Environmental Protection Alternative Fuels Incentive Grant (AFIG). Area residents and fleet vehicle operators can now more easily switch to NGVs and refuel with the swipe of a credit card.”
The update went on to note EQT’s and EGC’s efforts within their own vehicle fleets.
“EQT and EGC are at the forefront of using NGVs for their fleets of vehicles operating in western Pennsylvania, thereby reducing fuel costs and improving air quality,” the update said. “EGC currently has 25 NGVs in operation with the fleet consisting of service vans, trucks and passenger vehicles. EGC will have a total of 28 NGVs operating in the near future and plans on purchasing additional NGVs in 2012. By the end of 2012, EQT will have 160 NGVs operating in and around the cities of Pittsburgh, Washington and Waynesburg. The vehicles include half-ton and three-quarter-ton pick-up trucks. EQT plans to convert 10 percent of its fleet vehicles to CNG each year for the next 10 years.”
With the winter coming up and natural gas prices continuing to stay low, the companies are constantly looking ahead and preparing for more gas and more customers.
For example, Valley Energy is seeking to “continue to expand our distribution system as needed to meet the needs of the community and customers,” Crocker said.
“The Moxie Liberty Power generating plant planned for Asylum Township will be taking advantage of the local supply and Valley Energy will provide transportation service to the facility.”
“Equitable Gas will continue to focus on the safe and reliable distribution of natural gas to our customers using regionally produced natural gas,” Waitlevertch said. “This benefits Pennsylvania’s economy, creates jobs and benefits our customers with stable and lower natural gas prices.”
“Our main focus is delivering safe, reliable and efficient natural gas service to our customers,” Mazzie said. “We have been serving customers in Pennsylvania for more than 100 years and are currently upgrading and replacing our system so we can continue to serve customers for the next 100 years.
“From 2007 - 2012, Columbia has invested more than $400 million in Pennsylvania to replace bare steel pipe with state-of-the-art plastic pipe,” she continued. “In 2013, Columbia will invest approximately $140 million in continued pipeline replacement.”
Mazzie went on to say how the continued development of the Marcellus Shale not only benefits those who live locally, but those on a national scale as well.
“Columbia supports efforts to increase domestic natural gas reserves through the safe and environmentally-responsible exploration and tapping of the Marcellus Shale natural gas play,” she said. “The Marcellus Shale natural gas play has the potential to provide high-quality natural gas to a large portion of the United States for an extended period of time, keeping natural gas costs low for consumers and moving the country toward greater energy security.
“While we can’t predict the future, the long-term outlook is for continuation of lower gas costs,” Mazzie added. “It’s a great time to be a natural gas customer.”
Johnny Williams can be reached at (570) 265-1639; email: email@example.com.