Experts: Pipelines needed to get gas to market

Source: Standard Speaker

In order for Pennsylvania Marcellus Shale gas to be an asset, pipelines have to be built to get the gas to market, people in the industry say.

Pennsylvanians don’t have to worry, however, as selling the gas out of state won’t diminish its supply to state residents because there is so much gas, they said.

U.S. Rep. Lou Barletta, R-11, Hazleton, said there are 1,000 wells in the Marcellus Shale that aren’t being tapped because the gas has no way to get to market.

But industry experts who gathered at Capriotti’s in Banks Twp. for the Manufacturers and Employers Association of Northeastern Pennsylvania’s recent Keystone Energy Forum said it may not be long before those wells are turned on, because some of those pipelines have been or will be built in the near future.

Matt Carmichael, director of government relations for Southwestern Energy, the third-largest natural gas producer in the United States whose job it is to drill the wells, said the wells are drilled but the pipelines are needed to use the wells to their fullest advantage.

“The big difference in what the Gulf Coast has that we don’t have here is pipeline infrastructure, the ability to get those molecules (gas) to market,” he said. “I think if we can find a way to get more of these Atlantic Sunrise-type projects in the ground, we will have more economic development opportunities. You factor that with an able, willing and more-than-capable workforce and workforce training programs, it’s a natural progression of the Marcellus Shale and the resource that we have literally under our feet.”

Atlantic Sunrise is a pipeline project being built by the Williams Companies, which owns and has operated the Transcontinental, or Transco, pipeline bringing gas to the Northeast from the Gulf for almost 60 years.

Mike Atchie, public outreach for the Williams Companies, said Atlantic Sunrise will connect to Transco and create the ability to send gas both ways in the Transco pipeline and also to send Marcellus Shale gas to large Northeastern markets.

“You can see the decline in production,” Atchie said. “Part of that is because of the lack of pipelines to get those molecules (gas) to market. The Marcellus Shale wells coming online are significant. There is a great deal of gas that can be produced that can change the whole dynamic of how we move energy in the U.S.

“Instead of moving all of the gas up from the southwest part of the country feeding the Northeast, we have Pennsylvania gas right under our feet that can serve the huge markets like New York City. We’re seeing increased demand in Virginia, D.C., and the Carolinas, transitioning over from electric generation to natural gas growing areas where there is increased residential and manufacturing. Demand for natural gas is dramatically increasing, and we can help hit that demand by changing the dynamic by using regionally produced gas from the Marcellus.”

Construction on the 185-mile Atlantic Sunrise pipeline that will connect Marcellus Shale with the Transco pipeline in Lancaster County will begin late this summer, Atchie said

“It will take about a year to build,” Atchie said. “It will be in service in the mid-year to third quarter of 2018. There will be a $3 billion impact, about 8,000 jobs, including 2,300 construction jobs across 10 counties. There will be a $1.6 billion increase in economic activity because of the Atlantic Sunrise project, and it will generate almost a quarter billion in labor income.”

Local pipelines

UGI Energy Services is building shorter pipelines. Larry Godlasky, director of government affairs, said UGI has completed three projects, and has proposed another large project — all based in Pennsylvania

First, there is the Auburn pipeline system, the first phase of which connects Mehoopany, Wyoming County, and the Tennessee gas pipeline in southern New York state.

The second phase of Auburn is a 28-mile pipeline south to the Transco pipeline. The six-mile Uniondale pipeline connects Marcellus to UGI Penn Natural Gas, Godlasky said.

“The import of the Auburn and Uniondale (projects) is that we are able to serve all of Wilkes-Barre and Scranton with Marcellus Shale gas, whereas eight to 10 years ago, they were bringing up all of that gas from the Gulf Coast,” Godlasky said.

“We just finished the Sunbury pipeline, which connects to Transco in Lycoming County. It’s a 35-mile pipeline south to Snyder County, where the new Hummel Panda Power Station is being built — a 1,124-megawatt natural gas-fired generation station, which will be one of the primary customers on this pipeline when it goes online next three to six months.”

One pipeline that isn’t built is PennEast, a $1.2 billion pipeline to connect customers in Pennsylvania and New Jersey.

“The economic case for PennEast is compelling,” Godlasky said. “We’re delivering this gas into a very congested part of the natural gas transmission system. It (the pipeline) will go directly to alleviating cold weather demand spikes and relieve transmission constraint in those areas in those areas, and the pricing differentials between Northeast Pennsylvania and southeast Pennsylvania and New Jersey.”

Gas is cheap

The local pipelines make the Marcellus gas very inexpensive, Godlasky said.

“We are now sitting almost on top of the most prolific gas field in the world,” he said. “There are two advantages now. With pipeline distances from six to 100 miles, transportation cost is less, and Marcellus Shale gas trades at a discount. Marcellus Shale gas is some of the cheapest gas in the United States. But you don’t have enough pipeline to get the gas out of the area.”

Joseph Swope, a spokesman for UGI Utilities, said even with the pipelines, gas will still be cheap to Northeast Pennsylvania residents.

“Going forward, you’re going to continue to see reasonable prices because it’s local, it’s plentiful, and we don’t have to transport it very far,” Swope said. “Marcellus Shale gas is priced at a discount, typically about 33 percent. Comparing fuel costs from 2008, all UGI customers saved $343 million in 2015 attributable to Marcellus Shale and the impact that it has had on supply and prices.”

And more regional homeowners and businesses are switching to natural gas to take advantage of the savings; Swope said 53,000 households converted to natural gas in the last four or five years.

“They alone have saved about $91 million in energy costs,” he said. “They have more money to spend and bring into the economy. Since 2008, we have converted 68,000 households and businesses to natural gas — including 73 large commercial and industrial facilities — predominantly from fuel oil.”

And Marcellus Shale gas is creating jobs, Swope said.

“Shale gas created 500,000 jobs, 100,000 alone in Pennsylvania,” he said. “U.S. manufacturing is seeing an increase in jobs for the first time since 1990 primarily due to much lower energy costs.

Aside from creating an increased demand, the savings in natural gas has spawned a lot of new technology.

“We’ve installed 11 combined heat and power projects,” Swope said. “We have about 20 large potential customers interested in converting. We have 16 natural gas fueling stations with more coming online.”

Some of those fueling stations are at truck depots that fill Waste Management trash-hauling trucks.

John Hambrose, a Waste Management spokesman, said the hauler has invested heavily in trucks that run on compressed natural gas, or CNG, for their eastern Pennsylvania, New Jersey and Delaware territory.

“We are running 308 CNG front-load, rear-load and roll-off trucks for collections, and have about 6,000 across the U.S. and Canada,” Hambrose said. “That is coming close to about a third of our fleet. We are going to convert as much of our fleet to CNG as possible.”

Of Waste Management’s 94 internal fleet fueling stations, the closest of which are in Dunmore, Lackawanna County, and Pen Argyl, Northampton County, 25 of them were built as public fueling stations, including Pen Argyl and Bristol Twp., near Philadelphia.

CNG trucks have advantages over diesel trucks, Hambrose said. Instead of waiting in line at the diesel pumps to fill up with fuel in the morning, CNG trucks are ready to go — because the night before, hoses from the slow-fill trucks, connected at the end of the previous day, already have filled the truck.

“Natural gas is domestically abundant, and the price is dependable,” Hambrose said. “Natural gas is less expensive than diesel. Every time we take a diesel truck off the road, that’s 8,000 gallons of diesel fuel we don’t purchase a year for that truck. The environmental impact is about 24 tons of greenhouse gases a year per diesel truck.

“CNG trucks are as quiet as your car. We believe our CNG trucks will last longer, because the engines are cleaner and not constantly rattling themselves apart allowed us to double the operating life of our motor oil.”

Train workers

Susan Spry, vice president of applied technology and workforce development for Luzerne County Community College, said aside from dealing with the traditional 18- to 21-year-old student, the college also deals with customized training aimed at filling skills gaps within the labor market.

“We put great effort into identifying what skills are necessary to qualify individuals for high-demand occupations, and then to respond with programs that produce those graduates who have the technical and soft skills industries need,” Spry said.

“We are in the fourth year of a five-year grant with Lehigh-Carbon and Northampton community colleges to identify high-demand occupations in the regional workforce, and develop curriculum programs and strategies to address those demands.”