Appalachian Basin

Shale Gas to Deliver Big Consumer Savings This Winter

Thanks to continued development of the Marcellus Shale, natural gas prices are at their lowest level in 14 years. This means lower heating costs for states with the necessary infrastructure to take advantage of their close proximity to the Marcellus. And that’s great news for American consumers who can use the money they save to pay bills around the holiday season.

One company that’s been able to pass savings on to their customers is Public Service Electric and Gas (PSE&G) of New Jersey. The company is providing a bill credit for the next three months for its residential gas supply customers. According to PSE&G, the typical residential gas customer will see their average bill cut by about 31 percent.

“Since 2009, PSE&G’s residential gas customers have benefitted from steady reductions in the cost of natural gas, we’re able to provide additional savings this winter given the continued availability of low-cost gas from the nearby Marcellus Shale Formation in Pennsylvania. In addition, our transportation and storage capabilities and the way we manage our pipeline contracts have enabled us to seize this opportunity to once again reduce costs for our customers.” – Jorge Cardenas, PSE&G vice president of asset management and centralized services.

An Indiana based company, NIPSCO, is also passing savings on to their customers. NIPSCO current projections indicate that natural gas bills for residential customers will be approximately four percent lower when compared to last winter. According to NIPSCO CEO Jim Stanley:

“Last winter was one of the coldest on record and customers used more natural gas than normal, yet the abundance of domestic supplies continues to hold down market prices.”

Interestingly enough, New York and Illinois, two states that have yet to allow shale development, are also benefitting from increased domestic natural gas production.  Under New York’s current Governor, Andrew Cuomo, the state has a now six year moratorium on shale development. Despite this, New York continues to benefit from Pennsylvania’s ability to develop its shale resources by importing more natural gas from the Marcellus Shale.

National Fuel Gas Co supplies natural gas to residents living in Western New York and the company estimates that the average residential customer will pay $648 to heat their home between November and March. That’s roughly $160 less than last winter, about a 4 percent decrease.

According to Gary Marchiori, President of EnergyMark, a Williamsville-based energy services firm:

“Western New York’s proximity to the prolific shale gas fields in Pennsylvania also is helping to keep heating costs down.”

Much like New York, Illinois is still waffling on how shale development will occur in the state.  Nonetheless, Illinois residents will still reap the benefits through cheaper heating fuel this winter.

According to a MarketWatch report, Ameren Illinois customers can expect another year with natural gas prices lower than the national average.  Ameren Illinois Gas Supply Director, Ken Dothage, stated:

“Because of our price hedging and storage strategies along with the continued increase in natural gas production in the U.S., we anticipate that the gas supply portion of our customers’ bills will again be lower than the national average.”

States with the necessary infrastructure to bring natural gas to market from shale plays across the United States reap the benefits that come along with domestic natural gas production.  However, some regions lacking infrastructure will unfortunately be paying more this coming winter.

According to Federal Energy Regulatory Commissioner, Tony Clark, a lack of infrastructure has isolated natural gas markets in New England.  This winter New England could be looking at $21/Mcf compared to $4.02/Mcf for areas with more infrastructure. Clark stated:

“…It’s not really a supply problem that we have in this country, but we have a rather severe infrastructure problem.”

With winter fast approaching, it’s important to remember where that heat comes from when we turn our thermostats up, and, more importantly, why we’ve seen a decrease in heating bills over the last few years. It’s thanks to increased domestic production of natural gas from shale formations utilizing important technologies like horizontal drilling and hydraulic fracturing.

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