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Op-Ed: The
importance of Pennsylvania’s natural gas
[The Center Square] Jude Clemente |
RealClearEnergy
Thanks to fracking in the
Marcellus shale, Pennsylvania has led a U.S. natural gas revolution
since 2007. The state’s production has exploded almost 40-fold, to over
7,300 billion cubic feet, or 20% of the national total. Pennsylvania now
ranks second only to Texas on this measure and yields more gas than any
other country, except Russia and Iran. |
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 The rise of shale has been critical because natural gas is
easily America’s main source of electricity, at 40% of all generation. The
International Energy Agency credits the use of cleaner gas – and its
displacement of much higher-emission coal – for America’s achievement in cutting
CO2 emissions the most “in the history of energy.” Experts at Wood Mackenzie and
elsewhere conclude that gas demand will remain resilient, even in a policy
environment that seeks to keep the human-induced rise in global temperatures to
2 degrees Celsius or less.
Pennsylvania’s shale production has helped families
economically and given businesses a competitive advantage. With Pittsburgh long
eager to replace its fleeing steel industry, Allegheny County Executive Rich
Fitzgerald, a Democrat and strong Joe Biden supporter, says that “fracking
really saved us.” The University of Pennsylvania’s Kleinman Center for Energy
Policy reports on the economic benefits from shale development: it has led to a
decline in the state’s gas and electricity prices of 40% and 80%, respectively,
over the first decade alone, saving families thousands of dollars a year. Jobs,
government revenues, and royalties for landowners are among the many benefits of
shale development. Current numbers tell the story: compared to over $10.00 per
MMBtu in Asia, gas prices at Marcellus’s Dominion hub in mid-June were below
$2.10. Such affordable energy explains why civil rights leaders like Revs. Jesse
Jackson and Al Sharpton support natural gas.
And there is much more to look forward to. The Marcellus is the largest
producing field in the world, appraised at hundreds of trillions of cubic feet
of supply. Ongoing coal retirements and the closing of Three Mile Island nuclear
plant should extend gas’s current 50–55% share of Pennsylvania’s power
generation. Data from the Department of Energy indicate that this shift from
coal to gas has cut the state’s CO2 emission rate for electricity a staggering
75%, to 720 pounds per megawatt hour.
Not particularly sunny or windy, Pennsylvania currently has 23,200 megawatts
(MW) of gas capacity versus just 1,500 MW for wind and 90 MW for solar. And with
the state’s paltry 30 MW of battery-storage capacity, it’s clear that gas will
remain essential to compensate for the inherent intermittency of renewables and
ensure grid reliability. Indeed, it’s telling that the most green-leaning
states, such as California, New York, and Massachusetts, are all gas-dominant.
In tandem with Shell’s coming ethane-cracker plant in Beaver
County, a huge but low-cost shale resource gives Pennsylvania a chance to rival
the Gulf Coast as a manufacturing hub, now strongly bolstered by Act 66. The $6
billion Shell project is set to start operations in 2022 and create 600
permanent jobs. Politico reports that natural gas offers some of the
highest-paying energy jobs in the country – paying $30.35 per hour versus $24.50
for solar, adding up to $12,000 more per year for each worker.
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All this explains why Governor Tom Wolf’s plan to
push Pennsylvania into the Regional Greenhouse Gas Initiative (RGGI)
is so disconcerting. The cap-and-trade scheme has snared New York
and the New England states, which now have the highest electricity
prices in the country, a key reason why Chief Executive magazine
regularly ranks them among “the worst states for business.”
Pennsylvania would be the only major energy producer in the RGGI,
with the irony being that the others are highly dependent on the
Keystone State’s shale supply. Thus, the RGGI, made worse by Wolf’s
$4.5 billion proposal for a severance tax, could be a serious blow
to a gas industry already burdened by the after-effects of Covid-19.
Such “shoot yourself in the foot” energy policies could also push
companies to move to competing states, such as Ohio and West
Virginia, doing their best to entice the industry to develop further
its Marcellus and Utica shale plays.
Pennsylvania also stands to benefit from the rapid
emergence of the U.S. as potentially the world’s premiere exporter
of liquefied natural gas (LNG). Huge amounts of American shale are
being sought to help Asian coal-based economies reduce their CO2
emissions and clear hazy city skies. Exporting a modern fuel like
natural gas is not only a quick win environmentally but also a moral
imperative: six of every seven human beings live in still-developing
countries, where energy poverty blocks progress at every turn. LNG
exports can also combat the influence of Russia’s Gas Exporting
Countries Forum, which wants OPEC-like control over the globalizing
gas market. Afraid of losing his stranglehold on Europe’s energy
supply, Vladimir Putin has conducted an extensive anti-shale
campaign. A LNG export terminal in the Philadelphia-New Jersey
region, for instance, would help our European partners rein him in.
Finally, it often goes unmentioned that the U.S.
natural gas industry continues to get cleaner and more efficient,
across the entire value chain. Data from the U.S. Environmental
Protection Agency show that from 1990 to 2019, annual greenhouse gas
emissions from gas distributors plunged about 70%, even as utilities
added more than 788,000 miles of pipeline to serve 21 million more
customers. Pittsburgh-based EQT, the country’s largest gas producer,
supports the Biden administration’s goal of regulating the
industry’s methane emissions to fight climate change. One
international study credits the Marcellus gas industry as “best in
class” for reducing CO2 emissions. Companies are looking to deploy
carbon-capture and sequestration technologies and make substantial
investments in hydrogen to help meet emission-reduction goals, while
also examining ways for renewables to power their operations. In
particular, European climate performance standards for natural gas
should give Marcellus LNG a competitive edge.
It’s no surprise, then, that Pew Research finds that nearly
three-quarters of American adults support more natural gas
development. Shale supporters stand on the right side of history.
Jude Clemente is editor at RealClearEnergy and lives
in Squirrel Hill, Pittsburgh, with his wife and their three
daughters. |
