Southwestern Pennsylvania set to be major player in energy market, expert says
Already known for the Marcellus shale natural gas boom, Southwestern Pennsylvania stands to become a crucial player in driving demand for more natural gas in the next several years, an expert said Tuesday.
Jeff Quigley, director of energy markets at the Houston-based Stratas Advisors, said Marcellus shale production levels will increase as trends toward greater reliance on natural gas for power generation and industrial uses continue.
“Power generation is definitely one of the biggest incremental drivers of new demand,” he said. “Close behind it is going to be industrial sources of demand.”
Quigley, one of four speakers scheduled for the Guttman Energy 2017 Energy Forum in Canonsburg on Wednesday, will address the outlook for U.S. natural gas demand, supply and inventory levels, among other things.
“We're very bullish on natural gas at the global level and how the U.S. will play a role in that,” he said.
Forbes magazine recently reported that the Marcellus and Utica shale plays in Pennsylvania and Ohio represent 85 to 90 percent of the growth in U.S. shale gas production since 2012, with the Marcellus shale being responsible for 18 billion cubic feet per day in 2016.
Partly because of the Marcellus and Utica shale plays, the United States became a net exporter of natural gas last year.
The energy forum conference comes at a time of increasingly dire predictions for the U.S. coal industry and an increasingly optimistic outlook for natural gas downstream opportunities, such as refining, processing and petrochemical manufacturing.
Dayton Power & Light announced Monday that it plans to close two coal-fired plants in southern Ohio in 2018. Quigley predicted that 10 to 15 percent of the U.S. coal fleet will be retired in the next three to five years.
On the natural gas side, power plants such as the Tenaska Westmoreland Generating Station near Smithton and petrochemical plants such as the Shell ethane “cracker” facility in Beaver County are driving more optimistic forecasts.
Such plants rely on natural gas as their primary feedstock for electrical power generation and for the development of natural gas liquids such as ethane, propane and butane, which have a variety of manufacturing uses.
“The U.S. has the ability to make more petrochemicals and make more stuff from petrochemicals and export it to the rest of the world,” Quigley said. “The U.S. is positioning itself to be a pretty substantial exporter of petrochemical derivatives.”
Quigley said cleaner-burning natural gas is on pace to eventually displace coal for power generation.
“There's still a place for coal in the U.S. energy mix, but a lot of the things that are hurting it in the Appalachian region are on the regulatory side,” he said.
Quigley said as gas prices have gradually risen to the mid $3 range, the active rig count in the Marcellus shale has improved.
“We see natural gas prices getting stronger, but it's not likely that we're going to go back to the $7, $8, $9 range,” he said. “We don't really see a big uptick in prices until the new infrastructure comes online.”
Stephen Huba is a Tribune-Review staff writer. Reach him at 724-850-1280 or email@example.com.