Tuesday, December 20, 2011

Marcellus Gas Transported To PA Customers, Producing More Savings

A new source of savings for gas consumers in Pennsylvania is emerging due to the shale boom.

A residential gas bill consists of three basic parts: the cost of gas itself, the cost of transporting the gas from  gas wells to what is called the "city gate," and the cost of metering, billing, and distributing the gas to each and every home and business within a gas utility service territory.  Both the cost of gas and the cost of transporting gas to Pennsylvania customers have fallen since 2008.

For example, UGI has just opened a pipeline that means 15,000 of its gas customers in Northeastern Pennsylvania will get gas directly from Pennsylvania's shale wells.
http://www.centralpennbusiness.com/article/20111219/CPBJ01/111219842/UGI-opens-direct-from-Marcellus-pipeline.  This project will reduce gas bills, because traditionally transportation costs of bringing gas from Canada, Alaska, or the Gulf Coast could be 30% of a total gas bill.  Transportation cost savings will be increasing as more of the Marcellus gas avoids or limits the use of interstate pipelines and goes directly to Pennsylvania customers.

The gas transportation cost savings will be added to the approximately 70% reduction in the spot market price of gas from July 2008 to now that the surge of shale gas has yielded.  How big is the shale gas surge?  According to Daniel Yergin, shale gas provides today 34% of total US gas supplies.

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