New Gas-Fired Power Generation Flourishes Around Marcellus Shale

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Researched by Industrial Info Resources (Sugar Land, Texas)--The Marcellus Shale is a hotbed of natural gas development in the U.S., attracting plenty of spending in the Pennsylvania, Ohio and West Virginia tri-state area. Its readily available and relatively inexpensive natural gas, combined with a high population density, has caused a surge in natural gas-fired power generation development in Pennsylvania, which is now second only to eastern Texas in project spending.

The cheap price of Marcellus gas also means that regions with direct pipeline access to the shale have seen more gas-fired capacity being developed. Using Industrial Info's "Map It" tool, it is possible to trace major pipelines, existing and new, carrying gas out of the Marcellus.

According to Industrial Info's data, there are 19 active gas-fired capacity addition projects in Pennsylvania, representing more than $9.6 billion in investment. The Keystone State also boasts 64 new natural gas midstream projects, representing more than $3.8 billion. This new infrastructure provides better market access for Marcellus producers, allowing them to transport their gas to more customers, and helping increase the price of gas in the region.

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Due to the web-like interconnection of pipelines in the U.S., increased production and market access in Pennsylvania is spurring development in both gas supply and demand hundreds of miles south. Transcontinental Pipeline (Transco), owned by Williams Companies Incorporated (NYSE:WMB) (Tulsa, Oklahoma), is expanding its mainline system and adding bidirectional capability to transport Marcellus gas to the Carolinas.

The increase in gas being sent into the area means cheaper natural gas for local consumers. This price decrease would explain the new gas-fired capacity being developed along the pipeline's path in North and South Carolina by companies such as NTE Energy, a subsidiary of NTE Solutions (St. Augustine, Florida). NTE Energy is developing the Kings Mountain Energy Center, a 480-megawatt, combined-cycle power plant in western North Carolina.

With the increased power development at the source, as well as increased natural gas from the Eagle Ford Shale, gas prices between the Gulf Coast and Northeast regions are bound to fluctuate.

As seen with Transco, natural-gas pipeline operators are choosing to make their lines bidirectional, rather than simply reverse them, in order to increase their flexibility should moving gas out of the Marcellus cease to be profitable. While this scenario is unlikely, as population (and thus the need for power) continues to increase in the Marcellus states, shippers may find themselves shipping gas from the Gulf Coast up to the Mid-Atlantic to compensate for less Marcellus gas. Likewise, shippers may find themselves flowing almost exclusively to the Gulf Coast as liquefied natural gas export terminals begin to be brought online and supply to the Mid-Atlantic from the Gulf Coast slows.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.