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Fracking And Natural Gas Have Cut Pennsylvania's CO2 Emissions 30%

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Thanks to the mighty Marcellus shale play, Pennsylvania's natural gas production has boomed nearly 30-fold since 2005. At over 16 billion cubic feet per day (Bcf/day), the Marcellus, also being developed in West Virginia, now produces more gas than all of Canada. Our shale revolution is even more remarkable because it has generally come in spite of lower prices, a problem that obviously makes producing energy more difficult.

Rising shale has also led to a natural gas power generation revolution in once coal-dominant Pennsylvania. Electricity is a baseload demand market that usually comprises 40-45% of a state's energy usage. The Keystone State has extended its gas capacity to about 12,200 megawatts (MW), up from 9,400 MW in 2010.

Unfortunately, with many coal plants coming offline, Pennsylvania's overall power capacity has actually fallen from about 46,000 MW back in 2009 to 42,000 MW today. Thus, as a growing economy and population where power shortages mean more blackouts, the nearly $15 billion now being invested in new gas plants in Pennsylvania is crucial. Pennsylvania will see most of the 10,000 MW of coal capacity retired nationally 2016-2017 (here).

More Natural Gas Production in Pennsylvania = More Natural Gas Electricity

Source: EIA; JTC

Pennsylvania's natural gas boom has had the measurable benefit of lowering total CO2 emissions in the state's power sector by about 30%, a very important development because it's absolute emissions that are required to tackle Climate Change. As for unit of electricity produced, Pennsylvania has evolved from emitting about 1,300 pounds of CO2 per MWh in 2005 to just 910 pounds today, another example of why anti-fracking positions make little environmental sense.

This 30% reduction in CO2 emissions per MWh over 10 years is actually better progress than what has been experienced in California's power market, continually cited as EPA's exemplar for other states to follow (here). Since California first installed its Renewable Portfolio Standard in 2003, the state's CO2 per MWh has surprisingly stayed at around 630 pounds, even increasing in some years (see EIA data, here). And Pennsylvania has tremendous room for natural gas growth: gas is only about 30% of Pennsylvania's power generation, compared to over 60% in California.

So, despite not being blessed with the great sunshine and wind areas that California has, Pennsylvania has been lowering its CO2 emissions rate faster with shale gas. And California: has power rates that are about 40% higher, has a very expensive regulation of 50% RPS by 2030, and is forced to import 33% of its power. And also in stark contrast: California imports over 90% of its natural gas, while Pennsylvania supplies the clean energy source to surrounding states, like New York (here).

Pennsylvania does have an Alternative Energy Portfolio Standard, which calls for 18% all energy generated in the state come from alternative and renewable sources by 2021, including a very realistic 0.5% from solar. The standard "only requires renewable energy to account for about half of the total requirement."

As for the source of the 30% reduction in total CO2 emissions in Pennsylvania's power sector, let's examine the facts. From 2005-2015, solar remained at 0% of electricity, hydro-electric stayed at 1%, wind increased from 0% to 1.5%, nuclear stayed at 35%, and overall annual power demand stayed about the same, 216-220 terawatt hours.

Thus, reduced CO2 emissions in Pennsylvania's power sector can almost entirely be attributed to natural gas displacing coal and petroleum. Since 2005, coal's share of Pennsylvania's electricity has fallen from 55% to 30%, while oil's share is down from 2.3% to 0%.

Natural gas-based electricity emits 30% less CO2 than oil and 50% less than coal, and has a lot less mercury, soot, sulfur dioxide, and nitrogen dioxide pollution. As for production, EPA data shows that methane emissions from the gas output system has plummeted over 40% the past decade.

I've already shown how U.S. air quality overall has DRASTICALLY (and inconveniently for some) IMPROVED, and as for that of Pennsylvania's Marcellus region: “The air is the cleanest it’s been since the Industrial Revolution,” says Jim Thompson, manager of the Allegheny County Health Department’s Air Quality Program.

Pittsburgh, long ago known as "The Smokey City" or "Hell with the lid off," has come a long way. Pittsburgh is the largest city in Allegheny county, and improved air quality from natural gas helps the city's most vulnerable: Forbes interestingly ranks Pittsburgh as "the oldest city in America...where 23.6% of the metro area’s population is over 60."

In future, natural gas will be just as key for Pennsylvania because the state will need to cut its CO2 power sector emissions by 30-40% by 2030 to meet EPA's Clean Power Plan (here), not to mention the fact that it's gas that backups intermittent wind and solar.

More Natural Gas Electricity = Less CO2 Emissions

Source: EIA; JTC

Pennsylvania's rising natural gas production is of national and international significance. Contrary to what the anti-oil and anti-gas business might be telling you, Pennsylvanians should be very proud of their shale energy boom. And the benefits go far beyond demonstratively better air and fewer CO2 emissions.

The Internet is rife with stories documenting the economic and environmental benefits of the Marcellus, probably the largest natural gas field in the world, but let me pass along just a few.

"The industry has contributed more than $34 billion to the state’s economy. Energy production in Pennsylvania saved state and local governments $19 billion and public schools $45.5 billion in 2012-2013."

In fact, perhaps Pennsylvania's fastest growing industry, the oil and gas business now has more than twice as many workers as the coal mining industry for which the state is traditionally known. Pay in oil and gas is nearly 75% above the average pay in the state (here).

In 2005, before the shale boom, Pennsylvania's income was equal to that of the nation, but it is now about 3% above the national average, a per capita personal income in Pennsylvania of $49,180. Shale has helped make land owners rich (here), and lowered prices for families to save on energy bills (here). 

The reliable and affordable energy that comes from shale gas gives Pennsylvania manufacturers a critical competitive advantage. "Pennsylvania’s shale industry has been a boon to the region's steel industry with many of the manufacturing centers bringing on new employees to accommodate the oil and gas industry."

Indeed, the Marcellus is a key reason why the U.S. will soon become a net gas exporter and help buffer the influence of energy-empowered despots and dictators around the world. And it's the Marcellus that has been the driving force behind U.S. power sector emissions being their lowest in decades.

Looking forward, Pennsylvania is a booming non-traditional oil and gas region that is changing the entire U.S. and global gas markets by making natural gas, the world's fastest growing major fuel and the energy source that will be leaned on most to meet environmental goals, more available.

Along with the Utica shale play in Ohio, the Marcellus is the driving force behind an expected 45% increase in U.S. gas production by 2040, with the Marcellus adding perhaps as much as 5-8 trillion cubic feet (Tcf) per year in new supply alone. As importers not producers, surrounding states will be increasingly dependent upon this gas, which is now slated to reach as far away as Florida (here).

The industry continues to impressively reduce costs and increase efficiencies to support production volumes in a low priced environment, the average break even price for shale has declined 33-50% in recent years.

Other states, like New York, that love to use fracked gas but won't produce it itself, should be thanking Pennsylvania for producing and exporting so much. Again, it's gas that will dominate under EPA's Clean Power Plan, particularly since wind and solar are most often unavailable and nuclear plants are getting retired, not built. 

These natural gas facts point to another energy reality that the "anti-frackers" must come to grips with. The country in general needs more pipelines to get more access to the Marcellus and Utica gas surge. Centered on new takeaway capacity in the Northeast, from 2015-2030, EIA reports that the country needs 38-42 Bcf/day in new pipeline additions, or about half of our total production.

For example, a lack of pipelines caused gas prices to spike during the Polar Vortex of 2014 (here), and the New England states have non-sensicially been forced to import expensive liquefied natural gas from risky Yemen because they lack access to more affordable Pennsylvania shale (here).

And despite the very challenging times the industry faces right now because of sunken oil and gas prices, we can rest assured the gas supply is there and the future remains very bright. Pennsylvania's gas reserves are up around 65 Tcf, a 5-fold jump since 2010 alone. As prices rise from the ongoing rise in demand, even more of the 500 Tcf of the Marcellus resource will become available.

So, take these natural gas facts to heart Governor Tom Wolf, now proposing the Pennsylvania's gas drillers to pay a 6.5% tax on Marcellus production, a questionable move given the difficult times and a failed attempt to get anywhere last year with the lower 5% extraction tax proposal.

Perhaps Marcellus partner West Virginia is providing a better example. In March, Democratic Governor Earl Ray Tomblin approved tax breaks for West Virginia’s rising shale gas industry.

There's much at stake here Governor Wolf.

Surrounding State's Will Need Pennsylvania's Natural Gas

Source: Market Realist