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Marcellus Gas Producers to Benefit from New Electric Lines

Big utility has proposed a $4 billion to $6 billion investment in new electric lines for Pennsylvania that will make investments in natural gas fired power plants more attractive, thus increasing the long term demand of Marcellus Shale gas production.

The proposal, by PPL Electric Utilities Corporation, a subsidiary of PPL Corporation (NYSE: PPL), consists of building a major regional transmission line that would connect most of Pennsylvania and parts of New York, New Jersey, and Maryland.

PPL says that the new lines would make electric service more reliable and secure, while reducing costs for electricity consumers.

In addition, the utility company expects that the new 750 mile, 500 kilovolt line would attract investments to lower cost cleaner-burning natural gas fueled power plants which would replace the many coal fired plants set to retire over the next decade or so.

The region, already seeing capital flow to Marcellus Shale natural gas production, would certainly like to see sustainable investments for years to come.

“This is a forward-looking project with significant benefits for customers, for several states and for the region as a whole,” said Gregory N. Dudkin, president of PPL Electric Utilities, in a company statement.

Currently being constructed in Bradford County, PA, the Panda Liberty Power Project (Panda Liberty), a natural gas-fueled, 829-megawatt combined-cycle generating station, is expected to provide power for up to one million homes.

Panda Liberty claims that once completed, the plant “should infuse approximately $5.9 billion into the North Pennsylvania economy.”

The project began in August 2013 and is expected to be complete over the course of 30 months.

Plants like Panda Liberty will benefit from the surge in natural gas production being realized in the Marcellus shale.

Currently, the Marcellus Region generates about 40% of U.S. shale gas, making it the largest producing shale gas basin in the country according to the Energy Information Agency (EIA). In July, daily production levels surpassed 15 billion cubic feet per day (Bcf/d) up from 2 Bcf/d per day in 2010.

The EIA expects production rates to continue to rise.

MDS Energy Development, LLC (MDS), an integrated exploration firm with a focus on the Marcellus, sponsors natural gas private placements through independent broker-dealers.

If approved, the PPL project along with investments in natural-gas fired power plants would certainly be a boon for companies like MDS.

“As a natural gas producer, we are excited to see the market is realizing both the output potential and longevity of the Marcellus Shale and investing accordingly. Large, long-term consumers like electric generation plants and export facilities making these types of billion dollar infrastructure investments sends a strong signal to investors contemplating smaller projects that use natural gas as a feedstock for their value-added products. The aggregation of these small and large investments is likely to result in a robust and sustained increase in regional demand,” said Michael S. Knapp, Vice President of Land & Public Relations of MDS.

If approved, the PPL regional transmission line, could power long-term economic growth for Marcellus producers and many business aspects of Pennsylvania’s economy.