Cheap natural gas in the north east United States is helping Walt Disney World in Florida cut its energy bills.
The Reedy Creek Improvement District, which supplies power to the huge resort near Orlando in central Florida, is already benefiting because of a glut north east shale gas.
The district, which has a gas-fired co-generation plant and operates its own electric grid, is connected to Kinder Morgan’s Florida Gas Transmission pipeline system.
Reedy Creek customers “have seen lower electric energy supply costs as a result of shale gas supply,” Ann Blakeslee, the district’s deputy administrator said.
And a glut of even more shale gas will be heading south by the end of the year, radically changing the price differences between the regions.
Gas from the Marcellus reservoir will be piped to southern states as early as Q4 2015. That’ll narrow the premium for gas in the south east to as little as 30 cents per million British thermal units from more than a dollar versus the north east.
New pipelines are closing the divide between the winners and losers of America’s shale revolution as long-awaited supplies from tight-rock formations move to southern states and other regions. Without a Marcellus of its own, the south east, including Florida, where demand is booming, has missed out on the cheap fuel that has come with increased output.
“These projects will definitely reduce the spread between the north east and other regions,” Tony Franjie, senior natural gas analyst for Genscape in Texas
“Everyone but those near the shale plays has kind of missed out on the boom. It’s just crazy what’s happened in the north east.”
Gas output in the Marcellus has jumped more than 14-fold since January 2007, reaching a record 16.5 billion cubic feet a day in June, according to figures from the US Energy Information Administration. Some of that will be shipped overseas in the form of liquefied natural gas.
Projects capable of carrying as much as 2.1 billion cubic feet a day, or about 17% of south east demand, are scheduled to begin service by the end of the year. Kinder Morgan’s Tennessee Gas Pipeline system will boost deliveries beginning in November. Spectra’s Ohio Pipeline Energy Network will start shipping to the south and mid west in the fourth quarter.
Some of that shale gas will flow to Florida, where power plant demand for the fuel hit a record for April, up 13 percent from a year earlier, based on the latest EIA data. The state is home to six of the 20 fastest-growing US metropolitan areas. Gas flows to the south east have more than doubled since 2007, according to LCI Energy Insight in El Paso, Texas.
The shipments underscore how quickly the Marcellus shale formation — spread across Pennsylvania, West Virginia and Ohio — has dominated the gas market. It has become America’s biggest producer in less than a decade and is now spreading its wealth across the country.
The pipelines coming online over the next three years will mark an “opening of the floodgates” to the U.S. Southeast, Schmidt said. “It’s a little bit of the best of both worlds. The producers should see some relief and consumers should see some relief in the heaviest demand season.”
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