Gas/Electric Industry Coordination


Why is natural gas becoming a more important fuel source?

In recent years, PJM has seen an unprecedented shift in its fuel mix – the variety of fuel sources that generators in PJM use to produce electricity. The main change is the increasing use of natural gas as a fuel source. Electric generation is the largest consumer of natural gas in the U.S., using 33 percent of gas resources, followed by industrial (31 percent), residential (21 percent) and commercial (14 percent) sectors. (Source: EIA Natural Gas Annual Consumption 2014).

Changing economics and environmental requirements for coal-fired generators combined with the low cost for natural gas have made gas a favored resource for new generation. For decades, coal has been the dominant capacity resource because of its low cost. When coal-fired generation is the lowest-cost electricity source, gas is called on more during times of high electricity demand. This resource dynamic is slowly changing because of the shale gas available in the PJM footprint.

Just under half of all gas storage in the United States is located in PJM’s footprint. Gas storage in PJM is located in western Pennsylvania, West Virginia and eastern Ohio.

Gas Pipeline and Gas Storage Points Map

The abundance of shale gas is being driven by technological improvements in the industry. New extraction methods have provided better access to natural gas trapped within shale rock formations, allowing more to be recovered from previously untapped reserves. From 2007 to 2013, shale gas production in the United States grew by more than 560 percent, according to the U.S. Energy Information Administration. Additionally, two of the largest shale reserves, Marcellus and Utica, are located in the PJM region.

Natural Gas Storage in PJM

Natural gas storage allows gas pipeline owners, marketers, local distribution companies and consumers to meet variations in gas demand. While storage provides a reservoir of gas resources, it still requires a means to transport the gas to where it is needed. The location of the storage in relation to the pipeline network and the end consumer is important. Because gas storage relies on geological formations, the location, as well as the number of storage “units” and their useable capacity, depends on regional geology. Geologic formations, such as aquifers, depleted reservoirs and salt caverns (think of them like bottles, in the ground), may store large amounts of gas. Depleted reservoirs, the most common type of storage in PJM, are seasonal: the gas is stored in spring, summer and fall and then withdrawn in winter. Salt caverns can be drawn from anytime. Depending on the type of natural formation, there may be operational limitations on the amount and number of gas withdrawals in a given time period.