Energy and COVID-19 in Pennsylvania

As results to the COVID-19 pandemic, solar leasing in Pennsylvania may be on pause as land agents, court houses, and other services may be grounded. This does not mean that actions can't be taken remotely that would allow offers to be made and decisions regarding leasing offers can be considered. To learn more about solar leasing, join Penn State Extension's webinar on "Leasing your Land for Solar Energy Development".

Natural gas prices have been low and futures contracts indicate they will remain low in the near term. This is "shoulder season" in the business, which means that a lot less energy is used in the spring and fall as heating and cooling needs are at their lowest points. Mild winter temperatures have led to less gas withdrawn from storage and the Appalachian Basin has continued to produce more gas each year. COVID-19 in general has led to less energy consumption as more people stay home and businesses and factories are shut down. In addition, the construction of the ethane cracker plant in Beaver County has been delayed as this project is temporarily halted. This will likely slow demand for additional ethane. In addition, this is about 8,000 employees not going to work at the cracker plant and a lot of associated businesses affected. With exceptionally low oil prices, gas producers may benefit from less "associated gas" that is being produced in concert with oil from basins like the Permian and Bakken shales. Construction of pipelines and wells continues to be allowed in PA and surrounding states. Current pricing stands at $1.30 to $1.40/MMBtu for Natural Gas in PA according to Natural Gas Intelligence (spot price averages on March 24), while the Henry Hub/NYMEX price is about $1.65. There are still rigs operating in PA, but most companies have announced a cut in their capital expenditures. Rig Count as of March 20 was listed at 39 in the Appalachian Basin, with most of these rigs operating in Pennsylvania.

Oil prices have plummeted recently on the dual news that OPEC was increasing production, and COVID-19 has decreased demand. This has resulted in lower gas prices at the pump. Experts are predicting this will remain the case until production decreases and demand increases.

Power demand (electricity) is decreasing with less activity as well.