The next power plant in Pennsylvania will be powered by natural gas as coal fades from the U.S. energy landscape. Photo by Reinhard Tiburzy/Shutterstock
HOUSTON, July 6 (UPI) -- A Houston-based oil and gas company working primarily in U.S. shale basins said it signed a 10-year deal to supply natural gas for a Pennsylvania power plant.
Cabot Oil & Gas Corp. signed a 10-year sales agreement to become the sole supplier to a 1,500-megawatt plant planned for Lackawanna County, Pa. Billed as one of the most efficient power plants in the country, the Lackawanna Energy Center power plant will start full-scale operations by the end of 2018.
Dan Dinges, the company's top executive, said the agreement is unique in that it will power a state-of-the-art facility from natural gas "directly in our backyard."
The announcement comes as the energy landscape is shifting away from coal. According to the Pennsylvania Coal Alliance, the state relies on coal for about 40 percent of its electricity. A federal report, however, finds the amount of coal produced in the United States is the lowest it's been since the early 1980s.
Generating electricity accounts for nearly all of the coal use in the United States. Power plants during the fourth quarter received more coal than they consumed, leaving a net surplus of coal on the market.
Natural gas is becoming the primary source of electricity in the United States. Prior to April 2015, the total monthly share of electricity generated by coal had always been greater than gas, data from the U.S. Energy Information Administration show.
Cabot relies almost entirely on natural gas found in the Marcellus shale basin, which lies beneath Pennsylvania. During the first quarter of this year, the company produced on average 1.6 million cubic feet of natural gas per day from Marcellus, an increase of 10 percent from fourth quarter 2015.
Pricing terms on the Lackawanna power plant are confidential.