Appalachian Swing States Emerge as Energy Leaders in Pandemic

John D. Siciliano
Posted July 24, 2020

Key Appalachian swing states continue to competitively produce the majority of America’s natural gas supply, despite a global pandemic that continues to pose major challenges for the industry. 

Natural gas production in Ohio, Pennsylvania and West Virginia has skyrocketed in the last decade, making the Appalachian region the No. 3 natural gas producer globally behind Russia and the remainder of the United States. This has transformed the region into an energy powerhouse, one that continues to show room for growth.  

In his recent blog post, API Chief Economist Dean Foreman explained that Appalachia, when combined with the Haynesville shale region in the Southwest, currently represents 90% of the nation’s natural gas directed drilling activity amid the pandemic. That this happened during a time of historically low energy demand and low energy prices suggests that dedicated drilling for dry natural gas (vs. oil with associated natural gas) has achieved low breakeven price requirements that make it competitive.

It’s also notable because Ohio and Pennsylvania are Election 2020 battleground states. Their energy and economic stories figure to play an important role as the campaign intensifies. Same for West Virginia, where the natural gas surge has not gone unnoticed by voters, according to polling. Voters agree that improvements in the state’s economy will come from natural gas development compared to other industries. And 83% see the natural gas industry as good for the state by creating local jobs. 

Appalachia has remained competitive, and natural gas has helped consumers economically with everyday savings. An industry analysis showed that increases in U.S. natural gas supply, led by growth in Appalachia, created $1.1 trillion in cumulative energy savings since 2008 by increasing supply, benefitting residential and commercial users. The analysis also showed that savings have spread across the electric utility sector, heavy manufacturers and many other segments of industry, with those savings being passed down to consumers in Pennsylvania, Ohio, and West Virginia.

Natural gas has also generated millions in state and local tax revenues. These in turn have been used to assist communities with building new infrastructure and maintaining services. An industry analysis from last fall showed that shale companies operating in eight Ohio counties paid nearly $142 million in real estate taxes between 2010-2017. More than double that amount was contributed by the natural gas and oil industry through direct capital investments in the state, according to a separate report.

In West Virginia, the state’s revenue collection agency reported a 40% increase in tax revenue from the industry, providing $123 million to local schools and vital community services in 2019.

The good news is that the economic benefits of natural gas production are expected to grow with the construction of largescale petrochemical facilities in the region, adding jobs and billions of dollars in investment. A report released by the American Chemistry Council showed billions more in tax revenues for Appalachia over the next five years, in addition to the thousands of jobs that will be created.

The environment also benefits, as cleaner natural gas is replacing coal as the region’s leading fuel for electricity generation. Pennsylvania doubled the amount of electricity it generates from natural gas between 2010-2018, the U.S. Energy Information Administration (EIA) reports. The Keystone State now generates 36% of its electricity from natural gas, while the share of electricity it generates from coal fell by more than half to 21%.

The same transition is occurring in the Buckeye State, where EIA recently reported that natural gas generated more of Ohio's in-state electricity than coal for the first time in 2019. Ohio’s transition from a predominantly coal-fired electric grid to one fueled primarily by natural gas is but one example of how the shale revolution has reduced carbon dioxide emissions to their lowest level in a generation, while helping consumers meet their energy needs and the economy to prosper.