Dive Brief:
- Shale gas was the largest source of U.S. production in 2013, having increased from 5 Bcf/d in 2007 to 33 Bcf/d in 2013, according to data from the U.S. Energy Information Administration.
- Now representing 40% of total natural gas production, Florida utilities are eyeing investments in shale wells, allowing them to lock in supply for power generation while also profiting from the investment.
- Florida Power & Light has filed a $750 million proposal to invest in Oklahoma gas wells and Duke Energy has signaled it may follow. But according to the consumer representative at the Florida Public Service Commission, regulators should not permit the utilities to spend customers' money based on "faint promises of speculative fuel savings."
Dive Insight:
"New technology has enabled producers to shift production to resources that are now easier to reach and have lower drilling costs," EIA said of the boom in gas production. "These trends have been reflected in a lower market price of natural gas."
According to EIA data, Oklahoma wells pulled out 6.51 Bcf/d of gas in September, up 1.2% from the month before. If Florida utilities invest in gas production they could potentially save ratepayers money — or stick them with higher bills if wells don't yield as expected.
FPL has a placed a proposal to invest in Oklahoma wells before state regulators, and Duke Energy will likely do the same if the proposal is approved. But consumer advocates are wary of the risks.
The Tampa Bay Times reports that profit is likely the motive behind FPL's move. Currently Florida utilities do not make profit on their fuel consumption, but shale gas exploration might allow them to, if ratepayers will pick up the cost.
"FPL should not be permitted to spend the customers' money on the faint promises of speculative fuel savings on investments in gas reserves transactions based on faint promises of speculative fuel savings," Charles Rehwinkel, state deputy public counsel, said in opposition to the proposal.
