Cabot Oil & Gas Corp. has struck a 10-year sales agreement to exclusively supply a 1,500 MW natural gas-fired power plant in Northeast Pennsylvania.
Invenergy LLC's Lackawanna Energy Center is scheduled to enter full-scale operations by year-end 2018. Cabot would supply the facility with Marcellus Shale gas, it said Tuesday. At maximum capacity, the plant would burn up to 240,000 Dth/d.
The Pennsylvania Department of Environmental Protection approved the facility's air permit in December (see Daily GPI, Dec. 28, 2015). It would be located in the Borough of Jessup in Lackawanna County. Cabot has already agreed to supply the 1 GW Caithness Moxie Freedom natural gas power plant in nearby Luzerne County, PA.
Cabot's production in the Northeast part of the state has been constrained by a lack of takeaway in recent years. CEO Dan Dinges said on the company's first quarter conference call that Cabot has been working on finding more customers for its natural gas (see Shale Daily, April 29). The company now has 700 MMcf/d of takeaway capacity coming online in 2018, excluding the Constitution and Atlantic Sunrise pipeline projects, according to Tudor, Pickering, Holt & Co.
The utility South Jersey Industries (SJI) is also a counterparty to the deal with the Lackawanna plant through an exclusive supply fuel management service agreement. SJI is also delivering natural gas to the Caithness Moxie project.
Cabot said confidential pricing terms under the agreement "guarantee" it "attractive rates of return while providing fuel costs directly linked to power prices." Combined with the Caithness Moxie agreement, Cabot would supply more than 400,00 Dth/d to the generation facilities.