Natural gas produced from Marcellus Shale wells owned by Shell Upstream America and Ultra Petroleum Corp. has begun flowing through a UGI Central Penn Gas Inc. supply pipeline that feeds some 15,000 customers in Tioga, Bradford and Potter counties in Pennsylvania, according to the UGI Utilities Inc. subsidiary.

"For the first time in history, Pennsylvania's natural gas is flowing directly from the well to UGI customers," said Vicki Ebner, UGI senior vice president for customer and government relations. "This direct interconnection from energy source to consumer is the type of infrastructure necessary for Marcellus Shale to reach its full potential."

UGI recently said it was cutting residential heating bills 4.5-13.5%, thanks in large part to the flood of shale gas depressing prices in the region (see Shale Daily, Dec. 5). UGI customers are paying about 30% less than they did three years ago, Ebner said.

"We expect prices to have much less volatility in the near future because of the potential we have under our feet. The positive impact on consumer costs has led to a record number of conversions -- energy consumers converting from other fuels to natural gas. All indications are that the market is absolutely ripe for this trend to continue," Ebner said.

Reading, PA-based UGI serves about 570,000 gas customers in eastern and central Pennsylvania.

UGI Corp. is heavily invested in the Marcellus (see Shale Daily, April 21). In 2010 it announced plans to spend $300 million on projects to improve transportation access and increase storage in the region. Last year UGI Energy Services Inc. (UGIES) agreed to gather the Marcellus production of Citrus Energy Corp. in Wyoming County, PA (see Daily GPI, Sept. 22, 2010). And UGIES recently announced a $150 million project to add 30 miles to its Auburn Gathering System in northeastern Pennsylvania, connecting prolific production areas to the Transcontinental Gas Pipe Line (see Shale Daily, Oct. 24).