Will The TVA Jump Start The Chattanooga Shale?

A new natural gas powered facility in Tennessee is being hyped by some as the impetus to the long awaited development of the Chattanooga Shale. The Tennessee Valley Authority is proposing to build an electric plant to come on line in late 2011. The electric plant will cost $820 million and have three gas turbines when it is fully completed.

The plant will require 160 million cubic feet per day in natural gas, compared to current production in Tennessee of 16 million cubic feet per day in natural gas. Although the construction of the plant may lead to more “home grown” production from The Chattanooga Shale, there is an oversupply of natural gas in nearby states that can be used by the electric plant.

The bottom line is that most of the exploration and production industry is not developing the Chattanooga Shale because they are more comfortable with the geology and cost curve of competing shale plays in North America.