Marcellus Shale Production Yields “Game-Changing” Benefits

Now generating twenty percent of the nation’s natural gas supply, shale production in Pennsylvania is soaring to record levels, according to recent production reports from the Pennsylvania Department of Environmental Protection and the U.S. Energy Information Administration. And we’re reaching these levels “with a lot of focus on making sure it gets done correctly,” said Marcellus Shale Coalition president David Spigelmyer in a recent interview with the Pittsburgh Business Times.

This week, MSC Members CONSOL Energy and Noble Energy kicked-off a new project at the Pittsburgh International Airport, which Allegheny County Executive Rich Fitzgerald is calling “a win, win, win, win for this region.”

This project, which is estimated to generate $20-$25 million per year in new revenue for the airport, will also create additional opportunity along the natural gas supply chain, stimulate the local economy while strengthening our nation’s energy security.

Here’s what they are saying about this “game-changing” opportunity:

PENNSYLVANIA PRODUCTION RISES “DRAMATICALLY” 

  • Pennsylvania producing 20% of national gas supply: Pennsylvania’s shale gas wells yielded a record amount of natural gas during the first six months of 2014, producing about 1.9 trillion cubic feet, according to data provided by the Pennsylvania Department of Environmental Protection. Compared to the last six months of 2013, production increased a bit more than 14 percent. And compared to the first six months of that year, production rose 38 percent. David Spigelmyer, president of the Marcellus Shale Coalition, said production is on pace to top 4 trillion cubic feet by year’s end, despite a rig count that’s about half of what it was in 2012. “The efficiencies have grown dramatically,” he said. … Spigelmyer said in 2008, unconventional wells were producing one-quarter of Pennsylvania’s gas supply. Now, they’re producing 20 percent of the national supply. “That’s a pretty extraordinary feat, and we’re doing it with less disruption and with a lot of focus on making sure it gets done correctly,” he said. … In southwestern Pennsylvania, Washington County was the top producer, yielding 198 billion cubic feet. … Spigelmyer said he believes future growth could be constrained by a pipeline infrastructure that hasn’t yet caught up with the rapid growth. (Pittsburgh Business Times, 8/26/14)
  • Pickens: Pennsylvania natural gas production approaching that of Texas: The oil and gas industry is the most dynamic industry in the U.S. and will remain so for a long time, according to T. Boone Pickens … who spoke Monday during Gov. Tom Corbett’s Jobs 1st Summit in Pittsburgh. “What an opportunity for our country with 30 of our states being producing states,” he said. Pickens said the country should take advantage of its energy resources and convert its fleet of commercial heavy-duty trucks over to natural gas. And it should form a strategic energy alliance with Canada and Mexico. … Pickens also noted Pennsylvania’s natural gas production is quickly approaching that of Texas. (Pittsburgh Business Times, 8/25/14)

SAFE SHALE DEVELOPMENT AT PITTSBURGH AIRPORT TAKES FLIGHT

  • Allegheny Co. executive: We are “posed to be an energy capital”: Consol has built two well pads and plans to construct four more to drill a total of 47 Marcellus Shale wells in a footprint located on more than 9,000 acres of county-owned land near the airport. The Canonsburg-based company expects the airport project will bring more than $1 billion to the region, including a $50 million bonus payment paid to the Allegheny County Airport Authority last year, 18 percent royalties to the authority over the next two decades and $500 million in capital spending by Consol. “This is a good way to utilize public lands, public assets, to benefit the public. This public-private partnership, if you will, this arrangement, is going to be very beneficial,” said Mr. Fitzgerald, who said the benefits will be especially significant for the airport. … Revenues from shale development — Mr. Fitzgerald puts his estimate of the county’s take at $20 million to $25 million a year for the life of the lease — will go to pay down the airport’s debt. That will reduce per-flight costs to make the airport more competitive and attract flights back to Pittsburgh. “We’re sitting on a very valuable asset,” he said… With the kickoff of the airport project, Mr. Fitzgerald said Allegheny County is “posed to be an energy capital.” (Post-Gazette, 8/25/14)
  • CONSOL Energy breaks ground on “safe” shale development at PIT Airport: “The airport area is ripe for industrial and commercial development,” added Findlay Township Supervisor Janet Craig. … The first pad to drill is located closest to residents, says DeIullis, in order to reassure that this is safe. … “We know that the natural gas is here. We know we got the technology to unlock it. Our job is to get at it as safely and compliantly as possible.” Each well represents four hundred jobs with average pay and benefits of $90,000 a year. And here’s another benefit that local officials say will result from this development — energy independence for the United States, beginning right here in western Pennsylvania. … The county will use royalties from the drilling to upgrade the airport, lower gate fees, and promote economic development on airport property. … “We can use that shale money to create jobs in this part of the county,” noted Fitzgerald. … Taxpayers of Allegheny County will get an 18 percent royalty on all the gas that’s taken out. (KDKA, 8/25/14)
  • Marcellus Shale under PIT Airport to attract new flights, lower passenger costs: When Pittsburgh International Airport opened in 1992, it was built to be a hub for US Airways, then US Air. … And when US Airways left, the per-flight cost went up for the other airlines, making the airport less attractive to them. … Pittsburgh International Airport isn’t alone in its financial woes. With the airline industry in turmoil and as fuel prices rise, airports across the country have had to find creative ways to generate revenue. In Dallas-Ft. Worth, they’ve been extracting natural gas. San Francisco installed solar panels and generates energy. The largest blueberry producer in Georgia is at an airport. … The county hopes to make $500 million from natural gas in the next 20 years, an estimate that comes from lease holder Consol Energy. … “What we’re hoping, by lowering the cost using some of the shale money we will be able to attract the flights and start to stabilize those revenues,” he said. (WESA, 8/25/14)
  • MSC Member’s PIT Airport deal spurs investments, improvements: Consol Energy will conduct a groundbreaking ceremony on Monday for its project to drill deep into the Marcellus shale under the airport’s nearly 9,000 acres, an estimated $500 million deal for an airport reeling from the loss of its US Airways hub a decade ago. … “It’s been so long since we’ve had discretionary money to be able to spend, I think some of us didn’t know what to do,” said Allegheny County Airport Authority Acting Executive Director James R. Gill. “It’s refreshing.” Consol agreed to pay the airport $46.3 million in up-front payments and an estimated $450 million in royalties during the next 20 years. Despite a volatile market, Consol and independent industry analysts said the deal likely could exceed projections. The airport authority will spend about $24 million of the up-front money during the next five years to lower fees that airlines pay to use the airport, Gill said. … lower fees will make the airport more attractive and competitive. … The rest of the up-front money will be split between an economic development fund and capital improvements to the nearly 22-year-old airport: exterior repairs, heating and air conditioning improvements and upgrades to baggage handling and baggage screening systems. (Tribune-Review, 8/24/14)

“GAME-CHANGING” ECONOMIC BENEFITS

  • Because of the Marcellus Shale, Pennsylvanians are returning to the region: “Around 2008, I began hearing more and more about Marcellus and Range Resources, and I saw the opportunity to move home.” … “Knowing how big the Marcellus play is, it’s reassuring to know there will be opportunities for my children here in the area when they enter the workforce,” [Range Resources Employee Matt Curry]  said. … “Growing up in western Pennsylvania, I always hoped I’d be able to raise my family there,” … “I had to move away for the best opportunities,” said [Rex Energy’s Mike] Endler, who now lives in Cranberry Township, Butler County, with his wife and four small children. “Shale development changed all that. I’m really happy I was able to come back home area.” … According to the U.S. Bureau of Labor Statistics … Pennsylvania’s increase in annual average oil and natural gas industry employment between 2007 and 2012 jumped by 259.3 percent. … 245,000 jobs in the state, as of the third quarter of 2013, were related to Marcellus shale. Of all the new hires working in the state’s shale industry, 96 percent are from Pennsylvania, West Virginia, Ohio, Maryland and New York. … The Marcellus Shale Coalition, a Pittsburgh oil and gas trade organization, said in a recent report that the state is now producing 20 percent of the nation’s natural gas supply. “Responsible shale development in the commonwealth continues to be a powerful source of job creation and economic growth … Not only are these jobs being created directly within the industry with exploration and production, midstream and oilfield service companies … but the robust supply chain that supports the industry is strong and growing … Likewise, regional labor and building trades as well as manufacturers are capitalizing on this historic opportunity in terms of creating good-paying, local jobs at a time when they’re most needed.” (Beaver County Times, 8/26/14)
  • “The growth of the gas industry has been a game-changer” for truck drivers: With a newly minted commercial driver’s license, Von Seggern of Greensburg is in total control of his job search …“There’s so many job opportunities out there, and you can pretty much do what you want to do,” said the Iraqi war veteran, who received his license on Friday. There is a shortage of about 23,000 licensed operators nationwide … In Western Pennsylvania, the shortage is even worse because the rapidly growing Marcellus shale drilling industry has driven up demand. … “It’s very tight for drivers. There just aren’t enough to go around,” said Jeff Cable, owner of Coordinators Inc. in Irwin. … In this region, the growth of the gas industry has been a game-changer. “The gas industry is taking drivers from everyone,” said Joe Rapp, a CDL instructor at the Central Westmoreland Career and Technology Center in New Stanton. … Jan Klevis, director of post-secondary and workforce education at Lehigh, has helped begin several such training programs, and the one in New Stanton has become the busiest the fastest, she said. “(At) this one, we’ve seen the fastest ramp-up of students coming into the program,” she said. “The gas industry needs so many drivers.” (Tribune-Review, 8/24/14)
  • Energy company is Pittsburgh’s fastest growing company: Keystone Clearwater Solutions LLC is southwestern Pennsylvania’s fastest-growing company, revealed at the Pittsburgh Business Times’ 18th annual Pittsburgh 100 event Thursday evening at the Duquesne Club. … “It’s not surprising that an energy company topped the list, but this is the first time it’s happened,” said Pittsburgh Business Times Publisher Alan Robertson. “It certainly speaks to the strength of the energy renaissance in the Pittsburgh region.” (Pittsburgh Business Times, 8/21/14)
  • Natural gas is “fueling an economic transformation”: The Marcellus, which is owned by hundreds of thousands of Pennsylvanians who have built their lives for generations on top of its hidden treasure. … The Marcellus has already been good to these property owners. … The Associated Press estimated that over $1.2 billion had been paid to Pennsylvania mineral owners in the form of royalties. Where I come from, this money is saving the family farms from previous foreclosure threats, keeping properties from being subdivided, saving us all from the associated effects of urban sprawl and, overall, making a hard way of life a little easier. Royalty owners are using this money and investing it in our kids, in better farming and forestry practices, as well as into the communities through support of local businesses, and into the state, through personal income taxes. … I see new tractors, new roofs on barns and charitable donations. … Ninety-six percent of unconventional natural gas produced in Pennsylvania is produced by members of the leading industry trade group. (Post-Gazette op-ed, 8/22/14)