Marcellus Offers “Transformational” Opportunities for our Region, Nation

The U.S. is now the World’s largest producer of natural gas, and America’s “most incredible natural gas play” – the Marcellus – is leading the way. What comes with that title is an overwhelmingly positive wave of benefits to consumers, small businesses, local economies, the manufacturing sector and our environment. One of those benefits, the local impact fee generated by shale development is highlighted in a new web video released this week by the MSC: “Shale Impact Fee Benefits all of Pennsylvania.

Also this week, it was announced that a $5 billion pipeline project that would transport clean-burning natural gas from the Marcellus to east coast and southeast markets —  a project that Virginia Governor Terry McAuliffe (D) touted as a “win-win for everybody” and one West Virginia Governor Earl Ray Tomblin (D) said “has the potential to create good-paying jobs for our hard-working men and women” – was under development, providing much needed take-away capacity for producers in the Appalachian Basin.

Here’s what they are saying about shale, the ultimate job creating engine:

NEW PIPELINE CREATES JOBS, OPPORTUNITY

  • New Marcellus Pipeline Will be a “Reliable Supply Source” for Consumers: Two major pipeline projects are in the works to ship natural gas from the Marcellus and Utica shales to the southeastern U.S., a region with a growing appetite for natural gas. … A partnership of four energy companies — Dominion, Duke Energy, Piedmont Natural Gas and AGL Resources — also announced Tuesday a roughly $5 billion pipeline project to take about 1.5 Bcf/​d to North Carolina and Virginia. The Atlantic Coast Pipeline would span 550 miles from Harrison County, W.Va., through Virginia and then south to North Carolina. The southeastern U.S. is hungry for more natural gas. … Subject to FERC approval, the 330-mile pipeline will connect the existing Equitrans transmission system in West Virginia, to the Williams’ Transcontinental Gas Pipeline Company, or Transco, station in Virginia — “a highly marketable trading area for the southeast region,” EQT said Tuesday. EQT said it will operate the pipeline and own a majority interest in the joint venture. … “This is an exciting opportunity to invest in a high-quality natural gas pipeline that we expect to be fully contracted for the next 20 years,” said TJ Tuscai, president, NextEra US Gas Assets. “This project is expected to support production growth and physical takeaway capability in the Marcellus and Utica and provide new markets to producers and shippers in the region. In addition, customers in the southeast United States should benefit from a new reliable supply source.” (Pittsburgh Post-Gazette, 9/3/14)
  • Atlantic Coast Pipeline Expected to “Drive Economic Development and Create Jobs”: Duke Energy and Piedmont Natural Gas today announced the selection of Dominion to build and operate a 550-mile interstate natural gas pipeline from West Virginia, through Virginia and into eastern North Carolina to meet the region’s rapidly growing demand for natural gas. Called the “Atlantic Coast Pipeline,” it also is expected to serve as a key infrastructure engine to drive economic development and create jobs, helping counties on the pipeline’s route attract new, energy-dependent businesses and industries – especially along the Interstate 95 corridor in eastern North Carolina. …The pipeline has an estimated cost of between $4.5 billion and $5 billion, an initial capacity of 1.5 billion cubic feet of natural gas per day, and a target in-service date of late 2018. (Release, 9/2/14)
  • VA Gov. Terry McAuliffe: Project will Create Thousands of New Jobs, Lower Energy Costs: Virginia Gov. Terry McAuliffe, D, on Tuesday unveiled plans for a 550-mile natural gas pipeline through three states … A consortium of companies led by Dominion will spend up to $5 billion to build the “Atlantic Coast Pipeline” in Virginia, West Virginia and North Carolina, which McAuliffe enthusiastically supports … According to the announcement, Dominion Resources, EVP Distribution Operations, AGL Resources and Virginia Natural Gas will join forces to build the pipeline, which supporters say will initially create 8,800 new jobs. After the six-year construction phase, about 217 jobs will be necessary to maintain the pipeline, said Christine Chmura, chief economist for Chmura Economics & Analytics in Richmond, who studied the project’s economic impact. She estimated it would generate $14.6 million in tax revenue for the state. No state dollars will be used. … He said the project will create thousands of new jobs, lower energy costs for Virginians and contribute to the shuttering of aging coal plants. “We’re talking jobs, economic development and it’s good for the environment,” McAuliffe said … “What we’re doing today is great for the environment. . . . This is a win-win today for everybody.” (SCNow, 9/3/14)
  • VA Chamber of Comm. President: Abundant Natural Gas Empowers Small Business and Manufacturers: Dominion Resources Inc. will form a joint venture with three other major energy companies to build and own a $4.5 billion to $5 billion, 550-mile natural gas pipeline from West Virginia through Virginia and into North Carolina. The proposed project would be “a game changer” for Virginia industry and homeowners, Gov. Terry McAuliffe said Tuesday at a standing-room-only announcement in the Capitol. “It will spur economic growth in all parts of the commonwealth.” The Atlantic Coast Pipeline immediately drew wide business and bipartisan political support … “The new abundance of natural gas will empower Virginia businesses to expand, as well as help recruit new businesses and manufacturers to the commonwealth,” said Virginia Chamber of Commerce President Barry DuVal. … The pipeline would have a $1.4 billion economic development impact in Virginia, creating 8,800 jobs — including 5,000 directly related to construction — and produce $14.6 million in revenue for the state, the governor said. … “Natural gas is increasingly important for advanced electricity generation, contributing to significantly lower greenhouse gas and other emissions.” (Times-Dispatch, 9/3/14)
  • WV Gov. Tomblin: Natural Gas is Providing Promising Opportunities for Current and Future Generations: “For many years, we’ve worked hard to make the most of the Marcellus and Utica Shale developments in West Virginia,” Gov. Tomblin said. “We continue to be optimistic about the existing and future opportunities this industry brings to the Mountain State, and today’s announcement by Dominion has the potential to create good-paying jobs for our hard-working men and women. We appreciate the continued investments Dominion is making in our region and look forward to capitalizing on our state’s abundant supply of natural gas, which has the potential to provide promising opportunities for both current and future generations. West Virginia is proud to continue its legacy as an energy-producing state and help create energy independence for our country.” (Release, 9/2/14)
  • New Pipeline is a “Transformational Project for our Region”: Four major U.S. energy companies – Dominion, Duke Energy, Piedmont Natural Gas and AGL Resources – announced today the formation of a joint venture to build and own the proposed Atlantic Coast Pipeline. The $4.5 billion to $5 billion, 550-mile natural gas pipeline would run from Harrison County, W. Va., southeast through Virginia with an extension to Chesapeake, Va., and then south through central North Carolina to Robeson County. …. The pipeline would provide a new route for direct access to the burgeoning production in the Marcellus and Utica shale basins of West Virginia, Pennsylvania and Ohio. … “The Atlantic Coast Pipeline is a transformational project for our region. It will create thousands of construction jobs during development and significant new revenue for state and local governments throughout North Carolina, Virginia and West Virginia. The expanded source of gas will also help fuel economic development across the region as businesses and homes rely more on natural gas. (Release, 9/2/14)

ECONOMIC ENGINE

  • Petroleum Engineer Column: What They Don’t Know about Energy Production: We are now the world’s leading producer of crude oil and natural gas. … People in many areas are worried about “fracking” because of what they have heard or read (even if they don’t know what it is), but they love natural gas. … Americans want their cars, their cell phones, their shoes (which are made of synthetic materials from petro chemicals), pharmaceuticals and all of the other things the natural gas and oil industry provides. Without petrochemicals our lives would look a lot like Colonial Williamsburg. … Most people don’t realize that our military is the leading user of oil and gas products. … If we don’t have energy to fuel our military we are not free. One of the scariest things I can think of is buying oil for our military from Russia, Iran or OPEC. People also want clean air and clean water. Most people don’t know that thanks to the expanded use of natural gas we have lowered our CO2 emissions to Kyoto treaty levels without a carbon tax … Thanks to our increased production of natural gas, my 90-year-old mother’s gas bill went down $100 a month. Most people don’t know that the natural gas industry has lowered global pollution by bringing industry back to the USA like steel mills and chemical plants that operate under U.S. environmental law instead of overseas environmental law that is nonexistent in most countries. (State Journal Column, 9/2/14)
  • WesBanco President and CEO: Shale a “Huge and Enormous Benefit” to our Organization: Managing growth has been a problem for some companies in the shale gas region of West Virginia, leading WesBanco to provide services to help them. “Much of the infrastructure to move gas from the wells is still being built,” WesBanco President and CEO Todd F. Clossin said during a recent conference call with investment analysts. “Royalty payments will increase as gas production increases over time. … Clossin said the bank had about $260 million in royalty deposits for Marcellus and Utica shale gas over the previous 12 months. “A company going from $10 (million) to $40 (million) to $80 million in revenue over a three-year time period has got to change their internal reporting,” he said. “I’m finding a number of banks are not having those conversations with their customers. We are. “I think that’s helping our customers, but I also think it will keep our credit quality pristine during this whole time period of growing financing related to the shale-related activities.” … “Historically, we opened a branch or two every 12 or 18 months,” he said. “I think one of the benefits we have with the strong deposit flow we have coming from shale-related activities, it’s a huge and enormous benefit, I think, to our organization. (9/1/14)
  • PGW Drops Natural Gas Rates for Fall: Philadelphia Gas Works (PGW) today announced that natural gas rates will decrease this fall for PGW’s residential, commercial, industrial and municipal customers. The rate for residential customers, for instance, will be adjusted for the next three months from its current $1.51 per hundred cubic feet (Ccf) to $1.40 per Ccf for residential customers. On an annualized basis, the average residential customer using 850 Ccf, will lower their PGW bill by approximately 6.9 percent per month and equates to savings of $99 per year. (CBS Philly, 9/2/14)
  • Pittsburgh International Airport to Receive $500M from Natural Gas Royalties: Pittsburgh International Airport employee Bob Mrvos jokes that you could golf in the terminals’ corridors — they’re that empty, especially compared with other airports he flies into in cities like Los Angeles and Chicago. … The airport was built for bustle. Allegheny County Executive Rich Fitzgerald says it was transformed in 1992 with extreme optimism — for 30 million passengers a year, many of them US Airways fliers. … But then came Sept. 11, 2001. US Airways stopped using Pittsburgh as a hub three years later. Airlines merged, fuel prices rose, and the recession hit. That’s reduced the annual number of passengers the airport sees to 8 million. … Pittsburgh’s airport sits on 9,000 acres. Under those acres is the Marcellus Shale, a fertile and profitable rock formation full of natural gas. Consol Energy just broke ground and will begin extracting gas deep underneath the airport — including under the runways. … “By lowering the cost using some of the shale money, we will be able to attract the flights and start to stabilize those revenues,” Fitzgerald says. Over the next 20 years, the county hopes to make $500 million from gas royalties. (NPR, 9/3/14)
  • Shale Development “A Boon to the Nation’s Economy in Unlikely Places”: Pittsburgh International Airport has become a ghost-town and is turning to fracking as a means to earn revenue, according to a recent report by National Public Radio. … In an effort to generate revenue in other areas and in order to continue offering air service, the facility has turned to another means of making a profit by leasing the land for fracking. The Pittsburgh airport sits atop 9,000 acres of the Marcellus Shale formation. Consol Energy has recently broken ground and plans to begin extracting oil and gas from beneath the airport and its runways. … In an ever-changing economic energy climate, fracking is becoming a boon to the nation’s economy in unlikely places, such as beneath runways. Pittsburgh isn’t the only airport finding other ways to generate revenue, however. (Bakken, 9/3/14)
  • Affordable, Abundant Shale is Responsible for the Resurrection of our Refineries, Local Job Growth: Reps. Joe Hackett, of Ridley Township, and William Adolph, of Springfield, touted Pennsylvania’s job creation statistics Wednesday, claiming hard work and smart decisions made by both the public and private sector has sparked job growth. Led by the booming natural gas industry, Pennsylvania has gained 123,321 jobs since 2011, Adolph said, citing numbers prepared by the House Appropriations Committee. Delaware County has gained 6,900 jobs. … “It didn’t happen because it happened,” Adolph said. “It happened because good legislation was passed. Four straight budgets with no tax increases.” … “Our commonwealth is making world headlines on the energy front with the production of Marcellus Shale’s natural gas exploration in our state. This fact has played a role in the resurrection of the refineries in our area and contributed to the success story of East Coast.” (Delco Times, 9/3/14)

WORLD-LEADING PRODUCTION, EFFICIENCY

  • U.S. Now World’s Leading Natural Gas Producer: According to the BP 2014 statistical world energy review, the U.S. has achieved world-leading natural gas production, by reaching a new all-time high of 328 billion cubic feet per day (BCPD). World usage of natural gas is about 24% of all primary energy consumed … Over the past five years, U.S. natural gas production has grown over 20%. This is obviously due to the capturing of natural gas as a by-product to the massive shale expansion, as the shale “fracking” revolution seems to continue its unprecedented growth. No other global energy-producing nation has come close to matching U.S. production gains, while leap-frogging Russia in 2009, along with Qatar and Iran, previous global natural gas leadership aspirants. In 2013, U.S. production accelerated in earnest by achieving 20.5% of the global natural gas supply. … America’s greatest problem in becoming an active global “player” depends on how fast and voluminously the U.S. can complete its export terminals and convert to liquid natural gas for global export shipments. (Desert Sun, 9/2/14)
  • Wood MacKenzie: Marcellus Will Soon Account For 25% of Total U.S. Shale Supply: Since 2009, natural gas production out of the Pennsylvania-centered Marcellus shale play has soared 650%. Today, daily new-well gas output from the region totals 7.5 million cubic feet — making it the largest or second-largest unconventional gas play in the world, depending on who’s counting.  A new report argues the Marcellus has only just begun to boom, though.  Wood MacKenzie, an energy consultancy, forecasts that there remains up to $90 billion-worth of recoverable gas reserves in the play. The agency raised its estimate of 2020 output to 20 billion cubic feet equivalent per day from 14 billion bcfed, and that the Marcellus will soon account for nearly 25% of total U.S. shale gas supply. “Although rig counts have fallen across the Marcellus since early 2012, we can see that improved efficiency and a renewed focus on the play’s core sub-plays have led to on-going growth,” they say. Last year, recovery rates, or the amount of gas extracted from a given well, increased 10% thanks to improving horizontal drilling.  … “Rapid natural gas production growth in the Marcellus formation has contributed to low natural gas forward prices in the Northeast, and as a result new infrastructure has been proposed to take gas to other market regions.” (Business Insider, 9/1/14)
  • Goldman Sachs Report: 85% of U.S. Natural Gas Growth in the Next Four Years will Come from Appalachia: Spurred by the nation’s fracking boom, Dominion proposed Tuesday its largest natural gas pipeline — a nearly $5 billion project to move vast supplies produced in the mid-Atlantic to the Southeast. Dominion and Duke Energy, along with two other partners, are seeking federal approval for a 550-mile pipeline — called the Atlantic Coast Pipeline — that would stretch from Harrison County, W.Va., through Virginia and North Carolina to Robeson County, near the South Carolina border. “This will be one of the largest pipelines to take advantage of the abundant supply of natural gas in the Marcellus and Utica shale fields in West Virginia, Ohio and Pennsylvania,” says Dominion spokesman Jim Norvelle. … “This new technology of getting natural gas out of the ground is a game changer,” says Norvelle … A Goldman Sachs report in June said that while 85% of the growth in U.S. natural gas production in the next four years will come from Appalachia … As a result, it expects $21 billion in pipeline investment to move natural gas from the Marcellus Shale, $16 billion of which will involve reversing the flow of existing infrastructure. …[Donald Santa, president and CEO of the Interstate Natural Gas Association of America] says such investments are occurring, because natural gas is … reviving the petrochemical industry and raising prospects for U.S. liquefied natural gas exports. (USA Today, 9/3/14)

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