By R. Brock Pronko
In 2008, energy companies formed the Marcellus Shale Coalition (MSC) to bring together exploration and production, midstream, and supply chain companies operating in the Appalachian Basin to address critical issues regarding the production of domestic natural gas from the Marcellus and Utica Shale plays.
MSC also provides detailed information to policy makers, regulators, media and the public on the positive impacts that responsible natural gas production is having on families, businesses, and communities across the region.
Forty-five energy companies, including Range Resources, Chesapeake Energy, Rex Energy, Cabot Oil and Gas, and Shell Appalachia, are MSC board members.
More than 100 companies with ancillary ties to the shale gas industry are associate members: Babst Calland, Glenn O. Hawbaker, Inc., Deloitte, and GAI Consultants. Additionally, more than 300 companies from gas explorers to drillers to support firms belong to the coalition.
Marcellus Business Central spoke with Steve Forde, vice president of policy and communications for the Marcellus Shale Coalition, to ask about the trends MSC’s members expect to see next year and what challenges lie ahead for the industry.
MBC: One of the major themes for the industry in 2013 was the “pipeline build-out.” Some rigs were moved out of the state to drill for oil and natural gas liquids, and most companies have stopped drilling new wells in Pennsylvania. Will the build-out still continue next year?
Steve Forde: Yes. Even though the rig count in Pennsylvania has fallen, and the number of new wells being drilled has slowed, the amount of natural gas produced has gone up due to more efficient drilling techniques. So getting that gas to market is still a priority, and for that to happen, the pipeline infrastructure has to catch up with exploration and production infrastructure.
Given Pennsylvania’s proximity to East Coast markets, it’s imperative that we continue to get our gas wells online as quickly as possible, so there’s a great deal of pipeline activity taking place in Pennsylvania., particularly in the northeastern part of the state.
There’s also a big project in western Pennsylvania called Mariner East, which is a partnership among Range Resources, Mark West Energy Partners and Sunoco Logistics, which will take the natural gas liquids being developed in western Pa. and send them to a refinery in the Philadelphia area.
In order for that to happen, additional pipeline needs to be laid in western Pennsylvania to hook up the Mark West processing plant, where the gas will be coming from, to a pipeline owned by Sunoco, which is going to reverse the flow of the pipeline from west to east.
MBC: In October, Dominion Energy became the latest company approved by the Dept. of Energy to export liquid natural gas. Dow Chemical’s chief executive, Andrew Liveris, is spearheading a public campaign against increased exports, which he said is a threat to a manufacturing renaissance in the U.S., because it will raise prices. How do we strike the right balance going forward?
Steve Forde: It is a delicate balance regarding pricing, though I can’t offer a definite number about where the right price should be.
It would be good for our member companies and for Pennsylvanians at large to see natural gas used in the commonwealth, but also for it to be exported, because getting more gas to market means more opportunities for workers and companies involved in the exporting of the gas.
For the most part, our members are supportive of the Obama administration allowing the exports, but they would like the pace to pick up for the export applications that have been filed with the Department of Energy (a dozen applications are still pending).
MBC: The gubernatorial race is next year. The Corbett Administration has been very pro-industry, however, the governor is considered vulnerable because of his low approval ratings, and the Democratic Party Committee has talked about imposing a severance tax on the industry like other states have. How would a severance tax affect the industry?
Steve Forde: Under Act 13, if a severance tax is enacted, the impact fee would go away. So we won’t have both.
What we would see under a severance tax scenario is what rural communities have been complaining about for years. Most of the tax money that comes to Harrisburg each year ends up going primarily to Philadelphia and southeastern Pa. and to Pittsburgh and the surrounding metropolitan area.
Whereas with the impact fee, most of the money goes to the rural communities in which the industry is operating and having the greatest impacts.
A severance tax would also be punitive from a shale development perspective, because of the unfavorable tax structure that already exists in Pennsylvania.
We think the impact fee was the right choice, because these fees are mitigating impacts and contributing summarily to the taxpayers in the commonwealth, even in counties and municipalities that do not have wells.
It’s really important that the severance tax debate seen through that lens, and that’s going to be a focal point of the governor’s re-election campaign in 2014.
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