By Joshua Sterling
The shale industry will continue to grow in Pennsylvania and attract major capital investments as long as the state government works to create a more competitive business market for energy companies.
That was the theme of a presentation held Tuesday at Drake Well Museum, as the multi-purpose room was filled with state and local politicians, industry professionals and developers to hear the president of the Marcellus Shale Coalition, Dave Spigelmyer, speak of the successes and obstacles of the shale industry.
The Marcellus Shale Coalition (MSC) was founded in 2008 to work with exploration and production in the Appalachian Basin and across the country, to address issues regarding the production of American natural gas from the Marcellus and Utica shale plays. The coalition works with policymakers, regulators and media on the impacts of natural gas production.
Spigelmyer said that developing a stronger and more stable gas industry infrastructure is vital to drawing global dollars to Pennsylvania.
“We’re in a global, competitive marketplace,” said Spigelmyer. “Our focus at MSC is to create a predictable and certain environment for investment. I want to make sure folks are aware that we are in a competition to have capital flow into Pennsylvania.”
To do that, Spigelmyer said, there must be uniformity across all of Pennsylvania’s more than 2,500 municipalities. He said the current obstacle to drillers is similar to driving across Pennsylvania and needing a different license for each town through which the driver would travel.
He said that this is precisely the reason that the proposed Shell ethane cracker plant in Monaca has not yet been built.
“It’s uncertain whether or not it will be built. It’s uncertain because we don’t have predictability yet,” Spigelmyer said.
According to a story that ran in the Oct. 31 edition of the Charleston Daily Mail, in Charleston, W.Va., Shell has “hard choices” to make concerning three major projects currently in planning phase, which include a gas-to-liquids plant in Louisiana, a liquid natural gas plant in Canada, and the Beaver County ethane cracker plant.
“Many of you are in local government,” said Spigelmyer. “You want to be able to zone certain activities. But to oversee the environmental pieces of our business creates a very unpredictable environment for capital investment.
“We need to make sure we get it right,” he said. “Our charge is also heightened communications with legislators, regulators, civic leaders like yourselves and certainly the general public.”
He said that, even in the current jurisdictional and legislative climate of Pennsylvania, the several shale plays in the state, and across the country, have helped push U.S. dependency on foreign fuel below 50 percent — something Spigelmyer said he thought he’d never see.
“In 2008, we were 57 percent dependent on foreign oil. Today, we’re at 42 percent,” he said, giving a large amount of credit for that to the shale gas industry. “We are, indeed, in a global marketplace.”
With such complexity involved in making Pennsylvania a more welcome investment for large energy corporations, Spigelmyer said a focus on educating today’s youth on where energy comes from and how it is produced is of utmost importance, thus making the future policymakers more adept to making more informed choices for the economy.
“We need to do a better job of educating our citizenry,” he said. “This museum is an example of being able to educate our kids more regularly and more often about where our energy comes from. We have an unquenchable appetite for energy in America.”
To feed that appetite and drive energy market capital toward Pennsylvania’s vast underground fuel deposits, the gas industry infrastructure needs updated, Spigelmyer said.
Explaining that, while the history of oil and gas in Pennsylvania runs as deep as the shale formations below our feet, there has never been much of a market for ethane in Pennsylvania until vertical drilling turned horizontal in recent years.
“We no longer have the capacity to be able to move it in the pipeline system,” he said. “So, what ends up happening to wells that are ethane rich is that we’ve got a lot of them shut in until we either get cracking technology built or we get pipelines built to ship it.”
For the typical Pennsylvanian, the benefits of the industry will be seen in localized use of the shale gas byproducts in manufacturing and home heating purposes, as well as impact fees that were established to direct money into the state’s municipalities.
“The real ‘ah-hah’ for Pennsylvania comes when we use it here and we manufacture products here,” he said. “We lost a lot of our manufacturing jobs after World War II, up through the ’60s and early ’70s. We have the capability now, with the affordable energy supply in shale gas, to be able to regenerate those jobs again.”
He said the impact fees generated from shale gas drilling are already getting to the state’s 67 counties.
“$355,000 is the number that comes on a per well basis, over a 15-year period. There’s been $406 million raised and spread out across Pennsylvania.”
Since 2008, the industry has paid nearly $2 billion in taxes in Pennsylvania, Spigelmyer added.
That money goes into already established allocations, primarily comprised of two different components, he said. Those are direct payments to local governments, counties and townships; and through the Legacy Fund that was established to distribute money to all counties for greenways, recreational trails and open spaces, as well as community conservation and beautification projects, and water management.
He said that Crawford County has been the recipient of $20,000, with $150,000 from the Legacy Fund. That with very little shale drilling activity in the county.
In Venango County, the payments have been $35,000, with $32,000 from the Legacy Fund.
In Forest County, where there are currently 10 permitted wells and 14 operated wells Spigelmyer reported, $170,000 in impact fee funds have been distributed.
Spigelmyer called the Marcellus, Utica and Rhinestreet shales’ impact on the national and global market “game changing” and “multi-generational.”
“We’re just getting to the beginning of it now,” he added.
Spigelmyer said of Tuesday’s event that there’s “no better place to do it than here at the Drake Well Museum, where it all began.”
He admitted that he had not visited the museum since 1984, but said he had taken recent fishing trips to Oil Creek, nearby.
Spigelmyer also said that he’d “love to see the Marcellus Shale Coalition partner with the Drake Well Museum. It makes sense that we invest in the very industry from which we’ve arrived.”
Tuesday’s event was sponsored by the Oil Region Alliance of Business, Industry and Tourism.
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