Bearish, bullish outlooks abound on industry development
The Keystone XL Pipeline end point is about 1,000 miles from Butler.
But some in the energy industries worry about the effects of the project’s cancellation in Western Pennsylvania.
David Spigelmyer, recently retired president of the Marcellus Shale Coalition, said President Joe Biden’s order revoking the pipeline’s permit can even affect natural gas infrastructure 1,000 miles away from the pipeline’s end point in Steele City, Neb.
“His decisions there would likely keep any major pipeline from being built in America over the next four years,” he said. “The chilling effect of that decision would create indecision among pipeline investors.”
Shale extractors already pay a premium to move their supply through pipelines because of limited capacity, he added.
“We don’t have enough pipe in the ground to move the gas that’s being produced,” Spigelmyer said. “We take as much as a 30%, sometimes 50%, hit on the price of natural gas to move it out of” the Appalachian Basin.
Additional infrastructure investment would decrease the premium producers pay, whereas failure to increase pipeline capacity would mean shale prices would remain artificially high.
Some, however, don’t fully agree with the bearish outlook on pipeline investment. U.S. Rep. Conor Lamb, D-17th, said that while the financing and construction of pipelines is a “very difficult thing under any scenario” and “it’s become a little bit harder” after the Keystone XL permit revocation, it doesn’t spell doom for natural gas in the region.
“I see Keystone XL as one pipeline project that doesn’t spell doom for every other pipeline project, particularly ones that might get going in Western Pennsylvania,” said Lamb, whose district includes parts of Cranberry Township.
The Democrat, a member of the House Subcommittee on Railroads, Pipelines and Hazardous Materials, has previously come out against proposals to ban fracking. He said the president’s revocation of the XL pipeline permit does not mean ruin for the state’s Marcellus Shale industry.
“Joe Biden gave his word on Keystone XL during the campaign, and he kept his word,” Lamb said. “He also gave his word that he wouldn’t touch fracking in Western Pennsylvania, and I expect him to keep his word there as well.”
U.S. Sen. Pat Toomey, R-Pa., did not explicitly say how or if he believes the pipeline’s cancellation will affect the state, but firmly positioned himself as against the revocation.
“The Keystone XL pipeline was approved by bipartisan majorities in both chambers of Congress in 2015,” Toomey said in a Jan. 20 statement. “Revoking the presidential permit for the pipeline is bad economic policy, costs American jobs and, as one of President Biden’s first actions, runs counter to his stated goal of building bipartisan consensus early on in his administration.”
Spigelmyer said that while he understands the administration’s push to use more renewable energy sources, he doesn’t see why some Democrats wish to do away with the natural gas production.
“There is no better partner for renewables than natural gas,” he said. “I know this administration wants to ramp up renewables. Those are intermittent sources of electricity” that natural gas can complement when demand is up and supply from renewable energy sources is down.
County commissioner Kim Geyer agreed with Spigelmyer’s assessment, saying some renewable sources are more well-suited for climates that don’t match the frequently grey, dreary skies of Western Pennsylvania.
“I’m not opposed to solar and windmills,” Geyer said. “I believe they have a place. They’re not conducive to certain climates throughout the country and the world, as we’ve learned and as we know. They serve a purpose in places where they are conducive.”
Lamb also agreed with the retired coalition president that natural gas can complement renewable energy.
“A lot of places where they have increased solar and wind, they have increased gas as well, because gas tends to be the most flexible backup option for when the sun isn’t shining or the wind isn’t blowing,” Lamb said.
The congressman also said he’s “cautiously optimistic” about renewed levels of gas extraction in the state, adding the pandemic affected shale as well.
“I really think if you look at the forecasts, the gas price, drilling, all of that’s going to improve in 2021 as the overall economy improves,” Lamb said. “2020 was a tough year, no question.”
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