Had a Cool Yule? Have a Frantic First
and Marcellus Shale Revisited
Are we in recovery yet: Let’s see, Christmas day plus a couple. My best guess is that you had at least one of the following awkward moments grace your Christmas day festivities: Grandpa made the kids squeal when he took out his teeth, somebody burned the turkey and dinner plans had to be altered, family members who’d said they couldn’t make it showed up – at least one was crude, obnoxious, and drunk. Two brothers-in-law got into a fight. Grandma comments that your brother’s “trophy” wife dresses like a tramp. Somebody forgot to take the stuffing out of the turkey before baking and it caught fire. Halfway through dessert somebody realized the giblet gravy had not been put on the table. Somebody asked the newly married couple when they are going to start their family and got the finger in response, and finally, somebody said, “This is the last time we’re doing this. Next year we eat out.”
Hidden gold or fool’s gold: We would like to share a few more bits of information regarding Marcellus Shale and the impact it might have on Clairton and the entire Southwestern Pennsylvania region. Some see it as the savior of the region’s economy and others see it as one more snake oil pitch. But the facts are that things have happened quickly and there are some heavy hitters interested in the pursuit of a potential bonanza.
Discuss it and they will come: Several months ago event coordinators planned to host a Pittsburgh conference for natural gas producers. They expected somewhere between 200 and 300 attendees. Once registrations for the conference began to arrive it became clear that the numbers would exceed the projection – so much so that the conference venue was changed from a downtown hotel to the Convention Center in order to accommodate the nearly 1,500 attendees.
The giant sleeps tonight: The Marcellus Shale range, which extends from Tennessee to New York, is not a recently-discovered phenomenon. Neither is the technology required to extract natural gas from the shale a recently-discovered technique. What happened to spark interest in the gas was the publication of two reports; one by a Texas natural gas company, whose annual report documented production of the first natural gas wells, drilled in Washington County, PA. The following month a geology professor from Penn State co-authored a report with a colleague from a university in New York that further discussed the potential for the extraction of natural gas from the rock bed far underneath the rich Pennsylvania (and neighboring states) soil. In the report, the estimated amount of underground gas was increased from about 2 trillion (reported earlier by a U.S. Geological Survey) cubic feet to 516 trillion cubic feet of gas – up to 250 times the earlier estimate.
If gas production were to even closely approach its estimated potential, another Penn State study reports, the result could initially be the creation of some 30,000 new jobs in Pennsylvania. The following year that number could jump to 48,000 and the year after to 98,000 new jobs directly and indirectly related to Marcellus Shale development. By 2020 the development could add $13.5 billion to the state’s economy and create more than 176,000 new jobs. Collectively, these reports have begun a rush to be the first to exploit the new industry.
Where the wealth lies: In order to reach the Marcellus Shale layer of rock and extract the gas bonanza, it is first necessary to drill a well 6,000 to 8,000 feet straight down. Once Shale layer has been penetrated the drilling apparatus must turn 90 degrees and drill horizontally, as the caverns that contain the gas lie horizontally. A portion of the well is then sealed and water is pumped in. The pressure fractures the surrounding rock and allows for more gas recovery over a wider area. This process is called “hydrofracking.”
Timing is everything: The hydrofracking technique has been around for decades, as has the knowledge that rich gas deposits lie beneath the soil but it had not been economically practical to pursue the gas until a natural disaster hit. Beginning late August 2005 three storms; Katrina, Rita, and Wilma struck the Gulf of Mexico causing massive disruptions in the nation’s natural gas supply. As a result the price of natural gas doubled and doubled again, then skyrocketed from $2.00 per BTU to nearly $16.00 per BTU by the end of the year. Still, it was thought that Marcellus Shale gas deposits were buried too deep to be removed economically. However, after a few test drillings and importing the use of hydrofracking from West Texas (it had been used in other regions for nearly 30 years but not along the Marcellus range) made the gas more easily accessible. Once the horizontal-then-vertical drilling was coupled with hydrofracking, production increased dramatically. Hence, by 2007 the Marcellus Shale Range, more specifically, Southwestern Pennsylvania, became THE place to consider drilling for natural gas.
It’s never that easy: Although the natural gas producers are excited and the residents of Southwestern Pennsylvania are hopeful, environmentalists are worried and have erected a “Proceed with Caution” approach. Their biggest concern has to do with the wastewater produced with hydrofracking. One of the drilling companies has developed a system for recycling all its wastewater, another recycles part of its flowback and disposes the remainder through state or federal facilities. A third possibility for the recycling of the wastewater has been suggested – extracting the salt for use as snow removal deposits on roadways. Environmentalists, Industry representatives, and government agencies have formed the Marcellus Shale Coalition, a 62-member group that is examining possible risks and solutions.
In order for the Marcellus Shale natural gas exploration and mining to continue successfully, gas prices must stay above $ 3.50 per BTU. Recent prices have stabilized in the $5.00 per BTU range which bodes well for the industry and business in the region for years to come. Already several of our readers have written to report they’ve been approached by companies wishing to drill on or under their land in exchange for royalties.
Much of the information in this post was provided by former Clairtonian Thomas Nixon of Nixon and Associates, and an article by Elwin Green.
A little blogging music Maestro… “Classical Gas” by Chicago.
Dr. Forgot
http://drforgot.com
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