Want to get excited about Shale gas? Read this. (Pittsburgh: leases, credit)

[BrianTH]

Site Selection is a magazine about choosing locations for businesses, read mostly by executives. The first part of this article is about the possible impact of the Marcellus Shale play in Southwest PA:

NORTHEAST STATES -- Site Selection magazine, March 2010

The article touches on some issues that I am not sure even the people somewhat following the Shale story have really focused on yet. The Shale play has the potential to generate a lot of revenues and jobs on its own, but a cheap and reliable supply of natural gas is also going to be an attraction for all sorts of energy-intensive businesses. In turn those businesses are going to create work for other local businesses (legal, financial, transportation, janitorial, and on and on). Meanwhile, local heating bills will be lower, public transit could be cheaper to build and operate, and so forth.

In short, cheap energy being produced locally is a powerful economic lever, meaning its impact goes well beyond just the direct effects. Obviously, it remains to be seen exactly what will happen with the Shale play, and the primary source for that article (EQT) is hardly unbiased. But again, if you wanted to get a little excited about what this could mean for the region, these are the things to be thinking about.

[jimboburnsy]

Originally Posted by BrianTH

Site Selection is a magazine about choosing locations for businesses, read mostly by executives. The first part of this article is about the possible impact of the Marcellus Shale play in Southwest PA:

NORTHEAST STATES -- Site Selection magazine, March 2010

The article touches on some issues that I am not sure even the people somewhat following the Shale story have really focused on yet. The Shale play has the potential to generate a lot of revenues and jobs on its own, but a cheap and reliable supply of natural gas is also going to be an attraction for all sorts of energy-intensive businesses. In turn those businesses are going to create work for other local businesses (legal, financial, transportation, janitorial, and on and on). Meanwhile, local heating bills will be lower, public transit could be cheaper to build and operate, and so forth.

In short, cheap energy being produced locally is a powerful economic lever, meaning its impact goes well beyond just the direct effects. Obviously, it remains to be seen exactly what will happen with the Shale play, and the primary source for that article (EQT) is hardly unbiased. But again, if you wanted to get a little excited about what this could mean for the region, these are the things to be thinking about.

You may want to put out a memo. The people of Pennsylvania and New York have been vehemently opposed to any natural resource development, particularly anything to do with oil & gas (and more particularly anything to do with hydraulic fracturing).

It looks very feasible going forward that the economic viability of that play could be ruined by NIMBY's and preservationism (as opposed to conservationism).

[ki0eh]

I'm sure long distance transmission will be a bottleneck so this is kinda back to the future - a lot of the glass industry located where it did in the early 1900's due to the location of local gas (northern Indiana, Corning NY, in addition to parts of western PA).

With a local energy surplus the play-ers could use small NG-powered turbines to generate electricity or direct drive pumps for RO systems to demineralize the flowback water for disposal.

[BrianTH]

Originally Posted by jimboburnsy

You may want to put out a memo. The people of Pennsylvania and New York have been vehemently opposed to any natural resource development, particularly anything to do with oil & gas (and more particularly anything to do with hydraulic fracturing).

New York and Pennsylvania have followed very different tracks on this issue, which is part of why companies are in fact buying leases and exploring in Pennsylvania.

It looks very feasible going forward that the economic viability of that play could be ruined by NIMBY's and preservationism (as opposed to conservationism).

I think there are reasonable concerns that can be addressed while still allowing the gas to eventually be extracted. Of course there is money on the line so these will be contentious issues, but again I think at least in Pennsylvania it looks likely those issues will be resolved, as opposed to becoming a barrier.

[jimboburnsy]

Originally Posted by BrianTH

New York and Pennsylvania have followed very different tracks on this issue, which is part of why companies are in fact buying leases and exploring in Pennsylvania.

This is really true to a large extent, but for people and companies accustomed to the "culture of exploration" common to the Southeast, the Southwest and even California it has been a bit of a shock.

But, you're right, my first post was probably a bit unfair. Some very notable names have had success in very close proximity to Pittsburgh, which is difficult or impossible without some degree of support from municipal and county level government and the general population.

[BrianTH]

Originally Posted by jimboburnsy

This is really true to a large extent, but for people and companies accustomed to the "culture of exploration" common to the Southeast, the Southwest and even California it has been a bit of a shock.

But, you're right, my first post was probably a bit unfair. Some very notable names have had success in very close proximity to Pittsburgh, which is difficult or impossible without some degree of support from municipal and county level government and the general population.

Yeah, I could see how it would seem like a different policy environment from those other areas, but I am pretty confident the relevant authorities are all going to be supportive in the end (not without strings attached, but they won't kill the goose that lays the golden eggs at the end of the day). Of course Southwest PA has a long history in resource extraction, which may explain part of why it is little more welcoming than New York.

[bradjl2009]

So today, I saw a video about oil and gas drilling in the Rocky Mountains about the effects of hydraulic fracturing and before I didn't really have a problem with getting the Shale gas but now I'm more opposed to it. The video showed serious damage done to the mountains and plains over there and there were a lot of health problems and water contamination for the people who were near those wells. I would never want to see what is happening over there here and the reason we don't hear much about its cons is because the drilling companies put in hush stipulations with settlement cash from suing. There needs to be regulation so many of the cons that happened in Colorado and New Mexico don't happen here if our land is drilled on.

[BrianTH]

I'm not saying we shouldn't be vigilant, but I would keep in mind that hydraulic fracturing has many different uses, and in fact has been used in many different ways for a long time. For example, as I understand it, subsidence is a potential problem when you are actually removing fluids (oil or water, say) from underground reservoirs, but not so much gas.

[jimboburnsy]

Originally Posted by bradjl2009

So today, I saw a video about oil and gas drilling in the Rocky Mountains about the effects of hydraulic fracturing and before I didn't really have a problem with getting the Shale gas but now I'm more opposed to it. The video showed serious damage done to the mountains and plains over there and there were a lot of health problems and water contamination for the people who were near those wells. I would never want to see what is happening over there here and the reason we don't hear much about its cons is because the drilling companies put in hush stipulations with settlement cash from suing. There needs to be regulation so many of the cons that happened in Colorado and New Mexico don't happen here if our land is drilled on.

Would you mind posting a link to that video here?

The drilling companies don't have anything to do with hydraulic fracturing and tend to be under broad indemnification from the operator's umbrella policy. They wouldn't have any need for "hush stipulations" or cash settlements unless they were grossly negligent in their conduct of operations.

Don't buy into the "evil oil company" myth too much. There are definitely some shady operators who deserve a bad name, but oil & gas is orders of magnitude more forthright and transparent than anything that goes on in the Capitol Building, for example.

Depletion subsidence is real, but it requires some very specific conditions to even be noticeable at the surface and has likely been exaggerated to a large extent if it has been blamed for serious damage to the mountains and plains.

Water contamination is a possibility but I can basically guarantee that water bearing reservoirs are not being directly contaminated by fracturing operations. Runoff from spills can be a problem and disposing of flowback fluids can be difficult in areas without an established infrastructure, but oil & gas operations as a whole do not have the environmental impact that they had 50 years ago and certainly not as much as some would have you believe.

[bradjl2009]

Originally Posted by jimboburnsy

Would you mind posting a link to that video here?

The drilling companies don't have anything to do with hydraulic fracturing and tend to be under broad indemnification from the operator's umbrella policy. They wouldn't have any need for "hush stipulations" or cash settlements unless they were grossly negligent in their conduct of operations.

Don't buy into the "evil oil company" myth too much. There are definitely some shady operators who deserve a bad name, but oil & gas is orders of magnitude more forthright and transparent than anything that goes on in the Capitol Building, for example.

Depletion subsidence is real, but it requires some very specific conditions to even be noticeable at the surface and has likely been exaggerated to a large extent if it has been blamed for serious damage to the mountains and plains.

Water contamination is a possibility but I can basically guarantee that water bearing reservoirs are not being directly contaminated by fracturing operations. Runoff from spills can be a problem and disposing of flowback fluids can be difficult in areas without an established infrastructure, but oil & gas operations as a whole do not have the environmental impact that they had 50 years ago and certainly not as much as some would have you believe.

I can't post a link since I watched it in a lecture but it was called Split Estate (it is a fairly recent video; they mentioned a state from 2001 to 2008). Our bio professor thought it would be a good video for extra credit since the entire development of the Shale is getting pretty serious now.