Marcellus Shale Coalition President Kathryn Klaber

A conversation with the president and executive director of the Marcellus Shale Coalition

Founded in 2008, the Marcellus Shale Coalition is a trade association consisting of gas and gas-related companies working in Pennsylvania. On Jan. 11, Kathryn Klaber was named the organization’s first president and executive director. Prior to joining the MSC, Katie served as Executive Vice President for Competitiveness at the Allegheny Conference on Community Development and as the Executive Director of the Pennsylvania Economy League. A lifelong Pennsylvanian, she earned her undergraduate degree in environmental science from Bucknell University and her Masters in Business Administration from Carnegie Mellon University. The announcement of her hiring was made before about 700 people at the Second Annual Marcellus Shale and Pennsylvania Department of Environmental Protection (DEP) Best Management Practices Workshop and Training Seminar in State College.

PBC: What are the goals of the MSC?

KK: Our primary goal is the responsible development of the Marcellus Shale in Pennsylvania. We have a very special economic opportunity that we are just at the cusp of realizing. The coalition exists to help people realize the wealth generation that will come from Marcellus…a large amount of what the organization does is education and also advocacy about what laws and regulations need to be put in place or changed to make the most of this economic opportunity.

PBC: What do you hope to accomplish in your new position?

KK: My job is to find solutions that will lead to responsible development of the Marcellus Shale. I hope to have an opportunity to help shape some regulatory and legislative policy around environmental rules. That’s a major reason why the announcement of my hiring was done where it was, in front of 700 regulators and company representatives working on the best ways to implement regulations on Marcellus development. It’s about finding a balance between the economiy and environmental.

PBC: How will Marcellus benefit the average Pennsylvanian?

KK: There is no shortage of ways that spending in our local communities is impacting how businesses are able to find new markets and able to thrive. Real dollars are flowing into our companies and communities. There are certainly companies from [around the state] that are working daily now in developing Marcellus and there are companies benefitting from the secondary and tertiary impacts of the development, such as dry cleaners, restaurants, hotels, and of course, the communities themselves are benefitting from families moving into their school districts and adding to the tax base, and spending dollars in local areas.

PBC: There are numerous environmental concerns regarding gas drilling in the state – can you tell me if you share any of these concerns and how the industry is handling them?

KK: I think what we’ve seen is rapid change in response to recognition of issues surrounding water, specifically regarding wastewater and total dissolved solids. I’m proud to now be a part of an industry that worked very quickly to increase the recycling of frac-water. As a result of innovation, we’re dealing with a much more manageable quantity of wastewater than was originally envisioned being produced. Companies in Pennsylvania are pushing the envelope in areas no one’s worked on before, finding really innovative environmental solutions. I think the environmental issues you point to are ones that need to be addressed head on with facts, and solved with kind of innovations that I think we’re all capable of putting in place.

PBC: What is your view of how the gas severance tax proposed by Gov. Rendell might affect gas drilling in Pennsylvania?

KK: According to a recent Penn State report, about $800 million a year is coming into state coffers in the form of all the other taxes paid by businesses and individuals involved in the gas industry in Pennsylvania and that is happening without a severance tax. So the tax benefit of the Marcellus Shale play is already happening in this state without a doubt. Looking at the severance tax debate, which is most likely to soon be in all of our doorsteps once again, I don’t’ think anything has fundamentally changed. This state has to be positioned well to capture the opportunity Marcellus represents. How do we make our Commonwealth competitive for this development? There are a lot of components, including tax structure. If we mess this up, it will be to the detriment of everybody in Pennsylvania.

PBC: What is your view of the regulatory framework governing shale drilling in Pennsylvania?

KK: I think a lot of progress has been made in the last year and a half in streamlining the permit process for new well construction. The industry agreed to a much higher fee structure in order to support necessary staffing increases at the DEP to handle the flow of permits. Based on conversations with folks at the DEP and in the industry, I think we’re in a much better place right now, where the state is able to responsibility permit new well development. We need that same kind of collaboration between the public and private sector in terms of water quality regulations. I believe as the DEP continues to get a better picture of not just the natural gas industry, but of all the many sources of loading components of total dissolved solids, it will probably have a more sophisticated approach to total dissolved solids than are in the proposed rules. But that rule is going to have a big impact not just on shale but on any industry that needs water as part of materials management.

PBC: The MSC has been able to get more than 90 percent of all Marcellus drillers to join…are you hoping to attract the other 10 percent?

KK: There’s no fundamental reason that we shouldn’t be at 100 percent participation other than the dynamics of this marketplace are happening very rapidly. There’s a lot of change as companies invest in land leases, develop joint ventures, and otherwise expand their Marcellus commitments. I think we’ll see, as time goes on, that we’ll get near to or even hit 100 percent participation. We’ve recently seen dozens of additional inquiries. But we already have a great level of participation, and my seat is a very exciting place to be right now, that’s for sure.