Archive for Marcellus Shale News
STATE COLLEGE, PA – About 80 people gathered at the Nittany Lion Inn on Friday, Nov. 14 for the first Keystone Energy Forum (KEF) held in Centre County. The event was sponsored by the Centre County Chamber of Business & Industry (CBICC) and media sponsor Marcellus Business Central.
KEF was formed several years ago to educate citizens about natural gas development within the Marcellus and Utica shale regions.
The forum and luncheon featured discussions about Act 13 Impact Fees, the state of shale in Centre County itself, and how the Shale industry has brought local businesses and entrepreneurs success in the industry.
“KEF was formed to give the general public facts about the shale gas industry, and let them decide on their own,” said KEF Director Bill Stewart.
Stephanie Catarino Wissman, executive director at Associated Petroleum Industries of Pennsylvania (API), discussed Act 13 and related impact fees awarded to Centre County. She also pointed out that the natural gas industry has contributed about $34.7 billion into the state’s economy.
“We have a glut of natural gas,” she said. “But we have a shortage of infrastructure to get that gas to market.”
Catarino Wissman identified one of the problems facing the infrastructure shortage is a lack of laborers and skilled workers. API has launched a campaign to recruit the next generation of oil and gas workers via it’s new Web site: www.oilandgasworkforce.com. The site was launched in June.
David Yoxtheimer, a hydrogeologist and extension associate with Penn State University’s Marcellus Center for Outreach and Research (MCOR), provided natural gas statistics related to Centre County.
“Things are slowing down in Centre County as far as new wells drilled,” Yoxtheimer said. He said there are 65 wells drilled in the county, with 48 listed on the latest production report and 24 are active producing. There have been no new wells drilled since 2011.
“We won’t see gangbuster numbers (in Centre County) like in Susquehanna,” Yoxtheimer said. But he did point out that Pennsylvania is leading the nation in the storage of natural gas. He said the natural gas lines that have been used to send gas to storage are now being considered to transport it to the global market.
And Russell Bedell, manager of communications and community relations at Columbia Gas of Pennsylvania, said gas companies like his are thinking outside the box to get natural gas to more customers.
A Columbia Gas of Pennsylvania, Inc., pilot program was approved about a month ago by the Pennsylvania Public Utility Commission (PUC), and will provide a new way to bring natural gas service to those who request it.
The new program means many potential Columbia Gas customers will have an option to pay for all or a portion of their natural gas line extension payment over a period of 20 years rather than with just the lump sum payment that Columbia Gas has historically been required to charge.
The company’s current procedure for any extension of gas mains to serve new customers is to perform an economic analysis and determine if the cost of the pipeline extension can be justified by projected revenues, or if an upfront payment needs to be made.
Under the new program, qualifying customers may instead be able to pay all or a portion of the upfront payment through a monthly charge of “up to” $35 for new gas service. As Columbia Gas pilots this new option over the next four years, up to $1 million in customer deposits may be spread over 20 years, thereby enabling millions of dollars to be invested in line extensions to increase affordable access to safe, efficient, and clean-burning natural gas where the company does not currently have facilities available.
Dr. Jeremy Frank, president of KCF Technologies Inc. in State College, spoke about how the gas industry has directly or indirectly assisted small business owners and entrepreneurs like himself become more profitable.
Frank co-founded his company after earning a Doctorate in mechanical engineering. He has worked for fifteen years on the development and commercialization of electromechanical devices, with the recent focus on wireless sensors for continuous monitoring of machinery.
He saw a huge opportunity within the oil and natural gas industry to market a breakthrough new capability to improve the safety and reliability of upstream operations in the northeast region of the state. Wireless sensor systems monitor when the equipment is being damaged, identifies the component and severity of the damage, and enables the operators to take action – before the equipment breaks or becomes severely damaged.
“Ten percent of our economy is wasted due to breakdowns,” Frank said. “KCF is a technology development company trying to make things work smarter. We want to predict and prevent a problem before it happens.”
CBICC Communications Director Lesley Kistner said this is the first time a Keystone Energy Forum was held in Centre County.
“We were pleased with the turnout from a broad cross section of our membership,” Kistner said. “There was great interest in learning how our county is benefitting from shale gas drilling. We received a lot of positive feedback from attendees, particularly for the opportunity to hear directly from a local company that has developed innovative technology beginning to be used by the industry.”
STATE COLLEGE, PA – More than 80 people crammed into a conference room at the Nittany Lion Inn on Friday for the first Keystone Energy Forum (KEF) held in Centre County. The event was sponsored by the Centre County Chamber of Business & Industry (CBICC).
KEF was formed several years ago to educate citizens about natural gas development within the Marcellus and Utica shale regions.
Friday’s forum and luncheon featured discussions about Act 13 Impact Fees, the state of shale in Centre County itself, and how the Shale industry has brought local businesses and entrepreneurs success in the industry.
“KEF was formed to give the general public facts about the shale gas industry, and let them decide on their own,” said KEF Director Bill Stewart.
Featured speakers included Stephanie Catarino Wissman, Executive Director of Associated Petroleum Industries of Pennsylvania; Dave Yoxheimer of Penn State’s Marcellus Center for Outreach and Research (MCOR); Dr. Jeremy Frank, President of KCF Technologies, Inc. of State College; and Russ Bedell, Community Relations & Communications Manager at Columbia Gas.
“We were pleased with the turnout from a broad cross section of our membership,” said CBICC Communications Director Lesley Kistner. “There was great interest in learning how our county is benefitting from shale gas drilling. We received a lot of positive feedback from attendees, particularly for the opportunity to hear directly from a local company that has developed innovative technology beginning to be used by the industry.”
UNIVERSITY PARK, PA – The Penn State Marcellus Center for Outreach and Research (MCOR) and the Penn State Extension Marcellus Education Team are pleased to announce the beta launch of a new shale royalty calculator and decline curve Web app.
The new app is based on actual state shale production results, provides daily cumulative production and decline estimates, and offers an upgrade option for county specific data.
To provide the best available information, the new app is based on an evaluation of nearly 5,000 horizontal shale wells reporting production over the last four years.
The royalty calculator and decline curve app is currently offered in a free and lite subscription configuration, with a professional version anticipated early next year. The free version offers users insight into state production averages, average estimated ultimate recovery, potential royalties from a well, and gross income. The lite subscription upgrade allows users the ability to select a specific county, estimate tax implications and potential transportation deductions, enter six different gas pricing scenarios, see more than 15 years of annual royalty estimates, and the average estimated EUR for a specific county.
For more information about the beta version, point your web browser to www.shaleroyalty.org.
As the Shale industry continues to grow, the uses for natural gas continue to expand. Billed as a cleaner and cheaper alternative to conventional gasoline or diesel, compressed natural gas (CNG) is growing in demand.
More than half of the CNG fueling stations in the nation are available for public use, while others are for fleet vehicles only. But as consumers demand more CNG vehicles, both private and public fueling sites are expected to grow to meet that demand.
CNG stations are becoming common in many cities for public and private use.
Consisting mostly of methane, CNG is odorless, colorless and tasteless. It’s drawn from domestically drilled natural gas wells or in conjunction with crude oil production. Natural gas powers about 250,000 vehicles in the nation according to GE.
As gasoline prices have risen in the past years, interest in CNG is rising, and with good reason – CNG costs about 50 percent less than gasoline or diesel, emits up to 90 percent fewer emissions than gasoline and there’s an abundant supply in the region.
Many states have government incentives for drivers to purchase CNG vehicles or to convert their vehicles to operate on CNG fuel.
Gov. Tom Corbett and the state Department of Environmental Protection (DEP) today announced recently a third round of Natural Gas Vehicle grants will provide an estimated $6 million to help pay for the incremental purchase and conversion costs of heavy-duty natural gas fleet vehicles.
Since 2013, $14 million has been awarded to 44 organizations and companies making the switch to compressed natural gas (CNG), liquefied natural gas (LNG) and bi-fuel vehicles weighing 14,000 pounds or more.
Those eligible to apply include non-profit organizations, local transportation organizations, state owned or state related universities, commonwealth or municipal authorities, for-profit companies and the Pennsylvania Turnpike Commission.
Requests can be no more than 50 percent of the incremental purchase or retrofit cost per vehicle, with a maximum total of $25,000 per vehicle.
Grant applications will be awarded this winter.
CNG in the region
The Centre Area Transportation Authority (CATA) has taken advantage of natural gas vehicle grants, and is in the process of replacing some of its older buses with new ones – making the entire CATA fleet 100 percent operational on clean CNG. In addition to the new buses, CATA is also replacing four of its Ford Taurus service vehicles with natural gas-powered Honda Civics.
“These vehicles are used by our drivers and staff as we switch out buses, do road supervision, etc.,” said CATA spokeswoman Jacequeline Sheader. “This will be the first time we’ve used CNG vehicles other than full-size transit buses.”
Sheader said the ten new full-size New Flyer CNG Xcelsior buses are expected to arrive by the end of the calendar year.
All of CATA’s natural gas vehicles are fueled on site – but private CNG vehicle owners have to travel to Uni-Mart Exxon at 3180 W. College Ave. in Ferguson Township.
Initially open for use in 2001, it closed for a brief time before reopening in 2011. At one point, the station’s one CNG pump was the only one between Pittsburgh and Philadelphia.
According to the U.S. Department of Energy, there are only 768 CNG stations in the nation, and experts say the demand is growing.
Stations have been slowly popping up all over Pennsylvania. Most recently, the state awarded Sunoco more than half a million dollars to develop a CNG fueling station in Chambersburg, Franklin County. The Commonwealth Financing Authority approved a $591,502 Alternative & Clean Energy grant to match $887,253 provided by Sunoco.
The company has also received grant money for CNG fueling stations in Canonsburg, Washington County; King of Prussia in Montgomery County; and New Stanton in Westmoreland County.
In late April, Penn CNG Solutions of Williamsport opened its doors as the first CNG vehicle conversion site in the region. The company started with six employees who are certified to install and service CNG vehicles.
Loyalsock Township Manager Bill Burdett said Penn CNG Solutions is an example of the future of transportation in the state – and the goal of the township supervisors was to convert 50 percent of the township’s fleet to CNG within the next five years.
Besides CNG, the liquid form of natural gas (LNG) is also being utilized as a fuel in the long-haul trucking industry.
REV LNG Inc., a company based in Ulysses, Potter County, is planning to construct a facility in Bradford County that will cool locally produced natural gas to its liquid form.
The plant, which will be constructed off Dolan Road in Herrick Township, will produce up to 50,000 gallons of LNG per day, according to company CEO David Kailbourne.
There are not other LNG plants in Bradford County. And there are currently eight plants east of the Mississippi River.
REV LNG, which owns tanker trucks that transport the liquefied natural gas, distributes LNG to 18-wheel trucking fleets owned by other companies and to drilling rigs, Kailbourne said.
LNG-fueled trucks have less air emissions and are quieter than diesel-fueled trucks, and costs about 30 percent less than diesel fuel.
Currently, the company supplies LNG to more than a dozen drilling rigs in the Marcellus Shale that use LNG as a fuel. Kilbourne said up to five tanker trucks would transport LNG from the new Herrick Township facility each day.
Long-haul trucking companies are attracted to LNG because the vehicles can use it to travel longer distances with few storage tanks on board.
REV LNG received an $800,000 grant from DEP to help pay for the plant.
Slow but sure
Bill Hall, Director of Ben Franklin Technology Partners’ Shale Gas Innovation and Commercialization Center (SGICC) in State College, said the market is developing, but very slowly.
“The conversion for passenger vehicles and light duty trucks are very slow,” Hall said. “The cost of a new dual fuel vehicle is high, so a payback only works for people that drive about 35,000 to 40,000 miles per year.”
He said an additional problem is the lack of CNG stations available to the average consumer. However, there is a developing technology for home fueling stations, where a homeowner who has access to natural gas lines can have a fueling station installed at their property.
Hall added that for small fleets, there are companies that are developing “virtual pipelines” and will deliver CNG or LNG to the company’s location.
“This can be a way for the small fleet owner who either returns to base or can use a mid-point refueling option to take advantage of low-priced CNG without investing in an expensive refueling operation,” Hall said.
Hall said there is a lot of uncertainty in the market, due to various vendors offering different options, which can make it confusing for the customer.
“The SGICC has a grant from the state Department of Community and Economic Development (DCED) in their D2PA program that provides funding for ‘white papers’ on topic areas,” Hall said. SGICC has hired Harrisburg-based Gannett Fleming to prepare a study to provide CNG and propane potential users in the transportation sector with a non-biased evaluation of their options.
The report is expected to be available in March 2015, and the SGICC will provide a series of Webinars to promote it throughout the state.
Hall said that the study will be a reference document for small business owners and individuals to use when making a decision regarding the use of CNG or propane as a transportation fuel.
The Associated Press contributed to this story.
According to the U.S. Bureau of Statistics, Pennsylvania ranked 48 out of the 50 states in job growth last year. This month, the ranking climbed to 42. Pennsylvania has created more than 100,000 private sector jobs since Gov. Tom Corbett took office four years ago, although that number has not yet hit the governor’s original goal.
While Pennsylvania recently overtook Louisiana as the number two state for natural gas production, becoming number one in job growth has proven to be a tall order.
Only once since the 1990s has the state’s annual average job growth been ranked in the top 10 — in 2010, when Pennsylvania created 87,000 jobs and was ranked ninth in the nation.
That year, many of the harder-hit, higher-growth states were still recovering from the Great Recession. Pennsylvania was not immune to the recession, but it was less impacted in part because the Marcellus shale gas industry was in its development and exploration boom stage. Gas companies hired roustabouts, field hands and heavy equipment operators to build well pads and related infrastructure, construction companies to build roads, and CDL drivers to move materials needed to frack the shale. Many ancillary businesses serving the industry also hired workers, and federal stimulus dollars helped temporarily fund jobs through highway projects and other public programs.
According to the state Dept. of Labor & Industry, the gas industry is credited with directly employing 28,155 Pennsylvanians as of early 2013. There are also 203,814 people employed in ancillary industries that in some manner serve the shale gas industry, such as hotels and restaurants. But only 13,352 of those 203,814 jobs were created over the past four years. Still, it is a positive impact overall.
Since 2010, job growth in the commonwealth has steadily eroded, with only about a quarter of the number of jobs created in 2013 as in 2010, the first full year of the economic recovery.
While natural gas production in Pennsylvania continues to rise, particularly in the southwest where “wet gas” enriched with higher value natural gas liquids is being drilled, the frenzy from the development and exploration boom has subsided as gas companies await the build-out of pipelines to move the gas to market and for the price of gas to rise to make drilling more “dry gas” wells worthwhile.
David Passmore, director of undergraduate and graduate studies for the Department of Learning and Performance Systems in Penn State’s College of Education, said initial estimates stated the Shale industry created about 200,000 jobs in the state. But Passmore hasn’t been able to find a credible source to verify that number, which he feels is too large.
“This overestimate was one reason why some people were overly optimistic about Pennsylvania being able to attain a high ranking in job growth, but shale gas is a relatively small industry compared the three big drivers of the state economy, which are government, healthcare and real estate,” Passmore said.
Passmore points to the 27,000 educators who were laid off and government workers who lost jobs as a result of state government department consolidations as contributing to the state’s decline in job growth.
The monthly reports from Pennsylvania’s Independent Fiscal Office show that revenues in Pennsylvania are down all across the board – personal income taxes, corporate taxes, lottery earnings, casino gambling, etc. The result is a two-year revenue shortfall of more than $1.4 billion.
“Unless our state government finds a way of raising significant revenue, we may see more public sector job cuts over the next four years, and like the educator cuts, those job losses will have negative multiplier effects on the state economy – automobile sales, home sales, retail sales, etc.,” said Passmore.
Shale industry workforce survey
At the end of July, the Marcellus Shale Coalition (MSC) issued its 2013 workforce survey results with 61 members participating, including Anadarko, EXCO, Shell and Talisman. Some were support industry associate members such as S. P. McCarl & Company, McClure Company and Nuverra Environmental Solutions. A few were non-industry members such as Larson Design Group, McNees Wallace & Nurick LLC, and Northwest Savings Bank.
The greatest job growth in the shale region’s Marcellus and Utica plays occurred in four categories: engineering and construction, equipment operations, operations and maintenance, and administration. The most difficult positions to fill were professionals such as engineers, management personnel and executives, and technicians.
Of the new hires, about 60 percent were hired in Pennsylvania, 11 percent in Ohio, 9 percent in West Virginia, 1 percent in New York, and the remainder from other states.
The three greatest challenges the members found in hiring workers were finding qualified talent with both knowledge and experience, competition for qualified talent with other shale plays and other industries, and a willingness to relocate.
Gas companies often require professionals such as engineers to have two or three years of experience in the shale gas industry before they work for gas companies in Pennsylvania, but few qualify.
“I’ve had mechanical engineering students in my class who ended up working for shale gas companies, but first they were sent to Texas to learn the technical aspects of the industry they couldn’t learn from textbooks or instructors in the classroom,” said Rose Baker, assistant professor of education, workforce education and development at Penn State.
“The flip side is that with all the shale plays going on in the U.S., it’s hard to get experienced workers to move from one play to the other, let’s say, from North Dakota or Colorado to Pennsylvania, because shale plays are where you’re going to find experienced workers.”
Last year, the greatest recruitment challenge for MSC’s members was compensation.
“Workers are demanding higher salaries because they’ve seen so many people became millionaires because of the shale industry that they, too, want to make big money, but to some extent salaries are driven by natural gas prices,” said Baker.
What does the MSC workforce survey tell us about the industry’s role in Pennsylvania’s economy?
“From a job growth perspective, the state economy works from fiscal year to fiscal year and from election cycle to election cycle, but the oil and gas industry has a longer term perspective,” said Passmore.
He said when market conditions are more profitable, he predicts the industry will “go gangbusters” again to move the gas and push it to market faster. He said while the positive impact the shale industry as had on the state economy is real, it will take more time to reach expectations.
“I think we have learned to temper our expectations of how great an impact the shale gas industry has had while not giving up hope on the future impact it could have once the pipelines are completed, after wider uses for the gas are developed, and when the two cracker plants are built and attracting manufacturers to the Appalachian basin,” Passmore said.
Due to the high demand for Class-A commercial drivers in southwestern Pennsylvania, last year the Central Westmoreland Career and Technology Center (CWCTC) in New Stanton partnered with the Sage Truck Driving Schools and began offering commercial driver (CDL) training.
One student started receiving job offers from gas drillers and trucking companies even before he graduated.
“He told me his phone was ‘blowing up’ with job offers, and that he felt like an NFL recruit,” said Ed Roberts, Sage representative at CWCTC.
The competition for truck drivers in the region where the “wet gas” boom is in full swing, and companies are offering to fully reimburse the student’s tuition, which can run between $6,000 and $8,000, and offer up to a $3,000 signing bonus for a two-year commitment to work for the company.
Some trucking companies such as Con-way Freight, Schneider, J.B. Hunt, and Maverick Transportation have their own driving schools and train drivers for free, but they also require them to sign a contract agreeing to stay with the company for a specified time.
In Pennsylvania, a Class-A CDL is required to operate any combination of vehicles with a gross weight rating of 26,001 lbs. or more, where the vehicles being towed are in excess of 10,000 pounds.
Some of the students in CWCTC’s CDL program receive funding through CareerLink or a VA-approved program, but most have to pay out-of-pocket.
“We had a recruiter from a Marcellus related-company come into office yesterday afternoon and say he would hire 75 drivers on the spot,” said Roberts. “Due to the continued boom in the ‘wet gas’ in western Pa., the industry can’t get enough drivers, so that’s the region of greatest demand, but we also get calls from shale gas companies in the Poconos looking for drivers.”
The big attraction of the shale gas industry for truck drivers is that most of those hired work locally and can go home every night, as opposed to traditional over-the-road trucking jobs. Shale companies also offer salaries equal to or better than long-haul carriers, which had traditionally been the best paid jobs in trucking. Most CDL drivers start at $40,000 annually and average about $50,000. Experienced long-haul drivers who drive cross-country can make $80,000 to $100,000 annually.
In addition to a number of high school technology programs, the Central Pennsylvania Institute of Science & Technology (CPI) in Pleasant Gap offers 60 in-house adult and continuing education programs, including CDL driver training.
David Priester, CDL instructor at CPI, said a local staffing agency had recently inquired about hiring 50 drivers. He said the agency has helped staff gas companies and shale-related businesses including Curry Supply Company, which is opening a new $2.4 facility at the DeGol Industrial Park Center in Hollidaysburg.
Curry’s new facility, which will manufacture vacuum trucks, rig vacs and water trucks for the shale gas industry, is expected to create 50 new jobs and retain 144 existing jobs over the next three years.
Although CWCTC is a part-time vocational-educational school with 10 sending school districts, most CDL students are career-changers like Preister, who was raised in a family that operated heavy equipment. He drove a truck while attending college, and later taught music for many years before returning to trucking at age 39.
“We have a student now whose father I trained about 18 years ago,” Priester said. “I’ve had lots of father and sons and brothers become interested in the profession because of family ties, but that’s changing somewhat.” He said that, while many young people are not following in their father’s footsteps into trucking, the industry is still a fast track to a family-sustaining income.
“I used to think that electricians and plumbers were the quickest path to good-paying technical jobs, but you have to go to school for those professions and then work as an apprentice,” said Priester. “A truck driving student comes out of the class in six weeks and can make as much or more than electricians and plumbers if they go to work for a long-haul carrier or a gas company.
Driver shortages and barriers to entry
Pennsylvania is the not only state that’s feeling pinched for truck drivers. According to the American Trucking Association (ATA), the nation has a shortage of about 23,000 truck drivers nationwide, and if the shortage continues growing, the gap could grow 10 times larger by 2023.
ATA attributes the shortage to several factors: government regulations; insurance requirements; the drying up of government funds for CDL tuition; more young people using drugs and failing health exams; the migration of experienced drivers to the oil and gas industry; and the relatively low pay for the time worked for independent truckers.
Independent truckers do not receive the same workplace protections as company drivers such as overtime and mandated work breaks. Unlike company drivers who are on the clock, independent truckers are not paid for waiting and loading time at ports, causing many owner/operators to receive paychecks that are below minimum wage.
Like most other professions, the retirement of baby boomers is also causing ripple effects. According to ATA, the average age of CDL drivers in the U.S. is 56, and despite the good pay, those retiring drivers are not being replaced quickly, because truck driving isn’t as alluring to young people today as other good-paying technical professions such as computer programming, mechatronics, plumbing or welding.
Government regulations require CDL drivers be at least 18 years and may only drive within their licensed state. A drive must be 21 to drive over state lines. Insurance companies will not insure inexperienced drivers. Typically, new drivers get their experience driving interstate since long-haul carriers have high turnover, and it’s generally safer for an inexperienced driver to drive on interstate roads than it is to negotiate sharp turns through towns and cities surrounded by passenger cars.
“Insurance companies won’t cover drivers with less than a year’s experience, and some require two-year’s experience, because the truck and load could be worth half a million dollars, and insurers don’t want to take the risk of having to pay out that kind of money if an inexperienced driver has an accident,” said Jim Runk, president and CEO of the Pennsylvania Motor Truck Association (PMTA) in Camp Hill.
“Companies are at the mercy of insurance companies, and for the drivers it becomes a ‘Catch 22’ – the driver can’t get insured if he doesn’t have experience, but if he can’t be insured, he can’t get on-the-job experience.”
Because CDL drivers can’t drive interstate until age 21, many young people don’t want to wait three or four years after high school graduation to become a truck driver.
“They will go on to become a mason, wielder, electrician or some other technical professional, and then we’ve lost them for good,” Runk said. “The federal government could help the situation by lowering the minimum age requirement for long-haul drivers from 21 to 19 or even 18.”
Priester said the shale gas industry has been a mixed blessing for the trucking industry.
“On one hand, it’s provided opportunities for drivers to make more money for working four days than they did working all week for smaller companies and be closer to home so they can spend more time with their families,” Priester said. “The downside is that takes those drivers out of the market for the general business and industrial community.”
STATE COLLEGE, PA, Oct. 28, 2014 – The Chamber of Business & Industry of Centre County will host a Keystone Energy Forum and luncheon from noon to 1:15 p.m. on Tuesday, Nov. 14 at the Nittany Lion Inn.
During the program, a panel experts and businesses involved in the Marcellus Shale/natural gas industry will address a wide range of issues related to the economic potential of the industry to Centre County and the surrounding region.
CBICC President and CEO Vern Squier said hosting a Keystone Energy Forum is an opportunity to continue the ongoing community dialogue about the natural gas industry.
“This particular forum will focus specifically on the economic opportunities – both direct and ancillary – that the energy field presents to Centre County and the surrounding region,” Squier said. “Businesses here are developing innovative products, services and technologies that help to support this industry. These are just some of the positive impacts we hope to highlight at this event.”
This is the first time that the CBICC will host a Keystone Energy Forum event.
Speakers include: Bill Stewart, Director of Keystone Energy Forum; Stephanie Catarino Wissman, Executive Director, API-PA; Tom Murphy, Co-Director, Penn State’s Marcellus Center for Outreach and Research; a representative from Columbia Gas; and Jeremy Frank, President, State College-based KCF Technologies, Inc.
A Q&A session will follow the panel discussion.
Marcellus Business Central is serving as CBICC Media Sponsor for the forum.
The Keystone Energy Forum is a group of concerned citizens and partners committed to improving the public’s understanding of, and support for, the many opportunities presented by the Marcellus Shale natural gas reserves in Pennsylvania.
The goal is to educate fellow Pennsylvanians in order to ensure elected officials are creating sound policies which promote a strong economy and energy security.
Since launching in January 2011, the Keystone Energy Forum team has held meetings and established relationships with a number of government- and citizen-based organizations to discuss Marcellus issues and to further the dialogue on Marcellus development.
The Utica Shale play in eastern Ohio is one of the fastest-growing natural gas plays in the nation. Last month, in recognition of this status, the U.S. Energy Information Administration (EIA) added the Utica to its monthly drilling productivity report.
The total production in the Ohio natural gas region, which includes production from the Utica and Point Pleasant formations plus legacy production from conventional reservoirs, has increased from 155 million cubic feet per day (MMcf/d) in January 2012 to an estimated 1.3 billion cubic feet per day (Bcf/d) in September 2014.
The EIA’s drilling productivity report uses recent data on the total number of drilling rigs in operation along with estimates of drilling productivity and estimated changes in production from existing oil and natural gas wells to provide up-to-date oil and natural gas production figures for seven key regions: Bakken (bah′-ken), Eagle Ford, Haynesville, Marcellus, Niobrara, Permian, and Utica. (see table)
These seven regions accounted for 95 percent of domestic oil production growth and all domestic natural gas production growth during 2011-13.
EIA’s approach does not distinguish between oil-directed rigs and gas-directed rigs because once a well is completed it could produce both oil and gas. More than half of the wells in the shale plays produce both.
In 2012, it was the anticipation of drilling oil shale that led Chesapeake Energy, which has the largest number of drilling permits in Ohio, and other E&P companies to pull some rigs from Pennsylvania and Texas and move them to Ohio and other states where shale formations showed promise of producing more oil and natural gas liquids.
In the past two years, Chesapeake has spent $17 million alone to widen, repair and build new roads to transport equipment and workers to and from its well sites in Ohio.
The Utica shale play, now in its third year, is producing an average 37,000 barrels of oil per day. By comparison, the Marcellus shale play, which is in its seventh year and covers a much larger area, with many more active wells (6,391 vs. 553 for the Utica), is producing 50,000 barrels per day.
For new oil production (the first 30 days a well comes online), the Utica surpasses the Marcellus, Haynesville and Permian shale plays.
The Utica is now producing almost as much natural gas as the Bakken Shale. The Utica has an estimated 38 trillion cubic feet of recoverable natural gas, according to the U.S. Geological Survey; however, the Bakken has significantly more estimated recoverable oil (4.3 billion barrels vs. 940 million barrels for the Utica).
The Bakken formation is rock from the late Devonian to Early Mississippian age, which occupies approximately 200,000 square miles under parts of Montana and North Dakota in the U.S., and Saskatchewan and Manitoba in Canada. It’s named after Henry Bakken, a farmer in Tioga, North Dakota, who owned the land where the formation was first discovered while the farm was being drilled for conventional oil.
The Utica formation took its name from the city of Utica, N.Y., where it outcrops at the earth’s surface. The Utica was deposited in a deep ocean basin about 450 million years ago during a period geologists call the Ordovician.
Ohio was one of the first states where the oil and gas industry originated. Standard Oil, the famous oil company of John D. Rockefeller, was established in Ohio in 1870. Over the past few decades, Ohio’s once-active oil production has been steadily declining, but now eastern Ohio, home to Point Pleasant, the liquids-rich “sweet spot” of the Utica shale play, is changing that.
As with the Bakken, it was long known that oil existed in the Utica shale, and hydrofracturing was already pulling up oil from the wet gas in southwestern Pa. and other shale plays, but it wasn’t until oil prices jumped to more than $100 per barrel in early 2012 that oil exploration in the Utica became economically feasible.
Conventional crude oil is relatively cheap to produce and refine, and it produces most of our transportation fuels.
However, drilling the oil shale in Ohio turned out to be more difficult than anticipated. Some the oil located in oil shale region of western Ohio was too shallow to provide enough pressure to come up through hydrofracturing. The deeper oil found in the Utica proved more difficult to permeate the shale rock than natural gas.
“We haven’t really unlocked the code yet as to how to get the oil out of the shale, it’s harder to get oil molecules to move through rock than gas molecules,” said Mike Chadsey, director of public relations for the Ohio Oil and Gas Association (OOGA).
OOGA is a trade association with more than 3,300 members involved in the exploration, production and development of crude oil and natural gas resources in Ohio.
“We have to figure out what kind of technologies we need to put in place — the frack fluid, the pressures, how long to drill the laterals– there’s a lot of things that need to come together in order to extract the oil from the shale,” said Chadsey
“We have a good understanding of the dry gas and the wet gas, we just have to figure out the oily gas, so it’s coming — our companies are working on it, and we’ll eventually get there.”
It’s the oil that’s mixed with the “wet gas” that’s now being extracted in the Utica.
E&P companies have drilled for natural gas in 44 of Ohio’s 88 counties, with 198 wells being drilled in the Utica/Point Pleasant formations. Carroll County has the most active wells in Ohio, with 87 wells drilled.
In Pennsylvania, Bradford County has the most active wells, with 1,142 — more than twice as many as all the gas wells in Ohio. However, as in other shale gas producing counties in the Northern Tier, the Marcellus wells produce only methane, the “dry” component of natural gas, which is less valuable than “wet gas.”
“Our dry gas extends over the Pennsylvania border, and as you move west, you get into the wet gas window and then farther west, you move into the oil shale window, though the oil shale has had limited if any exploration thus far, but that will change in time, particularly as oil prices rise,” said Chadsey. (see map)
The good news for drillers is that nearly all the shale in the Point Pleasant “sweet spot” in the east-central Ohio counties of Belmont, Harrison, Gernsey, Monroe, Jefferson, Carroll and Washington contains “wet gas,” methane mixed with natural gas liquids (NGLs), which adds value to the gas.
The NGLs can be broken down into individual components through processing, and those components such as butane, isobutene, propane, natural gasoline, and ethane have uses in various products and industries. Butane is used in cigarette lighters, propane for heating, and ethane can be “cracked” into ethylene, which is the chief feedstock for the plastics and polymers industries.
According to OOGA, the oil and gas industry has spent nearly $12 billion in Ohio in the last two years, developing processing plants and pipelines to process Utica wet gas and transport it to markets in Canada and the Gulf Coast.
The bad news for the drillers is that due to the low price of methane or “dry gas,” many companies have decided to focus on wet gas in Ohio, southwestern Pa. and elsewhere that the price of NGLs is also dropping.
The Wall Street Journal recently characterized the ethane market as “collapsing,” and said that energy analysts expect NGLs to sell at low prices for years to come.
“The bottom line on the ethane market is that the region that includes the Ohio Valley, eastern Ohio, western Pa. and northern West Virginia needs a cracker facility, which will assist our producers in getting the product to market, and that facility will also attract plastics and polymer manufactures to the region, which means new jobs,” said Chadsey.
“Two companies, Shell and Oderbrecht, have already announced plans to build cracker plants in the Appalachian basin, Shell in Pennsylvania near the Ohio border, and Oderbrecht in northern West Virginia.
“Time will tell if they intend to follow through with their plans, but as the Wall Street Journal pointed out, there should be plenty of wet gas production to justify building a cracker plant or two.”
WELLSBORO, PA – Tioga County and neighboring Bradford and Susquehanna counties have been a large focus for the Marcellus Shale industry for a number of years.
As exploration and drilling increased, the region found itself trying to accommodate the number of visitors to the area, along with the demand for services.
Julie VanNess, Executive Director of the Wellsboro Area Chamber of Commerce, described business growth and expansion as “steady.”
“Some businesses have seen substantial growth, while others are seeing slower increases,” VanNess said. “Businesses directly impacted by the gas industry, such as Tioga Central Railroad and Wellsboro Johnston Airport, have seen and continue to see growth and expansion.”
In addition to an abundance of Shale gas available beneath the ground in the Northern Tier, VanNess said Tioga County offers new business and industry many advantages, including newly constructed interstate highways, a regional airport, an active railroad and most importantly, a viable workforce.
She explained that the
“The Marcellus industry impact on Tioga County varies,” VanNess said. “The industry boom a few years ago had a significant impact on the county but has since slowed down. The local hospital, Soldiers and Sailors Memorial Hospital, added a new emergency room to meet the growing needs of the area.”
The Macellus drilling boom has brought a few new hotels and restaurants to Tioga County in the last few years, bringing additional jobs to the area.
“Many of the existing businesses took advantage of the boom by adjusting to the needs of the industry,” VanNess said. But she added that while some new Marcellus businesses seemed to show up overnight, many also moved with the industry when the price of natural gas bottomed out a few years ago and drilling seemed to wane.
But VanNess said the Northern Tier should not be referenced only as a Marcellus-driven and dependent area.
“Tourisms is significant to many of our businesses, most of which are privately owned, who count on the tourist industry,” VanNess said. “The Pennsylvania Grand Canyon and the many events hosted by the Chamber attract thousands of visitors each year.
“Tioga County boasts a variety of attractions and activities, vibrant and well-maintained communities, as well as owner-operated shops, restaurants, and lodging.”
STATE COLLEGE, PA – Once again, The Pennsylvania and Marcellus Business Central is proud to present the fourth annual “Women Making a Difference” publication scheduled to appear in the Sept. 19 edition.
It was announced earlier this week that nominations are now open for the very popular “Women Making a Difference” that showcases some of the most successful women in the region.
This marks the fourth year that the publication has teamed up with St. Francis University to seek nominations for “Women Making a Difference” so that the stories of some of the most successful women in the 22-county coverage area can be told!
Nominations are being sought from readers, community leaders, Chambers of Commerce, local businesses and community organizations to nominate women who make a difference within their own companies and the community.
Once collected, nominations will be presented to a third party independent committee spearheaded by St. Francis University’s school of business. The selection committee chooses the finalists, whose success stories will be published in The Pennsylvania Business Central on Sept. 19.
In the past, readers have presented dozens of candidates who were worthy of recognition.
Nominations can be obtained by visiting the PBC Web site: www.pabusinesscentral.com. Click on the “Women Making a Difference” tab to download the nomination form. Nomination forms can be e-mailed to email@example.com, faxed to (814) 278-1303, or submitted verbally by calling (814) 278-1321 or (814) 278-1323
The deadline for nominations is Sept. 5.