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Marcellus Shale Holds Key to Sustainable Economic Development and Revitalization in Region

Guest columnist Jim Protin says, 'Our future is bright because of the companies working to responsibly extract natural gas from Marcellus Shale.'

By Jim Protin, Director of Business Development, Mid-Atlantic Region Chester Engineers

By now, you have heard the statistics that state there are 141,000 employees in direct Marcellus Shale or related industries—48,000 new hires since fourth quarter 2009 and 71 percent of new hires from Pennsylvania.

Add to that the fact there are currently 2,400-posted jobs in Marcellus Shale-related industries. The commonwealth has seen dramatic increases in tax payments, a more than 11-percent increase in state sales tax, and a 7-percent increase in individual taxable income.

These are staggering numbers not seen in our region since the heyday of the steel industry. This is the path to a stable economy for the Commonwealth of Pennsylvania. In any region across the United States, economic development professionals will tell you the key to recovery and future growth of the economy is jobs.

These are not just any jobs but family-supporting, sustainable jobs. Sustainable is the key word when describing the opportunities that Marcellus Shale offers.

For the first time in maybe a generation, young men and women can leave college, or high school and enter the local workforce in a career that will allow them to live, work, and retire in Pennsylvania.

No longer will our children have to leave home for the Sunbelt or other region to escape our depressed economy. If you are a parent, there are no better words you could hear. Our future is bright because of the companies working to responsibly extract natural gas from Marcellus Shale.

Marcellus Shale, as well as the deeper and potentially richer Utica Shale, composes the largest natural gas field in North America and before it is all said and done, possibly the world. More importantly to us on the ground in Southwestern Pennsylvania, it represents the greatest
economic development opportunity our region has seen since the 1960s when the steel industry and its extensive supply chain made Southwestern Pennsylvania the leading industrial region in the country.

The potential exists for our corner of the commonwealth to again assume that leadership role not only in the United States, but globally. The oil and gas industry in Marcellus Shale has an extensive supply chain of its own that is shaping up to be a true game changer for Pennsylvania.

We are still in the infancy stage of development of Marcellus Shale play, possibly at 5 percent, which leaves us with a long way to go. Think about the employment numbers mentioned earlier and we still have a long way to go. Pennsylvania currently imports nearly 75 percent of the natural gas we use daily.

That is residential, commercial, and manufacturing uses across the commonwealth. Marcellus Shale alone holds enough recoverable natural gas reserves to serve Pennsylvania’s needs and turn Pennsylvania into a leader in the global energy market.

The world’s leading manufacturing companies are taking notice of what is happening in Pennsylvania. Several large chemical companies are interested in making billion-dollar investments in the commonwealth. The chemical industry is a large consumer of natural gas as a feedstock and energy supply.

Major transit bus and trucking fleets are converting existing diesel- powered vehicles to cleaner-burning natural gas vehicles and are purchasing new natural-gas powered vehicles—also known as NGV. These vehicles run on compressed natural gas—or CNG—and there is a major initiative in the commonwealth to develop a CNG corridor across Pennsylvania.

The Pennsylvania Clean Transportation Corridor will be a strategically planned network of natural gas refueling stations connecting Philadelphia, Scranton, Allentown, Harrisburg and Pittsburgh.

This corridor could potentially be the cornerstone of a larger regional clean transportation network across the northeast United States. The development of a micro-corridor in the Pittsburgh region, including Washington County is already underway.

Another opportunity is in the handling and transportation of natural gas liquids—or NGL— such as ethane, propane, or butane to markets across the country. Pennsylvania is not alone in the North American shale gas boom. The Barnett and Eagle Ford Shale’s in Texas, Haynesville Shale in Gulf Coast Region, and the Horn River Shale in Canada are all competing for these same economic opportunities. These major North American Shale plays contain more natural gas than the total combined amount produced in North America since 1930.

Other industries are taking notice and are joining the ever-increasing Western Pennsylvania supply chain. TMK ISCO, a tubular steel producer, announced recently it would add a second pipe threading line at its Brookfield, Ohio, facility to meet the growing demand in Marcellus
Shale play. Natural gas from Marcellus is providing heavy industrial manufacturers such as U.S. Steel with a locally based energy supply for its mills in Western Pennsylvania.

Dow Chemical announced a plan to build a new ethylene production plant in the Gulf Coast region to take advantage of Marcellus Shale gas.

Several companies are investigating the opportunity to build ethane cracker plants that convert ethane (a natural gas derivative) into ethylene that is used to make plastics. This opens the door for plastics manufacturers to locate new facilities in Pennsylvania. With existing raw materials, efficient transportation options including interstate highway, rail and shipping, and a skilled workforce, Western Pennsylvania is in a strong position to take advantage of these developing economic opportunities.

Like any opportunity, the natural gas boom in Marcellus Shale has its share of challenges. One major concern in the environmental community is the hydraulic fracturing or fracking process used to extract the gas from the shale. This process involves injecting fluids under high pressure into a well to fracture the rock and release the trapped natural gas to the surface. The fluid is typically made up of water and sand with less than 1 percent being chemical additives. There remains no documented evidence of chemicals from hydraulic fracturing contaminating an aquifer or other underground water supply.

It is estimated that over the next 20 to 25 years, nearly $20 billion in pipeline infrastructure will be necessary to move the gas to market. Each mile of pipeline represents $1 million to the local economy. Every Marcellus well drilled represents $4 million invested in the local economy. At 3,000 wells projected to be drilled that is an additional $12 billion.

Considering that all challenges are opportunities, this infrastructure need represents yet another potential economic development opportunity for Pennsylvania.

Exploration and production and drilling companies working in Marcellus Shale invested more than $411 million over the past three years to repave, rebuild and improve roadways, and transportation infrastructure across the state of Pennsylvania.

Since 2008, approximately 21 percent of the payments have been made toward local roads, while approximately 79 percent went toward improving roads maintained by the state.

Pennsylvania law requires these companies to bond each mile of posted road traveled, submit road management plans to the Pennsylvania Department of Transportation, and acquire hauling permits prior to truck traffic traveling on a given road. Road management plans outline which roads an operator may travel while also stipulating a maintenance plan for each roadway.

We are concerned about our environment. Pennsylvania is blessed with an abundance of natural resources and we must protect them at all costs. To my knowledge, nobody associated with the industry, drillers, producers, or consultants has ever disputed that environmental
safety is mission number one.

As environmental professionals, the consulting engineering industry will continually do our due diligence to ensure that our natural resources are adequately protected.

Pennsylvania is the most heavily regulated state in the country with 18 regulations specifically related to hydraulic fracturing. The consulting engineering industry has been energized by the development of Marcellus Shale. Many of the companies supporting the industry have been Pennsylvania companies for more than 50 years, and for more than 100 years Chester Engineers have devoted entire groups to Marcellus Shale engineering activity.

With the majority of people working either directly or in support of Marcellus Shale industry being Pennsylvanians, the environment is in better hands. In addition to putting our professional careers and reputations on the line, we are raising our families here. We are breathing the same air and drinking the same water. Protecting the environment is second nature to us.

We are stewards of our environment and the precious natural resources of the commonwealth.

Amanda Gillooly July 12, 2011 at 05:19 PM
Thank you for the info!
dan July 12, 2011 at 05:56 PM
your right, thanks
Sara-Summer Oliphant July 12, 2011 at 06:45 PM
Jerry, while you make very valid points, perhaps people in the region would be more open to drilling if the industry were paying taxes to help the economy. Instead, we are seeing our schools get poorer and the industry making money. I think people are very frustrated in a lot of the politics that accompany MS.
Liz Rosenbaum July 13, 2011 at 12:37 PM
Mr. Protin, 48,000 jobs is a fluffed up number from the industry. It does not represent net job creation. Also, we are the only gas drilling state in the the US without a gas extraction tariff. I am glad Pennsylvania is gaining jobs, even if they are in the dangerous gas extraction industry. But our state leads the nation in "fraccidents" - by a mile. And what's point of reviving a region economically only to render large swaths of land uninhabitable. Fracking is a crime against Nature, and Pennsylvania is a study in getting it wrong. Liz R., KeepTapWaterSafe.org (Also posting on BrynMawr-Gladwyne.Patch.com]
James Protin July 13, 2011 at 02:42 PM
Crime against nature? Wow... Liz with all due respect, you have just made my point. The amount of misinformation surrounding this industry is staggering. All of the stakeholders in this process must come together for an open, honest discussion of the issues concerning both sides. I think you will find that the industry is just as concerned about the environment as you are.
Bob Zanakis July 13, 2011 at 02:47 PM
Only one needs to do is to read all the fines impossed upon the industry of which are mostly through neglect and choice of dumping of fracture water into our streams. Bottom line is that this industry like many others in this country do not pay federal or state taxes due to the tax loop holes provided by congress at bequest of the corporations themselves in a quid pro quo arrangement with their campaign donations to people like our governor. Give you a million dollars and then ask you to do their bidding and you would be jumping for joy. Politicians today are bought and paid for. What we need is campaign reform. No more donations from corporations nor unions. Someday, hopefully, our politician will do what is right for our people and not for their re-election bid. Until then, we will have these Marcellus companies and other industries that pollute our air, land and water. What a future we leave our children. Wish we had leaders like Teddy Roosevelt today.
Liz Rosenbaum July 13, 2011 at 03:34 PM
I hope so, James! But I think you may put too much faith in corporate good intentions and a few hundred DEP inspectors. I certainly agree that we need to find a way to come together on this complex and divisive issue. I, too, am interested in seeing more facts about this controversial drilling process come to light. Instead of Drill, Baby Drill, perhaps at this stage in the Marcellus play it should be: Test, Baby, Test! The more information the better, yes? If drillers and the Corbett Administration were serious about getting it "right" they would require drillers to conduct independent baseline testing for thermogenic methane in all local water wells within the 1-mile frack zone; monthly testing at municipal intakes downstream of operations and facilities where recycled frack flowback deposits are made (for things like radium 226, strontium, barium and bromide); and to manifest ALL waste water, with no exemptions for shallow wells or wells producing less than 80,000 gallons. It's unlikely that stiffer regs will stifle the industry one bit. They claim to recycle nearly 100% of their flowback, anyway. They want the gas, and they're gonna get it. Pennsylvania is selling itself cheap!
James Protin July 13, 2011 at 03:45 PM
Liz, you see how a positive discussion can lead to consensus? I agree with what you are saying...I've been in the environmental business my entire career. Keep in mind we are still at the very earliest stages of development of this resource, the Commonwealth, E&P firms and all of us who call Pensylvania home have time to get it right. I've stated in a blog here that there are 69 PA Regulations (18 related to fracking alone) on the books as we speak. That is on a par with every other gas & oil producing state. I am very confident we are on the right track.
Liz Rosenbaum July 13, 2011 at 03:51 PM
I'm glad. I look forward to reading more.
Eric Belcastro July 13, 2011 at 04:57 PM
Well, it looks like there is a good conversation going on here, and I will try to join in soon but I have some work to do at the moment. In the meantime, I want to at least share a few writings on this subject that may or may not throw quite a lot of many things said here into question. The industry has quite a lot of money to air it's perspective, and we all know this, so it is imperative to research where possible. Insiders Sound an Alarm Amid a Natural Gas Rush http://www.nytimes.com/2011/06/26/us/26gas.html?_r=1&pagewanted=3 Shale Gas a Business Plan very much in the Red https://www.facebook.com/notes/shale-gas-info/shale-gas-a-business-plan-very-much-in-the-red/188867797815818 Unanswered Questions About the Economic Impact of Gas Drilling in the Marcellus Shale: Don’t Jump to Conclusions http://catskillcitizens.org/learnmore/bartheco.PDF How Should we think about the Economic Consequences of Shale Gas Drilling? http://www.greenchoices.cornell.edu/downloads/development/marcellus/Marcellus_SC_NR.pdf
Eric Belcastro July 13, 2011 at 04:58 PM
Shale Gas, An Accountant's Perspective https://docs.google.com/viewer?a=v&pid=explorer&chrome=true&srcid=0ByYhNhSZs5YTM2E1OGQ4YjUtYzdiMC00YWJjLWE0NWQtODFmMGNlYTYzOWRk&hl=en Dr. Jannette Barth - Economic Impact of Gas Drilling (video) http://www.youtube.com/user/ShaleShock#p/u/7/hJxJQBCK9-o http://www.youtube.com/watch?v=IWFw22301pk&feature=relmfu Open letter to General DeLuca http://www.damascuscitizens.org/Letter_to_General_DeLuca-final.pdf Headwaters Economics - Fossil Fuel Extraction as a County Economic Development Strategy: Are Energy-Focusing Counties Benefitting? http://headwaterseconomics.org/pubs/energy/HeadwatersEconomics_EnergyFocusing.pdf The Truth About Those Industry Funded Studies http://catskillcitizens.org/learnmore/RESPONSETOINDUSTRY.pdf Broken Promise - analysis of Penn State study http://responsibledrillingalliance.org/news/economics/brokenpromises.html Economic study on gas drilling is full of holes http://www.pressconnects.com/article/20101118/VIEWPOINTS02/11180309/1120/nletter01 Webinar with Susan Christopherson (video) http://breeze.cce.cornell.edu/p60973433/?launcher=false&fcsContent=true&pbMode=normal Behind Veneer, Doubt on Future of Natural Gas http://www.nytimes.com/2011/06/27/us/27gas.html?pagewanted=1&_r=1&ref=ianurbina
Eric Belcastro July 13, 2011 at 04:58 PM
Potential Impact on the tourism Economy of the Southern Tier http://www.stcplanning.org/usr/Program_Areas/Energy/Naturalgas_Resources/STC_RumbachMarcellusTourismFinal.pdf Drilling for Money—Shadbush Collective Releases Report on Gas Industry Shareholders http://shadbushcollective.org/wp-content/uploads/2011/07/Drilling-for-MoneyFINAL.pdf
Eric Belcastro July 13, 2011 at 05:17 PM
"Public health professionals must accept that corporations do not have a social mission or goal and that corporations only undertake such activities as long as they contribute to profit. the corporation is not a moral being. Some corporations benefited from supporting Nazi Germany, including operating concentration camps, such as a predecessor conglomerate corporate of Bayer (Coalition Against Bayer Dangers Germany, 2003). Corporate officials may be "nice" ethical people with their family and friends, but when acting in the corporate roles they cannot, by law, be "socially responsible" if doing so conflicts with their duty to ensure that the corporation makes a profit. Conveying the message that companies can be more "socially responsible" distracts from the work of getting laws passed and regulations implemented that will address the underlying corporate causes of disease. Singling out a single highly profitable company for its unhealthful practices or products misses the point. Such a corporation is operating the way the corporate system we established requires." "Corporate 'social responsibility' is a meaningful as cotton candy." Robert Reich
Eric Belcastro July 13, 2011 at 05:20 PM
That quote was from The Bottom Line or Public Health, specifically an article by William Wiist professor of Northern Arizona University.
Alexander M. Cianfracco July 13, 2011 at 10:31 PM
Hey Jerry, you really can't understand why some people aren't thrilled about the natural gas industry being here? Look in the mirror. Sara made a totally valid point and you pretty much called her a dumb liberal who is too young to know anything. Here's a thought- maybe some of the animosity towards the natural gas industry would be less severe if some of the people working it that industry didn't invite the animosity through their redneck arrogance.

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