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

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.