Washington, Greene getting a lot of mileage out of gas

Posted August 31, 2013

Rick Shrum
Observer-Reporter

Washington County, Energy Capital of the East?

This is the first of two articles on the bountiful energy industry in Washington and Greene counties. Coal will be the focus Monday.

It could, arguably, be the nation … perhaps Planet Earth.

The Washington County Chamber of Commerce, along with the Washington County Energy Partners, promotes its domain as just that, and there is merit to the designation. An abundance of coal mines and shallow gas wells had already made the county a significant energy player. Then in Chartiers Township in 2005, Range Resources Corp. became the first company to produce natural gas from Marcellus Shale.

Kaboom! It sparked a drilling rage featuring about a half-dozen firms that, in eight years, have made the Marcellus the most productive natural gas field in the nation.

It is especially bountiful in Pennsylvania, where, during the first six months of this year, a record 1.4 trillion cubic feet of gas was produced, according to the Pennsylvania Department of Environmental Protection. That’s a 57 percent increase from the first half of 2012, despite fewer wells being drilled than previous years because of lower gas prices.

Capital, indeed.

Some would argue that Greene County should share in that moniker, and Fayette and Westmoreland to a lesser extent. All four were among the top 10 natural gas-producing counties in the state from January through June, DEP figures show.

But if the region, Southwestern Pennsylvania, is the true Energy Capital of the eastern United States, Washington County is the epicenter. This is where more than 700 natural gas wells have been drilled over the past six years; where processing sites have proliferated; where dozens of oil, gas and supply chain companies and energy-affiliated law firms have located; and where thousands have found meaningful employment.

Unconventional shale has helped spawn population growth, new construction, a more vibrant business climate and a burgeoning tourism industry.

“The shale gas revolution is upon us,” said Tommy Johnson, vice president of external affairs for Consol Energy Inc.

“Whereas the rest of the state and other areas of the country have had a slower recovery period (from the Great Recession), the gas industry has helped keep us afloat,” said state Sen. Tim Solobay, D-Canonsburg. “We’d have double-digit unemployment, higher taxes and higher costs if not for that.”

Shale drilling, to be sure, also has sparked environmental concerns. Some have proven to be valid, but many are still being determined. Drillers’ use of hydrauling fracturing – or fracking – to extract shale gas has been hotly debated, and likely will be for a while.

This once mostly rural county, with a healthy mining mix, has experienced a landscape change over time, symbolized appropriately by those towering well pads. It is a landscape that hasn’t matured, either.

“We’re still in the early stages of (shale) development,” said Scott Roy, vice president for government affairs for Range Resources Corp. during the annual Energy Symposium at Southpointe in August.

National gas will be in full bloom once its price rises, but it is performing with great vigor hereabouts – and nationally.

Coal remains the main source of electricity generation in the U.S., accounting for 37 percent, according to 2012 figures provided by the U.S. Energy Information Administration.

But coal’s percentage is declining and natural gas, a favorite of the Obama administration, is a surging runner-up at 30 percent, well ahead of third-place nuclear (19 percent), then hydropower (7 percent). The leading fuels could very well switch places in two or three years.

Yet coal remains a significant, if controversial power source, and an integral export resource. Natural gas and coal have an uneasy coexistence, but it is a coexistence – one that makes this an energy mecca.

At the epicenter

Marcellus Shale is one of the largest unconventional natural gas reserves in the world, according to Pittsburgh Regional Alliance. It covers 95,000 square miles, including more than half of Pennsylvania and all of Washington and Greene counties. Work there has resulted in the creation of about 240,000 jobs statewide and lower utility bills.

Range Resources is the largest leaseholder in the play.

It’s no surprise that Pennsylvania is second nationally in the number of active wells.

Greene and Washington were top contributors to that record 1.4 trillion cubic feet of shale gas produced in the state from Jan. 1 through June 30. Greene was fourth among Pennsylvania counties with 154.7 million cubic feet and Washington fifth (115.8 million). Westmoreland (32.0 million), Fayette (21.1 million) and Butler (14.6 million) were eight through 10.

Bradford (343.6 million), Susquehanna (302.6 million) and Lycoming (184.5 million) topped the list.

Natural gas and coal are fossil fuels, which raise the hackles of many environmentalists, sympathizers and large segments of the public. Some people living near well sites are wary of or downright opposed to drilling, and a number of individuals oppose the burning of coal, which, because of regulations and new technology, is done more cleanly than ever – but is that clean enough?

Several gas industry-related occurrences have roused concerns locally. They include health issues expressed by some living near drill sites; the Worstell impoundment, a reservoir for used fracking water operated by Range in Cecil Township; and black smoke emission in Chartiers Township from a gas-processing facility operated by MarkWest Energy Partners LP.

Yet coal, gas and another fossil fuel, petroleum, have been vital to energy generation. They account for more than two-thirds of our nation’s electricity.

Consol’s double play
Consol Energy embraces the fossils. It is the largest diversified energy producer in the Appalachian Basin, a major player in the natural gas industry, working in the Marcellus and Utica shales, and operator of the world’s largest underground coal mine, Bailey Mine in Greene County.

Jim Grech, executive vice president and chief commercial officer at Consol, extolled the virtues of each at the Energy Symposium,

He said that over the next two decades, the demand for coal – which some contend is diminishing – will increase 20 percent in the U.S. and 55 percent worldwide. Grech also asserted that the Marcellus may yield enough gas to satisfy the nationwide energy demand for a quarter-century.

Steve Winberg, vice president of research and development at Consol, looks beyond the local shale.

“If you consider shale plays on a global basis, in areas that have been explored,” he said, “you’re looking at over 100 years of supply. So this is game-changing.”

“There shouldn’t be anything stopping us from being totally energy self-sufficient,” said Grech. “We can do that, but we have to have some sound energy policy in our country.”

There is none, though – nationally, statewide or locally. David Ginther, an energy industry analyst with Waddell & Reed, told symposium attendees that if one is devised, it likely will come from the energy industry. Ginther doubts it will happen in Congress because of the relatively short terms of its members.

Diversity is key

Energy policy or not, the consensus among energy analysts, industry officials, political figures and even some special-interest groups is that the nation must have a diverse energy portfolio to experience true energy independence. That would be all or most of the natural sources: gas, coal, nuclear, hydropower, solar and wind.

“We need to have a comprehensive plan that includes coal, natural gas and renewables,” said John Pippy, chief executive officer of the Pennsylvania Coal Alliance and a former state senator. “We not only can have low-cost energy, but energy we can export.

“There is potential for us to be the center of energy for the entire country. Our (Philadelphia) port in Pennsylvania should be an example for the country.”

State Rep. Pam Snyder, D-Jefferson, is a staunch coal advocate – as she should be. Mining is integral to Greene County, which gets 40 percent of its annual tax revenue from that resource. She has been lobbying to keep FirstEnergy Corp. from shutting two area coal-fired plants Oct. 9: Hatfield’s Ferry Power Station in Monongahela Township, near Carmichaels, and Mitchell Power Station in Union Township, Washington County,

Yet she acknowledges that coal is just a part of the energy equation.

“Coal must be part of our national energy policy,” she said. “To remove it makes no sense. But if our country wants to be self-sufficient on energy, we need to have everything on the table.”

That table is full, and there is plenty left in the kitchen, said Bill Flanagan, an executive of the Allegheny Conference on Community Development. His concern is the availability of chefs.

“We will need to hire 130,000 people by the end of the decade in this region, and we’ll need a highly skilled, educated and trained workforce,” Flanagan said in November at the annual Energy & Innovation Conference at Southpointe. “But we have a declining population and a low number of people who are interested in the technology fields.”

There is plenty, he said, for anyone who wants seconds or thirds.

“What we have here in natural resources will drive this economy for the next century.”

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