Expert predicts prosperous Pa. future with natural gas

Posted September 29, 2010

By Michael Bradwell

An author of a study on the economic impact of the Marcellus Shale region said Friday that Pennsylvania could become a gas exporting state and by the end of the next decade could be hosting a $13.5 billion industry that generates 175,000 new jobs across the state.

But Dr. Robert Watson, professor emeritus of petroleum and natural gas engineering at Penn State, told members of the Washington County Chamber of Commerce that the industry, which invested $2.8 billion and created 29,000 jobs last year in Pennsylvania, faces a variety of physical, environmental, governmental and even psychological challenges.

Watson, who co-authored the study with several others in the energy field, said the Marcellus Shale region, which stretches across two-thirds of Pennsylvania and occupies parts of four other states, has the potential of supplying most of the energy needs for the Northeast for the next 100 years.

He cautioned that development of the shale is in its infancy.

"We are witnessing the development of a brand-new industry," he said during the chamber's breakfast meeting at Southpointe Golf Club.

The study, entitled "An Emerging Giant: Prospects and Economic Impact of Developing the Marcellus Shale Natural Gas Play," which was commissioned by the Marcellus Shale Committee, a consortium of natural gas exploration and development companies working in the state, was released in July.

While it discusses the widespread and long-term economic impacts of what Watson called "a world-class resource," he said its first impact was in Harrisburg, where he said it gave legislators ammunition to stand up to Gov. Ed Rendell's recommendation of levying a severance tax on natural gas.

"The report really (created) a bipartisan effort to stand up to the administration," Watson said. Rendell said earlier this month he was dropping the idea of a severance tax from the 2009-10 budget.

Watson stated that the industry isn't exempt from taxation, noting that in 2008 it paid about $240 million in state and local levies.

But for the industry to see the Marcellus reach its full potential, something that industry sources say would require as many as 100,000 gas wells across the state, Watson acknowledged that it has several challenges to overcome. Its practice of hydrofracturing the hard shale to extract the gas requires millions of gallons of water. He said the industry is working with the state Department of Environmental Protection, looking at ways of using water sensibly, including recycling it for future drilling projects.

Another challenge to the industry is the fear it generates among some people, Watson said.

"The reality is that people do have a fear of things they don't understand," he said, noting that the gas industry has made an effort to educate the public about its work.

Another challenge to building gas production is the need for additional infrastructure.

As more gas is extracted from the Marcellus, Watson said, "it will require a considerable amount of new pipeline" to reach end markets. "We have the generating capacity in the west and the people who use it are in Eastern Pennsylvania."

When asked about the potential of creating a market for natural gas in transportation, Watson said the possibilities are tangible.

"Natural gas for transportation doesn't need a leap in technology," he said, adding that the best use would be for fleet service, such as taxis, delivery vehicles and school buses.

Copyright Observer Publishing Co.