The Lackawanna College Energy Lecture Series put on a lecture program a few weeks ago that demonstrates what a fantastic opportunity shale gas is for the US, the Northeast and small cities in and around the shale gas region.
Lackawanna College is conducting a continuing education series of lectures on the shale gas development that has helped so much in establishing the college as one of Pennsylvania’s education leaders. Called the Lackawanna College Energy Lecture Series, it was launched back in November with a lecture program surrounding Community Health and Shale, which focused on the results of a study of childhood cancer risks in areas where fracking is taking place and featured talks by health assessment professional Sue Mickley and Rexford Catlin of Endless Mountains Health System.
The more recent January 29th program was titled The Economy of Shale and you read some of the highlights here and here. It was focused on opportunities Scranton and Wilkes-barre have to be a part of the shale gas revolution. It was co-sponsored by the Greater Scranton Chamber of Commerce and Cabot Oil & Gas Corporation. Bob Durkin, President of the Greater Scranton Chamber of Commerce served as moderator. Speakers included Rayola Dougher, Senior Economic Adviser with the American Petroleum Institute (API), Vince Matteo, President and CEO of the Williamsport/Lycoming Chamber of Commerce, and Patricia Acker, Engineer at Linde Corp. and Chairwoman of the Scranton Lackawanna Industrial Building Corp (SLIBCO).
If there was any doubt about what shale gas was doing for the region as a whole and could mean for Scranton and Wlikes-Barre, it should have been erased by these presentations, which also shed light on what the industry has meant for the Williamsport area.
There were so many great points and illustrations offered by the speakers, the easiest way to summarize is to simply list the highlights, of which there were many.
Rayola Dougher – A Nation and State Transformed by Shale Gas
Dougher, who grew up with strong connections to the region, explained the extent to which the shale gas revolution has impacted Pennsylvania and the US as a whole:
- The Marcellus Shale play has taken Pennsylvania from being the 7th largest producer of natural gas in the US to No. 2 and it will be No. 1, exceeding even Texas. This has produced the Pennsylvania “hockey stick” displayed in this chart plotting Pennsylvania natural gas production market annually from 1967 through 2012:
- Relatively low natural gas prices are anticipated for the next decade and beyond as Liquified Natural Gas (LNG) exports are expected to produce more stable pricing worldwide, bringing them down in foreign countries due to US competition. It costs $3 per thousand cubic feet to liquify and ship LNG, and the price of US gas is so much lower than being paid overseas that the US will always have a price advantage wherever countries are unable to develop their own shale gas resources. This is why manufacturers are already starting to come back to the US from places such as China. It’s also why, with 63 worldwide competitors, the US needs to accelerate development of LNG export facilities. It’s our global edge at stake. Shale gas is shifting the balance of energy power to the US.
- The Shale Gas Revolution is really a technological revolution. Pennsylvania shale gas well production went up 40% even as the numbers of wells being brought on line went down 21%. The cost of developing shale gas per unit of production is declining due to recycling of water and new approaches such as 10 and 20-well pads that dramatically improve efficiency, reduce overhead per unit of production and require ever less land disturbance.
- Northeastern Pennsylvania has natural advantages due to its existing and planned pipeline infrastructure, which is fairly extensive already and connects the gas fields to nearby urban markets.
- Oil and gas are the biggest drivers of the US economy right now and, particularly, with respect to the balance of payments. LNG offers tremendous export opportunities which will further help in this regard. The benefits to consumers are also huge with the average family saving $1,200 per year in energy costs due to the advent of shale gas development. Shale gas workers are also earning an average of $35,564 per year the typical member of Pennsylvania’s workforce.
- Natural gas is the natural complement to renewables. It is achieving major reductions in emissions and the pursuit of shale gas opportunities by China is exciting as this means replacement of coal plants and the likelihood of worldwide reductions of emissions in the future. Moreover, we are projected to reduce our energy needs per person by 40% going forward after having reduced them by 40% from our previous high. Renewables are a part of this and oil and gas companies have put more money than anyone into their development, including Exxon’s planned $600 million investment in energy production from algae. Natural gas is, however, the bridge to get there and the natural back-up and complementary source of energy.
Vince Matteo – A Region Transformed by Shale Gas
Matteo, who went to Williamsport after serving the Scranton area in a similar job, explained the extent to which the shale gas revolution has impacted the Williamsport region nows serves as an economic development leader:
- Matteo picked up on Bib Durkin’s theme that the “Marcellus Shale is changing the vision of our energy future.” He noted the Lycoming County area that constitutes greater Williamsport, is not only the 7th fastest growing metro region in the entire US, but also has had the 6th highest increase in salaries, mostly due to the fact Williamsport has positioned itself as the hub of natural gas activity in central Pennsylvania and into the Northern Tier.
- Williamsport has four new hotels, a dozen or more new restaurants and a sold out industrial park attributable to shale gas development. Halliburton, starting from nothing, has become the largest for-profit employer in the county in just six years. There is also tremendous growth in legacy businesses which are now serving not only shale gas operations locally but also in Ohio, Texas and North Dakota via their expansions into shale gas support activities. One food caterer was able to become a supplier of services by posting flyers on white gas trucks whenever he saw them. The Chamber of Commerce leads a monthly Business Energy Roundtable program designed to bring shale gas industry companies together with suppliers.
- A 250-300 megawatt power plant that will use locally produced gas is being developed now and another is planned next door, with enough capacity to heat 1,000,000 homes.
Patricia Acker – A Company Transformed by Shale Gas
Acker works with Linde Corp., a utilities construction company she notes was formed in 1942 and in 2007 had never heard of the Marcellus Shale. Since then, because the company has gotten involved in building pipelines and other infrastructure for shale gas companies, their business has doubled in size and revenues have tripled, to the point shale gas related work represents three-fourths of their activity. They have constructed roughly 60 miles of pipeline, installed numerous well pads and built various compressor stations. They have also developed a rail to truck transfer facility in Carbondale, Pennsylvania.
Acker observed that, except for a handful of specialized welders, all of Linde Corp.’s employees are from the region they serve. She invited anyone to look at the license plates of vehicles at any of their facilities to verify this for themselves. Their headquarters are in Pittston, indicating Lackawanna and Wyoming Valley enterprises can compete for shale gas business, noting responsiveness was the key to developing opportunities and expanding shale gas lines of work.
The Shale Gas Bottom Line
During the discussion that followed (depicted below), several other key points were made regarding the opportunities available to the Scranton and Wilkes-Barre areas. It was noted, for example, the oil and gas industry has paid over $1 billion in taxes in Pennsylvania and Lycoming County alone is garnishing $20 million in impact fees from shale gas development. So much for the idea the industry isn’t paying enough in taxes.
Perhaps the most telling comment summarizing the import of the entire event was made by a member of the audience, however, an individual who grew up in Williamsport and had this say:
“All my life Williamsport was dying. Now it’s not.”
Yes, that’s about right and that’s the future for Scranton, Wilkes-Barre, Binghamton, Elmira and any other small struggling city that’s will to grab the shale opportunity with both hands and go for it. Hats are off to Lackawanna College for pointing the way, not only with their own initiatives but in sponsoring this Energy Lecture Series. The next one is scheduled for 6:30 PM March 5, 2014 and will be on the subject of “The Education of Shale” A Bright Future.”
How appropriate–put it on your calendar–now.