On a recent visit to Pennsylvania, I saw signs of a natural gas boom on the wane.
Googling "Pennsylvania 'natural gas rush'" this morning got me 356,000 hits. Some may call it a gas boom instead of a rush, but, regardless, it seems to be a happening thing.
The development of the technology that combines horizontal drilling with hydraulic fracturing (or fracking) along with the trillions of cubic feet of natural gas that lie in the Marcellus shale formations (from less than 2,000 feet to more than 11,000 feet [pdf] beneath the surface) has lured the gas industry to the Keystone State.
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This animation by the U.S. Energy Information Administration shows how horizontal drilling in Pennsylvania has increased since 2005, helping the state's gas production more than quadruple. The black diamonds represent conventional vertical wells, and the red diamonds horizontal wells. |
That "fracking" rush, along with similar ones in Texas to exploit the Barnett shale and elsewhere (some 20 states in all), has ushered in a sea change in America's energy outlook. So much so that we have a good chance of becoming a net energy importer to exporter.
Natural gas prices have declined so much that natural gas power plants are now edging out coal-fired power plants on economic considerations, and threaten to put the kibosh on market penetration by wind and solar.
It goes without saying that a resource-extraction boom often makes for an economic boom, and fracking has done that for Pennsylvania. At a meeting of the Pennsylvania State Association of Township Supervisors in May 2012, Lieutenant Governor Jim Cawley reported that drilling companies had added $1.6 billion to the commonwealth's tax coffers since 2006. He pointed with pride to "the neighbor, the brother, the aunt, the friend, who's been unemployed for two and three and four years, finally having a family-sustaining wage."
In addition to dollars, resource extraction can bring to a community environmental issues -- sometimes nightmares that can last for generations after the extraction has shuttered.
A case in point: pollution of streams from acid mine drainage. And fracking has definitely raised the hackles of folks concerned about water quality. With mounting evidence that at least some families have had their well water contaminated, there is a fairly loud chorus of people calling for a moratorium (here and here) or at least a slowdown of drilling in the Marcellus shale.
A moratorium seems pretty unlikely, but there are suggestions that a slowdown is in the cards -- not because of environmental concerns, but a slowdown nevertheless.
If there is one word that is commonly associated with boom, it is probably bust. Booms don't last forever; the resource gets mined out and/or prices decline because of oversupply, and the boom goes bust. The mining companies pull out, and the mining community is left with the legacy. Did I hear someone say ghost town?
Which brings me to Pennsylvania. I had heard from colleagues who had been to Pennsylvania that the fracking-related truck traffic in towns like Williamsport and Montrose was overwhelming -- clogging thoroughfares and making what should have been a five-minute jaunt to the local grocery store into a 30-minute crawl.
But when I visited those towns in June, trucks certainly barreled through them, but not nearly enough to disrupt traffic. I asked some local residents about it, and they allowed that things had definitely slowed down recently.
That piqued my interest, so I did a little surfing and found this data on drilling in Pennsylvania from Baker Hughes, an oil-field services and shale gas company.
Starting in early 2009, the number of active rigs (those that are drilling) skyrocketed from about 20 to a peak of almost 120 in August 2011. But in late 2011 that number began to decline, falling below 100 in February 2012. As of the end of May, according to the Akron Beacon Journal Online, the number of active drilling rigs was down to 95. In January 2012, Chesapeake Energy, the largest driller in the state, announced plans to cut its drilling rigs from about 75 to 24.
Note: This is not to say that production from Pennsylvania will fall off anytime soon. The thousands of wells that are in production will remain so for quite some time, and there are also reportedly some 2,000 wells that have been drilled but not completed. What it does suggest is that drilling of new wells is on the wane in Pennsylvania.
What is the explanation for the slowdown? Economics are certainly part of the answer. I have been told by folks who work in the energy business that fracking for the dry gas that one gets out of the Marcellus is only profitable if the price of natural gas is above $4 per thousand cubic feet. According to the U.S. Energy Information Administration, natural gas prices at the wellhead (pdf) in the United States fell below the $4-threshold around August 2011. Is it a coincidence that that is the same time we began to see a decline in new drilling rigs in Pennsylvania? Probably not.
What does the future hold? Will we see natural gas prices spike, bringing a new rush back to Pennsylvania to frack new wells? Or, given all the wells already in production, will prices remain depressed for some time and the apparent slowdown in new well drilling continue? I can't say. But depending upon how things go, environmentalists could get a bit of what they have been asking for: a slowdown in new fracking and some time to assess the environmental impacts more thoroughly.
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Watch Gasland the movie
http://www.youtube.com/watch?v=phCibwj396I
watch the Gasland movie> http://www.youtube.com/watch?v=phCibwj396I
These kind of people are paid to say things like this. They use all the same stuff: mocking people for not being "scientists," claiming they are scientists, claiming they are progressive and environmentalist. They are just like the nuckists. That is how they roll.
And all the money to pay for this tro))ing is in the hands of the big extraction corporation public relations departments. Thus, you will never see an antifracking tro.
Hope you are not referring to me as you would be mistaken. My wife would be happy to confirm that I am not a scientist, not conservative or particularly stealthy. As much as I love the way "agent provocateur" rolls off the tongue, I just looked it up and have to report that I am neither french, seeking to join your group or interested in encouraging anyone to commit a crime. To further confound you and the wife I have to report that sadly, no one is bankrolling any part of my information operation.
Apologies if you were referring to some other self proclaimed environmentalist.
As a self described environmentalist, I would hope that we can keep an eye on the big picture and fully consider the potential positives associated with current domestic energy boom before speculating about its demise.
Nothing clean about fracking.
In thinking through the issue for myself, I weight GHG as the major environmental issue of concern. I live in northern PA and the problems I find with natural gas production lie more in the unfair business practices of the big oil & gas companies. Locally, serious spills and methane migration has occurred, but are relatively few and not consistent with the "Gasland" narrative. I do not trust the oil & gas companies' lack of transparency, but generally think the DEP and EPA (with local residents) are doing a decent job of monitoring and successfully addressing the problem of migration.
I mean no disrespect to your opinion, fracking is conducted by the likes of Haliburton, uses chemicals and lots of water, it seems like it must be environmentally disastrous. Many people are convinced by that gut feeling and end of story. For me, I just don't see any evidence that it is anywhere near a disaster, or for that matter anywhere nearly as bad for the environment as coal mining. Have ever seen a strip mine or flown over a mountain top removal
If you want environmental Justice, vote for Rocky in November.
And obviously, if prices drop, wells become less marginally profitable and some number will cease to exist - and won't become active again until prices rise to make the profitable.
I live in Williamsport and we never had 30 minute traffic jams. Those were stories created by anti-domestic energy groups as part of the hysteria.
You see, liberals supported and promoted natural gas produced by hydraulic fracturing until we found an abundant supply under our feet. A clean, domestic supply of energy produced by American workers earning above-average wages conflicts with the liberal worldview of people dependent on gov't-subsidized solar and algae.
The drilling slowdown is absolutely due to the low price of natural gas that benefits poor and fixed income families in the winter. The low price is also due to a lack of infrastructure to move the gas out of the area.
Pipelines are being installed everywhere (much to the chagrin of liberals) so the gas can be transported to a wider audience. Power plants are being built. Coal power plants are being converted. Ethane crackers (the key ingredient in plastics) are being built.
But all this takes time.
The natural gas has waited underground for us to extract it and it will still wait.
The only way our newfound domestic energy reserves will be a "bust" is if we cave to the hysteria of liberals who oppose the type of energy independence we all dreamed about for decades.
Liberals this and liberals that.
The math-- every fracking well uses an average of 5 million gallons of water.
Fracking also causes air pollution. What's in the waste and how is it disposed? We also know that fracking causes earth quakes.
Liberals are in favor of energy independence. We are also in favor of having access to drinking water and water for our crops. We'd like this water to be available for our children and their children and not to lose our homes because our wells were polluted.
Ohio has seen the rig count almost double since the start of spring due in part to frost load limits on roads.Landowners are in some areas being paid close to $6000 per acre for leasing and a 20% royalty as well. A great financial boost to those land owners and their communities.
I have had 3 wells fracked on my property and more surrounding property with no ill results. I prefer that Ohio establishes a environmental excise tax be imposed upon the NG, NGL, and oil that Ohio will export, like say to NY, MD, NJ we could easily set aside funds to cover any clean up cost and eliminate the State income tax upon Ohioans.
http://articles.philly.com/2012-02-13/news/31055078_1
People definitely over-invested, and the current correction may take a few years to unwind. I hope natural gas development unfolds in a more sustainable and steady manner when it finally picks up again in Central Pennsylvania.
Arthur H. Sterngold, Ph.D.
Professor of Business
Lycoming College
Williamsport, PA
It remains great money for the drillers, as they get their money at the start. Well owners are facing the interest payments. They also face the significant issue of uncertainty over the longevity of production, and the amount of work they need to do to maintain their new asset.