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Saturday, December 20, 2008

Marcellus Shale Horizontal Drilling Promised To Bring Jobs, Billions Of Dollars In Royalties, Economic Stability

CCEDC banquet focuses on
economic impact of drilling


Thursday, December 18, 2008
By Wendy B. Lynn Staff Writer
The Progress News.com

DUBOIS - The annual meeting and banquet for the Clearfield County Economic Development Corp. was held at the DuBois Country Club yesterday.

Guest speaker was Z. Hunter Hill, chief financial officer and principal in Little Pine Resources, an oil and gas exploration company based in Dallas, Texas, which recently opened offices in Clearfield. Mr. Hill is in charge of obtaining permits from the state Department of Environmental Protection and Susquehanna River Basin Commission for horizontal drilling of natural gas wells in Pennsylvania.

Mr. Hill began his presentation by saying the Marcellus Shale deposit, which is located beneath parts of Pennsylvania, Ohio, New York and West Virginia, could be the savior to communities with stagnant growth and dwindling industry.

Mr. Hill began by giving information on the Marcellus Shale formation, which is a black, organic-rich shale in a blanket formation with low permeability, meaning that it is rich with natural gas deposits that are difficult to remove, especially with conventional gas drilling methods.

The shale is about 4,000-8,000 feet deep covering more than 30 million acres. He compared that to the Barnett shale, which created a natural gas boom in Texas that is only 5,000 acres. The shale deposit in and around Clearfield County is roughly 150 feet thick.

The technology to drill for this natural gas has advanced in recent years, making it a viable economic opportunity for the state, Mr. Hill said. Other reasons to drill now include the domestic energy crisis and high natural gas prices.

The gas is extracted by horizontal drilling and hydraulic fracturing where holes are shot into the shale utilizing water and the resulting fractures release the gas.

Mr. Hill noted there are challenges to the development of natural gas in Pennsylvania. It has few natural gas pipelines and there is a lack of equipment and personnel with experience in the industry. There are issues with the availability of adequate water supplies in the state and limited disposal. Also, Mr. Hill said the permit process with DEP and SRBC is unique and difficult. There is also an unknown issue of legislation and court rulings, no state severance tax, no current or relevant case law and a five-year confidentiality clause where the public cannot see information on a company's drilling results for five years.

On the forefront of the minds of most residents, however, is the economic impact of the drilling. Mr. Hill said his company has estimated the impact based on similar results with the Barnett shale.

Approximately 13,104 jobs could be created annually and more than $5 billion in royalties paid out. Created jobs would include retail trade, professional services, new construction, oil and gas jobs and fabricated metals.

He also said there would be higher-than-average salaries, a sustainable population growth, recession-proof economies, new housing construction, higher property values and lower energy costs. Referring back to the recession-proof economy, he noted that Texas has a budget surplus this year as a result of revenues of Barnett shale drilling.

He compared Clearfield County to Parker County, Texas, and noted there was a 30 percent drop in unemployment, 25 percent increase in per capita income, new businesses were created and schools and municipalities benefited.

"You are going to have a higher quality of living, if you do it right," Mr. Hill said, adding that Pennsylvania can be a model for other areas in eco-capitalism.

Mr. Hill outlined Little Pine Resources' proposed plan for Pennsylvania. "I'm for a separate production tax of 5 percent as long as it is used correctly," he began, noting that part of the revenues of the tax should go to the local communities.

Other parts of the plan include imposing strict water reuse policies, creating a new oil and gas agency and streamlining the permitting process. He suggested eliminating the five-year confidentiality clause, which would protect property owners and those receiving revenues. A state-sponsored gas pipeline and storage facility would be part of the plan. He also said Little Pine Resources encourages the support of local county task forces, noting that local people need to tell their representatives what they want.

Clearfield County is currently in the process of forming an energy task force.

The wells are projected to have a 20-year productivity life span; however, Mr. Hill said there are experimentations being done in Texas with refracturing wells and the theory is that the life span of a well could be extended to 100 years, but he advised that no one should count on that.

In other business at the meeting, Lt. Gov. Joseph B. Scarnati briefly addressed the group and said he is often asked how he and Gov. Edward Rendell will get along since Mr. Scarnati is a Republican and the governor is a Democrat. He said he and the governor agree on some things, but one thing they do not agree on is taxes. He said he plans to guide the Senate to tackle the financial crisis without raising taxes and noted that the most important thing right now is to have a vision for the future of the commonwealth.

Rob Swales, executive director of CCEDC, noted some of the accomplishments of the CCEDC in the past year including work on making Clearfield County a hub for alternative energy in the state, noting there are seven projects in the pipeline right now, including the BioEnergy/Bionol LLC ethanol plant in Clearfield, the Sunnyside Ethanol project in Curwensville and the Swann Biomass project in Clearfield. He noted the CCEDC has worked with the Governor's Action Team in facilitating the reconstruction and expansion of Rescar in DuBois and expanding Paris Cleaners Inc., also in DuBois.

Three board members were elected at the meeting: Lois Richards, Tim Fannin and Kim Kesner. It was noted that Mr. Kesner's election is a reappointment and Ms. Richards and Mr. Fannin are new members to the board.

For more information on Little Pine Resources, visit http://www.littlepineresources.com/.

Solomon's words thanks Wendy B. Lynn, Reporter, and Jill L. Golden, Editor of The Progress in Clearfield, PA, for allowing us to share this great article with our readers.

1 comment :

Anonymous said...

I have been in the oi&gas business for over 30 years and work for a service company. And so far i have seen alot of marcellus wells being fraced and nothing yet in this area. thats vertical and horizonal. Till a gas company hits it in the region i will stay with the shallow wells that do produce and need explored and a money maker. L