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Industry leaders meet to discuss shale drilling
By GRACE WYLER
pittsburgh
More than 200 representatives from the world’s leading steel and natural-gas companies gathered here for a conference on new business opportunities in the growing domestic shale drilling industry.
Pennsylvania, which sits atop the Marcellus Shale, has emerged as the new epicenter of onshore natural-gas drilling, industry experts said Thursday.
The Marcellus is the second-largest shale formation in the world, spanning 54,000 square feet, almost a mile below the surface.
By some estimates, the shale could contain as much as 489 trillion cubic feet of recoverable gas — enough to meet total U.S. natural-gas demand for 20 years.
“Today, all of our expectations are completely off the chart,” said Ray Walker Jr., a senior vice president for Range Resources, a Texas-based oil and natural-gas company. “We’ve got our hands on the tail of a huge elephant, and we are just starting to see what it looks like.”
Walker was among several industry leaders who spoke at the conference, hosted by trade publication Steel Business Briefing. Presentations focused on opportunities for producers and distributors of steel tube and pipe in the shale drilling supply industry.
Shale drilling uses recently developed techniques that require highly specialized steel-tube products in multiple sizes and grades, said Doug Matthews, vice president of tubular operations for U.S. Steel.
U.S. Steel has reinvested in the region because of the Marcellus Shale, Matthews said. The company recently expanded its steel-tube plant in Lorain, Ohio, as a result of demand from customers in the Marcellus Shale. Plans for another expansion are under way, Matthews said.
The region’s steelmaking capacity will need to grow to respond to Marcellus Shale development, said Kathryn Klaber, president of the Marcellus Shale Coalition, a trade group.
“We are just on the cusp of seeing the infrastructure that will get the gas to the market,” she said.
Growth could come to a halt, however, if the state imposes excessive environmental regulations or a severance tax on natural-gas extraction, Klaber said.
The Pennsylvania state Legislature is considering a tax on 5 percent of the value of the natural gas, plus a fee per thousand cubic feet.
Unnecessary taxes and regulations will drive companies to the nation’s other shale formations, she said.
The oil and gas industry has come under increased scrutiny due to the massive BP oil spill in the Gulf of Mexico, said Walker, who serves as chairman of the Marcellus Shale.
Environmental groups and elected officials have raised concerns that hydraulic fracturing — forcing millions of gallons of water down the well to crack the shale formation — could degrade surface and groundwater supplies.
Klaber and Walker urged attendants at the conference to “dispel myths” about natural-gas drilling and educate elected officials about its economic benefits to the state.