Thursday, June 21, 2012
PITTSBURGH
As the shale-gas industry continues to mature in Pennsylvania, a number of opportunities remain for economic development.
A panel discussion Wednesday night at the University of Pittsburgh focused on economics of the Marcellus Shale.
There have been four phases of shale-gas development. The land rush, drilling, midstream including the construction of pipelines, and demand, said Pat McCune, president and CEO of Community Bank based in Washington County, Pa. — one of the state’s leaders in shale production.
“I advise people to get education about natural-gas drilling, adopt an open mind and get involved,” he said.
McCune was part of a group in Washington County that worked to help the drilling companies connect with local businesses so the local companies would become part of the supply chain. The group had job fairs and business expos to make sure Washington County would see the maximum economic impact, he said.
“We wanted to make it as easy as possible for the industry to succeed,” McCune said.
Good and bad things will come with shale development, he said.
Natural gas is a viable American source of energy. It has the ability to reduce the nation’s reliance on oil, said Tejas Gosai, editor of theUticaShale.com.
“We need to make sure we develop it properly,” he said.
Pittsburgh is in a good area for continued natural-gas development because it has both the Marcellus and Utica shales, Gosai said.
Shale natural-gas development remains new around here, but other areas of the country are used to it, he said. People here should look to see what has occurred in places like Texas, Arkansas and North Dakota.
Vehicles are one of the primary areas of potential growth for natural gas. Companies like Giant Eagle are starting to add compressed natural gas (GNG) filling stations, Gosai said.
“Eventually they’ll be at every filling station,” he said.
One of the things that is surprising to some people is each shale drilling site is different, said William Hefley, a professor at the University of Pittsburgh.
The cost of an average well in the Marcellus Shale from leasing the land to production is $7.6 million, he said.
Many local companies have the opportunity to be part of the supply chain for natural gas, Hefley said. These companies are looking for reliable, flexible business partners.
“The market will continue to grow,” he said.
There is so much active discussion over the Marcellus Shale, said John Delaney, dean of the University of Pittsburgh school of business. “It’s almost a gold rush of epic proportions,” he said.
There are some people who want so desperately for this to be an economic boom. There are also cynics who believe the shale activity will hurt the environment and there will not be any money for people to receive, Delaney said.
“My hope is that our students take advantage of the opportunities that come from the shale,” he said.
Shale development is important to the housing market, economic recovery and government entities in Western Pennsylvania, said Mark Luschini, chief investment strategist for Janney Montgomery Scott LLC.
The jobs expected to be created are key for the continued economic recovery, he said.
“Consumer spending is responsible for 70 percent of economic activity,” Luschini said.
People are more likely to spend when they have jobs and feel good about the long-term security of those jobs, he said. Currently job growth is not coming fast enough.
Projections show the shale work could add as many as 60,000 jobs in Pennsylvania by 2015, Luschini said.
Shale could also provide another source of energy that could help the U.S. to stop depending on foreign oil, which can be subject to supply disruptions, he said. The potential also exists for additional income through exporting natural gas to Europe and Japan.
The key to this event is to look at the potential economic benefits of the shale industry, said James Foley, vice president/branch manager for the Pittsburgh office of Janney Montgomery Scott LLC.
“There will be winners, and there will be losers on the local and national level,” he said.