W.Va.’s Marcellus boom

W.Va.’s Marcellus boom

Charleston (W.Va.) Gazette: A new horizontal well in Tyler County produced an amazing 7 million cubic feet of natural gas in a single day, along with 650 barrels of valuable liquids: ethane, propane, butane and pentane. The operator, Magnum Hunter Resources of Texas, said of the 10,880-foot-deep well near Middlebourne:

“We believe this to be a new super-rich area for our company, which we (call) ‘Magnum Rich.”’

An Associated Press analysis estimated that horizontal-style Marcellus Shale drilling produced $1.2 billion earnings in West Virginia last year — about one-third of the $3.5 billion it generated in Pennsylvania. New York state hasn’t yet allowed deep-well “fracking” that is required to exploit the Marcellus strata.

The AP quoted an Oppenheimer & Co. senior oil-and-gas expert: “We’re really just at the tip of the iceberg.... This is much bigger than anything we’ve seen in our lives.”

The onrush of new gas production has caused prices to fall from a high of $6 per 1,000 cubic feet not long ago to just $2.50 today.

AP reported: “Experts say that a sharp drop in wholesale prices over the past year means that, in the future, much more money will be made — and more jobs created — by petrochemical companies that process the gas into other industrial and consumer compounds.”

Coal production in the Appalachian basin already was dwindling as easy-to-reach seams were exhausted. The rapid availability of cheap natural gas is expected to undercut coal further, causing various industries to switch to the less-expensive fuel.

West Virginia’s Legislature passed regulations to minimize environmental ravages that usually accompany industrial upsurges. More state inspectors are being hired to enforce them. Policing this boom will require major effort in the Mountain State.

Like it or not, West Virginia’s economy is being altered by the snowballing natural gas era. If a much-sought ethane “cracker” is built and chemical plants grow to utilize this fossil-fuel bonanza, it will be a powerful boost. Stay tuned to the economic news.