SEPTEMBER 2014 • www.GasandOilMag.com
A FREE MONTHLY PUBLICATION
The Hunter Family of Companies
18 Locations to Serve You in PA, NJ, NY, WV & OH
• Oil & Gas Services • Truck Sales • Leasing & Rental • Trailer Sales • Body Shop • Parts & Service
• Hunter Truck Sales & Service Inc. Butler, PA 800.999.7744
• Hunter Truck Center Butler, PA 724.282.1456
• Hunter Idealease Butler, PA 724.282.0641
• Hunter Truck Sales & Service Inc. Eau Claire, PA 800.842.8092
• Hunter Truck Sales & Service Inc. Emlenton, PA 866.802.6340
• Hunter Erie Truck Sales Erie, PA 877.736.8930
• Hunter Buffalo Buffalo, NY 800.400.9537
• Hunter Idealease Etna, PA 412.781.2846
• Hunter Truck Sales & Service Inc. Pittsburgh, PA 800.438.3397
• Hunter Truck Sales & Service Inc. Uniontown, PA 800.257.8782
• Hunter Keystone Peterbilt Clearfield, PA 877.736.8940
• Hunter Keystone Peterbilt Allentown, PA 800.874.3020
• Hunter Keystone Peterbilt Lancaster, PA 800.243.2458
• Hunter Jersey Peterbilt Clarksburg, NJ 866.586.4061
• Hunter Jersey Peterbilt Pennsville, NJ 877.222.2163
• Hunter Keystone Peterbilt Lamar, PA 877.955.4004
• Hunter Truck Sales & Service Inc. Wheeling, WV 888.847.1038
• Hunter Truck Sale, Inc. Brookfield, OH 330.448.6295
10286488
www.HUNTERTRUCKSALES.com
Subscriptions Now Available! Fill out the form below and mail to: Gas & Oil Magazine 212 E. Liberty St. • Wooster, OH 44691 330-264-1125
PUBLISHER Andrew S. Dix
EXECUTIVE EDITOR Ray Booth
ADVERTISING Rhonda Geer
Christ Penland
Ed Archibald
DIGITAL CONTENT MNGR Brad Tansey
ART DIRECTOR Pete Kiko
“Gas & Oil” is a monthly publication jointly produced by Dix Communication newspapers across Ohio & PA. Copyright 2014.
Table of Contents 4
Rally Held to Support American Energy
6
One the Issues: With Pat Toomey
7
Shell Sells Shale Gas Rights for $2.1 Billion
8
Shale Insight 2014
9
Shale Fueling Growth
10
European Firm Signs Gas Deal
11
Local Workers Getting Industry Jobs
12
Gas Prices are Just Too Low
15
Marcellus Shale Largest, Most Developed
16
Marcellus Region to Continue to Grow
18
Energy Briefs
20
Polling Shows Support
H
arrisburg, PA – Pennsylvania Governor Tom Corbett led an event on behalf of working families in Pennsylvania’s energy sector this summer. Joined at the Rally to Support American Energy in Pittsburgh by West Virginia Governor Earl Ray Tomblin and Ohio Lieutenant Governor Mary Taylor, Gov. Corbett criticized the U.S. Environmental Protection Agency’s (EPA’s) recent proposed rule for power plant emissions reduction, which could result in significant job loss in Pennsylvania. “In Pennsylvania, nearly 63,000 men and women work in jobs supported by the coal industry,” Corbett said. “Anything that seeks to or has the effect of shutting down coal-fired power plants is an assault on Pennsylvania jobs, consumers, and those citizens who rely upon affordable, abundant domestic energy.” Pennsylvania’s coal industry is a vital contributor to the state’s economy, with direct, indirect and induced impacts responsible for approximately $4.1 billion in economic output; $2.1 billion directly by the coal industry. Of the nearly 63,000 jobs attributed to Pennsylvania’s coal industry, more than 8,100 are miners. Coal is a crucial energy resource, used to generate more electricity than any other resource in Pennsylvania and responsible for approximately 44 percent of the state’s electricity generation. In 2011, Pennsylvania generated 227 million megawatts of electricity, making it the second largest producer of electricity in the United States and the largest net exporter of electricity among the states. “Reducing greenhouse emissions is a goal we support,” Corbett said. “However, some officials refuse to acknowledge that coal is now cleaner, and they don’t recognize the advancement this Amer-
ican industry has made, particularly in Pennsylvania. In recent years, Pennsylvania has made great strides to reduce emissions, and I am confident in saying that our commitment to Pennsylvania’s coal industry does not mean we have to sacrifice clean air.” In April, in anticipation of EPA’s proposed rule, Pennsylvania submitted a plan that would achieve lower emissions from existing power plants, which would lead to cleaner air, by removing obstacles and encouraging efficiency projects. At the heart of Pennsylvania’s plan is efficiency and the preservation of states’ authority and discretion in the development and implementation of emissions control programs. “No one disagrees that protecting our environment is crucial, and that we need to do our fair share,” Corbett said. “In Pennsylvania, that is exactly what we are doing. We have proposed a plan to EPA that would realize lower emissions and cleaner air through increased efficiency, without endangering jobs or our stable and diverse energy supply.” On Thursday, the Pennsylvania Department of Environmental Protection (DEP) will be testifying on EPA’s proposed rule, offering Pennsylvania’s plan for how cleaner air, lower energy prices and more jobs can be achieved through a responsible plan for emissions reduction that recognizes Pennsylvania’s diverse energy resources. For more information about Governor Corbett’s energy plan for Pennsylvania, visit www.governor.pa.gov/energy. To review the plan submitted by Pennsylvania, visit www.dep. state.pa.us, select “Air,” then “Bureau of Air Quality.”
On the Issues: with U.S. Senator Pat Toomey F
rom Washington, PA to Washington, D.C., energy is increasingly coming into focus in public discussion. With far-reaching impacts both home and abroad, the dramatic increase in oil and natural gas production from shale development here in Pennsylvania, and across the country has thrust domestic energy issues into forefront. This month, Gas and Oil Magazine had the opportunity to speak to U.S. Senator Pat Toomey (R-PA) on the impact of the development of the Marcellus Shale here in the Commonwealth, and the policy debates taking place in Washington, D.C.
Q:
The natural gas industry has taken off in the region over the past few years. How do you think Marcellus Shale development has impacted Pennsylvania?
Q:
What other items are you working on in the energy space?
Well, I hope one day soon natural gas will be a common vehicle fuel, and I am working with my colleagues to help make that happen. A big barrier holding back LNG vehicles in particular, is that they are taxed unfairly. Federal taxes on LNG, gasoline and diesel are based on volume, rather than energy content. Since a gallon of LNG has less energy than a gallon of gasoline or diesel, LNG vehicles pay more in taxes per mile traveled. This July, my colleagues and I on the Senate Finance Committee approved a proposal to tax LNG and gasoline equitably, based off their energy content. We hope to get that passed into law soon.
The transformation throughout the state has been astounding. It’s been especially great to see the growth occurring in the northern tier and southwest, but the impact on the rest of the state is fantastic as well. Just the other month, I attended a factory opening in Lancaster County where a company was bringing jobs back from China, because energy has become so much cheaper in the US due to the shale boom. The growth and the benefits have been tremendous.
Q:
Right now, it’s incredibly difficult to export natural gas products. How do you feel about all the export restrictions on LNG?
I think the restrictions on LNG exports are counterproductive. They hinder natural gas development, which means fewer jobs and less money for Pennsylvanians and others employed in the energy sector. These restrictions also directly benefit despots and dictators in energy rich countries like Putin in Russia. Close to two-thirds of Russia’s government spending is funded by oil and gas receipts. I think lifting export restrictions in this country would go a long way towards reducing Putin’s power and that’s why I’ve cosponsored legislation to allow energy firms to export LNG to all 160 WTO member nations.
Elected in 2010, Senator Toomey serves on the Finance; Banking; Budget; and Joint Economic committees, and is the chairman of the Senate Steering Committee. Sen. Toomey previously served in Congress as a member of the House of Representatives from Pennsylvania’s 15th Congressional District. The senator has also served as president of the Club for Growth, owned and operated a small restaurant chain in the Lehigh Valley, and worked in the financial services industry. A graduate of Harvard University, he lives in Zionsville with his wife, Kris, and their three children.
Jonathan Fahey AP Energy Writer
R
oyal Dutch Shell has agreed to sell drilling rights in shale formations in Louisiana and Wyoming for $2.1 billion in two transactions. In one of the deals, announced Thursday, Shell will also receive drilling rights to land in Ohio and Pennsylvania. Shell is working to focus its onshore U.S. drilling program on a few of the more prolific formations in an effort to boost profitability. The company wrote down the value of its shale acreage in the U.S. by $2.1 billion last year amid lower natural gas prices. Shell will sell its Pinedale acreage in Wyoming to Ultra Petroleum for $925 million and 155,000 acres in the Utica and Marcellus shale formations in Ohio and Pennsylvania. It will sell its Haynesville acreage in Louisiana to Vine Oil & Gas and the investment firm Blackstone for $1.2 billion. Shell and other major oil and gas explorers regularly sell rights to fields where production is flat or declining. They then use that cash to fund exploration programs designed to discover new or more prolific fields that oil giants need to fuel growth. The Pinedale and Haynesville formations produce dry gas, which is less profitable than oil or so-called natural gas liquids, at relatively moderate rates. The Marcellus shale in Pennsylvania has proven to be an extraordinarily prolific dry gas producer, and profitable for drillers because it produces gas at high rates per well. The Energy Department says the formation will produce an average of 15.9 billion cubic feet of gas per day in September, nearly a
quarter of total U.S. production. Ohio’s Utica shale is also proving to be prolific, and it includes a higher proportion of more profitable liquid hydrocarbons. Utica gas production is expected to rise to 1.3 billion cubic feet per day in September, up nearly eightfold from 155 million cubic feet per day at the start of 2012, according to the Energy Department. “We continue to restructure and focus our North America shale oil and gas portfolio,” said Marvin Odum, president of Royal Dutch Shell’s U.S. division, Shell Oil Company, in a statement. “We are adding highly attractive exploration acreage, where we have impressive well results in the Utica, and divesting our more mature, Pinedale and Haynesville dry gas positions.”
STRAW FOR SALE WITH DELIVERY
h t t p : / / w w w. s t r a w f o r s a l e o h i o . c o m /
Semi trailer deliveries to job-sites of small square, rounds, and large square bales.
*Certified, Weed Free straw available too*
10277262
Mary @ 740-974-8112 Transportation Office, Inc. 10286733
Lancaster, OH
P
ITTSBURGH — The Shale Insight 2014 conference is scheduled for Sept. 24-25 at the David L. Lawrence Convention Center in Pittsburgh. The conference focuses the creation and development of clean, natural gas from Marcellus Shale specifically. By connecting policy makers, industry leaders and elected officials with sponsors, attendees and industry companies, the Shale Insight conference provides participants the opportunity to discuss the developing industry with its main players. With keynote speakers ranging from Bill Richardson, former secretary of the U.S. Department of Energy and 30th Governor of New Mexico, to Dana Perino, a former White House press secretary and political commentator and co-host of Fox’s “The Five,” the conference provides a wide variety of speakers with different viewpoints and experiences. Along with speeches from keynote speakers, the conference also includes public affairs and technical sessions. Some of the sessions; topics include drilling and completions in the Appalachian basin, creating sustainable habitats through pipeline development and how shale is impacting America in world energy exports. The Shale insight conference provides attendees the chance to attend pre-conference workshops and discussions. Held Tuesday, Sept. 23, the event hosts technology showcase keynote presenter, Kemal Anbarci, the vice president and managing executive of Chevron. The showcase allows companies to present developing technologies to natural gas producers, midstream pipeline and service community. Topics for the day include pre-drilling water sampling, protection of sensitive lands and the planning of the Underground Injection Wells in Pennsylvania. The official conference starts with registration at 6:30 a.m. on both days. A continental breakfast that lasts until 8 a.m. will help wake up participants and prepare them for a day of keynote presentations, breakout sessions and networking. With multiple networking breaks held in the exhibit hall throughout the day, participants are able to meet with industry leaders, suppliers or other conference attendees to bounce ideas off each other or create new business contacts. The conference concludes Thursday, Sept. 25 at 1:30 p.m.
Anyone interesting in registering should visit shaleinsight.com/ register-now. Registration before Sept. 16 costs Marcellus Shale Coalition members $775, non-members $975, academic and nonprofit attendees $475 and government attendees $375. A discount for groups more than five people is$725 for Marcellus Shale Coalition members and $925 for non-members. The fee includes attendance to the pre-conference woorkshops, luncheons, conference materials, a conference bag and more. For more information visit shaleinsight.com.
Joe Massaro Energy In Depth
I
Counties taking advantage of the vast resources beneath their feet are helping to shake the rust off the Rust Belt, and are putting an increasing number of men and women back to work. Touting this economic upturn, President Barack Obama has now visited the region twice to showcase the renaissance of manufacturing jobs fueled by cheap abundant natural gas. During a speech during his most recent trip to U.S. Steel, President Obama noted the importance of this revitalization, and its benefit to the American economy: “Business leaders are starting to realize that China is no longer the best place to invest and create jobs, America is.” It’s certainly looking that way here in the Commonwealth. Joe Massaro is a spokesman for Energy in Depth and owner of ShaleGasNOW.com
Now is your chance to join the best in the tank truck industry. No Tank Experience Required! We’re seeking Class A CDL Company Drivers & offering $1000 SIGN ON BONUS! (paid out over 1 year) • 5 days on, 2 days off work schedule • Excellent benefits including: Medical, Dental, & Vision plans • Paid vacations & holidays • 401K with company match • Paid training on safe driving & product handling • Driver referral incentive pay • And so much more! We require Class A CDL, 2 years recent, verifiable tractor-trailer experience, Tank & Hazmat endorsements, TWIC Card (or ability to obtain), and a safe driving record. Kenan Advantage Group is an Equal Opportunity Employer.
With KAG you’re moving your career in the right direction!
800-871-4581 Call to speak with a recruiter or apply online at
TheKAG.com
10279587
n the last six months, shale development here in the Commonwealth of Pennsylvania has again beat expectations producing an amazing 1.9 Trillion Cubic Feet (TCF) of natural gas, 1.8 million (MM) barrels of condensate and a little over 200,000 barrels of oil. These numbers were a fourteen percent increase over the last six months of 2013. With the Marcellus Shale producing at a record rate, it’s clear the Commonwealth will have the opportunity to reap the benefits that come with shale development for years to come. Washington County is just one region that has benefitted greatly from the expanding development. It is now home one of the lowest unemployment rates in the tri-county area, and one that falls well below the national average. Jobs here have been fueled by the production of the Marcellus Shale, and large investments from the oil and natural gas industry. These benefits go far beyond the oilfield. Jeff Kotula, President of the Washington County Chamber of Commerce, has witnessed other industries in the county benefiting from the residual impact from oil and natural gas development. “The energy industry has impacted every sector of our economy, however, one of the most important has been job creation,” Kotula said. “In addition to the direct job growth in terms of energy production, we have also seen an impact in indirect jobs-retail, service, energy vendors and hospitality.” The “shale revolution” has put many back to work, and with new job opportunities opening up in Pennsylvania there has been an influx of new workers to the area further contributing to the county’s economic growth. This is a trend Kotula finds encouraging. “This growth has been so successful that we consistently exceed other Pennsylvania regions in terms of job growth, as well as are a leader in the Greater Pittsburgh Region in wells drilled,” Kotula said. Many of these jobs provide workers with family sustaining wages (and then some) because of this Washington County has seen a huge spike in direct visitor spending in the county. In their most recent report, the Pennsylvania Department of Community and Economic Development found that in 2012 direct visitor spending dollars in Washington County was $740.7 million up from $669.2 million in 2011 - nearly 11 percent increase. With the full economic benefits of shale development only beginning to scratch the surface, and we can expect the community will continue to reap these benefits for decades to come.
P
HILADELPHIA (AP) — A European firm has signed a deal to buy a type of Marcellus Shale natural gas liquid from Antero Resources Corp. The Philadelphia Inquirer (http://bit.ly/1oyWuoU ) reports that the Austrian petrochemical company Borealis has signed a 10-year contract to buy ethane coming from the Marcellus and Utica Shale formations in Pennsylvania and Ohio. The liquid, a raw material in plastics production, would be piped to the Sunoco Logistics Partners terminal in Marcus Hook and loaded onto ships. Antero is based in Denver, Colorado. The new agreement would start in 2016, when Sunoco expects its second Mariner East pipeline will begin service. The first Mariner East project is scheduled to begin transporting gas liquids this year. Gov. Tom Corbett’s administration and gas-industry leaders support the pipelines, but some nearby residents oppose them.
Visit us for our Grand Opening Sale!
For Work or Play
Sales, Service and Parts • Experienced, Knowledgeable Staff • Five Awesome Brands of Motorcycles, Quads and Side-By-Sides
Bentley’s in Canonsburg is now Barnes Bros. Motorcycles & Off-Road! Under New Ownership and Management – Same Location for More than 20 Years 724-746-7100 • 589 West Pike St. • Canonsburg, PA 15317
www.BarnesBrosMotorcycles.com
Staying Local I
while some challenges still exist, this survey helps identify gaps to refine and better direct our collective efforts aimed at boosting local job growth for years to come.” Job creation is expected to fall largely into three sub-sectors identified as being in greatest demand to the industry: midstream and pipeline; operations and maintenance; and engineering and construction. Engineering Success It pays to be a petroleum engineer. Quite well, actually. According to CareerCast’s annual Jobs Rated Report, petroleum engineering ranks as the 6th best paying jobs of 2014. Using data collected from the Bureau of Labor Statistics, the report found the average salary of a petroleum engineer to be $130,280. With expansion in oil and gas development in various formations across the country, the field is expected to be one of the highest growth postions, with a 26% projected growth through 2022. The report’s findings are on par with an August 12 study released by American Geosciences Institute (AGI), which found the median salary of petroleum engineers had increased by more than $10,000 since 2011. “The geosciences continue to be a lucrative employment option within the current workforce,” the AGI study concluded.
Oil & Gas Safety Training • SafeLandUSA Basic Training
• OSHA 5810
Raeann Guiley
330.268.3958 THE BUILDING BLOCK TO A SAFE WORKING ENVIRONMENT
CATS Compliance, Auditing & Training Solutions, LLC
415 S. Chapel St. • Louisville, OH 44641 • rguiley@neo.rr.com
10277708
n August, the Marcellus Shale Coalition (MSC) released the results of its annual workforce survey based on data from 2013. The study found that 83% of new hires from the oil and gas industry came from areas within the Marcellus Shale region [Pa., Oh., W.Va., N.Y., Md.]. That’s good news for the local workforce, as expanding development in the region is creating an increasing amount of new job opportunities. According to the survey data, MSC member companies (representing nearly 95% of Pennsylvania’s shale production) expect to hire more than two thousand new employees through this year, a continuation of the economic revival the industry has brought to the area. “Shale development represents a generational opportunity for our Commonwealth. Since day one, our industry has focused on fostering the growth of a skilled and well-trained local workforce to ensure that lifelong opportunities are being fully realized,” said MSC president Dave Spigelmyer. “These collaborative and ongoing efforts – industry groups, member companies and other key stakeholders working closely with a host of educational institutions as well as trade schools – continue to deliver strong results in the form of new jobs for our region’s workforce, as reflected again in this survey data.” The survey broke down different fields in which new employees are being hired, with 26.5 percent of new working in engineering and construction, 23 percent of new hires work in equipment operations, 15.2 percent in operations and maintenance, 8 percent in administration, 7 percent in land and 5 percent in environmental, health & safety. Job growth is expected to continue favor southwestern Pennsylvania, and efforts to train and attract workers from within the community will continue to be a focus of the industry, Spigelmeyer said. “Attracting and retaining a high-quality, local workforce is a key tenet of our Guiding Principles. By nearly all metrics – and with Pennsylvania’s unemployment at its lowest level since September 2008 and well below the national average – we continue to make positive progress on this important commitment, helping to create opportunities for those seeking work in our growing industry. And
Dan Garcia Attorney
“G
as prices are just too low,” the older gentleman said, not to anyone in particular but to anyone that would listen. As he took a sip of his coffee he continued, “I’m guessing many of these oil guys will just move on out if those gas prices don’t go up. They’ll just stop drilling.” Next to him sat a mountain of a man wearing brown Dickies coveralls that were well worn, so much that his plaid work shirt provided the pathwork for his accidental modesty, and muddied steeltoe boots, which were untied and their tongue folded over the laces, much like the tongue of a Labrador after several hours of flushing birds. “Naw, I think we’ll be alright, these guys aren’t going anywhere.
There’s just too much here and not enough of us to get it out,” said the mountain man as he dipped his Texas toast into his dippy eggs, “I need to hire more guys just to keep up with what I got now. Things get slow sometimes because we just don’t have enough pipe in the ground to get things going.” “So, why don’t you just put more pipe in the ground,” responded the older gentleman. “Wish I had control over that one, Chief, no clue what the holdup is.” This conversation seems to happen in a number of townships here in Southwestern Pennsylvania. There is a fear that Marcellus and Utica shale development will be a flash in pan. Many, like the older gentleman above, remember the good old days of steel and coal but they also remember how painful things became as these industries waned over the last couple of decades. Thankfully, these opportunities are real and multigenerational. The Marcellus and Utica shale play will create an economic ripple effect that will touch every person in Southwestern Pennsylvania for the next several generations. Identifying the opportunities that define the limits of this ripple effect, however, have been difficult to identify and adapt. Opportunities that directly support the oil and gas industry exist in the upstream (exploration & production), midstream (gathering & transmission pipelines), and downstream (gas distribution systems and pipelines). Although it is no longer the ‘gold rush’ era of the early years of Marcellus and Utica development, there are a number of services needs that are still needed to support these three market sectors. For the upstream gas operators, there are opportunities relating to a number of wellsite services like completions, cementing, roustabouts, rig hands, water hauling, water treatment, among a host of other opportunities. According to the Pennsylvania Statewide Marcellus Shale Workforce Needs Assessment, an expected 30,684 direct workforce jobs will be created in 2014, up from the 14,777 direct jobs created in 2010 to complete 1,368 wells. This number only promises to increase as shale development continues. As existing transmission lines begin reaching their maximum capacity for natural gas, exploration and production efforts may slow down to allow infrastructure development to catch up with production. For many in Southwestern Pennsylvania, this slowdown in production causes many in the region to worry that Marcellus and Utica may be a flash in the pan. Instead, this slowdown in production is temporary as more gathering and transmission
lines are design, permitted, and built. It is in this slowdown where entrepreneurs in this region may find the best opportunities. One of, if not the biggest demand is for qualified labor. The mountain man at the diner had it right, there is a massive shortage of skilled and unskilled labor for many of the projects that are planned for this region. Common needs are surveyors, inspectors, pipe welders, Cathodic protection installers, and contractors. Finally, and often overlooked, there is a massive natural gas distribution network in Southwestern Pennsylvania with its own needs and opportunities. In Pennsylvania there are thousands of miles of older bare steel and cast iron pipelines delivering high pressure natural gas to homes and businesses. All of these assets need to be replaced by newer, corrosion-protected, pipelines. Gas utility companies across the Commonwealth are taking advantage of the Distribution System Improvement Charge (DSIC), a Pennsylvania Public Utility Commission-approved charge that allows certain utilities to use a surcharge on customers’ bills to accelerate the replacement of existing aging facilities that will otherwise occur if the utility must wait until the completion of a rate case to begin receiving a return on its investment. Taken from puc.state. pa.us. This authorization is critical in high density residential areas where high pressure gas lines are prevalent. Because of DSIC and the abundance of aging infrastructure, there are a number of opportunities to provide a number of services to the gas distribution industry. While this industry is highly regulated (smaller margins for vendors), there are significant opportunities to create a long term relationship with the handful of utility companies in Western Pennsylvania. The opportunities to provide goods and services to the oil and gas industry are certainly plentiful in Southwestern Pennsylvania. While the upstream sector of the market has a greater tendency to ebb and flow, the midstream and downstream sectors offer a bit more stability for long term strategic planning. As a small business owner in Southwestern Pennsylvania, any desire to participate in this market will require both a solid understanding of the natural gas supply chain and a strong relationships with key decisionmakers or influencers in the areas where you would like to operate.
Blanchard Grinding up to 42� high 96 diameter 1020, A36, 1045, 4140, T-1, C1119, C1144 CNC Flame Cutting CNC Milling 40 x 70
Phone: 800-321-9107 Fax: 800-858-0329 SimcoxGrinding.com
Dan Garcia is an Oil and Gas Attorney in Pittsburgh, PA. He received his undergraduate of Texas A&M University and his law degree from the University of Pittsburgh. Please feel free to email Dan at dagarcia76@gmail.com if you have any questions.
TRUCK -N- STUFF ACCESSORIES & EQUIPMENT CENTERS
WASHINGTON 1180 JEFFERSON AVE. (RT. 18) WASHINGTON, PA 15301 724-228-4640 10276662
Marcellus shale named largest, most developed shale plays in U.S.
T
he 2014 North American Energy Outlook has been released, according to JLL, a professional services and investment management firm offering specialized real estate services to clients seeking increased value by owning, occupying and investing in real estate. This report details the impact that the oil and natural gas industry has had on American shale zones in places like Pittsburgh. The report pinpoints the Marcellus shale as the largest and most developed of the shale plays in the United States. The Marcellus shale is the most heavily populated of all the plays with 1.5 million residents in the Pennsylvania counties with 50 or more active wells. Having already reached significant size, it is expected to see the lowest population gains through 2018. Those living here are the oldest, with a median age of 44. There are nearly 80,000 different businesses within this geography. This mass has led to greater industry diversity though the area does have the highest percentage of manufacturing jobs at 21.2 percent. The unemployment rate is at 7.9 percent. Because of its growth, a large population has driven up home values. However, there is plenty of vacant stock in Marcellus to go around (vacancy rate of 15.4 percent). Retail supply is also largely sufficient. Currently, there is a surplus of automobile dealers, general merchandise stores and restaurants. Instead there is a huge need for grocery stores with a retail gap of $237.7 million. Energy Office Markets Leasing demand from natural gas and other energy-related companies is helping to drive growth and bolster the Pittsburgh office market, where rents are at their highest in more than a decade. In fact, the Pittsburgh market is outpacing national growth in rents and occupancy, thanks in large part to the energy sector. Energy Industrial Markets The Marcellus Shale industry continues to have a positive effect on Pittsburgh’s industrial market as the drilling, processing, storage and transportation of natural gas remains strong. Over the past few years more than 50 companies have rushed to the area, many of which are coming from Texas and Oklahoma. They include major independent companies such as Range Resources and Talisman Energy USA, but also include international oil conglomerates such as ExxonMobil and Shell. These companies have located predomi-
nately in Washington County, within the Parkway West and Southpointe submarkets. Energy requirements have typically been for warehouses of 10,000 to 20,000 square feet and four to five acres of lay-down yard space. Many of these companies have had a hard time finding existing properties that meet their requirements given Pittsburgh’s topography and history manufacturing steel and glass, often in huge industrial facilities. Although numerous large blocks of space exist, very little is premium space. Consequently, many companies have met their needs by partnering with developers on build-to-suit projects. Energy Hotel Markets Pittsburgh is a mid-size lodging market which has seen a higher amount of hotel transaction activity than its peers, with deal volumes totaling $330 million since 2011. Our outlook for hotel operating performance, however, is more temperate; RevPAR growth among the city’s downtown full service hotels lagged national averages in 2013. That said, certain submarkets within Pittsburgh are seeing disproportionate demand growth due to specific economic sectors such as energy experiencing rising investment and employment. Pittsburgh currently boasts a slightly larger construction pipeline than Philadelphia, even though Pittsburgh is notably smaller. The hotel development pipeline consists primarily of branded selectservice hotels in downtown and suburban locations near corporate campuses and other demand generators which are expected to post robust growth during the next several years. Hotels with an extended-stay positioning are expected to fare well, as they will be well-suited to accommodate travelers on long-term assignments in the energy sector. A trend of note is the increasingly core and mature positioning of Pittsburgh’s hotel stock. Once primarily conceptualized in larger gateway markets, Pittsburgh is expected to see the addition of a new luxury boutique hotel. Kimpton’s Hotel Monaco Pittsburgh is slated for a late 2014 opening, speaking to investors’ increasingly core view on the market. To learn more about the report or to discuss the specific effects the marcellus shale has on the Pittsburgh area, email Andrew Batson, Pittsburgh researcher, at andrew.batson@am.jll.com.
The report shows production has increased from 2 Bcf/d in 2010 to its current level. The agency attributes the growth in production to the oil and gas industry’s “increasing precision and efficiency of horizontal drilling and hydraulic fracturing”, and EIA projects the increase in new well production will offset the typical decline in production of natural gas wells. According to the report: “With 100 rigs in operation and with each rig supporting more than 6 million cubic feet per day in new-well production each month, new Marcellus Region wells coming online in August are expected to deliver over 600 million cubic feet per day (MMcf/d) of additional production. This production from new wells is more than enough to offset the anticipated drop in production that results from existing well decline rates, increasing the production rate by 247 MMcf/d.” In March, EIA’s DPR showed five of the six U.S. shale plays an-
alyzed for the report have experienced an increase in oil and natural gas production per rig, with the Marcellus Shale having the highest increase in production of natural gas per rig. The Marcellus Shale has held strong as the country’s most prolific natural gas basin, and the projected growth has industry analysts predicting a bright future. Industry veteran Tom Shepstone, owner of Shepstone Management Company, Inc., and editor of NaturalGasNow.org, describes the Marcellus as “Unstoppable”. “These are incredible production numbers coming out of this formation. To put it in perspective, in just the last month, the Marcellus added 252 million cubic feet of natural gas to the daily supply. Assuming an average of 193 cubic feet of gas consumption per day, that’s enough gas to meet the needs of 1.3 million homes, a city slightly larger than Chicago, the nation’s third largest,” Shepstone stated.
Specializing in explosion proof, spark resistant, intrinsically safe cranes for use in Marcellus Shale
KEYSTONE CRANE AND HOIST CO. 396 Morganza Road Canonburg, Pa 15317 Since 1972 www.keystonecrane.com
724-746-5080
and Virginia. Spectra spokesman Arthur Diestel tells The Daily Progress (http://bit.ly/1uOmX7j ) in an email that the company is suspending development work on the proposed project. Diestel says the company will continue to evaluate opportunities in the region. Houston-based Spectra is a pipeline builder and operator. INDIANAPOLIS UTILITY TO CONVERT COAL PLANT TO GAS
I
REPORT SAYS OIL PRODUCTION CONTINUES TO GROW
B
NDIANAPOLIS (AP) - Indianapolis’ local utility plans to convert to natural gas an aging, coal-fired power plant it’s faced growing pressure to retire. Indianapolis Power & Light President and CEO Kelly Huntington tells The Associated Press the utility’s decision to ask state regulators to approve switching the 427-megawatt station to natural gas was the “least cost option” for IPL’s 470,000 Indianapolis metropolitan area customers based on the impact of new federal EPA regulations. Jodi Perras of the Sierra Club’s Beyond Coal Campaign says more than 55 local groups passed resolutions urging IPL to retire the plant that’s long been Indianapolis’ biggest industrial polluter. She says “today, those calls have been answered.” But Perras says the Sierra Club and other groups will now focus on ensuring coal ash around the plant is cleaned up.
ISMARCK, N.D. (AP) - North Dakota’s Industrial Commission says oil production numbers hit record highs again in the state in June as the state’s booming oil industry continues to grow. A report released Friday shows oil drillers in the state produced an average of about 1.09 million barrels of oil a day in June. The state’s Department of Mineral Resources says the production was up from about 1.04 million barrels a day in April. The North Dakota oil patch saw a record 11,079 producing wells in June, up from 10,902 wells in May. The state produced 37.5 million cubic feet of natural gas in June, an all-time high. That’s up from 36.9 million cubic feet of PROJECT AT KY. COAL PLANT TO CATCH CARBON DIOXIDE natural gas in May. ARRODSBURG, Ky. (AP) - Political leaders and reOil production numbers typically lag about two months.
H
NEW NATURAL GAS PIPELINE PLANNED FOR W.VA., OHIO
C
HARLESTON, W.Va. (AP) - A company is planning a $1.75 billion project that includes laying 160 miles of natural gas pipeline in West Virginia and Ohio. Columbia Pipeline Group announced the investment in a news release Tuesday. The proposal would help transport up to 1.5 billion cubic feet per day of natural gas. Columbia expects to start construction in fall 2016 before putting the pipeline in service in the second half of 2017. It will support natural gas development in western Pennsylvania, northern West Virginia and eastern Ohio. A second component will allow for more Appalachian shipments through a corridor stretching to the Gulf Coast. It primarily involves adding compression for existing pipelines. Columbia Pipeline Group is run by Indiana-based NiSource Inc. Columbia’s companies run about 15,000 miles of interstate natural gas pipeline. PROPOSED PA.-TO-NC NATURAL GAS PIPELINE ON HOLD
C
HARLOTTESVILLE, Va. (AP) - Spectra Energy has put a proposed interstate natural gas pipeline on hold. The pipeline would have run from Pennsylvania to North Carolina, and would have crossed Maryland, West Virginia
searchers say a new project to capture carbon dioxide at a central Kentucky power plant is a crucial step to continue burning coal for electricity in a time of tougher environmental regulations. The $19.5 million testing facility under construction at the E.W. Brown Generating Station near Harrodsburg would capture and separate carbon dioxide from the emission stream after the coal is burned. Kentucky Gov. Steve Beshear on Monday called the project “a big step forward for solving one of the biggest challenges facing the Commonwealth today, and that challenge is carbon emissions.” The technology is seen as a fix to keep old coal-fired power plants operating under tighter federal environmental rules. Last month, the Obama administration unveiled new regulations meant to cut carbon dioxide emissions by nearly 30 percent in 15 years. The E.W. Brown plant has coal-fired units that date to the 1950s. So far, carbon capture has remained in the development phase due to high upfront investment costs and recent cheaper prices for natural gas that has enticed utilities to switch to burning gas to achieve lower emissions. The U.S. Department of Energy gave about $14 million for the Kentucky project and it is sponsoring another 15 post-combustion capture projects around the country.
DRILLING INDUSTRY USING MORE IMPORTED STEEL
P
Strata-X Energy received four drilling permits from the state last year for Emmons and McIntosh counties, in the southeastern part of the state. The Denver-based company drilled a well about 10 miles east of Linton in June and says it hit gas. The company plans to drill three more wells later this year, as it works to determine whether future drillings in the two counties would be economical. Strata-X has leases on about 187 square miles for its Sleeping Giant Gas Project.
ITTSBURGH (AP) - Recent state data suggests that Marcellus Shale natural gas drillers may be using far more imported steel pipe than previously thought, but the industry is questioning that figure. The Pittsburgh Post-Gazette (http://bit.ly/1v1uP9u ) reports that Department of Environmental Protection records show that over the last two years 77 percent of the shale wells drilled in Pennsylvania were built with foreign steel, while 12 percent used American steel and 11 percent were mixed. U.S. Steel Corp. says a glut of foreign tube steel has put about 260 people out of work at a plant near Pittsburgh and ALABAMA POWER REDUCING COAL USE AT 3 PLANTS another in Belleville, Texas. IRMINGHAM, Ala. (AP) - Alabama Power Co. said The Marcellus Shale Coalition, an industry group, says a Aug. 1 it will reduce or end coal use at three generating brief survey found that more than 90 percent of the steel pipe plants because of federal environmental rules as it spends $1 its members use is American-made. billion to meet new air emission rules. The utility said it will close two coal-fired generating units at ARCH COAL IDLES MINE COMPLEX IN VA., KY. Plant Gorgas in Walker County northwest of Birmingham. It PPALACHIA, Va. (AP) - Arch Coal says it is idling also will eliminate coal as a fuel and switch to natural gas for the Cumberland River Coal Company complex in fuel at three Plant Barry units near Mobile. Wise County, Virginia, and Letcher County, Kentucky. The changes are supposed to be finished by 2016. Officials said Monday that more than 210 full-time positions are being eliminated by the move. Arch Coal CEO John Eaves says the company is responding to market challenges for metallurgical coal used to make steel. Eaves said the company’s strategy is to shift its portfolio toward higher-margin, lower-cost metallurgical coal operations. The mining complex had previously shuttered two contract mines during the second quarter of 2013. Idling the operations will reduce the company’s 2014 metallurgical coal sales volumes by about 200,000 tons. Arch Coal now expects to ship between 6.3 million and 6.9 million tons of metallurgical coal for 2014.
B
A
COMPANY FINDS NATURAL GAS IN SOUTHEASTERN ND
B
ISMARCK, N.D. (AP) - A company exploring for natural gas outside of western North Dakota’s oil patch says it has found the resource.
Livestock, Deckover, Flatbeds, Tiltbed, Dump, Utility, Cargo, Custom Enclosed, Car Haulers, Landscape Trailers
PARTS • SALES • SERVICE • FABRICATION
If You Can’t Find It... We’ll Built It! Mr. Trailer Sales specializes in custom building and fabricating
156 Steeele Hill Rd., New Philadelphia, Oh 44691 Phone: 330-339-7701 www.mrtrailersales.com
• • • • • • • • • •
Experts in Natural Gas
10156579
I
n two months, voters across the state will be heading back to the polls to vote in the November election. Across the Commonwealth, politicians at the local, state and federal level will be stumping for support and looking to distinguish themselves from their opponents. If they are hoping to be successful, a recent poll indicates they’d be well served to demonstrate support for increased domestic energy production. Regardless of party affiliation, the new poll, released by the American Petroleum Institute, shows the vast majority of Pennsylvania voters support increased development of U.S. energy and energy infrastructure, and are more likely to support the candidates who support producing more U.S. oil and natural gas. Conducted by Harris Poll, the state-wide poll surveyed 608 registered voters in Pennsylvania, and the findings indicate clear-cut support for America’s energy development, and the candidates who work to advance it. The survey finds that 70 percent of respondents stated they are more likely to support a candidate in November’s election who “supports increasing the country’s energy infrastructure and producing more oil and natural gas from here in the U.S.”. “Pennsylvania voters, regardless of party affiliation, want more American made energy,” said Stephanie Catarino Wissman, executive director of API’s Associated Petroleum Industries of Pennsylvania. “Voters are more likely to support candidates who encourage smart energy policy that will increase investments in the commonwealth and increase energy and job security for Pennsylvanians in the future. “ Campaign experts agree with Wissman’s assessment. Mark Harris, a Pittsburgh native and political consultant with extensive experience in Pennsylvania politics, is not surprised by the polling data, as it appears to match recent voting trends. “These numbers aren’t surprising when you look at the success pro-energy candidates have received over the course of the last few years. There is a great deal of support on both sides of the aisle - it’s not really an issue people consider partisan,” said Harris. “It goes back to the old adage - ‘it’s the economy, stupid’. Oil and gas development has been a boon to the economy, and created many jobs, particularly in this area. I can’t imagine any candidate having much success campaigning against job growth.”
While the polling data shows support for continued development of domestic natural resources, it also found concern in the manner Washington is approaching U.S. energy policy. 70 percent of those polled believed the federal government does not do enough to encourage the development of the country’s energy infrastructure. It’s a perception Congressman Tim Murphy is pushing for his Capitol Hill colleagues to address. Rep. Murphy (R-18), who serves as Chairman of the House Energy and Commerce Subcommittee on Oversight and Investigations, has been at the forefront of the energy debate in Washington. A staunch advocate of domestic energy production and infrastructure development, the Congressman faults overbearing regulatory barriers in inhibiting continued growth. “People in the ‘Keystone State’ recognize the abundance of energy that lies in the Marcellus Shale and want to capitalize on the opportunity to benefit all Americans, by investing in the commonwealth’s ability to transport natural gas to consumers nationwide,” Rep. Murphy stated. “Thousands of Southwestern Pennsylvanians are earning solid paychecks because of the Marcellus Shale. Thousands more would be employed, but regulatory and permitting barriers are restricting economic opportunity, especially in gas-poor regions of the country that stand to benefit from access to Pennsylvania’s affordable and plentiful natural gas.” Rep. Murphy urged fellow lawmakers to take a proactive addressing the issue, citing the recent winter and increasing energy costs as a call to action for continued development of energy infrastructure. “As we saw during the polar vortex when power prices surged in New England, parts of the country need gas to power their factories, heat homes, and keep the lights on. To address this critical infrastructure need, the Senate must act on the House-passed Natural Gas Pipeline Permitting Reform Act, which would speed up the construction of new pipeline projects by removing needless bureaucratic delays without impacting safety.” The bill, H.R. 1900, aims to expedite the federal review process for natural gas permit applications.
SEPTEMBER 2014 • www.GasandOilMag.com
A FREE MONTHLY PUBLICATION