Marcellus Shale: The Trillion Dollar Question
We’re sitting on what may be the second-largest natural-gas field in the world—but is it possible to improve our air and water while making the most of the enormous economic opportunity?
Photos by Martha Rial
As gasoline costs skyrocket and the search for clean alternatives gains urgency, the extraction of the region’s massive supply of natural gas may offer a just-in-time solution to the country’s growing energy needs. Dubbed a “super-giant” find by energy companies, Marcellus Shale is now thought to contain 500 trillion cubic feet of natural gas.
Even if only 10 percent of that supply is captured, the result would supply the natural gas needs of the U.S. for two years. Drillers say local wells can be expected to produce for the next quarter-century, bringing a steady stream of investment and jobs into western Pennsylvania.
Though first discovered in 1839 near Marcellus, N.Y., the energy embedded in a layer of thick black shale was largely undisturbed until the 21st century. That’s when a new technique called hydraulic fracturing and horizontal drills became widely deployed. Forcing large volumes of high-pressure water, sand and chemicals up to 8,000 feet into the earth, “fracking” allows the trapped gas to escape into a well.
However, air pollutants, wastewater and toxins from the process can escape, too. And because Pennsylvania has more miles of rivers and streams than any other state besides Alaska, the potential effect of Marcellus extraction on our water, wildlife and forests is as significant as its economic advantages. That has galvanized drilling opponents to demand stringent regulations on drilling procedures, locations, wastewater treatment and work site traffic. Citing the damage wrought by 20th-century coal mines and steel mills, they argue that communities must be more vigilant in protecting their shared resources.
Throughout the past five years, local Marcellus activity has gone from blip to boom. Washington County has seen more than 300 wells drilled since 2007; Greene County, 175-plus. Major energy companies are rushing to stake their claims. In June, Exxon made its second purchase in the region, paying $1.7 billion to explore 317,000 acres. Debate on state involvement—from environmental regulations to severance taxes—preoccupies Harrisburg. The natural-gas gold rush has arrived—but is the Pittsburgh region ready?
Bobby Vagt, president of the Heinz Endowments, views the Marcellus debate from two perspectives. Before joining the $1.4 billion regional foundation in 2008, he spent nearly 20 years as an executive in the oil- and gas-exploration industry. He believes that the sheer size of the resource, along with the widespread use of fracking, makes its impact dramatically different than other energy finds.
“Assuming the shale is developed, people will be drilling here for 25 years,” he notes. “The whole nature of the business has been changed. You’re here for the long term, so your relationship with people and suppliers and governments is important. The question now is not discovering the resource; it’s how cheaply and effectively you can drill a well. That has to be tempered with a focus on the environment.”
In some cases, Vagt says, environmental-protection and cost efficiencies will converge. He cites the example of on-site treatment of wastewater, which can save more than $330,000 per well and millions of gallons of water. But he cautions that negotiations on those solutions must start now.
“It’s not as simple as getting like-minded people together, even those who recognize that the issue must be dealt with,” he says. “And the difficulty of resolving the problems grows exponentially with the passage of time. The environment has to be protected and can’t be overrun by the sheer enormity of the dollars. We can solve this the right way. The question is: Who will we anoint to carry this out?”
Pittsburgh magazine asked five regional leaders with deep experience on all sides of the issue to weigh in on the Trillion-Dollar Question: How do we improve our air and water while making the most of this enormous economic opportunity?
Their responses frame a debate that may define the region’s 21st-century history.
Nicholas J. Deiuliis
President, CONSOL Energy Inc.; president and chief operating officer, CNX Gas Corp.
CONSOL Energy’s roots run deep in Southwestern Pennsylvania. We have embraced innovation and continuous improvement as part of that deep culture. During the last 150 years, we have witnessed and deployed innovations that have improved how we access our energy resources, how we convert our fuels into energy and how we deliver that energy to our homes and businesses in increasingly efficient ways.
Domestic, abundant, reliable and affordable are coal’s strongest attributes, which is why it continues to be the lifeblood of the country, producing nearly half of our nation’s electricity. Advancements in technology have allowed coal to make incredible strides to improve its environmental legacy.
Regulated emissions from a coal-fired power plant built today are 90 percent cleaner on average than the plant it replaces. Natural-gas discoveries in the Marcellus Shale have the potential to shake up the energy markets and geopolitics across the globe, and it is all because of the application of horizontal-drilling technology. We are able to safely tap into resources that we could not tap into historically.
Stewardship of our natural resources must go hand in hand with their development for energy use. At CONSOL, we take a holistic approach to water management and conservation, actively employing advanced water-treatment technologies and processes in our operations. We are proud that our Marcellus Shale gas operations are recycling 100 percent of our flowback and produced waters.
Today, there are more than 3.5 billion people on planet Earth without access to affordable and reliable electricity. Global demand for energy will increase by more than 50 percent between now and 2030. Nowhere else in the world will you find such a rich mix of energy assets and institutional know-how to enable our resources in a responsible way. The greater Pittsburgh region is uniquely positioned to take advantage of this rapidly changing balance of trade. All of the elements exist to transform the global energy challenge into an energy opportunity—an historic opportunity to develop new supply chains, invest in and apply new technologies, and create new American jobs right here in our local communities. This is an opportunity we must not and will not squander.
President and chief executive officer, Citizens for Pennsylvania’s Future (PennFuture)
All forms of energy production have environmental impacts. The Pittsburgh region’s air is significantly compromised by pollution from coal-fired power plants. The Post-Gazette’s series “Mapping Mortality” revealed that 14,000 people died prematurely from breathing pollution emitted by these plants. The region has long lived with the legacy of coal mining with many of its rivers and streams degraded by acid pollution from abandoned mines.
Natural gas is a much cleaner-burning fuel than coal. It emits virtually no mercury or soot pollution and has markedly lower emissions of ozone smog forming nitrogen oxides and acid-rain-causing sulfur dioxide. Many coal-fired power plants in the Pittsburgh region are more than 40 years old and do not have modern pollution controls. Those plants should be either shut down or converted to gas-fired power plants.
However, to ensure that the benefits of natural gas as a fuel are not outweighed by the environmental impacts of drilling, we need stronger regulations. Gas-drilling operations involve many sources of air pollution: diesel generators, increased diesel truck traffic, compressor stations and more. In order to ensure that the drilling does not further degrade the region’s air quality, drillers must control the pollution from these new sources.
There also need to be greater protections for water, and the Pennsylvania Department of Environmental Protection has made progress. As of May, gas drillers will no longer be permitted to pass their wastewater through sewage-treatment plants that are not equipped to treat the water. But we also need to expand protection for water by requiring well pads to be set back further from waterways and drinking-water supplies, prohibiting gas wells in flood plains and tracking the use of water from withdrawal to disposal.
If we set world-class standards that protect our air, land and water, then all Pennsylvanians can benefit from the development of the enormous and valuable resource under our feet.
Kathryn Z. Klaber
President and executive director, Marcellus Shale Coalition
Responsible shale-gas development is producing thousands of jobs in Pennsylvania, generating millions in tax revenue and billions in local development while improving air quality and reducing the environmental footprint of the industry.
State tax revenues from this industry for the first quarter of 2011 totaled $238 million—up $20 million from last year. The Department of Labor and Industry estimates that Marcellus activity generated an average of 3,000 jobs per month during the first three months of this year, and more than 141,000 Pennsylvanians work in Marcellus Shale industries.
By any metric, these economic figures are staggering. But with this historic opportunity comes the obligation to leave our environment healthier and stronger for future generations. Our industry’s professionals share with their neighbors the goals of environmental stewardship.
Highly advanced equipment and controls allow for tight monitoring of drilling activity. Dozens of state and federal regulations oversee all stages of the process. Natural gas offers consumers and power-generation companies a clean, cost-effective and reliable source of power while improving the air we breathe and reducing the footprint from energy generation.
As in any industrial process, there are risks. However, managing those risks—through sharing best practices and strengthening workforce training—is key to environmentally responsible shale-gas development.
Working alongside state environmental officials, our industry has helped modernize regulations to protect our environment and water supply. Specific to water, the Pennsylvania Department of Environmental Protection (DEP) has implemented new well-casing and construction guidelines to further protect ground water supplies. And more recently, DEP took action to prohibit the discharge of treated water into our rivers. Our industry supported and worked hard to meet this challenge.
Developing the Marcellus Shale in an environmentally responsible manner is not a voluntary directive; it’s a mandate that our industry has imposed upon itself. As a lifelong Pennsylvanian raising two children in the area, I am one of so many who see this homegrown resource offering opportunities for generations to come.
David L. Porges
Chairman, president and chief executive officer, EQT Corporation
Natural gas is vital to the U.S. economy. Because of newfound resources, the price of natural gas has come down dramatically over the past few years, leveling off during the same time as crude-oil prices have been increasing.
EQT is one of the largest exploration and production companies working in the Marcellus Shale, the largest shale resource in the United States. We have worked hard to refine and improve our production techniques so that our region and our country can benefit from these natural-gas resources, which are cleaner, cheaper and much more abundant locally than imported oil, while protecting our environment. During our 120 years of operation in southwest Pennsylvania, we have learned an important lesson: Preserving the environment is good business.
EQT sets high standards when it comes to protection of the environment and safety. The company has developed a comprehensive production plan entitled “Marcellus Operations Guiding Principles,” which defines numerous areas critical to the safe production of natural gas and provides a foundation for training and operations within the company’s drilling, completions and production activities.
EQT is committed to protecting water supplies. For instance, we conduct pre-drill testing on all domestic water sources and have increased our recycling of water used for hydraulic fracturing. We guard freshwater supplies using a process called “triple casing”: multiple layers of steel casing and concrete between drilling equipment and the water aquifers.
EQT has also developed industry-leading spill-prevention plans, and we were one of the first natural-gas production companies to publish monthly reports detailing our fracturing fluid additives on our website, EQT.com, and on FracFocus.org, a national registry maintained by the Groundwater Protection Council (GWPC), a leading environmental group.
EQT has also been active in promoting natural gas as a clean, alternative-fuel source, which will lessen America’s dependence on foreign oil. This summer EQT will open a compressed-natural-gas (CNG) fueling station in the Strip District. The station will provide cleaner and less expensive fuel for privately owned and commercial natural-gas vehicles (NGVs). EQT’s distribution company, Equitable Gas Company, is converting a significant portion of its own fleet to natural gas vehicles.
These new resources represent a great opportunity for economic development and a better environment, but only if they are developed responsibly. Part of doing so is recognizing that natural-gas companies are the new neighbor in southwest Pennsylvania, and EQT is committed to conducting itself as a responsible neighbor.
President and chief executive officer, Aquatech International Corp.
Aquatech is a global leader in water-purification technology. We focus on helping our clients manage their water use by minimizing consumption, maximizing reuse and eliminating waste.
A typical project for us could include desalinating seawater, recycling acid-mine drainage or taking an industrial facility to zero liquid discharge, which means that all water is recycled and any waste is evaporated into a safely disposable solid or saleable product. Our client list includes many of the world’s top energy companies and utilities.
Founded in 1981 in the Pittsburgh region and headquartered in Canonsburg, Aquatech has over 1,000 operating facilities in over 60 countries. Traditionally active all around the country and world, our company sees the emergence of the Marcellus Shale industry as an opportunity to address water issues right in our own backyard.
For the unique water challenges of the Marcellus Shale, we focused on developing a solution that is environmentally compliant, economical and infrastructure-friendly. The result was our MoSuite™ portfolio of solutions, centered on taking our cutting-edge technologies and scaling them to a mobile platform for treatment at the well pad.
The plug-and-play approach to treatment includes units for pre-treatment, evaporation and sludge management. An example of this is MoVap, our mobile evaporator, which enables waters to be reused or returned to the environment in compliance with National Pollutant Discharge Elimination System (NPDES) permits.
Our solutions help reduce the total amount of freshwater required for gas exploration as well as significantly reduce the amount of wastewater that must be transported off-site for further treatment and disposal. This reduces truck traffic and also reduces fresh draw of surface waters.
In order to fully realize the economic potential of Marcellus Shale, we must solve the various water challenges being faced by the gas industry. Aquatech is able to apply globally proven technology in order to provide a reliable, sustainable and adaptable solution for these challenges.
In Pennsylvania we are lucky to have energy resources such as coal and gas. The wastewaters generated during the production of these fuels can be successfully converted to clean water and reusable solids today, thus allowing us to strike the important balance between economic growth and development, and environmental stewardship.
Christine H. O’Toole, a feature writer who lives in Mt. Lebanon, is a frequent contributor to Pittsburgh magazine.