Watching Government: Marcellus shale's sweet spot

March 15, 2010
Although the shale gas formation stretches across several states, the new Marcellus Shale Coalition president and executive director thinks Pennsylvania is its "sweet spot."

Although the shale gas formation stretches across several states, the new Marcellus Shale Coalition president and executive director thinks Pennsylvania is its "sweet spot."

"New York's regulatory regime has made it less desirable to invest there. Our members still spend time in Albany, but Pennsylvania has been more hospitable," Kathryn Z. Klaber said during a visit to Washington.

The group's 37 producers and 40 associate members operate 96% of the Keystone State's rigs. Accomplishments include growing relationships with the state's Department of Environmental Protection and workshops on obtaining permits, Klaber said.

Pennsylvania's not having a severance tax also has helped producers sink 1,100 Marcellus wells so far, 700 of them in 2009, she said. Counties already are collecting hundreds of millions of dollars in property and income taxes as a result, she said.

"It's absolutely creating jobs, 110,000 this year. We've also formed a workforce committee to quantify information from anecdotes, such as an engineering company's opening a new department and increasing its staff for Marcellus work," she said.

'Very bad timing'

Klaber acknowledged that Gov. Edward G. Rendell has renewed his push for an extraction levy. "The governor said we're not in our infancy any more," she said. "We're growing. I'd say we're in our adolescence. I think the timing is very bad."

She became the group's first president on Jan. 11 after working as executive vice-president of competitiveness at the Allegheny Conference on Community Development. MSC is poised to more actively address Marcellus development questions. Klaber has been meeting key players and learning about specific issues.

Producers like Jeffery F. Kupfer, a senior vice-president for Atlas Energy Inc., which has drilled thousands of wells in southwestern Pennsylvania, are helping her learn more about water management, for example.

There's significantly more flowback from a conventional well than from horizontal wells used to produce shale gas, he said. "We're looking at a 100% recycling goal for economic as well as environmental reasons," he said.

Recycling improves

Klaber said, "It's one area where technology has had a major impact. Additional, centralized water treatment facilities are being discussed. Over the last 9-12 months, the ability to recycle this water has increased tremendously. Contractors have pushed the envelope. Much less water flows back now, about 15% instead of 25%. It's absolutely a continuing important issue, but it's not holding up production growth."

Klaber sees efforts to bring fracing regulation under the Safe Drinking Water Act as unnecessary. MSC backed increases in fees for producers so Pennsylvania's DEP could hire more inspectors, she said. The state also adopted one of the nation's toughest wellhead casing standards to protect water supplies.

"The people we talk to don't wonder what's going on in Washington. They're more interested in what's going on down the street."

More Oil & Gas Journal Current Issue Articles
More Oil & Gas Journal Archives Issue Articles
View Oil and Gas Articles on PennEnergy.com