Tuesday, March 22, 2011

Getting Shale Gas to Market is Focus of Conference

Just as the rivers of southwestern Pennsylvania provided the transportation infrastructure for the coal, steel and glass industries of the 19th and 20th centuries, gas pipelines will be key to the region’s natural gas industry in the 21st century. That is according to with Pennsylvania Independent Oil and Gas Association President Louis D’Amico.

A few hundred people are gathered in Pittsburgh this week to delve into the subject of collecting, transporting and storing the gas once it leaves the ground. The Marcellus Midstream conference kicked off D’Amico using the now cliché phrase, “If you build it they will come” to describe the opportunities for companies wanting to move the gas around and out of Pennsylvania. He says the Marcellus Shale has the potential to build “middle east scale gas production” but he says right now there is no way to get much of it to market due to a lack of pipeline infrastructure. “No one company or small group of companies is going to be able to meet this [demand],” says D’Amico, “So this is an opportunity not only for the existing companies around but for new entities.” The need for new pipeline is not just limited to the production fields. “We have limited existing capacity on interstate lines to meet the needs… the volume of estimated reserves in western Pennsylvania makes this the second largest natural gas field in the world.

D’Amico compares the pipeline infrastructure to the rivers that provided transportation to the steel, coal and glass industry in southwestern Pennsylvania when those were the region’s key economic drivers.

But everything is not perfect for would-be investors. Although new Pennsylvania Governor Tom Corbett is seen as being more friendly to the gas industry, D’Amico says, “Pennsylvania’s regulatory and legislative environment has been somewhat of a challenge for everybody, particularly new players who are not used to the sometimes insane way we do things here in Pennsylvania.”

D’Amico says relatively low natural gas prices will also slow growth in the Marcellus play. However, many believe the region’s proximity to markets and the increasing volume of gas coming from each well will help.

D’Amico says the green and environmental movement also poses a roadblock to shale gas production in the state. “They always have to have an evil target to fundraise and get their base excited, currently we’re it. They work on propaganda and emotion instead of science and facts and we have to meet that,” says D’Amico.

The conference runs through Wednesday afternoon.

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