FirstEnergy Corp. believes demand for power may increase quickly in the near future if shale gas development from the Marcellus and Utica shale spark a “manufacturing renaissance.” Chief Financial Officer James Pearson recently told analysts that he thinks that the manufacturing and industrial industries may grow at far greater rates than in the past because of the economic development potential of the Marcellus and Utica shale.
On February 25, 2013, the Commonwealth Financing Authority (CFA) began accepting applications for the following five programs established and supported by the Act 13 Marcellus Legacy Fund:
1. Abandoned Mine Drainage and Abatement and Treatment Program
2. Baseline Water Quality Data Program
3. Greenways, Trails, and Recreation Program
4. Orphan or Abandoned Well Plugging Program
5. Watershed Restoration and Protection Program
These programs are jointly administered by the Department of Community and Economic Development, the Department of Conservation and Natural Resources, and the Department of Environmental Protection. The total funding available for these programs is $14 million dollars, which comes directly from impact fee payments made last year by natural gas operators. Applications are currently being accepted through July 31, 2013, and will be considered at CFA’s Nov. 13, 2013, meeting.
James Cutler, CEO of Houston-based Appalachian Resins, Inc., indicated to the State Journal that his company is preparing to announce the details of its planned $500 million integrated polyethylene facility in Marshall County, south of Wheeling. Funding for the project has appeared to come together, reports the State Journal. The plant will include an ethane cracker that would consume 15,000 barrels of ethane per day. Ethane is produced with the “wet gas” found in the Marcellus Shale formation in northern West Virginia, Southwestern Pennsylvania and Ohio. The plant’s cracker will produce ethylene, and the facility will ultimately produce polyethylene resins, such as HDPE. The plant is projected to produce upwards of 120 permanent jobs.
Allegheny County Council voted yesterday to approve a lease with CONSOL Energy Inc., permitting gas drilling at Pittsburgh International Airport, the Pittsburgh Tribune-Review reports. County Executive Rich Fitzgerald intends to sign the bill. CONSOL estimates that drilling will start no earlier than late 2014. Current estimates are that gas drilling at the airport could earn the Allegheny County Airport Authority $500 million dollars. Federal law requires that the revenue that the county receives from the lease must go directly to the airport. The Shale Energy Law Blog has more coverage on the airport lease here and here.
The Ohio Department of Job and Family Services has issued its first quarterly report which summarizes employment and workforce trends related to specific oil and gas activities in Ohio. According to the report, over the past year, core industry employment (such as pipeline construction and well drilling) rose 17 percent, ancillary industry employment (such as freight trucking and environmental consulting) rose 3.1 percent and 39 core business establishments were added to the State.
The Allegheny County Airport Authority has approved an oil and gas lease with CNX Gas Co. that could net the Authority as much as $500 million from an up-front payment and estimated royalties, the Pittsburgh Post-Gazette reports. The agreement provides the Authority with an upfront rental payment of $50 million and will cover the 9,263 acres of mineral rights controlled by the Authority. Authority representatives said CNX was tentatively planning to develop six to seven well pads on the property and to drill 45 to 50 wells on those pads. The deal still requires approval from the Allegheny County Council.
LS Power Development LLC, a New Jersey based company, received site approval this week to build a power plant estimated to cost $750 million in Lawrence County, Pennsylvania, the Pittsburgh Tribune-Review reports. The plant would be powered by Marcellus shale gas. The company still needs state and federal permits, but construction could begin early next year and the plant could generate electricity by 2016. Tennessee Gas Pipeline Company, L.L.C., a subsidiary of Kinder Morgan Energy Partners, owns and operates the gas pipelines that would supply the plant.
INNOVA Commercialization Group, a West Virginia early-stage investment program, has announced that it will provide financing to Alternative Fuel Solutions of West Virginia, LLC for the construction of a facility in Morgantown that will convert aftermarket vehicles to operate on compressed natural gas (CNG), propane, and other alternative fuels which have been made abundant by shale gas development, reports The State Journal. West Virginia’s 2011 Marcellus Gas Manufacturing and Development Act has made aftermarket conversion, which can require a substantial investment, a more attractive option: West Virginians who convert vehicles to operate on certain alternative fuels, such as CNG and propane, may qualify for state tax credits of 50% of the cost of conversion up to $7,500 for conventional vehicles, or up to $25,000 for large industrial vehicles. At current prices, fleet owners may save an average 35 percent on fuel costs after switching to CNG, before accounting for state tax credits like those available in West Virginia.
The assessed value of property located in Marshall County, West Virginia has increased by almost half in the past two years and has doubled since 2007, reports The State Journal. Chris Kessler, Marshall County Assessor, indicated that the increase in the property values can be largely attributed to the growth in the natural gas, coal, chemical and power industries, according to a news release on January 24. Mr. Kessler specifically listed natural gas drilling, processing, and pipeline activities in Marshall County as some of the items that have impacted the property values.
West Virginia, Pennsylvania, Ohio and New York could benefit from more than $10 trillion dollars in new economic activity as a result of the full development of the Marcellus and Utica shale plays, according to an analysis from New York-based Kroll Bond Rating Agency that was reviewed by Business First. Kroll’s economic prediction is based on the sale of shale gas and indirect economic benefits, such as higher employment, increased tax revenues and improved infrastructure.
Marketwatch.com reports that most consumers living in West Virginia believe shale exploration will provide economic opportunity. Of those polled, nearly a quarter already reported seeing economic impact. The poll, conducted as Huntington Bank’s Midwest Economic Index, shows that populations with the most exploration activity, Pennsylvania, Ohio, and West Virginia had the highest expectation for economic opportunity. Huntington Bank predicts that natural gas production, particularly from the Utica and Marcellus Shale formations, will increase dramatically over the next 25 years and that job growth will continue as well. According to the report, Huntington plans to expand its commercial banking services to serve the energy sector to meet new demand in the energy sector.
Last month, the Allegheny County Airport Authority accepted a bid from CNX Gas Company LLC, a subsidiary of CONSOL Energy Inc., to drill for Marcellus gas under the authority’s 9,300 available acres. The Pittsburgh Post-Gazette reports that as the parties continue to negotiate the lease, county officials expect the bonus payment to be between $35 and $40 million. Some estimates value the project at as much as $250 million over the next 30 years. Per Federal Aviation Administration regulations, any gas proceeds must be spent to improve the airport or its properties.
The Potter Leader Enterprise reports that REVH20 LLC may soon begin construction of a shale gas wastewater treatment plant in Ulysses Township, Potter County, Pennsylvania. The company has already obtained the necessary permits from the DEP, and will break ground on the plant as soon as the Ulysses Township supervisors approve it. REVH20 expects the plant, which is to be built along Route 49, to bring new jobs to the area.
CONSOL Energy Inc. announced today that it expects to invest $835 – $935 million in its gas operation in 2013. According to a press release from CONSOL, (i) an estimated $160 million will be used to maintain production; (ii) $600 million will be used to develop Marcellus Shale assets; and (iii) $122 million will be invested in the CONSOL/Hess Corporation joint venture in the Utica Shale. According to the press release, CONSOL projects its gas production to increase by 8 to 15 percent in 2013 to approximately 170-180 Bcfe.
Drilling for oil and gas in the Utica shale underlying eastern Ohio has led to an increase in plentiful, well-paying jobs in the region, with established operations actively seeking local workers rather than outsiders. While some companies used experienced workers from other states to begin drilling operations, jobs for drivers, welders, diesel mechanics and other trades will be going to local workers in areas where wells have been drilled. Utica shale development has been credited as a factor in Ohio’s unemployment rate dropping from 8.6% in 2011 to 6.5% in November of 2012, and there are projections that development of the Utica will generate more than 140,000 jobs in Ohio by 2020.