Region benefits from shale drilling operation

November 22, 2012
dsp Shale Play

By BRETT DUNLAP

Shale Play

PARKERSBURG, W.Va. - Those involved in the local natural gas business believe Marcellus Shale drilling will have a positive impact on the state.

Some benefits have already been seen in the region, said Denny Harton of GasSearch Corp. in Parkersburg.

Marcellus Shale natural gas drilling operations have been underway in parts of the state for over a year. Last December, the West Virginia Legislature passed regulations geared specifically to the emerging Marcellus Shale industry as well as work being done in the Utica Shale deposits.

Harton said Marcellus drilling is having a positive impact on the state's economy, while the impact is not yet as prevalent in the Wood County area as it is in a number of other counties around the state with a good deal of activity from Tyler County north and east into Doddridge Ritchie, Harrison and a few other counties.

"Some benefits our area have resulted in jobs for land and lease workers, pipeline companies and excavation contractors," Harton said. "Landowners are receiving very lucrative leasing opportunities that is bringing new wealth to the area.

"The Marcellus is thinner under most of Wood County than in other areas. This will serve to delay development in the area until economic conditions favor such endeavors," Harton said. "The Utica shale may well prove to be more productive for Wood County. Speculation is that Wood County lies within the area likely to be explored at some point."

Harton said while some interest groups are still concerned about certain elements of the drilling and fracturing process, most are learning that this is not a new concept and that more than a million wells have been fracked over the last 60 years safely.

"Estimates are that more than 75,000 wells have been fracked in West Virginia alone since the late 1940s," he said.

Frank Deem, a former state senator and owner of J. Frank Deem Oil and Gas, said development of the Marcellus Shale deposit is a golden opportunity for West Virginia in job creation and generating tax revenue.

A well drilled in Tyler County in March is generating 7 million cubic feet of natural gas a day and has done $23 million in business, he said.

"This is one of the greatest opportunities in the history of West Virginia," Deem said. "There is so much potential in job growth, economic benefits and tax revenue. Natural gas is the fuel of the future."

Gov. Earl Ray Tomblin has assembled a committee to study the feasibility of using natural gas to power state vehicles.

"Natural gas costs $1.50 less per gallon than gasoline," Deem said.

Groups have come out against the emerging natural gas industry, many of the same groups that are against the state's coal industry, he said. Groups have tried to portray natural gas as being just as dirty as traditional fossil fuels.

"Many are afraid development of natural gas will displace the development of other alternative fuels (like wind and solar)," Deem said.

However, these alternatives do not make up the difference fossil fuels possess, he said.

West Virginia, and particularly Wood County, is being considered for a multibillion-dollar chemical processing plants, also known as an ethane cracker plant. A cracker plant converts ethane, a byproduct from Marcellus Shale natural gas, into the widely used ethylene. It is a key component for the plastics industry.

West Virginia lost out on such a facility earlier this year to Pennsylvania. Such a facility could represent a large investment

Cam Huffman, executive director of the Wood County Development Authority, said the company considering where to locate the plant is in its review process.

"We are working to clarify any questions they might have," he said. "We are keeping in contact with the company as well as the state.

"With a large project like this, they want to make sure their i's are dotted and their t's are crossed."

The industry is bringing a lot of opportunity to the areas where they work, with landowners receiving more revenue from land that was previously not productive and local businesses doing more business as a result, Harton said.

"Tax revenue in to the state and counties from oil and gas are dropping because of the price received by producers of natural gas is but a 20-25 percent of what it was just a few years ago," he said. "However, for the counties where Marcellus is being drilled, the tax revenues are not as depressed and in some cased are actually increasing."

As the gas market begins to balance itself out and prices start to rise and stabilize, more drilling will occur, Harton said.

"It is inevitable that drilling will come to Wood County," he said. "Wood County enjoys a strong hardworking well educated workforce. This fact combined with the river transportation and reasonably good rail systems and a major highway running through the county could all help bring industry here that are the result of the Marcellus and Utica expansion."