Shale hits a rough patch

But natural gas remains a boon to Pennsylvania

Pennsylvania continues to play a leading role in America’s energy revolution. Through ingenuity, entrepreneurship and cutting-edge technologies, as well as hard work and grit, this revolution is dramatically reducing America’s dependence on foreign energy sources. At the same time, families and small businesses are realizing huge savings at the pump as well as in home-heating and electricity bills.

Without a doubt, natural-gas development directly benefits consumers throughout the commonwealth. Pennsylvania families and small businesses are realizing year-over-year winter energy savings of nearly 26 percent, and consumer natural-gas rates have plummeted more than 50 percent since 2008.

At the same time, more affordable energy costs have helped generate more jobs locally and restored our domestic manufacturers’ competitive edge in the global marketplace. It’s no wonder that a Harvard Business School study found that responsible shale development is “perhaps the single largest opportunity to improve the trajectory of the U.S. economy.”

What’s more, with natural gas, we don’t have to choose between economic growth or a cleaner, healthier environment. It’s a false choice to suggest otherwise.

Thanks to natural gas, consumers have benefited while America has cut greenhouse-gas emissions more than any other nation, according to the Environmental Protection Agency.

Indeed, we have seen natural-gas generation of power grow to nearly one-third of our domestic power supply, demonstrating that natural gas is a necessary partner with otherwise more expensive and intermittent renewable-energy sources such as wind and solar.

However, these shared benefits we are all experiencing have not come without challenges.

While our industry was a bright spot during the historic 2008 economic downturn and the anemic recovery that followed, global energy commodity prices have collapsed. Influenced by geopolitical decisions and a host of global economic factors, the economic headwinds facing the energy industry could not be more fierce.

In Pennsylvania, natural gas is selling below the national average as oil prices continue to fall. At the same time, a lack of pipeline infrastructure continues to limit regional natural-gas producers from getting these local resources to consumers across high-demand markets in the northeast.

The statistics are numbing: Pennsylvania’s active rig count is down 51 percent, monthly permits for new wells have fallen by a third, monthly wells drilled are down 55 percent and monthly production is leveling out. The Energy Department expects prices to remain low throughout 2016 and analysts suggest this will continue throughout 2017 — and perhaps longer.

As a result, we’re seeing deep reductions in the types of investments that have helped unlock our abundant shale resources while supporting thousands of good-paying Pennsylvania jobs. Fitch Ratings recently reported that weak natural-gas prices further “challenge Marcellus economics” and “may inhibit future production growth,” directly affecting Pennsylvania’s job and economic outlook.

This energy slowdown is being felt by tens of thousands of men and women who work for the more than 1,300 diverse Pennsylvania businesses that make up the shale-gas supply chain. One southwestern Pennsylvania-based small-business supplier told The Wall Street Journal last fall that it’s “in survival mode,” reflecting what others across the entire supply chain are feeling.

Despite these strong headwinds, we can weather the storm and emerge stronger if Pennsylvania seizes on the opportunities presented through expanded natural-gas development and use.

These difficult market conditions underscore the need for all stakeholders — industry, lawmakers and regulators — to work together to ensure that our commonwealth’s business climate supports continued investment and job growth, especially from a tax and regulatory perspective. In fact, there couldn’t be a worse time to raise energy taxes, as some propose, which would make it more difficult for Pennsylvania to grow shale-related small businesses, building trades and manufacturing jobs.

Our industry is as committed as ever to ensuring that natural gas’ benefits improve the lives of every single Pennsylvanian. With the right policies in place, we’re sure that this shared progress will extend for generations to come.

David Spigelmyer is president of the North Fayette-based Marcellus ShaleCoalition (marcelluscoalition.org).

Author: David SpigelmyerPublication: Pittsburgh Post-Gazettehttp://www.post-gazette.com/opinion/2016/01/29/Shale-hits-a-rough-patch-But-natural-gas-remains-a-boon-to-Pennsylvania/stories/201601290088