Storage for liquified natural gas (LNG), improved infrastructure and sound public policy will catapult Pennsylvania forward in energy production and increase economic benefits for the commonwealth, stakeholders said during a recent roundtable discussion hosted by state legislators in Beaver, Pa.
The conversation, held by the House Majority Policy Committee, specifically focused on Marcellus Shale and the Shell Manufacturing Plant and included State House Speaker Mike Turzai (R-Allegheny), 10 House members from southwestern Pennsylvania, committee chairwoman Pennsylvania Rep. Donna Oberlander (R-Clarion/Armstrong/Forest), and U.S. Department of Energy Undersecretary Mark Wesley Menezes.
Executives from the energy industry also attended, including from Range Resources Corp., Marathon Petroleum Corp., the Marcellus Shale Coalition, PennEnergy Resources LLC, and the Pennsylvania Chemical Industry Council.
“This roundtable was a great opportunity to showcase our resources and industry partners to the undersecretary so that he knows Pennsylvania is open to attracting not only national but global companies,” Rep. Oberlander said last week.
In fact, Menezes said the Trump administration is working with the European Union (EU) to market energy resources there, including natural gas.
The EU, which is obligated to make emissions reductions as a signatory to the Paris Accord, is leaning on central and eastern European countries to close their coal plants and move toward natural gas, explained Menezes.
“That’s a great thing, however they now have increased tremendously their dependence on Russia as a source for natural gas,” he said, adding that it’s up to Russian whims on when to provide the resources.
So to ensure America’s LNG resources can be transported to Europe, Menezes said the United States has been meeting with EU officials on how to help improve the infrastructure stateside and abroad.
“It will be freedom gas that states like Pennsylvania will be providing if we can get our infrastructure in place here to have it exported there,” he said. “We are working diligently to open those markets and get infrastructure in place. Not only in Germany, Poland and France, but also in India.”
The same demand also exists here in the United States, especially in New England, the undersecretary said.
K. Scott Roy, senior vice president at Range Resources Corp., agreed.
Infrastructure to new LNG facilities is critical to meeting new demand, especially from Europe, said Roy, but there’s also a real opportunity for the commonwealth to also increase use and consumption in the Appalachian basin.
“Finding a way to get the product to New York and the New England states is critical,” Roy said. “Critical for them and critical for us. It cuts transportation costs, improves our thin margins by a little bit, but it really opens the door to the use opportunity and we’re desperate to see that here.”
Roy added that the future of the industry will be determined over the course of the next couple of years so the state’s General Assembly should ensure the right policy moves get made. He said the industry isn’t asking to be unregulated, but policy and regulations must be reasonable, consistent and clear.
Richard Weber, president and CEO of PennEnergy Resources, shared that sentiment.
PennEnergy Resources, a private equity-backed independent oil and gas operator focused on the Marcellus Shale in Pennsylvania, has made a significant investment in Beaver, Pa., over the last four years, pumping more than $300 million into the county in natural gas production.
“We hope to grow our company here and in other counties across the commonwealth,” Weber said. “We still have room to grow and get better, but we need to be in a cooperative relationship with those that regulate us.”
Oftentimes, Weber said state regulation has been used against PennEnergy Resources.
“Honestly, almost to force policy, which is painful. We’d love help with that,” he told the lawmakers.
Weber also said he thinks “it’s a crime that folks in New England, who are burning significant amounts of fuel oil to heat their homes, don’t have access to our low-cost resource right here in Pennsylvania.”
In addition to support from state legislators, Weber told Menezes that the company could use help from the federal government “to help us grow this industry and we will do it responsibly.”
Chris Koop, who handles government affairs for Energy Transfer Partners, said the company also has invested billions in pipeline infrastructure and in one LNG facility in the state. The company also looks forward to continuing to develop investment partnerships with Pennsylvania and with the federal government, he said.
“But I think it takes good public policy to make it an economic feasibility” to continue to grow such partnerships, Koop added.
In addition to such partnerships, better infrastructure and improved public policy, stakeholders said that liquid storage is needed in the commonwealth to sustain growth in the energy industry.
“I suggest storage is going to be a big problem for us in the next five to 10 years,” said Dave Ledonne, vice president at Marathon Petroleum. “I would ask that we continue to focus on storage.”
Ledonne said liquid storage in the state is at a disadvantage, forcing his company to utilize pipelines, railcars and trucks. “But there’s going to come a time when opportunities for storage are going to be needed to continue to sustain the growth,” he said, particularly as international interest grows.
Legislative issues in the state and between states should be resolved to make that happen, Ledonne said.
Following the roundtable event, participants toured the $6 billion Shell Manufacturing Plant construction site in nearby Monaca, Pa., where the plant will accept ethane from three pipelines from Marcellus Shale fields in Ohio and Pennsylvania and convert that through “cracking” molecules to make ethylene and further polyethylene for plastics, according to Rep. Oberlander.
“Undersecretary Menezes was impressed with the sheer magnitude of energy production in Pennsylvania and the ability to attract the Shell plant, which is currently one of the largest construction sites in the United States,” Oberlander said.
A thousand unconventional natural gas wells are drilled in an average year in Pennsylvania with most sites hosting multiple wells on a single pad, which ranks Pennsylvania second in the nation on natural gas production, but 13th on attracting energy investments, she added.
“We want to see family-sustaining jobs created out of the opportunities provided by the Marcellus Shale,” said Rep. Turzai. “In addition to the homegrown energy found within our commonwealth, the president’s policies have created economic growth that have also made a tremendously positive impact here.”
“We know we are a powerhouse as the Keystone State and already making a difference in our economy overall,” Oberlander said. “We know that we can do more to improve our regulatory climate and attract even more business and industry to our commonwealth.”