Recently in Natural gas Category
I am getting this question - why do we need to develop bioenergy in PA since we sitting on a wealth of shale natural gas? My answer is a clear - we need multiple energy sources; one source won't solve all our problems. I also won't get into the fossil fuel energy vs renewable energy debate. However, if you convinced that natural gas will solve our problems take a look at this review. Its starts off:
" While there is the possibility that shale gas will allow US natural gas supplies to increase for a few years (or even 10 or 15 years), natural gas is only about one-fourth of US fossil fuel use, so it would be very difficult to ramp it up enough to meet all of these needs."Then the article details a litany of points:1. The US is a natural gas importer. It does not produce as much natural gas as it consumes.
2. The US supply pattern for natural gas has been quite irregular over the years.
3. In the absence of shale gas, EIA's forecast for US natural gas production would be a decline over the next 25 years.
4. The production of Canada, the US's largest source of imports, is declining as its own use is rising.
5. The much publicized report from the Potential Gas Committee relates to "resources". Much of these resources may prove to be too expensive, or not technically feasible, to extract.
6. If Texas experience serves as an example, shale production starts dropping fairly quickly after it starts.
7. Shale gas drillers appear to need higher prices than are currently available to make production of shale gas profitable.
8. High (and volatile) prices tend to depress natural gas consumption for industrial use and for heating buildings.
9. The amount of oil and coal consumption that needs to be replaced is huge in relationship to natural gas consumption.
10. There are a number of outstanding environmental questions.
Some of them are self explanatory. Read the article for more explantion. I think the issue of technology and extraction costs as we go deeper in the earth is big one. Its sobering, but adds to my ammunition when people ask me that question next time.
Its good to see a Hanger not hanging up (excuse the pun) the game but remaining active. Another slam on the article here. I'll leave it to you to decide but seems like some slack journalism.
Now let's examine the strange omission from the article of the independent review of Pennsylvania's hydraulic fracturing regulatory program done by STRONGER (see http://www.strongerinc.org/).
I'm wondering how many forest landowners getting royalty checks will say - "now I don't need income from timber? What is pretty clear is that gas has taken employees from the logging a forestry workforce. I hear many situations where workers go to the gas industry, not only because of the downturn in the the forest sector, but because they pay better. Do you blame them? I think this is something our lawmakers should be looking into. The question for them is how we maintain a viable forest industry in PA. We still have some of the most valuable forests in the world but we should be thinking about its future."Say hello to Pennsylvania's nouveau riche -- the Marcellus "shalionaires." It's better than any milk checks we ever got," said Bednarski, 52, of Avella, whose family has owned the farm since 1932. Today, he sells hay and breeds heifers. "It made farming more fun." Bednarski sold his 50 dairy cows when his family began receiving royalty checks in January 2010 from a lease his mother signed 11 years ago.
I've been looking at tax and fiscal implications over the last few years, writing an extension pub and facilitating some workshops. Just last week I was on a talk show discussing financial implications. You can listen to this show and more here.
My take has always been for everyone to be very cautious because of all the uncertainty. Perhaps the industry are too aggressive in pushing forward. Just imagine if we didn't have the recession to slow them down. But whose to slow them down? Are our regulators and politicians doing their job? My area of expertise is helping landowners make the most from their land use opportunities without degrading the land and planning for future tax and financial implications.
Some of the uncertainty landowners should be aware of include:
1) We don't know how much "proven" reserves there are under your property until they actually produce.
2) There are limited number of drill rigs - who knows when they will drill in your production unit?
3) Even if you have a lease who knows when they will produce and start pays you royalties. The industry may just drill and shut-in the well to hold the lease.
4) While a producing well may pay millions of dollars over its life, do you know what your share is - accounting for your royalty share, your acreage share of unit (see division of orders), post production expense deductions, etc? It may not be as big as you think.
In other words, it could take years to get a check. This issues require careful planning. Don't jump into a deal. Have a solid lease, know your rights and share of royalties, and most of all do tax and wealth management planning.
The Nature Conservancy came out with an important report entitled: Pennsylvania Energy Impacts Assessment Report 1: Marcellus Shale Natural Gas and Wind. Part 2 I guess will look at Woody Biomass and Transmission Lines. With respect to the gas part, I think the report is well done given all the assumptions. It's tough projecting this immature industry 20 years into the future. They come up with 3 scenarios: low impact with 6,000 well pads with 10 wells per site; medium impact with 10,000 well pads with 6 well per site; and a high impact scenario of 15,000 well pads with 4 wells per site. They find that each pad impacts an average of 8.8 acres of forest (including roads and other infrastructure). Total forest clearing is 33,800 acres (low scenario) to 83,000 acres (high scenario). They go further to suggest indirect impacts to adjacent forest interior habitats would total an additional 81,500 acres (low scenario) and an additional 200,300 acres of forest interior habitats affected (high scenario). To get this they assume the interior forest impact of 100 meters around the well pad:
"To assess the potential interior forest habitat impact, we created a 100 meter buffer into forest patches from new edges created by well pad and associated infrastructure development. For those well sites developed in forest areas (about half of the 242 total sites), an average area of 21 acres of interior forest habitat was lost."
That adds 21 additional acres of forest lost to the already impacted 8.8 acres = 30 acres/well pad - wow. This is where I may quibble - why 100 meters? However, I do like the fact that they distinguish intact forest tracts in discussing impacts:
"In contrast to overall forest loss, projected Marcellus gas development scenarios indicate a more pronounced impact on large forest patches. For example, over 20 percent of patches greater than 1,000 acres are projected to have at least one well pad and associated infrastructure located in them."
Yes, its more problematic to impact larger intact tracts then already fragmented areas. But, why not address the question of reclamation and restoration? Probably because we don't know how long the play will last or how long it will take for them to drill 10 wells/site? The take home message is industry can do a better job of well location to reduce impacts:
"Integration of conservation features into the planning and development of Marcellus gas well fields can significantly reduce impacts. For example, relocating projected wells to open areas or toward the edge of large forest patches in high probability gas development pixels in the southern Laurel Highlands reduces forest clearing by 40 percent and forest interior impacts by over a third."
I'd like to ask the authors whether they think 'forced pooling' can help smooth out the irregular well placements and reduce negative conservation impacts. My answer - yes.
How many jobs are local (ie PA residents)? Answer: Unclear.As to the latter I would say "lots" - especially from the forest industry labor force. Part of the problem is the recession confounds the situation - not many new jobs are not been created. The forest industry will recover, but in what form?
How many jobs are taken form other industries? Answer: Unknown.