Shale Development Beyond Drilling

Posted: November 4, 2012

A look at other aspects of shale development

News stories have highlighted the recent decrease in natural gas drilling throughout the Commonwealth, with some suggesting the activity is drying up or stopping completely. Although the rig count is half of where it was at this point last year, there is just a shift in activities related to the development of the natural gas resource. The most recent DEP production data highlighted that 895 BCF of natural gas has been extracted over the first 6 months of 2012. These large quantities have flooded the market causing an oversupply of the resource and drilling companies are slowing down their drilling activities until the market catches up with the current supply.

The news show there is still plenty of activity related to shale development in the Commonwealth and surrounding states.   The first natural-gas fired power plants to use Marcellus gas will be built in Asylum Township, Bradford County, and in Clinton Township, Lycoming County.  The locations were strategically chosen due to their proximity to the shale gas supply, the northeastern electricity markets, and the pipeline infrastructure.  Moxie Energy, the Virginia-based energy development company is the developer of the plants, which will cost about $800 million each, generating enough power for 1.5 million homes. 

Natural gas processing plants separate the various hydrocarbons and fluids from the pure natural gas, to produce what is known as 'pipeline quality' dry natural gas.  Many of these products extracted are useful by-products.   Plans and permitting for natural gas processing plants have been in the news, as  the closed Sunoco refinery in Marcus Hook, PA has been eyed for a possible site, and Dominion is completing a processing plant  in Natrium WV by the end of the year.

Shell continues to assess the commercial feasibility of a petrochemical complex (often referred to as an ethane cracker plant) in the Beaver County area. This type of facility will use the by-product of ethane to break down into ethylene that will be used as feedstock for producing a variety of everyday products.

With the increase in natural gas availability, natural gas vehicle technology and natural gas to liquids conversion technologies are in the limelight.  This is further assisted with the new three year Natural Gas Energy Development Program outlined in Act 13 that will provide $20 million in grant funds available on a competitive basis to purchase or convert eligible vehicles to natural gas.

Shale exploration and development will continue, perhaps at a slower pace than what the state experienced prior to late 2008, but with the estimates of natural gas in the Appalachian area, companies will continue to pursue the capture of it.