Gas in­dus­try high on fu­ture, de­spite cur­rent low prices

The Washington Times Daily - - Nation - BY BENWOLFGANG

PITTS­BURGH| De­spite loom­ing fed­eral reg­u­la­tions and rock-bot­tom mar­ket prices, lead­ers in the nat­u­ral gas busi­ness are con­fi­dent the shale boom that’s helped re­vi­tal­ize economies from Penn­syl­va­nia to Wy­oming is only just get­ting started.

Com­pa­nies from across the sec­tor, from multi­bil­lion-dol­lar out­fits such as Ch­e­sa­peake En­ergy to small-town hard­ware stores, have gath­ered in Pitts­burgh this week for the an­nual Mar­cel­lus Mid­stream Con­fer­ence, one of the largest in­dus­try meet­ings in the na­tion.

It comes at a time of un­cer­tainty for oil and gas pro­duc­ers, who fear un­prece­dented reg­u­la­tory crack­downs from the Obama ad­min­is­tra­tion and have seen their profit mar­gins shrink as nat­u­ral gas prices have sunk to near-record lows.

“This is go­ing to be a huge year” for the sec­tor, said Andy Birol, a small-busi­ness con­sul­tant whose clients pro­vide prod­ucts to drilling com­pa­nies in the Mar­cel­lus Shale. He said 2012 could be the de­ci­sive year for the long-term fate of one of the rich­est known nat­u­ral gas de­posits in the world, stretch­ing from up­state New York as far south as Ken­tucky.

“Gov­ern­ment can’t make up its mind how, or if, it’s go­ing to reg­u­late” the in­dus­try, par­tic­u­larly the pop­u­lar “frack­ing” process for gas ex­trac­tion, he said.

Later this year, the En­vi­ron­men­tal Pro­tec­tion Agency will re­lease a re­port about the safety of the prac­tice, and many ex­pect the study to call for new rules and reg­u­la­tions that could greatly ham­per the in­dus­try. The agency is also un­der­tak­ing a study of air emis­sions from well sites, and will re­lease new pol­lu­tion-con­trol rec­om­men­da­tions in about two weeks.

Both re­ports could have a ma­jor ef­fect on com­pa­nies that have seen busi­ness boom over the past sev­eral years, and could make drilling in the Mar­cel­lus and else­where much more dif­fi­cult and ex­pen­sive.

But firms also count on the ebb and flow of the po­lit­i­cal cy­cle, and re­main con­fi­dent that the in­dus­try’s long-term prospects are promis­ing.

“I think that you’re go­ing to see at least an­other 10- or 15-year boom,” said Eric Jarvis, a man­ager with Ag­greko LLC, a power gen­er­a­tion and tem­per­a­ture-con­trol com­pany that rents equip­ment to drilling firms and other busi­nesses.

With an econ­omy still strug­gling to re­cover from the Great Re­ces­sion, Mr. Jarvis said po­lit­i­cal lead­ers and other crit­ics should take a sec­ond look at the eco­nomic shots in the arm a drilling boom can gen­er­ate.

“I think it’s very hard to ar­gue with the idea of com­mu­ni­ties cre­at­ing wealth of their own,” he said, re­fer­ring to the small com­mu­ni­ties out­side Pitts­burgh and else­where in Penn­syl­va­nia, some of which have trans­formed from near ghost towns to vi­brant hubs.

Pres­i­dent Obama and other ad­min­is­tra­tion of­fi­cials of­ten speak in glow­ing terms about the nat­u­ral gas in­dus­try and the eco­nomic im­pact it has had through­out the na­tion, but many in the in­dus­try, along with some Repub­li­cans in Congress, doubt their sin­cer­ity.

“The ad­min­is­tra­tion’s ac­tions ap­pear to be 180 de­grees apart from what the pres­i­dent’s rhetoric has been,” Rep. Andy Har­ris, Mary­land Re­pub­li­can, told The Washington Times last week. As chair­man of the House sub­com­mit­tee on en­ergy and the en­vi­ron­ment, Mr. Har­ris and his panel is charged with keep­ing tabs on the EPA and its grow­ing reg­u­la­tory foot­print.

Those rules, he said, are rooted in Mr. Obama’s “ties to rad­i­cal en­vi­ron­men­tal­ists” who want noth­ing more than to see the oil and gas sec­tor brought to its knees.

“It’s a thinly veiled at­tempt by the ad­min­is­tra­tion to put a stop to fos­sil-based fu­els,” Mr. Har­ris said.

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