Lack of infrastructure stalls natural gas use
PITTSBURGH | With unprecedented amounts of natural gas in storage because of soaring supplies and plummeting prices, industry leaders and their political allies are mounting a major effort to find new uses to work down the glut.
Replacing gasoline in the nation’s automobiles is the ultimate goal, but building the necessary infrastructure — such as filling stations and a network of pipelines to move natural gas to metropolitan areas — remains a serious challenge.
“There’s a whole host of [natural gas] applications. It’s almost limitless. We just have to play a very quick game of catch-up to create those opportunities,” said Pennsylvania Lt. Gov. Jim Cawley, a first-term Republican, after a speech here Tuesday at the Marcellus Midstream Conference, one of the largest oil and gas business gatherings in the nation.
“Our biggest challenge right now is to get the infrastructure in place to get the gas to where the people are,” he said.
As the epicenter of the Marcellus Shale drilling boom, Pennsylvania has taken a lead role in that effort. Legislation signed into law this year provides tax credits and other incentives for both private businesses and local transit agencies to convert their fleets to run on natural gas. Several major firms, such as grocery chain Giant Eagle, have already done so. The company has also opened natural gas fueling stations at several store locations.
Earlier this month, General Motors announced plans to begin selling trucks that can run on either natural gas or gasoline. GM estimates that customers could save as much as $10,000 in fuel costs over three years. Those savings could rise as the price at the pump continues to skyrocket, whereas natural gas is now at about $2.30 per 1,000 cubic feet, a near-record low.
“We need to start embracing natural gas as the fuel of choice. This country has to acknowledge its advantages,” said J. Mike Stice, CEO of Chesapeake Midstream Partners, a subsidiary of energy sector powerhouse Chesapeake Energy. “We’re trying to get natural gas [vehicles] to be something you can buy right off the shelf from your dealer.”
Even though companies such as Chesapeake have cut back their investment in the Marcellus and elsewhere in recent months, production in Pennsylvania and elsewhere is still expected to rise over the long term.
“Pennsylvania today is producing approximately 2 billion cubic feet [of natural gas] every day. We project that by 2020, that could be as high as 17 billion cubic feet” per day, Mr. Cawley said.
Several major companies also recently announced plans to build a new pipeline from the Marcellus Shale south toward the District, bringing natural gas to major cities along the East Coast. A pipeline running to the Pittsburgh area is expected to come on line later this year.
But those investments have also sparked a backlash. On Tuesday afternoon, as conference-goers were headed back to their hotels, a group of 80 protesters called for an end to “fracking.” Short for hydraulic fracturing, the popular gas-extraction process has led to the massive increase in production in Pennsylvania, West Virginia and elsewhere and unlocked previously inaccessible fuel deep inside the earth.
“Our ultimate aim is to stop it. I personally don’t think it will ever be done safely,” said Diane Sipe, an organizer with Marcellus Outreach Butler, a protest group that’s taken aim specifically at the western Pennsylvania pipeline.
The company building the line, Dallas-based Superior Pipeline, and others concede that the public relations fight with detractors such as Ms. Sipe will continue for the foreseeable future.
“I don’t know how long the public can read the words ‘hydraulic fracturing’ preceded by the words ‘a controversial drilling technique’ without believing that there must be something bad going on here,” said Superior President Robert Parks. “We have a continuing PR battle that’s actually getting worse, not better.”