Lack of in­fra­struc­ture stalls nat­u­ral gas use

The Washington Times Daily - - Business - BY BENWOLFGANG

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.”

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