Even as drilling activity has noticeably declined, the natural gas industry will remain part of the area's economic landscape for generations to come, industry officials said at NEPA Energy Day in Scranton.
About 300 people turned out Thursday for the event designed to acquaint business and civic leaders in Northeast Pennsylvania with the process and opportunities of natural gas in an era when new drilling in the region is waning.
"My grandchildren will be working this shale play," declared Mike Dickinson, of gas pipeline company Williams.
Presenters said the lapse in drilling is part of the economic cycle of liquid fuels as capital and drilling rigs chase the most valuable resources available. Industry success in unlocking natural gas reserves from the shale caused prices to fall, dominoing into a drilling slowdown.
On the eastern part of the state, "dry" natural gas lack liquids such as ethane that can be separated out and sold. Rigs shifted to western Pennsylvania where "wet" gas, which contains the valuable liquids, can be separated and sold.
Many companies find themselves in situations such as WPX Energy, which used to have three rigs, each drilling about two wells a month. Those went to Westmoreland County, to wet gas. The WPX team in Susquehanna won't know until next year if they get any of those rigs back.
Slightly higher natural gas prices could bring that activity back to the dry gas areas, said Paul Smith of the America's Natural Gas Alliance. With natural gas trading at just over $4 per million BTU, it's creeping back up from lows of less than $3. At $5, the price offers a balance of economies for wet and dry gas production. At more than $5, dry gas areas get a noticeably better edge.
Other factors come into play, said Kathryn Klaber, executive director of the Marcellus Shale Coalition. Individual companies' financial circumstances determine where and how much they drill.
Local conditions, such as "protective rather then punitive" regulations, reduces barriers to drilling, she said. Pennsylvania has no gas extraction severance tax, which makes it unique among major natural gas-producing states. But imposing additional costs are another piece of the economics of drilling, she said.
"Rig count is dynamic and capital will be invested where it can reap the largest reward," she said. "We have to recognize that the industry can make choices."
Even with that slowdown, Pennsylvania natural gas production is robust. In 2012, Pennsylvania natural gas production accounted for 10 percent of the nation's total production. The region's natural gas benefits from its proximity to East Coast markets.
Over time, the important thing to have is the resource. The Marcellus Shale will be tapped over a long period of time, Ms. Klaber said.
The focus should be on the shortage of infrastructure, said Mr. Dickinson, noting that every well needs to be connected by pipeline to someone who will use it.
"It's not about rig count," he said. "It's about infrastructure - that's the bottleneck."
The day began with a welcome from Scranton Mayor Chris Doherty and later a keynote address from Secretary of Department of Community & Economic Development C. Alan Walker.
Marcellus Shale Coalition's John Augustine hopes the event gets people thinking about uses of natural gas for fleet vehicles or for combined heat and power systems.
Contact the writer: dfalchek@timesshamrock.com