19 November 2008
NEW YORK - Executives of drilling companies exploring a huge untapped reserve of natural gas say the economic windfall expected from the Marcellus shale may not come to pass if Pennsylvania doesn't get its regulatory house in order.
Industry officials complained Tuesday about a time-consuming and lengthy permitting process and cumbersome regulations that, on top of plummeting natural gas prices and the credit crisis, is making it difficult for them to operate in Pennsylvania.
"I have great hopes for what the Marcellus shale play might still hold for Pennsylvania. Unfortunately, my experience to date does not lead me to be very optimistic," Wendy Straatman, president of Exco-North Coast Energy Inc., told Republican state senators at a hearing in northeastern Pennsylvania.
She said the Akron, Ohio-based company has moved drilling equipment to West Virginia and delayed its plan to transfer a "significant number" of employees into Pennsylvania because of DEP permitting delays that are "unlike anything we have seen in any other state in which we operate."
Another executive, Scott Rotruck of Oklahoma City-based Chesapeake Energy Corp., the largest natural gas producer in the United States, predicted "ominous" consequences for Marcellus development if Pennsylvania's regulatory environment doesn't become more welcoming. He said the permitting process is easier and less costly in other states.
Sympathetic GOP senators pressed acting Environmental Secretary John Hanger for answers, warning that Pennsylvania can't afford to scare off an industry that has promised to create tens of thousands of new jobs.
The state needs to be "careful we are not killing the goose that's laying the golden egg," said Sen. Mary Jo White, R-Venango.
Hanger agreed that regulations need to be streamlined and said his agency is working on it, but added that most applications are processed within 45 days.
"There has to be a smart way to protect what we need to protect, and at the same time (prevent) a delay that really serves no purpose," he said. "I believe there's a learning curve here for everyone involved."
Part of the problem may be a lack of DEP manpower to cope with a record number of natural gas applications. The agency is on track to issue 8,000 permits in 2008, up from 2,000 in 1999, yet staffing in the agency's oil and gas division has remained stable at about 80. The DEP has proposed to raise fees on drilling companies to pay for additional staff to process applications and inspect wells.
The hearing at Misericordia University was called by the Senate Majority Policy Committee to explore the economic and environmental impact of drilling in the Marcellus, a layer of rock deep underground that experts say holds vast stores of largely untapped natural gas.
Industry executives also opposed a tax on natural gas that the administration of Gov. Ed Rendell has said it is considering.
"New taxes will stymie Marcellus development," said Ray Walker Jr., vice president of Range Resources Corp., a Texas-based oil and gas company with an office in southwestern Pennsylvania.