We’ve come a long way. Two years ago, the theme of natural gas and energy conferences was drilling and production and the issues, challenges and opportunities. Now, the talk has all moved downstream. From petrochemicals to exporting to transportation fuel, the focus for many is now how to use all this gas we are pulling out of the ground. And by using the fuel, it can boost the economy by encouraging more drilling and building the infrastructure needed to move the gas. “Before it was all about drilling and fracking and compressor stations. But now it’s capturing the downstream opportunities. This is unprecedented development,” said Marcellus Shale Coalition CEO Kathryn Klaber at the opening of the Energy Inc. Conference and Trade Show. “We have a lot of resource here and how we take advantage of it and the entrepreneurial opportunities will dictate how we take advantage of this opportunity.”
Energy Inc. was held Tuesday at the David Lawrence Convention Center in downtown Pittsburgh. Klaber noted the conversation around natural gas development in southwestern Pennsylvania has changed moving away from the wellhead on both the industry and environmental side. She described how the coalition’s latest conference in Philadelphia went from having hundreds of protesters in past years to just a handful this year as environmental groups and industry are finding ways to talk and even work together. One of the biggest opportunities for the state in terms of downstream development is likely the transformation of the Marcus Hook refinery in Philadelphia and other projects likely for Philadelphia’s industrial complexes.
Another related area of growth is in midstream companies like MarkWest building the infrastructure needed to separate natural gas liquids that can go places like Marcus Hook. MarkWest has 22 projects planned in the Marcellus region. There was also talk of the possibility of growing a petrochemical industry here based on Shell’s proposed ethane cracker in Beaver County. Shell’s proposal is by no means the only petrochemical project in the pipeline to take advantage of cheaper natural gas feedstock. For ethylene (which would made at an ethane cracker) there is 10.1 million metric tons of new capacity planned by companies, she said. “The vast majority of new capacity, 85 percent, is in the Gulf. For that plant to come to Beaver County that would represent a huge shift in where the chemical industry is doing its work,” she said. However, she noted though it would be an outlier in the industry the company is considering the site for a reason. “It would be completely transformational,” she said of the project. “The longer they are continuing to look at it I think we see it as a good thing.”
On top of industrial or export uses of U.S. natural gas, Bob Beatty, president of “O” Ring CNG Fuel Systems urged attendees to examine the opportunity in using compressed natural gas as a transportation fuel. Increasing the use of CNG vehicles will require building out infrastructure as well as the vehicles themselves and that is an opportunity for businesses, he said. CNG only makes up 3 percent of vehicle fuel market. Beatty is realistic and doesn’t see natural gas taking 100 percent of the market, but instead sees 20 percent as a healthy take. Right now there are 340,000 places to buy gas and diesel in the North America, he said, and less than 1,500 are public CNG stations. Just to boost CNG stations by 10 percent means building 3,400 new stations. In his company’s case, Beatty said he uses local suppliers and vendors to build the stations he works on. “There is a piece of the pie for everybody,” he said of this downstream development. “We can create an energy infrastructure that can revolutionize our tristate region and across the country.”
The majority of the morning’s speakers focused on the oil and gas segment of the region’s energy sector. But John Pippy, CEO of the Pennsylvania Coal Alliance, was on hand to say that despite rhetoric, it isn’t an us-vs.-them mentality between the two fuels. “The pie is so large can have (both) industries and deal with environmental challenges and have everyone involved in Pennsylvania and U.S. energy sector,” he said. The reason he said is the global growth of energy demand, not only in developed nations, but in countries like India and China that are going through their own urbanization changes. Just in the U.S. the Energy Information Administration estimates in the next 20 years, the U.S. needs 20 percent more energy. Coal should be a part of that, he said.