Though many states in the Mid-Atlantic region are beginning to develop their Marcellus Shale Gas resources, it is likely that none will surpass Pennsylvania as the leader in production. The necessary equipment, wells, pipelines and other operating systems are already in place in PA, and it would prove to be an enormous cost to set up the same level of operations in other states. Fadel Gheit, an oil and gas analyst with Oppenheimer & Co. in New York City, commented on the topic saying, “The industry will always stay with what they’ve got.”
Not only is the physical system well established in Pennsylvania, but the regulations and operational procedures are also up and running. The fight continues in New York as a moratorium is still in effect for the controversial drilling technique known as horizontal fracturing—or “fracking.” Although North Carolina has recently passed Senate Bill 820 (a controversial bill that would allow fracking in the state) through an important legislative committee, the expanse of the reserves in North Carolina is much smaller than in PA. The regulations that NY and NC will inevitably impose are likely to be much tighter than those that already exist in PA.
In April, Bentek Energy reported that PA was leading the industry by producing 5.3 billion cubic feet of gas per day, with West Virginia in second producing 1.5 billion cubic feet. Pennsylvania is so far ahead in production that, according to another study done by Bentek Energy, there are enough partially drilled wells in PA that if no new wells were drilled for the next 16 months, production would still increase by 31% as these partial wells are hooked up. Associated Press tells us that in the last four years, over 2,000 wells were drilled, but not completed. It is vastly cheaper for a company to invest in these drilled wells and collect gas, than to drill new ones.
Furthermore, western Pennsylvania is soon to be the home of a massive petrochemical “cracker” plant that will convert liquid natural gas, or “wet gas” into other industrial and consumer products, such as plastics. PA’s dominance in the Marcellus Shale industry is likely to continue for at least a few more years, and the state will continue to reap the profound economic benefits. In his conversation with Associated Press, Fadel Gheit added that “for many companies, there’s less risk sticking with a state—and with regulations—they know.”