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The New Gold Rush: Drilling for Gas

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By William Ecenbarger

 

The play began in the fall of 2003 in the Appalachian foothills of rural Washington County, Pennsylvania, when the business end of a drill began a mile-long journey through sedimentary rock deposits formed from the mud of shallow seas some 200 million years ago.

A Texas-based energy exploration company--Range Resources Appalachia, LLC-was gambling that new technology could tap into vast reserves of natural gas - known to exist for years, but considered prohibitively expensive to exploit.

The prize lies beneath a subterranean layer of rock known as the Marcellus Shale Formation, which embraces some 50,000 square miles and stretches from New York to Tennessee. 

Two years after the red-tipped drilling rig first soared into the sky from a rumple of green hills next to a farm field,  the well began producing - and the "play" (industry jargon for a promising group of exploratory fields) was on.

Today drilling company representatives with Southwestern drawls are knocking on doors and leaving voice mails with farmers, homeowners, municipalities, school districts and other landowners throughout much of Pennsylvania. They are dangling money - at previously unheard of prices -- to lease land for their rigs, which require drill pads as large as four acres.  

Bright-ribboned surveyor's stakes are sprouting like flowers in forests, fields, farms and backyards. They soon are followed by 150-foot high derricks with angled legs that make them look like giant insects. The landscape in these mostly rural counties is silhouetted with drilling rigs. Small Pennsylvania towns that had fallen into a stupor of decline and neglect are suddenly bustling with traffic and workers.Thumbnail image for Marcellus Shale Permits Issued 2009.jpg

The natural gas industry's hottest exploration area isn't in Texas, Alaska or the Gulf of Mexico. It's in Pennsylvania, where a modern-day Gold Rush is on.

Even the experts are surprised. "Who'd have thought that Pennsylvania would be a hot area?" ask analysts for Tudor Pickering Holt, a Houston-based energy investment banking firm.  

 

A long history

But some Pennsylvanians are not so surprised. After all, the state is considered the birthplace of the American oil industry. Edward L. Drake is widely credited with being the first man to drill for oil in the United States with his operation at Titusville in 1859. Oil and natural-gas development has been going on in Pennsylvania for 150 years. Natural gas storage, crucial to the nation's interstate pipeline system, was pioneered near Warren, Pennsylvania. The University of Pittsburgh and Pennsylvania State University were among the first institutions to offer petroleum engineering studies. 

The state happens to be at the heart of the Marcellus Shale, which in Pennsylvania is shaped like an arc that begins in the southwestern counties and extends north and east to include all of the northern tier counties to the Delaware River. 

The Marcellus Shale is estimated to hold as much as 50 trillion cubic feet of recoverable natural gas, but even if it ends up producing a fraction of this, it still will be the largest gas field ever in the United States.

An intense land rush is underway that already has made some landowners rich and others furious because they leased their acres too early for too little.

Stores are opening that specialize in drilling and gas production supplies. Lawyers are offering counsel to landowners on how to lease, and investment counselors are offering advice on how to maximize the windfalls. Vacant storefronts are reopening. Every diner has a roaring fire of conversation sprinkled with words like "sediment," "aquifer," "play," and "permit."

And the f-word--"fracking.

 

Drilling down

Fracking is short for a new drilling technique, called hydraulic fracturing, that was first tried in Texas in 2001 and has proven to be a viable means of extracting gas from deep formations like the Marcellus Shale. Before fracking, this gas could be reached only at great expense -- too expensive to justify the investment. Fracking has changed that.  In the process, a normal vertical well is drilled, and then the bottom of the well is gradually turned sideways until the well is horizontal. This runs parallel to the rock formation and allows greater surface contact between the well and the source rock. Water is then pushed into the well at high pressure and velocity in order to induce cracking in the rock surrounding the well. 

The formation, which was named in a report by the New York State Geological Society in 1839 after an outcropping was discovered near Marcellus, N.Y., was never considered economically viable until now.  "[S]hales have a very low permeability, meaning there isn't enough space between grains in the rock to allow the gas to flow to a well," explains the Paleontological Research Institution. "Therefore, companies went after oil and gas in rocks like sandstones, where it could flow like water to the well."

But the water used in the hydraulic fracturing is treated with chemicals to enhance its effectiveness. Not surprisingly, environmentalists are concerned about the effects of large water withdrawals on streams and aquifers in general--and in particular the risk to adjacent drinking water supplies posed by the chemically treated water after it is used.

Not only is the Marcellus a boon to local economies, it promises a taxpayers' bonanza both in tax revenues and because much of the property is public land owned by the state, local governments and school districts.

The play that has come to Pennsylvania could revive towns, create thousands of jobs and fill the coffers of local and state governments. But at what cost to the environment?

 

Part II, The Smell of Money: Drilling brings money -- and worries -- to the Pennsylvania countryside.

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