Shale industry's problem: An excess of success
Too much success is becoming a problem for Marcellus shale drillers.
Shale formations such as the Marcellus are producing so much natural gas that the nation's gas supply will exceed its demand by 2017, according to research released on Tuesday by Bentek Energy LLC.
The consultant said its models show production in Pennsylvania and Ohio will be eight times larger than the growth in demand during the next 10 years.
“We've had to pull back on some very profitable plays that just a few years ago were supposed to have tremendous growth,” said Justin Carlson, a Bentek analyst and Tuesday's keynote speaker at the 2013 Penn State Natural Gas Utilization Conference. “It is a substantial opportunity for end-users.”
The conference, in its third year, brought about 200 people to the Omni William Penn, Downtown, where Penn State officials and their industry partners could promote increased use of gas. After a full day of presentations, they had propane-fueled buses scheduled to take them to a reception in Market Square, which they filled with a display of natural-gas fueled trucks and vans.
Industry officials and boosters are trying to convince everyone that they can supply the cheap fuel for an energy revolution — if consumers would just prepare to buy it. As much as the Marcellus shale has produced, it's only a lack of buyers that's kept it from producing more, officials and analysts said.
Power plants and manufacturers are using more gas, but the country needs even more infrastructure if its drilling industry is to keep growing. Drillers have had to pull back in 2009 and 2012 as supply increases turned out to be more than the country could use, sending prices crashing, Carlson said.
“There's an education component” in pushing for new gas use, said Matt Henderson, shale gas asset manager at Penn State's Marcellus Center for Outreach and Research, which helped organize the conference. “We see it, we're used to it (in Pennsylvania). But around the rest of the country it's still new to a lot of people.”
When consumers start to believe is still a question. Many people in the audience were parts suppliers.
The Elliott Group in Jeannette wants to sell its compressors and turbines to the chemical arm of Royal Dutch Shell plc if it decides to build a multibillion-dollar petrochemical plant it's considering for Beaver County, Elliott officials said. If those kinds of developments happen sooner rather than later, it would be a big boost for business, said George Adda, the company's vice president for corporate marketing.
“I think (the new projects) are going to follow,” Adda said. “It's just ‘When?'”
Timothy Puko is a staff writer for Trib Total Media.