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Federal meddling in natural gas spurned

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On the Grid

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Wednesday, March 23, 2011

The federal government should not impose more rules on the state's natural gas industry, a Pennsylvania congressman said on Tuesday.

The state Department of Environmental Protection already is responsible for overseeing the industry and federal intervention could slow growth, U.S. Rep. Bill Shuster told industry executives at a conference in Pittsburgh.

Shuster, R-Hollidaysburg, Blair County, said the U.S. Army Corps of Engineers wants to impose more regulations and another level of permitting on natural gas pipelines. More than 150 natural gas wells in the state cannot be put into production because federal permits for needed pipelines have not been issued.

An urgent need for safety upgrades and the booming Marcellus shale drilling industry make Western Pennsylvania a hot spot for pipeline work.

"They will shut them down," Shuster said, if the federal government is allowed to add more regulations. "The state DEP will (oversee the industry) in an environmentally sound way," he added. Shuster heads a House subcommittee on railroads, pipelines and hazardous materials.

An expanded pipeline system to transport natural gas from wells to compressors and processing stations is crucial to the development of the Marcellus gas reserves in the state, industry representatives said yesterday.

About 1,500 industry representatives attended Hart Energy's Marcellus Midstream Conference at the David L. Lawrence Convention Center.

Although five of the nation's seven largest gas pipelines run through Pennsylvania, the state does not have a system of transmission lines -- essentially the city streets of the pipeline system -- to get gas from the wells to the interstate pipeline system, Range Resources Inc. CEO John Pinkerton said.

Range Resources, which has 1.2 million acres of Marcellus reserves under lease in Pennsylvania, has been drilling wells in the state for 25 years, but without big results. Only recently has it been able to exploit those rich reserves because the wells had been "stranded" without a nearby pipeline system, Pinkerton said.

The Marcellus play is producing about 2.4 billion cubic feet of gas per day, and that's expected to increase by about 400 percent in the next nine years.

Range Resources has joined with MarkWest Energy Partners L.P. of Denver to serve as the midstream operator for its gas.

MarkWest CEO Frank Semple said the company already invested $800 million in the gasline infrastructure in Pennsylvania to deliver gas from Range wells to the Columbia Gas Co. system. It initially looked at investing $300 million to $400 million for the midstream system, Semple said.

MarkWest, which has an office in Cecil and about 100 employees, has built a processing plant in Houston, Washington County, and a gas-processing facility in Majorsville, W.Va., along with four gas plants that separate propane, butane and heavy natural gas from the natural gas it delivers to Columbia, Semple said.

"We're trying to build an industrial-strength system to service the (Marcellus) play," Semple said.

MarkWest announced it will join with Sunoco Logistics Partners L.P. in Philadelphia to build a pipeline to deliver ethane liquid fuel from Marcellus reserves to MarkWest's gas-processing and fractionalization complex in Houston. It will be shipped to Ontario, Canada, through new and existing pipelines. The system would include the construction of a 25-mile pipeline from Houston to a Sunoco pipeline at Vanport.

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