It was billed as “The Philadelphia Story,” but the narrative took a different turn.
To be sure, Philadelphia state senators Vincent Hughes and Anthony Hardy Williams did turn up at the Pennsylvania Convention Center for a discussion of “Natural Gas and Public Opinion” in a workshop at the Marcellus Shale Coalition’s recent conference, “Shale Gas Insight 2012.”
But although the Coalition’s stated intention in bringing its second annual conference here was to acquaint Philadelphians with how the Marcellus energy boom benefits the whole state, much of the “Philadelphia Story” conversation centered on the efforts of a senator from the other end of the Commonwealth, Tim Solobay, to convince Philadelphia’s legislative delegation to support Gov. Tom Corbett’s bill authorizing “local impact fees” to support counties where drillers are working the booming energy development reshaping Appalachia’s economy.
The fees, since authorized by the Pennsylvania General Assembly, produced $197 million for the Commonwealth by early September, and are expected to top $206 million by year’s end. Portions of the state’s share of that money are to be distributed to municipalities across the Commonwealth, including Philadelphia.
Workshop moderator Solobay, whose 46th District spreads over parts of Allegheny, Beaver, Washington and Westmoreland counties and all of Greene County, had invited Hughes and Williams out to see for themselves what life was like in the poorer communities of Southwest Pennsylvania as the natural-gas boom ramped up. For the Philadelphians, that was an eye-opener. New approaches to hydraulic fracturing — “fracking” in common parlance — have brought accelerating development of Marcellus Shale resources, taking Pennsylvania from the bottom rank of natural-gas-producing states to near the top, second only to Texas, by the end of 2011.
Learning on the front lines
“I started out largely hearing about ‘fracking’ through documentaries and news reports,” Williams said. “I was not persuaded so much by Governor Corbett as by the real-life stories of people living in the ‘wasteland’ of Western Pennsylvania. I looked at the poverty in those communities and the jobs being produced, and that, more than anything else, persuaded me to support the impact fee.
“I voted ‘Yes,’ and got pilloried on billboards,” Williams said. But looking at what he saw — especially the rapid economic developments in communities that had been desperate pockets of unemployment and poverty — Williams was convinced it was the right thing to do.
“This, I think frankly, is one of Pennsylvania’s defining moments,” Williams said. “I think the news here (in Philadelphia) is dominated by narrow-band communications from people who think solar energy is the alternative energy source. But we are a Northeastern city.” He understood the environmentalists’ concerns about fracking and the potential of spills contaminating water supplies, Williams said, but in his mind, those dangers are “no different from the consequences of coal.
“To lead the country to miss this size of an opportunity,” Williams said, “is frankly irresponsible. This source of energy will have a positive effect. The benefits outweigh the negatives.”
Environment not neglected
“This is not an industry that’s looking for public relations nightmares,” Solobay said. The pipeline rights of way, and the well-pads they (gas producers) develop are creating wildlife habitat” as part of the developments, Solobay said. “This industry is probably more friendly to the environment than the people protesting realize.”
Perusal of the Shale Gas Insight Conference program booklet reveals that not only the Coalition’s daylong pre-conference meetings, but 15 workshops and presentations — half of all the regular conference sessions — were focused on environmental protection, safety, and regulatory concerns. One telling revelation was that, although shale formations are being drilled and fracked in many states, beginning with Texas’ Barnett Shale in 1985 and continuing with the Haynesville Shale spread across several Southwestern states, Pennsylvania is the only state where the gas producers are using special treatment plants to clean up the chemically treated fracking fluid once it flows back up the well bore, and re-using it to frack new wells.
Talking, but not listening
The protesters outside the Convention Center, arguing with arriving conference attendees about potential harm to Pennsylvania’s drinking water supplies, but with no representatives listening to the presentations inside, missed out on their opportunity for a full-bore discussion of whether the energy companies’ efforts actually were as well worked-out as the environmentalists would like.
State Sen. Hughes agreed with his western Pennsylvania colleague.
“We’ve got to move forward, helping people understand what shale gas means,” Hughes said. Getting the impact fee bill passed “was a pretty tumultuous process, especially here in Southeast Pennsylvania.
“Solobay said, ‘I want you to come out here and just see what this thing is all about’,” Hughes said. “I took him up on it — he did not believe I had jeans and work boots, but I did. Solobay put together a program so we could see up close — to the executives and the people on the ground. We shared and dialogued, and it opened my eyes in a number of different ways,” Hughes said. At dinner one night, people there asked, ‘why is there this contention?’ People in Southwest Pennsylvania experience this industry in their lives. In Southeast Pennsylvania, people don’t get a chance to touch it.”
Effects seen in utility rates
Solobay, for his part, noted that natural gas prices have fallen because of the Marcellus Shale development, producing a 48 percent decline in PGW rates. The availability of so much fuel, Solobay said, was cutting the cost of electric power across the state as well as cutting gas bills.
State Sen. Hughes said his experiences in the western part of the state had made him want to become more knowledgeable about the new energy boom.
“Not until you have that on-the-ground experience (do) you come to see what it means,” he said. We have to have an engaged conversation, and a thoughtful conversation,” Hughes said. “We (Southeast Pennsylvania) are 50 percent of the state’s economy,” he told Solobay. “You can’t ignore us. There’s always going to be a back-and-forth conversation about environmental issues, but the idea of getting people engaged is important.
“Southeast Pennsylvania has to be part of the enterprise, and not just users of the product.”
Not enough local leaders
That point might have been more easily made if more of Philadelphia’s community and government leaders been involved in the shale conference. Gov. Corbett spoke to a packed opening session at Shale Insight 2012, the second conference the gas producers have held in Philadelphia, but his audience was almost entirely made up of well drillers and pipeline builders, contractor companies of various kinds — some 300 counted on the exhibit floor — and representatives of law firms, investor groups and their business associates.
Philadelphia Mayor Michael Nutter spoke before another opening session, on the second day of the shale gas conference, but was not involved in its major workshop sessions. Ditto for Philadelphia’s City Council members, many of whom continue to express concern about the risks inherent in the use of chemically treated water — in large amounts — to “frack” underground rock formations to free up natural gas for harvesting. Their distrust has not been addressed.
Growth expected here as well
Several conference speakers, including Corbett, pointed to the Carlyle Group’s rescue of Sunoco’s South Philadelphia refinery, with its plans for a new, Marcellus Shale-gas-fired, 100-megawatt co-generator, new equipment to refine natural gas into petrochemical feedstocks, plastics and synthetic fibers, etc., as well as upgraded oil refining equipment to boost the refinery’s output of low-sulfur diesel fuel, which it exports to other countries.
That development, as well as the recently announced plans to bring 100-car trainloads of Utica Shale petroleum from Eastern Ohio to the Sunoco refinery and shale oil from Colorado and North Dakota also, will re-energize Philadelphia’s chemical manufacturing base. With more trainloads of North American oil headed for Delta Airline’s Trainer, Pa., refinery — and with still other trainloads of natural gas already rolling to Marcus Hook for processing and export to Caribbean countries and a “Mariner East” pipeline set to boost the flow by 2015 — that means this energy boom is as likely to prompt new economic and jobs growth in the Delaware River communities of Southeast Pennsylvania, as it is in the Commonwealth’s southwestern corner.
In other words, people in Philadelphia — and all along the Delaware river as well — are set to see expanding effects from the economic activity flowing out of the drill fields in Southwest Pennsylvania: refinery activity, re-invigorated manufacturing activities because of lower energy and feedstock costs, new port developments and increased river traffic, gushing out of the exploitation of the deep shale hydrocarbon reservoirs almost as fast as the hydrocarbon substances themselves pour out. In turn, that suggests Philadelphians can likely expect shares of the rampant jobs growth the Shale Coalition sees happening mostly in Appalachia — 200,000 new jobs by the state Labor Department’s most widely cited estimate — as well as increased contracting opportunities for small businesses here, just as is happening in Southwestern Pennsylvania.
That message was almost lost in the background noise, as the energy companies and their stock-market boosters celebrated another boom year in an energy development that, as state Sen. Williams said, has produced “a defining moment for Pennsylvania.”