Natural gas industry thriving in county
April 24, 2013
Natural gas development in Butler County is thriving and is poised for more success through this year, according to gas developers. Pipelines and gas processing facilities are being built; educational programs are being implemented and being improved to train the work force, and even the composition of the gas itself is favorable. According to a state Department of Environmental Protection report in February, natural gas production in Pennsylvania averaged 6.1 billion cubic feet per day (Bcf/d) in 2012, up from 3.6 Bcf/d in 2011, about a 69 percent increase. That placed Pennsylvania fifth in the nation in natural gas production, and Butler County ranked 11th out of the state’s 67 counties in production. This year, the DEP has issued 39 drilling permits in the county, resulting in 27 natural gas wells, all of them “unconventional,” a term used for wells where hydraulic fracturing, or “fracking,” is used to extract the gas. In 2012, 107 drilling permits were issued in the county by the DEP, resulting in 72 wells being drilled throughout the year. Of those 72 wells, 68 were classified as unconventional. Rex Energy plans to drill 19 wells in the county in 2013, four of which already have been completed, according to Mike Endler, senior director of civil and environmental engineering for Rex Energy’s Appalachian Region. Overall, Rex Energy has about 60 wells producing gas in the county, Endler said. By comparison, Rex Energy’s other major operations area in the region in Ohio is scheduled to have only seven wells drilled this year. “Butler County remains Rex’s core operating area. We have a long-term commitment to the county and we’re very pleased with the results we’ve seen so far,” Endler said. XTO Energy, another of the county’s most active exploration and production companies, plans to drill about 30 more wells this year and complete miles of pipelines, said Lorie Jackson, a company spokesman. Steve Forde, a spokesman for the Marcellus Shale Coalition, explained what makes Western Pennsylvania, and Butler County in particular, attractive for natural gas development as well as an area with consistent job creation in the industry. “Because of the composition of the natural gas in our part of the Marcellus, it’s a wetter gas, so there are more opportunities to use it for manufacturing and other uses, rather than just heating and fueling. I think that positions residents of Butler County, and southwestern Pennsylvania in general, in a good place in the industry,” he said. “In Butler County, the reason we are seeing a more consistent level of production, despite gas being at historically low prices, is due to that composition. That all leads to more opportunities.” XTO also plans to open compressor plants this year in Jefferson and Forward townships, and it opened a liquids recovery plant in Penn Township on Thursday. Rex Energy will not open any facilities, since it has an agreement with MarkWest Liberty Midstream and Resources to gather and process all gas Rex produces in the county. “That’s the kind of infrastructure that’s necessary to get gas to market in different ways, another example that this is an industry that is not just about drilling,” Forde said. “We have seen, in a lot of areas in Pennsylvania during the past several years, there have been a significant number of wells drilled — 4,000-plus — and there is a need for some of that infrastructure, pipelines and processing stations.” While Forde said he cannot speak specifically to the development of infrastructure in the county, he said the presence of its construction is “an impact that cascades across a variety of industries.” One such industry is education, brought to the forefront Thursday when XTO Energy announced a $100,000 contribution to Butler County Community College to implement a Petroleum Technology Training Center. “That contribution underscores the longevity of this industry in Western Pennsylvania. It is closing the skills gap that exists in our work force and creating a steady stream of talent to benefit from our industry,” Forde said. “I’d say Butler County is one where we see industry activity increasing, more than other (Pennsylvania counties).” According to FrackTrack.org, there are 338 unconventional natural gas wells in the county, up from 235 unconventional wells at about the same time last year. The watchdog site, built from publicly available information, indicates the vast majority of wells operate responsibly, with just 41 violations reported across all wells, resulting in about $11,000 total in fines. Most wells that have been issued violations have received only one, while no site has received more than three citations from the DEP. As more wells are drilled, impact fee revenues for municipalities containing gas and oil sites are expected to increase, as well. Act 13 of 2012 authorized counties to impose the state fees on wells in both the Marcellus and Utica shales. More than $200 million in impact fees were collected statewide in 2012, with more than $2.2 million of that returning to Butler County. The county was allotted $897,340, while eligible municipalities in the county should receive a total of $1.3 million. The state outlines what uses impact fees may be directed toward, including infrastructure repair, enforcement of clean air and water statutes and emergency response training related to natural gas production from unconventional wells. Forde said that while there always are cases of municipalities whose residents may feel they received less money than they deserved, he applauds the system that’s been put in place to ensure fairness. “I think the (state) Public Utility Commission did a good job at the outset in outlining a specific timeline through which they’d go about collecting these fees and, on the other end, they gave a pretty specific list as to how municipalities may spend those funds,” he said. In addition to XTO Energy and Rex Energy, gas well operators in Butler County include BLX, William McIntire Coal Oil and Gas, Swepi LP, Wilmoth Interests, Range Resources and Snyder Bros. To view the DEP’s production reports for the county and see the specific locations of each well, visit www.depweb.state.pa.us, then click on “Oil and Gas Reports” under the Office of Oil and Gas Management section.