PA’s Inept Government is Holding Back the Marcellus Shale

MDN is pleased to bring you another guest post from our very good friend Chris Acker. Chris is MDN editor Jim Willis’ right arm when it comes to scanning for stories, something Jim is profoundly grateful for. Chris is a geological engineer with an MBA. He grew up in the oil fields of Venezuela where his father, a petroleum engineer, was a drilling contractor for all the major players, onshore and off. Chris’ interest in energy economics and policy found him working for Exxon, Petroleum Industry Research Associates and Petroleos de Venezuela. He bought a parcel of land in the PA countryside twenty-five years ago and later semi-retired to work on antique pianos (see A few years ago, it was found that Chris’ property in Susquehanna County sits atop one of the Marcellus shale’s most prolific areas. He leased with Cabot Oil & Gas and has a well sitting off his front porch not more than 200 yards away. Chris is now happily engaged once again in energy economics, with an emphasis, naturally, on gas. He splits his time between Montrose, PA and Savannah, GA. Chris’ two “home states” of Pennsylvania and Georgia recently got him thinking–comparing and contrasting what he sees in both locations–which led him to pen the following guest post that takes aim at PA’s inept (Chris’ word) state government and how it is mismanaging the biggest gift it has received in generations: the Marcellus Shale…

The following guest post by Chris Acker is cross-posted on MDN’s sister site, Natural Gas Now.

Business-Friendly? What A Difference A State Makes!

Wow – what a world of difference. I’m Pennsylvania through and through, but do manage to spend some winter months in lovely Savannah, Georgia. Most of you may think historic buildings and moss-draped oaks, but there’s more to it. The region is an economic dynamo.

Contrast this with Pennsylvania’s lumbering economy and dysfunctional budgeting process. I was reading an article in the morning news and it got me to thinking what a difference a state makes when it comes to ability, attitude, efficiency, business-friendliness and so much else, particularly when it comes to matters of energy.

More to the point, why Is Georgia perceived as pro-business and Pennsylvania as anti-business?

Savannah’s container port is the fastest growing in the US and second largest on the East Coast. Georgia’s Brunswick terminal, to the south, is a huge auto port (emphasis added).

“The port’s proximity to open ocean, its expansive and expandable capacity, the connections to our inland supply chain, award-winning auto processors and – perhaps most importantly—the complete alignment between state and local government on finding business-friendly solutions for shippers makes the Port of Brunswick an easy choice.

Sadly, the opposite is true for Pennsylvania, as detailed in this scathing editorial by a leading business developer and highlighted in and excellent Marcellus Drilling News post. Essential reading for all citizens and especially politicians.

“Pennsylvania has cultivated a reputation for decades as a venue unfriendly to business investment…”

And, from Site Selection Magazine, Georgia is ranked number one. Pennsylvania is nowhere to be found as they don’t bother to list the bottom half. And Philly is wooing Amazon for its new headquarters. They’ll win when a sparrow flies to Mars with the Washington Monument tied  around its neck.

Here in Georgia, it is inconceivable the legislature would perceive one of its strongest and fastest growing industries could be likened to a ripe fruit for targeted taxes—ready to squeeze and funnel the juice to the children, or in reality, teachers’ unions and bankrupt pensions.

But yet, that is exactly what Gov. Wolf through the dysfunctional legislative process has been trying to do to the one shining star in the Pennsylvania economy; its energy industry.

Here are few additional things to think about as we ponder what’s wrong with the Keystone State. It could be much worse, of course. We’re not the Empire State, not yet anyway.

  • Pennsylvania’s credit rating is in the lower 20% – thank you Illinois and New Jersey keeping us off the very bottom. Georgia, on the other hand, has consistently rated “AAA” for decades and is among the top rated states.
  • The Georgia legislature meets for 40 days per year, despite have only a quarter less people than Pennsylvania and quarter more land. Salary – $17,000. Pennsylvania boasts a bloated legislature, the largest in the nation, and meets more or less full time. Of course, this requires a base salary of $85k with bennies up to $135k. Other budget-challenged states with full-time legislatures – CA, MI, NY, IL.
  • Pennsylvania has lost exactly half its Congressional representatives – from a peak of 36 in 1910 to 18 today – as population moved south and west. As Pennsylvania stagnated over the decades, the Commonwealth earned the dubious distinction of being number one in representational loss.

These facts notwithstanding, Pennsylvania has a miraculous new industry that came out of nowhere over the last ten years – natural gas.

The numbers are staggering, and I find it inconceivable that political leaders in Harrisburg generally cannot comprehend the concept or magnitude of the resource. They continue in petty infighting, budgetary squabbles and an inability to see past their parochial noses.

For instance:

  • The Marcellus/Utica formation has the largest known natural gas reserves in the Western Hemisphere, perhaps the world.
  • These formations currently produce 26 billion cubic feet of natural gas per day, about one-third of total US production. This could supply all of Europe. The crude oil equivalent in energy terms is about 4 ½ million barrels per day, enough to make it the second highest OPEC producer after Saudi Arabia.
  • Pennsylvania produces about 15 bcf/d, 20% of total US supply, and enough to supply all of China’s gas needs.
  • Susquehanna county alone produces about 4 bcf/d, enough to supply all of France.
  • The US is poised in the next few years to become one of the world’s top three LNG (liquefied natural gas) exporters, an astounding turnaround from a few years back when it was thought the US would be forced to import gas supplies. Much of this volume will come from the Marcellus region and has consequential political and global ramifications.

So, there you have it. Georgia is booming with a part-time, reasonably competent state government. Pennsylvania has again, through fortuitous geology, become an energy powerhouse. The state legislature, maddeningly inept, seems determined to impede this resource cornucopia for whatever perverse reason—incomprehensible to any pragmatic observer.

Chris with his two best friends