Cleveland Fed Bank Report Addresses Boom & Bust in Shale Drilling
An analyst with the Federal Reserve Bank of Cleveland authored and released an article addressing the concerns over shale gas and oil development. The article, titled “Deep Wells, Deep Pockets, and Deep Impact” (full copy embedded below) purports to address the issue of what can communities do about the boom and bust cycle attached to any natural resource extraction process? We were excited to read what the Fed’s learned analyst would say about an important issue like this one. We were disappointed that he did a lot of problem identification, but offered little in the way of problem resolution…
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Lately it seems like a week doesn’t go by that a new pipeline project is announced. No one should be surprised, but of course we all are. It only makes sense: drillers have sunk a lot of holes in the Marcellus and Utica, and now all of that gas and natural gas liquids (NGLs) needs a way to get to market. The northeast alone can’t handle all of the gas and NGLs being produced. Yes, the ethane cracker plants will help with regards to ethane–but there’s still way more ethane that even the planned three cracker plants can handle. And way more methane (natural gas) than the northeast can absorb. How do you get it to market? With pipelines. The first thing pipeline operators do is pick the “low hanging fruit”–in this case reversing pipelines and using loops to increase capacity and change the direction of the flows. But according to the midstream companies themselves, the low hanging fruit is about all picked. Now it’s on to the higher hanging fruit–so-called “greenfield” pipelines that cut through “virgin” land. Below we have a very interesting quote about decisions that will soon be made impacting the rest of this decade, along with a very useful chart of pipeline projects…
Washington & Jefferson College, located in Washington, PA (Pittsburgh suburb) has a Center for Energy Policy & Management–which makes sense since Washington County, PA sits in the middle of the wet gas Marcellus drilling zone. W&J recently teamed up with the Washington, DC-based Environmental Law Institute (ELI) to study the “boom and bust” cycle that communities face with resource extraction like the Marcellus Shale. The thought was to produce a document–in this case a series of documents–that can guide local and state politicians as they plan for the future. How can, and even *can* a community avoid a “bust” after a huge boom? That’s what the documents aim to answer. The only problem is, the ELI seems to tilt anti-drilling, and the entire study was funded by Mamma Teresa Heinz-Kerry and her Heinz Endowments–a strongly anti-drilling organization. So you know where this is headed…