Anti-Drilling/Fossil Fuel | Economic Impact | Industrywide Issues | Jobs | Pennsylvania | Statewide PA
Radical Enviros Cost PA $4B in Canceled Projects Last 3 Years
On Monday the Pennsylvania Senate Community, Economic & Recreational Development Committee together with the Senate Environmental Resources & Energy Committee held a joint hearing on consumer and economic impacts of failing to invest in Pennsylvania’s natural gas infrastructure. Strong views were aired. State Sen. John Yudichak, chairman of the Economic Development Committee shared a startling and disturbing fact…
Read More “Radical Enviros Cost PA $4B in Canceled Projects Last 3 Years”
Thanks to a sharp MDN reader/friend, we were alerted to a rather bizarre situation with the current issue of the Youngstown Business Journal. Once upon a time, the YBJ wrote encouraging (and accurate) stories about the Utica Shale industry and its many benefits in the Buckeye State. Lately, the YBJ has been taking potshots at the Utica, claiming it hasn’t panned out as advertised. Take the latest MidSeptember edition where two articles appear. One article boldly states that after 10 years there is “No Gusher of Jobs” in the Utica. Yet another article contradicts the first and states, “It’s Construction Jobs in Gas and Oil.” Bizarre.
Sometimes it seems like a full-time job running around and setting the record straight, correcting the outright lies and half-truths spun by the wacko environmental left. For example, shoveling up the messes made by the Ohio River Valley Institute (ORVI), a far-left, hyper-partisan, nonprofit organization. Last month ORVI peddled falsehoods at a hearing convened by the U.S. Department of Energy’s Office of Fossil Energy and Carbon Management which is conducting a study on the prospects for a petrochemical industry in the Marcellus/Utica (see 
EY, formerly known as Ernst & Young Global Limited, is one of the Big Four accounting firms in the world. The company is also a powerhouse consulting firm. EY published a new study yesterday called “EY US oil and gas reserves, production and ESG benchmarking study” (full copy below). In the study EY tells us what we already knew: That 2020, due to the coronavirus, was a waste of a year in the oil and gas sector. It was bad–really bad. The EY study puts some numbers to just how bad, including the shocking number that capital expenditures (capex) totaled $60.3 billion, 60% lower than 2019. Of the 50 companies studied they collectively drilled 41% and 32% fewer development and exploration wells, respectively, compared with 2019.
Oilfield services (OFS) companies are bouncing back. Oil and natural gas drilling is “ramping up as demand continues to hold on despite a global resurgence of coronavirus infections.” And that is “sweet music to the ears of oil-field services providers in the United States.” So says Dan Eberhart. He should know. Eberhart is CEO of Canary, one of the largest privately-owned OFS companies in the United States. He also serves as a consultant to the energy industry in North America, Asia, and Africa. Eberhart, writing on the Forbes website, says drilling and equipment contractors “are preparing for a multi-year upcycle on the back of recovering demand and rising commodity prices.”
A new report (full copy below) commissioned by the American Petroleum Institute (API) and undertaken by PricewaterhouseCoopers (PwC) has found the oil and natural gas industries directly or indirectly supported over 188,000 jobs in Pennsylvania in 2019, or 6.1% of the total share of commonwealth employment. Furthermore, the oil and gas industries produced $14.2 billion in labor income, which was 7.9% of the state total share, and had a statewide economic impact of $31.9 billion, for 9.7% of the state total share. The percentages for the impact of oil and gas on the West Virginia economy are similar.
In something of a strange twist, the Bloomberg News service is sounding the alarm that the world is headed for a shortage of natural gas. Bloomberg hates fossil fuels and anything to do with them. Yet they now sense an impending shortage of natural gas and it’s causing the Bloomies some existential angst. Bloomberg reports natgas prices in Europe have “surged more than 1,000%” since May 2020 with no end in sight. Earth to Bloomberg: Europe has no one to blame but themselves. They don’t want our “fracked gas.” Let them buy Putin’s pipelined gas at extortionist rates.
What’s taking the shale oil industry so long to restart drilling in a big way? Shale oil production remains some 1.4 million barrels per day (15%) below pre-COVID pandemic levels despite oil prices reaching near three-year highs of $77 per barrel since the start of this year. When you dig into the numbers it becomes apparent what’s happening. A lot of shale drilling is now done by big, integrated major oil companies–the Exxons and Chevrons and BPs of the world. Shale production from the majors is 68% below pre-pandemic levels. If you look at the output of smaller independent, non-publicly traded oil drillers, their production is only 2% below pre-pandemic levels.
It’s getting far more expensive to drill a shale well of any kind according to analysts at Citigroup. Inflation overall is on the increase. You can’t keep throwing trillions of printed, made-up money into the economy (a la “stimulus checks”) without the inevitable inflation happening. Too much money chasing too few goods and services equal higher prices, i.e. inflation. Citigroup says the inflation rate for the shale industry could reach 12% by the end of this year. That’s massive.
Ellen Wald is a senior fellow at the Atlantic Council’s Global Energy Center, and president of Transversal Consulting, a global energy and geopolitics consultancy. She is the author of “Saudi, Inc.,” a history of Aramco and how the Saudi royal family controls this multitrillion-dollar enterprise. Ellen is one of our favorite Forbes authors. She recently published a fantastic editorial in The Hill (rag targeting DC swamp dwellers). Wald writes that President Biden’s plan that commits the U.S. to reduce its greenhouse gas (GHG) emissions over the next eight years to about 50 percent of what they were in 2005 is “impossible, unrealistic and insufficient.”
In July 2020, PA Gov. Tom Wolf signed into law House Bill (HB) 732, a bill that grants tax breaks to companies willing to build brand new petrochemical plants in the Keystone State–plants that use huge quantities of Marcellus Shale gas (see 
Anecdotally it seems as though there has been less drilling activity in the Marcellus/Utica over the past year. Some say it’s due to the coronavirus pandemic. Others say there’s more to it than that. If you’ve tracked public announcements by drilling companies, they claim to have pulled back on drilling and won’t increase current levels of drilling even when/if the price of natural gas increases. Why? They must turn a profit, or investors leaving for greener pastures (pun intended). But is there really less drilling happening in the M-U today than say one year ago?
In July 2020, PA Gov. Tom Wolf signed into law House Bill (HB) 732, a bill that grants tax breaks to companies willing to build brand new petrochemical plants in the Keystone State–plants that use huge quantities of Marcellus Shale gas (see