This week MDN asks a question about you, our valued reader. Do you live in the Marcellus or Utica Shale region? If so, is your land leased for drilling? Not leased? Or does the question not apply to you—either you don’t own land, or you don’t own enough to be worthwhile for drilling, or maybe you own a house inside of a city or village, or maybe you don’t live in the Marcellus/Utica region. I would like to take the pulse of those who are reading MDN on a regular basis.

Speaking of which, MDN has just passed another major milestone. There are now over 40,000 unique individuals who visit the site each and every month. Some visit more than once (some many times!), so the number of visits on a monthly basis is now 70,000. Thank you!

In addition, some hardcore people subscribe to receive MDN’s daily email alert (subscribe here) that contains the headlines for stories posted that day (Monday through Friday, plus Sunday). That number now stands at 2,300. Again, thank you!

Since there are so many new visitors, I would like to know a bit more about who is reading. One of the best ways of doing that is to find out if your interest lies in leasing your land for drilling. Please take a moment to vote on the right side of any page in the site. It’s completely anonymous.

Last Week’s Cracker Plant Poll & MDN’s Prediction

Last week’s MDN poll asked you to put on your prognosticator’s hat and predict where Shell will decide to build its new billion dollar ethane cracker plant. I asked you to refrain from boosterism and tell me where you think it will be built, not where you want it to be built. The overwhelming majority believe it will be built in Pennsylvania. After that, Ohio, and last, West Virginia. Let me tell you what I think!

MDN must depart from the wisdom of the the crowd and predicts it will be built in West Virginia. Please don’t mistake this prediction for cheerleading or preference. I believe having it built in any of those states is a fine choice. Let me tell you why I think it will be WV.

The plant must be located near the wet gas areas of the Marcellus and Utica Shales. That means either southwest PA, WV or eastern OH. No mystery or great brainpower there. The company building the plant, Shell, also has extensive lease holdings throughout the region for drilling. The plant will be operated by a different division than the drilling, but it’s still the same company. Here’s the relevant things I would consider if I were Shell:

• In PA, the largest city in the western part of the state is Pittsburgh—arguably the energy capital of the Marcellus and Utica Shales. Pittsburgh has banned drilling and has threatened communities upstream with “toxic trespass” from drilling in their communities—they are very threatening and menacing to their neighbors. They also have a U.S. Senator, Bob Casey, who has introduced federal legislation that would severely limit hydraulic fracturing and make what is a state regulatory issue a federal issue, i.e., it would trample states’ rights. If I were them, I’d find Casey’s incessant cheerleading to land my plant hypocritical to say the least. In PA’s favor, they did just pass new legislation that makes drilling throughout the state a bit less uncertain by limiting local zoning laws that apply to drilling, and their version of a severance tax (called an impact fee) is very reasonable.
• In Ohio, we have the Utica Shale, and it’s hot. We have a governor, John Kasich, who wants the plant badly and a legislature willing to grant Shell $1.4 billion in incentives to build it—that goes a long way. But Ohio also has a Republican attorney general, Mike DeWine, who seems to want to score political points by going after drillers who he claims are polluting, and he’s trying to deny a wastewater treatment plant a permit to operate previously granted (saying it was granted illegally). Will Mr. DeWine come after Shell in the future? It seems the leaders of Ohio are not all on the same page when it comes to drilling. Still, it has its appeals—that $1.4B is a big incentive!
• Then there’s West Virginia. This past year they passed new gas drilling legislation in record time. They’ve passed a law saying if Shell invests $2 billion in a plant there, they won’t have to pay any property taxes for 25 years, and taxes on machinery and equipment will be drastically reduced. They’re also willing to install short line railroads, new railroad bridges, and do just about anything else Shell needs to make a site perfect for their needs. And they’ve been courting Shell, nonstop, for more than year. All of their leaders are on the same page, the welcome mat is out, and the panhandle area is smack in the middle of the tri-state region where Shell wants to be. OH on one side, PA on the other.

That’s how I would think about the decision before Shell, and why I predict it will be West Virginia. Of course there are other key considerations, like a suitable site that can be obtained at the right price, major highways and railways nearby, close to the river. But if all of those factors are about the same, I think Shell will favor WV for the reasons I’ve stated.

Caveat: I have absolutely no insider knowledge. No tips from anyone. I have not spoken to Shell. I make my prediction based purely on speculation and reading, widely, about the issue. That’s it. So if it’s one of the other states, oh well! I’ll eat some humble pie. The bottom line here is, no matter where it’s built, it’s a huge win for everyone in the entire northeast.

Poll results: Where will Shell build its new cracker plant?

Pennsylvania (42%, 144 Votes)
Ohio (31%, 106 Votes)
West Virginia (27%, 93 Votes)

Total Voters: 343

Below are the most recent “top 5” lists and the calendar of Marcellus-related events for the next two weeks.

Happy reading,
Jim Willis, Editor

Read More “MDN Weekly Update – Feb 19, 2012: MDN Predicts Where Cracker Plant Will be Built”