As infrastructure is completed, more efficient movement of gas to market to boost industry
Though the high-water mark for gas rigs may not be seen again, there is reason for optimism for those working in the natural gas industry here, according to David J. Spigelmyer, president of the Marcellus Shale Coalition.
Spigelmyer was in town this week for an editorial board meeting at the Sun-Gazette and an industry gathering at Pennsylvania College of Technology.
“There’s a bit of a cautious optimism in our industry,” Spigelmyer said. “Will we return to 111 rigs like we had back in 2011, the high water mark of where we were in development? I don’t think so.”
But there is optimism as a major hurdle is overcome, and that has to do with pipeline infrastructure that allows the industry to move its product to market, he said.
As that infrastructure is built, it should stimulate growth and bring back more natural gas companies to the state, Spigelmyer said.
Pennsylvania’s capacity for moving natural gas has been inadequate and caused prices to increase for natural gas companies. With new pipelines being built to efficiently transport the product to other markets, there is hope among insiders that the industry is at an uptick, he said.
Pipelines like the soon to be completed Atlantic Sunrise project, planned to connect Northeast Pennsylvania with Southern states like North Carolina and Georgia, will allow companies to transport gas farther and at less expense.
With the current capacity available to natural gas companies,
bountiful excess gas has to be stored and kept until it can be shipped, according to Spigelmyer, which keeps prices low for local consumers but discourages companies from coming to the state to drill.
“We have a reduction from the average price of natural gas,” he said, talking about prices in other parts of the nation.
When gas companies use alternative methods to transport their products, consumers pick up the brunt of the added cost, he said.
Spigelmyer also spoke about the industry’s continued fight with the state over a gas severance tax on top of the gas drilling impact fee.
Adding one tax on top of another, and then factoring in state’s corporate net income tax, will stifle Pennsylvania as an industry competitor, he said.
“The governor has discounted completely the proceeds of the impact tax and the approach is to slap one tax on top of another with the highest corporate net income tax in the country,” he said. “I think it renders us uncompetitive with other shell plays.”
Last month, the state’s Public Utility Commission announced that Lycoming County and its municipalities received $8.9 million out of $209 million distributed statewide from impact fee revenue.