Texas In Between

"Climate is gone," and other thoughts from last week's natural gas drillers convention.

by Matt Stroud

[ gas problems ]

Last Wednesday, with election results fresh in everyone's mind, Karl Rove, the Bush Svengali-turned-Fox News commentator, headed to Pittsburgh to deliver a luncheon address at the Developing Unconventional Gas East (DUG East) conference, a confab of those interested in extracting natural gas from the Marcellus Shale. At a podium inside the David L. Lawrence Convention Center — a 1.5-million-square-foot, one-size-fits-all exhibition giant on the southern shoreline of the Allegheny River — Rove delivered his canned address, one of a handful of speeches he's recently given to political and business groups across the country on such topics as "What changes in Washington mean for business." He told the nearly 2,000 attendees what they probably expected to hear. President Obama is bad for business, and bad for America. Rove received three standing ovations before he was done.

But Rove's main point — or, rather, the point that seems to make the most sense here, the day after Republicans swept to power both nationally and in Pennsylvania — was about the commonwealth's potential as a gas-drilling bonanza: He quoted James Carville's well-worn statement that Pennsylvania is "Philadelphia and Pittsburgh with Alabama in between," but then amended it. "It's starting to look like Philadelphia and Pittsburgh with Texas in between."

He wasn't just pandering to the Texas-based company men sitting before him, who would like to drill Pennsylvania's Shale and state forest lands as they've drilled Texas for oil and gas for decades. This was also a peek into this state (and perhaps this country's new reality). As Rove put it: "Climate is gone." He meant climate-change legislation or gas drilling regulation in the new Republican House, but it was an eerie statement nonetheless.

Over the last few years, the Marcellus Shale, an ancient rock formation spread throughout New York State and Pennsylvania, has become ground zero for natural gas drilling: Drillers, of course, see dollar signs. Politicians see it as a multi-billion-dollar boon to our stagnant economy. Environmentalists, meanwhile, fret about how that gas is extracted from the earth — a process called hydraulic fracturing, or fracking, which involves the injection of polluted water and sand into earth to loosen the dirt and allow drillers access to the gas reserves beneath. Mistakes can lead to leakages of the polluted fracking water; newspaper accounts and state regulators have documented thousands of instances in which drilling companies failed, ignored or otherwise violated state regulations, with potentially dangerous consequences. The recent HBO documentary Gasland showed a man who lives on farmland where gas drillers are fracking holding a lit cigarette lighter to water spilling from his kitchen faucet; after a few seconds, the water bursts into a ball of flame.

But here, mentioning that film doesn't draw much response. If anything, it's taken as an excuse to end a conversation.

The DUG East conference is primarily a place for firms to hawk their services to drilling companies — industrial lubricants, water purifiers, etc. These would-be contractors are here to sell and network, and if all goes right, to make a bunch of money for themselves and their companies. And so, environmental regulation is the last thing they want to discuss. Unless they want to discuss why environmental regulation does not make sense.

Simon Rosenberg, for example, is a Pittsburgh-based investor. He's here to evaluate whether the major gas drillers — the publicly traded ones like Range Resources, Consol Energy and Atlas Energy — are worth his dollars.

"All the concerns about water tables being affected by fracking just seem incredibly overblown to me," he tells me. "I suppose [ Gasland ] made certain people sure there is this supposed risk [to Marcellus Shale drilling], but honestly, the way I look at it is that this is going to happen. It's not going to stop. Money talks, you know? People are going to drill because they can make a killing. And that's just not something I can justify passing up."

This view is not unusual here. Nor is the idea that gas drilling has an altruistic quality. The case goes like this: We want to get off foreign oil, so why not tap this ocean of natural gas just under our feet?

Two Dallas-based contractors who specialize in producing gas lines that take natural gas from Appalachia to other parts of the country told me (on the condition of anonymity) they couldn't see any reason why any local government would bow to "paranoid hippies" who "don't know the first thing about how this business works."

John H. Pinkerton, chairman and chief executive officer of the Fort Worth-based Range Resources — which, according to its website, controls 8,052 wells, 4,000 miles of gas-gathering lines and 2.3 million acres in the Appalachian basin — takes this argument a few steps further: "For the last 60 years, our energy policy has been to get all our energy from the Middle East," he says during a Q&A session the day after Rove's speech. After some philosophizing, he gets here: "When the guys in the Middle East decide they want $200 for a barrel of oil — and I guarantee you that when the economies turn around, you're not gonna see a barrel of oil go for $80 or $90. It's gonna go up in leaps. And when that happens, we as a nation need to say, ‘No, thank you, we'll go power our cars with natural gas.'"

Pinkerton and his colleagues aren't modest with their intentions. The goal, they say, isn't just to make some money while the getting's good, but rather to change the way America thinks about energy policy altogether: "[Marcellus Shale drilling] is good for America," Pinkerton says. "It creates jobs. It's cleaner. And I think that a lot of people don't understand that this is current technology. We're not wishing that things work. We don't know how big the Marcellus is. We know it's a giant field. We don't know if it's a super giant. And it's not that we need to come up with some new technique and make it work. It's just that we need to drill more wells."

On this point, Pinkerton is crystal clear: He's in Pennsylvania because Pennsylvania has been a driller-friendly environment. To date, ours is the only major drilling state without a tax on gas extraction, and Gov.-elect Tom Corbett — to whom the gas industry gave more than $1 million — opposes any such taxes, despite the state's perennial budget woes. Corbett may also reverse Gov. Ed Rendell's recent executive order placing a moratorium on gas drilling in state forests. Were Pennsylvania to become less driller-friendly, Pinkerton says, Range and other companies might leave the area.

This argument strains credulity: The industry stands to rake in billions of dollars in coming decades from drilling the Shale; while a severance tax may lessen their profit margins, the idea that drillers would simply pull out — when every other gas drilling state has such a tax in place — is a bit hard to swallow. That said, with the incoming Corbett administration and both houses of the state legislature run by Republicans, it's unlikely the state will test that theory anytime soon.

"I'm cautiously optimistic," Pinkerton says. "I think the new [Corbett] administration will take a very constructive, commercial, diplomatic approach to it. And hopefully we'll come out with something that's good for the state that's also good for the industry. Because ultimately what's good for the industry is going to be good for the citizenry."

(editorial@citypaper.net)