Monday, September 13, 2010

много Marcellus

Out of Penn State today is a different look at the economics of Marcellus Shale and the debate over a Pennsylvania Severance Tax.  See: Benchmarks for Assessing the Potential Impact of a Natural Gas Severance Tax on the Pennsylvania Economy, by Rose M. Baker and David Passmore

I think that report is a precursor to future work looking more specifically at the economic impact of Marcellus Shale development in Pennsylvania. 

On the topic of economic impact, I have been regularly getting questions about Marcellus Shale economic impacts in the region both from folks in town and those far away.  One recurrent question that usually comes with a presumption has to do with the manufacture of pipes and how Marcellus-induced demand must be impacting steel production here in Pittsburgh. 

So I thought it was interesting when I caught a news item that did indeed reinforce the idea that Marcellus Shale development is indeed impacting pipe demand... First I was going to say  not much of it seems to be from anywhere near here, but the Russian firm being talked about in that story, TMK, has acquired one plant in Ambridge which I am sure is getting a lot of new pipeline orders.  But the profits?  Sure looks like they wind us as rubles.

and this via the NYT is this: Obscure Regulator Hits Brakes on Northeast Shale Drilling Rush. Gotta wonder about "obscure regulators".  What I don't get is why there is a Delaware River Commission, but not an Ohio River Commission.  It's not like we are not shy about creating local governments out here.  I guess we are just opposed to government entities that could be value added.  Lots and lots of river issues that nobody is really addressing in anything other than ad hoc ways. 

12 Comments:

Anonymous The Wiz said...

A French co called Vallourec SA announced an expansion of its plant in Youngstown Ohio that would add 350 jobs at the steel plant to supply pipe for Marcellus gas.

news article here

I imagine there are other places like Wheatland Steel near Sharon that are getting pipe orders. Got to be lots more around the state as there are announced plans to add hundreds of miles of pipeline. Plus each well pad with six to eight wells uses 10 miles or more for the casing.

There are also companies like Global Fabrication in Dubois that are manufacturing pressure vessels, tanks and industrial piping for gas wells. They are working near capacity last I talked to them.

Monday, September 13, 2010 11:03:00 PM  
Blogger C. Briem said...

Wiz, you really are reading 24/7! Maybe you should start your own blog since you have so much to put out there and have so much research at hand. Just saying.

Not that you are not welcome here.. just seems such a waste to just have all that buried in comments on a random blog like this.

I guess the whole issue with steel pipe is not an issue here? Not to be parochial, but none of those places are in the Pittsburgh metro at all, nor even in the 10 county area. So a Cleveburgh story maybe.

Monday, September 13, 2010 11:13:00 PM  
Anonymous The Wiz said...

Thought about my own blog, perhaps this winter.

I know that a few people from Lawrence and Beaver counties will work in the Youngstown and Wheatland mills. And I feel reasonably certain that pipe mills in the 'burgh metro area will get orders too.

Bet the people at the Marcellus Gas Coalition would have an idea of pipe manufacturers in the area.

Monday, September 13, 2010 11:39:00 PM  
Blogger C. Briem said...

I bet. We certainly can use any help we can get since fabricated metals and foundry employment has been pretty much continuously down for the last couple of years.

No deal on your property yet?

Monday, September 13, 2010 11:54:00 PM  
Anonymous th said...

Still working on final language. That's more critical than the $$$

Speaking of dollars, the price has gone up recently in my area with more companies interested. Has to be the Utica.

Tuesday, September 14, 2010 9:10:00 AM  
Anonymous The Wiz said...

Last was The Wiz Don't no what happened!

Tuesday, September 14, 2010 9:12:00 AM  
Anonymous BrianTH said...

Given that in the greater scheme of things the severance tax really isn't that big of a cost for drillers, I'm not surprised they found a (small) net positive effect on the PA economy. It would be nice if that report undermined those who seem to be arguing that the goose that lays the golden eggs will be killed unless our tax rate is set at the very bottom of the current range in other states.

Tuesday, September 14, 2010 11:18:00 AM  
Blogger Jim Russell said...

FYI,

There is an Ohio River Commission.

Wednesday, September 15, 2010 6:00:00 PM  
Blogger C. Briem said...

Jim, I'll believe you over the media any day, but if it exists it seems to not make itself known very well up here:

http://www.pittsburghlive.com/x/pittsburghtrib/business/s_691883.html

I do now see: http://www.orsanco.org/

fascinating...

Wednesday, September 15, 2010 7:12:00 PM  
Blogger C. Briem said...

What a great existential government issue... is there an Ohio River Commission or isn't there. Is it a matter of semantics? From that trib article:

The Army Corps of Engineers, in a December study of the Ohio River Basin, stated that in order to prevent future conflicts over water issues, perhaps a multi-state river organization should be reinstituted. An Ohio River Basin Commission was formed in 1971, but never had regulatory powers.

Not every industry organization is gung ho about forming a new commission.

"Establishing another regulatory body doesn't immediately mean better environmental performance," said Kathryn Klaber, president of the trade group Marcellus Shale Coalition.

Wednesday, September 15, 2010 7:17:00 PM  
Blogger Jim Russell said...

Chris, Perhaps I need to look into the watershed political geography in play. The PA part of the Ohio River watershed looks fragmented (go figure).

As for the Susquehanna example, I suspect that has more to do with the vigilance concerning the Chesapeake Bay ecosystem.

I suspect the Delaware River situation has more teeth given the bark and bite of NYC's water supply security along with the wealth/power residing in the Delaware Valley.

Check out the following:

http://www.pecpa.org/files/downloads/PEC_HMPC_Testimony__14_May_10.pdf

At this time the Delaware and Susquehanna River Basin Commissions – created through multi‐state compacts – are active in addressing water management issues in response to Marcellus Shale activities. In fact, the Delaware River Basin Commission (DRBC) has issued a temporary moratorium on permit review and approvals until new regulations are established for the natural gas industry.

The western part of the state is covered by the Ohio River Valley Water Sanitation Commission, but that commission is focused on pollution abatement and does not regulate water use or quantity issues. While the Department of Environmental Protection (DEP) does require submission of a Water Management Plan in the initial permitting phase of well development, those plans are performed pursuant to general guidance and are limited in scope.

Wednesday, September 15, 2010 10:15:00 PM  
Blogger Jim Russell said...

I think the following article is best posted here:

http://www.businessweek.com/ap/financialnews/D9IDQRSG0.htm

It's more about the regulatory hole for the Ohio River watershed (in this instance, in West Virginia).

Quote of note:

"The industry representatives on the task force are:

-Mike Brownell, director of regulatory affairs for Oklahoma-based Chesapeake Energy Corp. and former chief of the water resources management division at the Susquehanna River Basin Commission"

Thursday, September 23, 2010 5:30:00 PM  

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