Friendly City Is Proclaimed ‘Dead Center’ of Gas Rush
WHEELING – With local wells producing enough Marcellus and Utica shale natural gas to support an ethane cracker, industry leaders believe the city lies in the “dead center” of an economic boom.
“Right here in Wheeling, you are at the dead center of all the activity,” said Rayola Dougher, senior economic advisor for the Washington, D.C.-based American Petroleum Institute, during a Tuesday information session at the Capitol Theatre. API represents more than 490 oil and gas companies.
“Wheeling is becoming a very important hub in the oil and gas industry because of the nearby ‘wet’ gas,” added Gastar Exploration Vice President-Northeast Michael Mc-Cown.
Among the estimated 50 people attending the invitation-only event in the Capitol’s ballroom were Wheeling Vice Mayor Eugene Fahey, Wheeling Councilmen Robert “Herk” Henry and Don Atkinson, Ohio County Commissioner Tim McCormick, Regional Economic Development Partnership Executive Director Don Rigby, Wheeling businessman Dolph Santorine, and several other area business and government leaders.
With his company producing gas in Marshall County, McCown said the local wet gas – containing the natural gas liquids of ethane, propane, butane and pentane, in addition to the “dry” methane – is the reason the area may get an ethane cracker.
“Fifteen to 17 percent of what our wells are producing right now is ethane. That ethane has to go somewhere. Right now, it’s just being sent to be burned off in New York,” he said, noting this percentage of ethane is high for gas wells as a whole, but normal for this area of the Marcellus Shale.
Right now, McCown said Gastar sends all of its gas to the Caiman Energy processing plant near Cameron.
Companies like Caiman, MarkWest Liberty and Dominion Resources strip the ethane and other liquids away from the dry methane part of the natural gas so that all the products can be sold individually. After the ethane is separated from the other substances, it must be shipped to a cracker or placed into a pipeline.
Caiman, along with Chesapeake Energy and Range Resources, plans to send some local ethane to Texas or Canada, partially because there is no cracker in the area now.
McCown also said the local drilling boom is not a “flash in pan,” noting that companies of all sizes, including global oil giants Exxon Mobil and Chevron, are now in the game.
“In West Virginia, we have been drilling through the Marcellus for 80 years, but we didn’t have the technology to get much gas out of it,” he said. “The new (horizontal) drilling technology allows us to drill into it to retrieve the gas.”
McCown also briefly addressed the issue of “split estates,” in which the person who owns the mineral rights under the ground is different from the person who owns the surface rights. This is often the source of contention because surface owners can lose their farm land if a drilling company decides to operate there to collect the minerals.
“Usually, the friction with the surface owner involves the fact that they do not get an economic benefit from the drilling,” he said, however noting that the mineral owner has the right to sell his or her property. “The law is well established.”
McCown also took issue with the idea of, as he said, “out-of-state workers” taking all of the gas drilling jobs. Some local union workers and residents have expressed concern with seeing many vehicles with license plates from Texas, Oklahoma and Louisiana traveling to and from drilling sites.
“I am glad we have out-of-state workers. Typically, they are bringing a skill set that is not yet here,” he said. “One of two things will happen: The out-of-state worker will train a local replacement – or, the out-of-state worker will move here.”
Santorine asked Mc-Cown and Dougher how West Virginia can see more investment from the industry when trying to compete with its larger neighboring states of Ohio and Pennsylvania.
“Look at the tax code compared to Pennsylvania and Ohio,” said Dougher. “You are in a beautifully situated position here.”