Getting the ‘Appalachian Gold Rush’ Right

Editor’s Note: Guest columnist Babe is president and CEO of Bayer Corporation and Bayer MaterialScience LLC. He is also a member of the “Marcellus to Manufacturing” task force formed by Gov. Earl Ray Tomblin. He is a native of New Martinsville.

The vast Marcellus shale natural gas deposits have become big news in the Appalachian states and the subject of much discussion among citizens, state and federal legislators and regulators. A recent issue of TIME magazine features an eight-page cover story on shale gas. The headline: “This Rock Could Power the World.”

Shale gas development has been likened to the California Gold Rush of the 1840s and ’50s. This century’s modern Forty-niners are working to develop one of the great energy finds of the last half-century: hundreds of trillions of cubic feet of natural gas trapped deep underground in shale layers. The Marcellus shale field – extending from southern New York, across Pennsylvania, and into western Maryland, West Virginia and Ohio – may contain as much as 500 trillion cubic feet of natural gas. It’s potentially the world’s biggest natural gas field. Realizing this great potential will require a balanced approach; one that takes into account community interests, the environment and long-term economic prosperity.

As a leading worldwide chemical company, Bayer MaterialScience has a big stake in the outcome. Natural gas is our lifeblood. It’s our main fuel. It’s also our main raw material – the starting point for the chemicals we produce that make modern life possible.

High natural gas prices can be a double whammy for the chemical industry. Several years of volatile natural gas prices have presented huge challenges. Shale gas leads to a reliable supply of natural gas at lower prices and promises to be a game changer for the chemical industry. What’s more, it yields greater availability of ethane, an essential petrochemical feedstock that is the basis for hundreds of manufactured products. And Marcellus gas contains an unusual amount of ethane.

Will shale gas, as the TIME cover asserts, “Power the World”? Probably not. Yet, the relatively cheap and clean-burning natural gas it yields could help address climate change issues, lower electric utility bills, reduce our dependence on foreign energy supplies and change the way we use energy to the great benefit of our economy. But shale gas is not an energy panacea. It’s not a choice between shale gas or nuclear or solar power; clean coal technology or wind; more off-shore drilling or more energy efficiency. Modern society needs it all.

There’s no denying that shale gas development can produce enormous economic benefits to our region. In fact, it already has. According to a recent American Petroleum Institute commissioned study, Marcellus production increased gross regional product for Pennsylvania and West Virginia by $4.8 billion, generated more than 57,000 jobs and $1.7 billion in local, state and federal tax revenue. Separately, a West Virginia University study determined that Marcellus production created 7,600 West Virginia jobs and nearly $298 million in wages in 2009 alone. Much of this success can be attributed to the natural gas producers themselves. But as Marcellus development expands and high-paying jobs become more abundant, a host of industries are attracted to our region. That means tax revenue to support state and community needs. Together, these factors spell out a bright, prosperous future for our region.

As long as we get it right. There is a flip side.

There are environmental concerns associated with the horizontal well drilling and hydraulic fracturing that unlocks the shale gas. All interested stakeholders are working hard to address them. Strict regulations on well and monitoring standards should help the benefits of shale gas development outweigh the risks.

Two things are certain: First, the Marcellus shale formation offers a tremendous promise of abundant natural gas to industries and consumers as long as it is managed and maintained effectively and responsibly. And second, everyone involved must be aware of their environmental responsibilities and be fully accountable for their operations. Developers must rigorously adhere to regulations, help develop safeguards and, whenever possible, initiate better technical and scientific standards. Industry and citizens must use energy more efficiently. And regulators must rely on sound science and take economic considerations into account.

Getting it right will require developers, governments, non-government organizations, regulators, industrial leaders and citizens to start a conversation and keep it going to everyone’s benefit. The great potential of Marcellus shale puts Appalachia in a promising position right now. The “Appalachian Gold Rush” is on, and our region can become a model of American energy ingenuity. Whether it provides heat in the winter, cool air in the summer or plays a key role in a complex chemical formula, natural gas from shale is increasingly putting America on a sustainable path to a more competitive and cleaner energy future.

We can get it right. Indeed, we must.