Fracking Once Lifted Pennsylvania. Now It Could Be a Drag. – The New York Times

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CARMICHAELS, Pa. — The last time the global economy was in free fall, an economic savior showed up in southwestern Pennsylvania. Energy companies, which had discovered a way to get at the state’s vast natural-gas reserves, invested billions of dollars in the region, cushioning the blow of the Great Recession.

“There were just so many jobs,” Debbie Gideon, a retired community banker, recalls. “It was crazy.”

But 12 years later, as the region braces for the coronavirus recession, natural-gas companies are much more likely to weigh on the local economy than to rescue it.

Even before the latest shock, gas operators were reeling from self-inflicted wounds. They had taken on too much debt and drilled so many wells that they had flooded the market with gas, sending its price into a tailspin.

To conserve cash, the firms have been frantically slashing investments, cuts that will pummel local suppliers and contractors. “Every time one of these slowdowns occurs, they beat down every vendor they can,” said Steve Stuck, president of Jacobs Petroleum in Waynesburg, which supplies diesel to the natural-gas operators.

And Mr. Stuck’s fuel business has ballooned in size over the past decade, an expansion that was in part financed by loans from Community Bank in Carmichaels. “We would never have been able to employ local people from local universities for good competitive-wage jobs,” he said, “It’s been unbelievable to see the impact. And we’ve been through three downturns.” He says natural-gas companies’ demand for his services has not yet dropped because of the coronavirus outbreak.

Residents in gas-producing counties have received royalties for allowing shale operators to extract gas from and run pipelines across their land. “A lot of people made money,” said Ms. Gideon, the former banker. “I was happy for them; they had scraped by for years.” And the copiously flowing gas has lowered utility bills.

But now the shale-gas operators are trying to adapt to a harsher environment. They have cut the cost of drilling and fracking, which involves forcing liquids into the ground at extreme pressures to release gas by fracturing rock formations. Moving vast quantities of sand, used to prop open the fractures, has become more efficient, and operators are saving money by sharing water.

If the gas companies go into a long downturn, many in the community worry that it might become harder to get them to pay for legal settlements, cleanup costs, and wear and tear on local infrastructure.

This content was originally published here.

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