This Rock Could Power the World

Just in case you hadn’t heard, Marcellus Shale is officially a big deal.

This black shale rich in natural gas captured public attention in 2004 when Range Resources Corporation drilled the first Marcellus well in Washington Country, Pa., using modern drilling technology. But is has more recently become the subject of national and international headlines – including the cover of the April 11, 2011 issue of Time magazine.

As Marcellus Shale is being developed into one of the world’s largest natural gas fields, it has triggered debates about the environmental, social and economic impacts of the drilling activities necessary to harvest the gas. Nowhere have these conversations been heard more than in Pennsylvania, where in 2010, the number of wells drilled rose to 3,314. (In 2007, only 71 Marcellus Shale wells were drilled in the state, according to the Pennsylvania Department of Environmental Protection.)

We thought we’d take the opportunity to offer a bit of a “Marcellus Shale 101” for our readers. Our goal is to introduce you to Marcellus Shale, the technology used to harvest the natural gas, and the potential economic and environmental impact the industry could have on communities and the state. We were fortunate enough to have Scott North ’85, whose family owns land on which natural gas drilling has occurred, contribute to this story.

What is Marcellus Shale?

Sedimentary rock makes up about five percent of the Earth’s surface, according to Assistant Professor of Earth Sciences Bill Kreiger, Ph.D., and about 80 to 90 percent of the surface sedimentary rock is a type of shale, a fine-grained rock. “Particles weather from surface and near-surface rocks, and they accumulate in very thin layers in a variety of environments, primarily in water environments,” Kreiger said. “The small sediments can be compacted or cemented together to form shale rock.”

Shale rock is also composed of minerals, mostly clay, along with mica flakes, quartz, and very small pieces of pre-existing rocks. Along with these fragments, organic material can be found in small, interconnected pore spaces within the shale. “This organic material weathers chemically and physically, forming gases and solid carbon materials: coal and natural gas,” Kreiger said.

The Marcellus Shale/Utica Shale is the name of the rock formation found primarily in the northeastern Pennsylvania region and in southeastern and central southern New York. It is of the Devonian Period Geological Age, according to Kreiger, formed approximately between 400 million and 350 million years ago.  

Like many other scientists, Kreiger has been familiar with the Marcellus Shale for several decades although “it was recognized as a possible source for fossil fuels for many years before that.” In the mid-1970s during the energy crisis, he was among a group of educators gathered by the administration of Pennsylvania Gov. Dick Thornburgh to prepare books about utilizing alternate energy resources for teachers and students. “This was done for every grade level and each subject to bring attention to the need to invest in and produce water, wind, solar, and nuclear power,” he said. “This effort also brought to light the energy in oil shale, which included shales like the Marcellus/Utica Shales.”

The Marcellus/Utica Shale is believed to contain more than 350 trillion cubic feet of recoverable gas in Pennsylvania, according to Kreiger. “Researchers say the amount of recoverable gas would be equal to nearly four times the total oil reserves in the United States.”

Why wasn’t this energy source considered before now? Economics, Kreiger said. “This still is a constraint, but energy is needed, and there have been improvements and new developments in technology with horizontal drilling and hydraulic fracturing.”

Producing Natural Gas:
The Technology

Scott North’s family has been involved with drilling for natural gas in western Pennsylvania (near Punxsutawney) for more than 50 years. Recognizing the future potential, his father leased the rights to portions of his Punxsutawney farm’s underground resources in the 1940s. Over the years, he purchased additional land and managed those resources as well.

Since his father’s death in 1995, North, a 1985 graduate of York College, has tried to follow in his footsteps by managing the hundreds of acres his family owns. The wells drilled on North’s property – the latest ones in the 1980s – are all shallow wells with depths of 2500 to 4200 feet. The shallow well industry, once the staple of western Pennsylvania, is slowing down, according to North, as bigger companies from places like Texas and Oklahoma are moving into the area to harvest gas from Marcellus Shale.  

Shallow wells typically cost about $125,000 - $250,000 to drill, depending on “what you run into,” North said. Deep wells, like those drilled to extract natural gas from Marcellus Shale, are generally more than 5000 feet deep and come with a price tag of $3-5 million. “The benefit is greater, so it makes sense that the cost is much greater,” North said.

Such deep wells have brought horizontal drilling and hydraulic fracturing, two methods to increase the productivity of wells, to western Pennsylvania.

Natural gas occurs within the Marcellus Shale in three ways: within the pore spaces of the shale, within vertical fractures that break through the shale, and adsorbed on mineral grains and organic material. Most of the recoverable gas is contained in the pore spaces, which are very tiny and poorly connected. This makes harvesting the gas difficult and extremely time-consuming.

Horizontal drilling has improved the process, as it intersects numerous fractures, which allows the gas to flow through the rock and into the well bore. The fractures intersecting the well also intersect other fractures, and those fractures intersect still more fractures. An extensive fracture network allows one well to drain gas from a very large volume of shale, and a single well can recover gas from many acres of surrounding land.

Hydraulic fracturing, or hydrofracking, is a second method that has been used to increase the productivity of a well. Hydrofracking is done by sealing off a portion of the well and injecting water or gel under very high pressure into the isolated portion of the hole. The high pressure fractures the rock and pushes the fractures open. To prevent the fractures from closing when the pressure is reduced, several tons of sand and other “propant” is pumped down the well and into the pressurized portion of the hold. When the fracturing occurs, millions of sand grains are forced into the fractures. If enough sand grains are trapped in the fracture, it will be propped partially open when the pressure is reduced.

“The technology has improved as the demand has increased,” said North, “so now you have more drilling with more sophisticated techniques. It’s a much more efficient process, one that’s come a long way from the steam-operated equipment that was used on my family’s property in the late 1800s.”

Managing the Resources

Like other landowners in western Pennsylvania, North has been approached by numerous companies who seek to profit from the resource-rich land. He has had to continually educate himself to stay on top of the ever-changing industry. “Everything I thought I knew about gas and oil has changed in the past few years,” he said. “My knowledge has had to be dynamic.”

Despite the fact that he considers himself “an amateur,” North has been called upon to counsel friends and neighbors who are being approached by gas companies interested in having them sign a lease.

The process usually begins with a call or visit from a land agent representing the company, according to North.  Before they reach out to landowners, these agents have already “done their work at the courthouse to determine who owns the mineral rights. In western Pennsylvania, as in other areas, you can own the surface land but not the gas under your property,” North said.  

Landowners are usually presented with a lease at the first meeting with the land agent. The lease gives the gas company the right to explore the property by drilling and other methods like seismic testing. To entice the property owner to commit to a lease, the companies generally offer a signing bonus that allows them to explore the property for a limited period of time. If they don’t produce marketable oil or gas, then the lease expires. If they do find oil or gas and begin production, they pay landowners a royalty for as long as the well produces.

Although some landowners profit nicely from the arrangement, many never see the high payouts or royalty payments often proposed in leases. “People see numbers that make them dizzy,” North said, “but very often, their chances of getting a nickel out of the agreement are between slim and none.”

The key to ensuring a fair arrangement is having a capable, competent attorney to review the lease, according to North. “You have to look at it like you’re buying a used car,” he said. “You have to be absolutely careful, because the devil’s in the details, and the details are in the lease.”

Not all leases are bad, according to North, but he does admit he’s “seen some of the worst leases in recent years. There are good companies doing ethical business, and then there are others,” he said. “A good gas company and a good land agent should want you to scrutinize the lease.”

The Economic Impact

In addition to landowners benefiting from the harvesting of natural gas or oil, the communities in which they live often prosper from the industry. “Pennsylvania’s Marcellus Shale has the potential to significantly impact income, jobs, and population in the state,” said Nicole Sadowski, Ph.D., associate professor of Economics. In 2009 alone, the Pennsylvania economy was stimulated by the creation of 29,000 jobs and the generation of $2.3 billion due to natural gas production, according to a report by the Pennsylvania State University.

Economic impact related to Marcellus Shale is typically divided into three categories: direct  – companies involved in drilling, excavation, production equipment, pipeline installation, exploration activities, water transport, supplying workers or providing legal, royalty or tax revenue services; indirect – surveyors, attorneys, fuel providers, hospitality groups that provide goods and services to the natural gas extraction companies; and induced – food and drink, utilities, travel, higher education, housing and entertainment providers that benefit from higher wages and increased spending in the area.   

“The big companies that drill the Marcellus are often not local, so they need to have an infrastructure in place to get the product to their customers,” said North. “The many support activities related to drilling add to the local economy, and companies often focus their interests on areas where these support activities are in place or are anticipated.”

There’s also a cost for local communities who do business with gas companies. The heavy equipment used to harvest and transport the natural gas takes a toll on roadways not designed for such use. And more people living and working in an area puts pressure on the community’s infrastructure, increasing demand for housing, schools, and other services.

Local municipalities where Marcellus Shale drilling occurs have struggled with covering the costs of supporting the industry. One controversial solution that has been proposed to alleviate this is the institution of a “severance tax,” a tax that is imposed on the extraction of nonrenewable natural resources.

“Proponents of a tax note Pennsylvania’s need for tax revenue and suggest such a tax is necessary for local communities to benefit from natural gas extraction,” said Sadowski. “They also point out that Pennsylvania is the only state considered a ‘major’ natural gas producer that does not have a severance tax.”

On the flip side, opponents say that a tax imposed by the state is an increased cost of production for gas companies, which will stifle job creation and income growth from the industry in Pennsylvania, according to Sadowski.

North agrees. “Anything that can be taxed can be killed,” North said. “We are in an economy in western Pennsylvania that’s against the ropes – with double-digit unemployment. The last thing we need is a tax.”

North is in favor of an impact fee that allows local municipalities to determine the tax impact and levy fees. “Let them determine the cost and then gain from that,” he said. “I’m opposed to a severance tax from the state, because it directs revenues away from the areas that are producing it.”

The Environmental Impact

In addition to the debate over who should benefit from Marcellus Shale drilling – local municipalities or the entire state – controversy over the possible environmental impact of the industry has pitted individuals and groups against each other.

Drilling and pipelines have the potential of affecting water quality and quantity, air quality, forest fragmentation, wildlife, viewsheds, land use, and other important factors.

The threat of contaminated drinking water has drawn particular attention in Pennsylvania. Shale drilling – through hydraulic fracturing – requires injecting huge volumes of water underground to help shatter the rock. Some of that water returns to the surface, in addition to the gas, as ultra-salty brine tainted with metals like barium and strontium, trace radioactivity and small amounts of toxic chemicals injected by the drilling companies.

Most big gas states require drillers to dump their wastewater into deep shafts drilled into the earth to prevent it from contaminating surface water. Although it has moved to limit it, Pennsylvania currently allows partially treated drilling wastewater to be discharged into rivers from which communities draw drinking water. Pennsylvania Governor Tom Corbett created in March 2011 a Marcellus Shale Advisory Commission to develop a comprehensive, strategic proposal for the responsible and environmentally sound development of Marcellus Shale.

Air quality issues are also a possible negative environmental impact of shale drilling.  Pollution from diesel engines, compressor stations, and flaring (discharging or burning off waste gas) can lead to elevated levels of carbon dioxide and nitrogen oxide. In addition, a study by researchers at Cornell University indicates that while natural gas burns much more cleanly than oil and coal, the process of extracting it from shale contributes more harmful greenhouse gases than its clean-burning effects. That’s because some of the shale gas is vented directly from into the atmosphere during production.

“The process of hydrofracking is complex and is of interest as to the interaction with the environment,” said Kreiger. “Of course, it is a trade-off. Energy is needed. Energy is expensive. Energy is wanted to maintain the present way of life and more is required to continue in a search to make a better life. But we need to learn to live with nature. It is our responsibility to understand it and work with it.”

“Managing what’s under the surface is not different than managing what’s on top,” according to North. “You want it to be as good or better than the way you found it. Landowners have to defend and protect their property.  Ultimately, we have to use it responsibly.”

About Scott North

A girlfriend who lived near York brought Scott North to York College in 1981. As a Spartan, he studied political science (the major was formerly called government) and participated in student government.

North was also active in ROTC as a student. Following graduation in 1985, he traveled to Fort Sill in Oklahoma for military training. When he returned to the York area, he focused his attention on his interest in political science and worked in Camp Hill as director of the West Shore Council of Governments and then for Camp Hill Borough. He worked as the director of purchasing for York County before returning to Punxsutawney around 1995 after his father passed away.  

In addition to managing his family’s affairs, North pursued a full-time career with the National Guard upon his return to western Pennsylvania. He is currently battalion commander of the 107th Field Artillery, which is headquartered in New Castle, Pa. His unit provides artillery support for an infantry brigade in western Pennsylvania as well as soldiers for deployment. North was deployed to Iraq from January to September 2009 with the Stryker Brigade. He lives on the family farm in Jefferson County with his wife, Jodi.

North attributes York College’s excellent education, as well as the many friendships he formed there, as critical influences in his life. “Many members of the staff, faculty, and other students shaped my view on life,” he said. “ I still call upon those experiences to make the decisions that affect me today.”