Energy innovation and technology continues to create thousands of much-needed jobs all across the Commonwealth and in southwestern Pennsylvania in particular. But could opposition from environmental groups and the prospect of politicians seeking new sources of tax revenue slow or perhaps even stall that economic progress?
Southwestern Pennsylvania has a long, proud history as an energy-producing region. Readily available (and seemingly endless) supplies of energy from coal, oil and natural gas were among the chief reasons that men such as Henry Clay Frick, George Westinghouse and their contemporaries selected this region as the place in which to bring their innovations and ideas to fruition and to seek their great fortunes in the late 19th and early 20th centuries.
Today, we still have the immense deposits of coal, along with the largest known reserve of natural gas shale and dozens of local firms involved in the development of alternative energy sources like wind farms and solar power. All that, plus the nation’s only domestic manufacturer of nuclear power generation equipment all right in our own back yard, and it’s easy to see why this region has so rapidly become a beehive of activity for industries and international investors seeking to capitalize on these vast energy resources. It’s also been a boon for a lot of abstractors and examiners across the region, myself included, who felt the pinch of the recession when many of the smaller local title agencies and mortgage brokers closed their doors.
Current estimates are that the Marcellus Shale, the huge rock formation which runs throughout most of the Appalachian Basin, contains enough natural gas to meet the energy needs of the entire nation well into the next decade. Interest in Marcellus gas has attracted billions of dollars in international investment from firms in China and Great Britain. Westinghouse Electric Company LLC, which recently relocated its corporate headquarters to a brand-new 775,000 square-foot facility in Cranberry Township, Butler County, plans to hire as many as 1,000 people, according to a recent article in the Pittsburgh Tribune-Review. Company officials cite the rapid expansion of the nuclear energy industry worldwide as the reason for that growth.
Just last year, as a paralegal consultant at Westinghouse’s Legal & Contracts Group, I had the privilege of working closely with many of the attorneys and other professionals involved in contract negotiations for the company’s AP1000 nuclear reactor program. Four AP1000 plants are currently under construction in China, with a total of 12 units scheduled to go online in that country sometime in 2014 or 2015. Here in the US, the AP1000 reactor design has already received preliminary approval from the Nuclear Regulatory Commission and at this writing, NRC license applications for the construction of fourteen reactors at seven power plants across the country are pending.
A recent Penn State University study sponsored by the Marcellus Shale Coalition predicts that natural gas producers will spend over $8 billion in 2010, generating about $790 million in state and local tax revenues and creating more than 88,000 jobs, more than double the numbers from 2009. But critics in the environmental movement have expressed concerns over the method of extracting natural gas from shale formations by a process known as “fracking” (short for “fracturing”).
Gas drilling by Cabot Oil & Gas of Houston, Texas caused problems in a small township in Susquehanna County when methane gas seeped into the water supply through a cracked underground casing in one of Cabot’s gas wells. In response, the state Department of Environmental Protection ordered Cabot to plug the wells and gave the company 30 days to supply the affected residents with water treatment systems at its own expense. In addition, Cabot was hit with nearly a quarter million dollars in fines and has been barred from drilling any new wells for at least a year.
As you can well imagine, all this talk of jobs, energy production and environmental hazards has become fodder for local candidates on both sides of the aisle seeking to score political points with their respective constituencies. Senator Bob Casey, Jr. (D-PA), for example has introduced a bill that would remove the long-standing exemption from the federal Clean Water Act that allows hydrofracking. Critics of the bill contend that there has never been an instance of contamination of ground water by fracking.
A proposed three-year moratorium on leases for gas drilling on state-owned lands has passed in the state House of Representatives. Lame duck Governor Edward G. Rendell (D-PA) has promised that he will sign the bill if it reaches his desk. Rendell also advocates a severance tax on natural gas production, a measure supported by Allegheny County Executive and Democratic gubernatorial nominee Dan Onorato. His Republican challenger, Attorney General Tom Corbett opposes the moratorium, saying that it will discourage energy development and cost the state jobs. Corbett instead favors a tax on the royalties produced by oil and gas leases on public lands, rather than a severance tax as a means of raising revenue.
In my view, regulation and oversight is best handled by the state authorities, who are closer to the concerns of the citizens and are therefore in a better position to respond to any issues that may arise. Believe me, having clean water to drink is just as important to me as it is to anyone. No one in their right mind wants to have to deal with dirty air or water. At the same time, however, I’m also a big fan of having a job, being able to pay my bills, taking hot showers and keeping warm in the dead of winter. I dunno, call me crazy.