Tom Murphy

Co-Director, Penn State Marcellus Center for Outreach and Research

Biographical Sketch
Mr. Murphy is an Extension Educator with 25 years of field experience working with landowners, government agencies, and public officials while employed with Penn State Cooperative Extension. His work has been namely in the realm of educational consultation with a more recent emphasis in natural resource development, specifically in natural gas exploration and related topics. He has lectured throughout Pennsylvania and surrounding states on Marcellus shale and its impacts including landowner leasing issues, environmental aspects, the drilling process, infrastructure development, and financial considerations. In his role, he provides leadership to Marcellus outreach activities and is Co-Director of Penn State’s Marcellus Center for Outreach and Research (MCOR). Mr. Murphy is a graduate of Penn State University.

Presentation Summary
About 25 percent of our nation’s energy comes from natural gas. When it comes to electrical power generation, we are starting to see natural gas take a larger role, increasing three percent in the last two years. Coal, which is the primary fuel for electrical generation is beginning to decline. Economists predict natural gas will be used for 35 percent of power generation by 2030 and that green house gas emissions from power generation will decline 44 percent by that time. Natural gas is now widely viewed as a fuel that will become more important if a variety of applications including transportation.

Pennsylvania is currently a net energy importer but economists predict that by 2013 we will be a net exporter. Natural gas and wind are driving that trend. Shale gas production in the Marcellus formation in Pennsylvania and surrounding states has major implications for the region. In addition to producing the gas itself we are beginning to see industries that are heavy energy users such as steel, paper and glass production locating in close proximity to where the gas is being produced.

It is estimated that there is a 100- plus-year supply of gas in Pennsylvania’s Marcellus shale — a potentially recoverable 489 trillion cubic feet with current technology. Future technology may increase the amount recoverable. It will take decades to drill the wells to extract this resource. The western and northwestern part of Pennsylvania has what is called wet gas. That means it has other constituents in the gas that add extra value. Among these are propane, butane and pentane.

There are two major regions of exploration activity in North Central and Northeastern Pennsylvania and one region in the Southwestern part of the state, the latter being primarily due to the existence of wet gas. The infrastructure for transporting the gas is already in existence in Southwest Pennsylvania whereas it needs to be further developed in the other regions of the state. There is now more transparency regarding the yield information from gas wells in the state than there has been in the past. Companies must now report yield information every six months as opposed to every five years in the past.

These deep wells are producing in million-cubic-foot increments per day. The life of these deep wells is measured in billion-cubic-foot increments. The life of these wells is expected to be 30 to 50 years but about half of that production comes in during the first 24 to 30 months so it is a front-loaded proposition. Two of the highest-producing wells — 2.8 and 2.2 billion cubic feet over one year — are in Bradford and Susquehanna Counties. Based on this experience, companies are revising upward what they think the yields from these wells will be. The Marcellus Shale is a very large and productive gas field with superior geological characteristics compared to other parts of the U.S. and the world. It is also either the lowest-cost or second-lowest-cost shale to explore in the country.

There are about 70 companies exploring for and producing gas in Pennsylvania. Larger companies are buying out smaller companies and international companies are coming in. Among them are the Dutch, Koreans, Norwegians and Japanese. These companies are currently spending an estimated $8 billion dollars in Pennsylvania in the course of their activities, much of it in rural counties. By 2014 that is expected to increase to $15 billion. This has had a strong positive impact on the economies in those areas, particularly Bradford County. Landowners will receive a substantial amount of money in the form of lease payments and royalties on gas produced. One estimate pegs the figure for royalties alone at $250 billion. The amount of money companies pay landowners to lease the gas rights varies a great deal — from $750 per acre to $6,500 per acre.

As might be expected there is a great deal of development of pipelines and underground storage facilities that is taking place concurrently with gas exploration. There are a number of transmission lines, from the large federally regulated interstate lines to gathering system lines that go from well to well and to compressor stations to other transmission lines. In terms of impacts on agriculture, the development of pipelines has a larger impact than the drilling of the wells themselves. An estimated 10,000 miles of gathering line alone will be needed for Pennsylvania. Already, Bradford County has 500 miles of lines. Pipeline development raises issues such as invasive species of weeds, land grading and forest fragmentation. An estimated 100,000 acres of agricultural land is likely to be disturbed. This also impacts animal species. Elk, for instance, have used pipeline rights of way to move two counties over from their typical habitat. These impacts need to be anticipated, planned for and mitigated.

In terms of site preparation, more space is required for the hydro-fracking process than for drilling itself. When companies develop a drilling site (or pad), they are not looking to develop a single well but rather multiple wells. Six wells on a site is a common number. One drilling site is intended to cover 640 acres, although some companies are now developing drilling sites that cover a larger area, thereby reducing the development impact. Companies are now installing geo-textile material and other measures to minimize environmental impacts that may be caused by spills of fluids used in the drilling and hydro-fracking processes.
Press coverage of groundwater contamination resulting from hydro-fracking has focused a lot of attention on this issue. However, the larger contamination issue is surface water contamination from fluids used in the process. Companies and regulators now recognize that. The result has been more redundancy of environmental safety measure taken at these sites, increased regulation and development of best practices to be used by drillers. There are a variety of factors, including piping and grouting that can be used that now have higher required standards. The process requires millions of gallons of water and when that water comes back up out of the well it contains contaminants including large amounts of salt. Those contaminants are now being removed and about 70 percent of the water used in one well is recycled for use in another well.

Roads are impacted by the process since water must be brought to the drilling sites, often by trucks. Many rural roads are not paved adequately to handle this level of traffic from heavy trucks. Drilling companies are now spending significant amounts to local governments to improve and repair roads. Other impacts from the industry include the need for increased hotel, restaurant, railroad and airport capacity. Employment is also impacted since these companies are recruiting new employees in the areas they are exploring. As they look at groups most desirable to hire, they place a high priority in farm kids and military veterans. For more information on the issues involved in Marcellus shale exploration visit our web site at www.marcellus.psu.edu.

In an effort to provide wide-ranging views and perspectives regarding the practice of and issues surrounding agriculture, the Philadelphia Society for Promoting Agriculture (PSPA) seeks speakers representing a variety of perspectives. The statements and opinions they present are strictly their own and do not necessarily represent the views of PSPA.