Traditional Energy's Modern Boom
Friday, August 15, 2008
AMWELL, Pa. -- The guys on the derrick, filthy with mud and grease, have the best view in the county. Their drilling rig rises from a bulldozed, flattened patch of meadow near the top of a hill. To the south is an old farmhouse and a white barn. Hay bales dry in the sun.
It's classically pastoral as far as the eye can see, which makes all the more dramatic the presence of this derrick, 160 feet high, and the construction trailers, and the mud gushing into a holding pond, and all the roaring machinery.
Heavy industry has invaded the countryside because of something called the Marcellus Shale. It's a layer of hard, black rock, more than a mile down. Trapped in tiny pores of that rock is a huge quantity of natural gas. The Marcellus Shale could become what people in the natural gas business call a big play.
"It's a gold rush, really. It's a boom," said Steve Rupert, an executive with Range Resources, which is drilling aggressively in the rolling farmland southwest of Pittsburgh.
This is the world of 21st-century energy, which around here looks surprisingly like 19th-century energy. There is little evidence that the old, conventional sources of energy are about to disappear, or that the free market by itself is going to drive a transition to clean, renewable power.
With oil, gas and coal near record prices, there is an obvious market incentive to invest in renewable energy sources, such as wind and solar power. But those same high prices have also incited fossil-fuel companies to ramp up their drilling and mining.
Former vice president Al Gore has called for the United States to switch to 100 percent renewable energy for electricity generation in the next decade. But if the scene in Pennsylvania is any indication, policymakers wanting to see a greener America will have to do more than tweak the energy sector around the edges.
The state of Pennsylvania is on pace to issue more than 7,000 permits for oil and gas drilling this year, more than twice as many as five years ago. Coal mining is expanding, driven by rising coal exports. With the Marcellus looking so promising, Pennsylvania farmers are suddenly flush with cash from leasing mineral rights.
"It's a land-rush type of deal," said Gary Lash, a geologist at the State University of New York at Fredonia who studies the Marcellus. "Some people are becoming millionaires overnight."
The Pennsylvania fossil-fuel boom points to a broader national reality: The old energy sources come from mature industries that have the infrastructure, know-how and capital to put a big drilling rig in a hayfield at the snap of a finger. Oil and gas companies also benefit from a federal tax incentive, dating to 1918, that allows companies early deductions for "intangible drilling costs."
"We believe [fossil fuels] are going to predominate for at least 50 years," said Thomas Sarkus, a coal expert at the Energy Department's sprawling facility near Pittsburgh.
Bill Huber, 67, who lives near Oil City, Pa., recently tapped into the Marcellus play by leasing his mineral rights below 3,000 feet. But there's shallower stuff that's bringing in more money for him than ever before: Pennsylvania crude oil. He runs a mom-and-pop oil company just down the road from Titusville, where "Colonel" Edwin Drake drilled the world's first commercial oil well in 1859.