Cashing in: Companies, counties look to benefit from natural gas

A Johnstown-based trucking company with a fleet of 80 tractor-trailers hopes to be one of the first in the region to break the hold foreign oil has on gasoline prices and operate its vehicles on compressed natural gas.

But the problem is twofold: Getting the conversion motors for the trucks, and making sure a driver has a place to refuel once on the highway.

Rather than being put off by what some are viewing as stumbling blocks, W.C. McQuaide Inc. is pushing forward in the hopes of helping to find an answer, at least when it comes to refueling stations.

McQuaide is gearing up to begin purchasing new motors for some of its freight carriers as it pushes for development of a system of refueling stations along major highways.

“The motor is not yet available, but it should be soon,” said Tom Dowdell, McQuaide account executive. “Probably within a year we’ll have something. It takes time.”

Estimates are that even with the price of natural gas hovering around its current $4 per Million Metric British thermal units (MMBtu) – natural gas-powered vehicles could produce a savings of as much as 30 to 40 percent over conventional gasoline, Dowdell said.

McQuaide has been meeting regularly with other companies in the region who are looking to benefit from a switch to natural gas, and Dowdell indicates something could be in the works to open the door for local refueling stations.

The investment is huge and would require a joint effort of many, he said of the $1.2 million needed for a “fast fill” station, moving natural gas into a truck as quickly as a gasoline pump. A larger refueling station for public use can exceed the $2 million mark, he said.

Unconventional natural gas being pulled from the Marcellus and Utica shale beds lying deep underground was described by state officials two years ago as being a game-changer.

While the Marcellus in Pennsylvania and Utica in Ohio still are making news, the development of new wells has slowed, largely due to price – which two years ago was as high as $13 MMBtu – and a glut of natural gas on the market.

Low price is not discouraging a private company in Schuylkill County from building what it is dubbing a Clean Energy Center in Duncansville, Blair County.

Marcellus GTL, which lists its offices at Gilberton in eastern Pennsylvania, plans to invest $200 million to build a natural gas-to-liquids process plant, according to Paul Hamilton, company executive vice president.

The plant will convert natural gas into liquified propane gas and compressed natural gas, he said in a telephone interview from his Colorado office.

Hamilton said ground will be broken on the project late this year, with two years needed for completion. Hopes are to create 120 jobs through the building process and 30 permanent jobs after the plant is in operation.

A natural gas transmission line running through Pennsylvania, including Cambria and Blair counties, is one of the reasons Marcellus GTL picked this region, Hamilton said.

While the region has some natural gas infrastructure, the slowdown in well drilling and the capping of some already drilled wells may be due largely to logistics, said Ed Silvetti, executive director of the six-county regional Southern Alleghenies Planning and Development Commission.

Silvetti is convinced the Marcellus fever will start heating up again after infrastructure is expanded.  Gathering and main transmission lines must be built through many areas of the state before companies resume pulling gas out of the shale beds at a faster pace, he said.

Development of a multibillion-dollar “cracker” plant proposed for Beaver County by Shell Oil Co. has slowed while the state Supreme Court makes a decision on the legality of Act 13, the broad, sweeping state law that imposes a fee on all deep natural gas wells, stiffens environmental regulations and encourages natural gas-powered vehicles.

At issue before the high court is the municipal ordinance provision that shifts much of the local authority in development of wells to the state.

Shell, which plans to utilize 300 acres of a closing zinc plant near Monaca to break down and process carbons derived from natural gas, is waiting for the outcome of the high court decision, according to Marcellus Business Central, published in State College.

Dozens of spinoff business – companies that produce all manner of plastics from tubing to swimming pool liners – are expected to crop up around the cracker plant.   

Kathryn Klaber, chief executive officer of the Marcellus Shale Coalition, an industry-driven organization formed in 2008, said in an interview with the trade paper that use of Marcellus natural gas continues to grow.

It holds significant potential for electricity generation. Spring 2012 marked the first time that the same amount of electricity was generated from natural gas as from coal nationwide, Klaber said.

Meanwhile, the use of acid mine drainage water from decades ago holds potential for use in the fracking process.

The term “hydro recovery” has been given to the process, and to a treatment plant in Tioga County. It is then used at well sites to help meet the need for as much as 5 million gallons of water needed per well for fracking.

Fracking is the method used to break open the tightly knit Marcellus Shale beds, which often lie a mile or more underground.

While the Cambria-Somerset region has not experienced a rush to drill, there are economic benefits as a result of the handful of wells that exist through Act 13, Pennsylvania’s natural gas law that levies a fee on each well.

Jennifer Kocher, of the Pennsylvania Utility Commission – the agency tasked with collecting and distributing the money – said $204 million was paid into the fund by natural gas companies in 2011.

Of that amount, Cambria received $44,128 that the county can use for about a dozen eligible items. The money is targeted to help pay for emergency technology – primarily upgrades of 911 responders, President Commissioner Douglas Lengenfelder said.

A second allocation of $121,897 is going to help pay the county’s share to the Cambria-Somerset Authority, allowing more funds to remain in the general fund, he said.

A $202,000 allocation was made with the stipulation that it be used for repair or replacement of locally owned at-risk bridges within the county, he said.

And $18,939 went to the Cambria  County Conservation District for use at its discretion.

In Somerset County, $114,732 has been received for use in about a dozen eligible categories. The funding is being put into a reserve account until its use is determined, county officials said.

At-risk bridges have been targeted for $109,178, while $65,956 will go toward planning and recreational uses, Commissioner John Vatavuk said.

A definite use for the nearly $66,000 has not been determined.

The Somerset County Conservation district has received $37,000 from 2011 Act 13 funds and anticipates $17,000 more, said district manager Len Lichvar.

Be it a small amount or larger allocations, depending on the number of well sites, each municipality in the state, even those without wells, will get a share of the fee.  

In Cambria County, Adams Township got the largest amount at $28,324, which Supervisor B.J. Smith said is being used to fix township roads.

Allocations may be down slightly for 2012, with $198 million expected in collections from oil and gas companies, Kocher said.

That final figure may jump a bit, she said of the information from drilling companies due to the PUC by April 1.

The status of some wells is in dispute.

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