Pennsylvania Natural Gas Industry Faces Uncertainty and Infrastructure Challenges

The natural gas industry in Pennsylvania is facing several challenges that create uncertainty and hinder its growth. James D. Welty, president of the Marcellus Shale Coalition (MSC), identified four key areas of focus for the organization: operational certainty, regulatory predictability, infrastructure build-out, and severance tax.

Welty emphasized that the industry needs a clear understanding of the rules and regulations to develop a business plan. The MSC is concerned about expanded setbacks, which would essentially ban 99% of Pennsylvania's acreage from development due to excessive buffer zones around buildings and sensitive areas. These setbacks are already stringent, with requirements for 500 feet from existing buildings, water wells, streams, springs, wetlands, and other water resources.

The MSC believes that the current tax structure maintains operational certainty, but regulatory predictability is a major issue. The organization wants to know when permits will be approved and how regulations are implemented consistently throughout the state. Welty noted that operators are working efficiently, but changing goalposts by the Department of Environmental Protection (DEP) creates uncertainty.

The industry also faces difficulties in getting gas to market due to limited infrastructure. Pennsylvania producers receive an average of 20% less for their gas compared to prices on the Nynex and Henry Hub listings. The MSC prioritizes infrastructure build-out, which would enable gas to reach more downstream opportunities, including power generation.