Coal still King, shale drilling rises

Nov 13 - Register-Herald (Beckley, WV)

A Charleston attorney specializing in natural resources said Tuesday during the Beckley Rotary Club meeting that although "King Coal has not yet left the building," shale gas drilling will be the state's best hope for jobs and economic impact.

James "Jimmy" Russell, with Steptoe & Johnson, said that coal has taken some substantial blows here in the U.S., but worldwide, coal production is rising.

He said 2012 marked the largest coal production year globally since the 1970s, but with the Environmental Protection Agency regulations falling harshly on America, jobs are being lost and tax revenues are down.

"Shale gas drilling is our best hope to replace coal as the West Virginia economy driver," Russell said.

Natural gas and petroleum production has gone up since 2008, and Russell said that energy imports to the U.S. have decreased because more fuel-efficient cars and energy-efficient homes are being made.

Although U.S. energy demand has plateaued in terms of projected future needs, Russell said that ExxonMobil is predicting there will be a tremendous energy demand worldwide in upcoming years.

He discussed the sections of the Appalachian region that has Marcellus, Devonian and Utica shale formations and how those resources could prove highly beneficial to the energy market.

"Employment growth has been tremendous since 2008," Russell said, noting that shale gas-drilling employment has gone up 34 percent in West Virginia.

He said that state colleges and universities are trying to capitalize on this opportunity by offering courses and training programs to students for careers in administration in the shale market, and even drilling programs at trade schools.

While he said environmental activists are quick to point out the potential negative impacts of gas drilling, he said he remains an advocate for the industry.

Critics say that hydraulic fracturing, the process of gas extraction, could potentially contaminate drinking water and could also "de-water" streams.

Russell said that these horizontal wells are man-made and are not foolproof, but the structures are made with multiple steel casings cemented in the earth, which many researchers believe will prevent groundwater contamination.

"The EPA is not a friend of any extractive industry," he said.

The key to ensuring these wells are safe, Russell said, is for state laws to regulate them properly.

As for the water needed for a horizontal well, he said that yes, a lot of water is needed upfront to begin the drilling process, but he pointed out many other industries that use much more water in comparison. He also noted that water is used a lot more efficiently in gas drilling than in coal-fired power plants.

One Beckley Rotarian asked Russell what he thinks the cost of a gallon of gas will be 10 years from now.

"It depends on our ability to export natural gas and market it worldwide," Russell answered.

He said that as of now, natural gas is a domestic market, but if and when natural gas becomes part of a global economy, he expects there will be a substantial decrease in gas prices.

Another Rotarian asked him why southern West Virginia isn't feeling the impact of gas shale drilling.

He explained that most of the jobs are on the Ohio River right now and he has not yet seen any drilling in the southern part of the state. He said in the north, there is more "wet" gas than the "dry" gas found in eastern and southern West Virginia. "Dry" gas is primarily methane. "Wet" gas is methane along with gases such as propane, butane and ethane, giving producers more products to sell.

Russell focuses his practice in the areas of coal, oil and gas, commercial transactions and commercial litigation.

He has been with Steptoe & Johnson since 1977 and is a member of the Chambers USA America's Leading Lawyers for Business and The Best Lawyers in America.

-- E-mail: wholdren@register-herald.com

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