JERSEY SHORE - To coin a phrase by Mark Twain, news of the demise of Marcellus Shale natural gas development in Lycoming County has been greatly exaggerated.
That is according Penn State Cooperative Extension educator Thomas Murphy, who said rumors that gas companies are pulling up stakes and heading for greener pastures are false.
"The reality is different. There's been a slowdown, but not by any means a stop," Murphy said during a gas exploration workshop at the Robert H. Wheeland Center in Jersey Shore.
According to Murphy, the slowdown has been caused by a number of factors, including a drop in wholesale natural gas prices to about a third of what they were last summer.
"As the price of gas comes down, it's going to make a difference in the amount of (exploration) activity," he said.
Many energy companies that spent millions of dollars on leases are "scaling back" on their drilling activities. Leases were paid for with borrowed money and now the companies must work within their cash flow, he said.
Gas companies also are considering the cost of water used for hydrofracturing - the process used to free natural gas trapped in the shale - the cost of labor, the regulatory climate and the lack of support infrastructure, such as drilling rigs, water treatment facilities and suppliers.
Buying and treating water used in gas development is a huge expense for gas companies, said Murphy.
"There is a lot of re-evaluation going on about the cost of doing business and the cost related to (doing business in) other places," Murphy said.
On the plus side, companies have invested $2 billion in Pennsylvania in a short time and want to begin production to recoup some of that investment, he said.
Also, some of the leases signed early in the gas boom are about to expire, he said. Gas companies can only extend those leases by drilling wells on those properties, he said.
Another plus is more than half of the nation's population lives in close proximity to the Appalachian Basin where the Marcellus Shale is located, he said.
Murphy said the downturn in the economy may actually benefit the gas industry because as the cost of steel, cement and labor falls, companies will be able to drill gas wells cheaper.
Extension educator Mark Madden discussed regulatory issues related to the use and treatment of water used for gas exploration.
According to Madden, industry experts estimate a need for 28 million gallons of water per day during the peak of Marcellus Shale development activity.
That amount does not come close to the amount of water used by electricity generating power plants or even the state's golf courses, he said.
However, it will be a challenge to find ways to treat the waste fluids generated from drilling and hydrofracturing, he said.
Madden also discussed ways property owners can protect their fresh water supply when gas drilling is occurring nearby.
If a change in quality of a water supply located within 1,000 feet of a gas well occurs within six months after the well is drilled, it is automatically assumed the change was caused by the gas well, he said.
The only way to prove the water was harmed by a drilling operation is to have it tested beforehand by an independent certified water testing lab, he said.
Michael A. Forgione, a senior engineer with Texas-based Range Resources, discussed the methods gas companies use to determine where a gas well should be placed.
Forgione said the Marcellus Shale formation is "really huge" and expressed faith that development of the formation will continue.
"Companies still wouldn't be in the (area) if they didn't believe in it," he said.
