What does industry think of U.S. EPA's plans to take a life-cycle approach to studying the impacts of hydraulic fracturing? During today's OnPoint, Kathryn Klaber, president and executive director of the Marcellus Shale Coalition, discusses the latest on safety and regulation of hydraulic fracturing. She also explains how natural gas prices and the economy are affecting development in the Marcellus Shale.
Monica Trauzzi: Hello and welcome to OnPoint. I'm Monica Trauzzi. With me today is Kathryn Klaber, President and Executive Director of the Marcellus Shale Coalition. Kathryn, thanks for coming on the show.
Kathryn Klaber: Thanks, my pleasure.
Monica Trauzzi: Kathryn, U.S. EPA has announced plans to take a lifecycle approach to the study of -- to study the impacts of hydraulic fracturing. Does the scope and reach of the issue warrant that kind of in-depth analysis like EPA has proposed?
Kathryn Klaber: Well, I mean I really think that hydraulic fracturing has been used as a moniker for the overall gas development. I think as we look across multiple energy sources it's important that we understand all aspects of them. The industry has certainly, as we said in our comments and continue to say, welcomed this additional study. I do think the public deserves that kind of a lifecycle analysis of other energy sources as well though.
Monica Trauzzi: So, if you don't oppose it in any way on hydraulic fracturing specifically?
Kathryn Klaber: Yeah, I mean we really do welcome this kind of study because if the past 50 years and over a million wells are any testament, it's a very safe practice and one that's been delivering clean energy to Americans very well.
Monica Trauzzi: No doubt if the Marcellus Shale formation was fully explored it would provide major economic benefits. How does regulatory uncertainty then impact the industry and how it moves forward?
Kathryn Klaber: Right, well, the uncertainty issues are, you know, big across any industry and certainly are very dynamic at this point. Our organization, the Marcellus Shale Coalition, has worked very closely with regulators to be able to understand firsthand where we're going on the state level. And I think because of that communication there's more certainty in certainly the well casing standards that have been finalized that make Pennsylvania one of the most protected states. On the water quality I think and the erosion sedimentation issues, definitely have the certainty at the local level. The biggest uncertainty right now is how will the federal government intervene or change the rules of the game with states. I think it's important as recently former DEP Secretary Hanger mentioned recently, that we are doing a very, very good job at the state level and we need to keep that being the focus unless we want a tremendous amount of more uncertainty, which I don't think anybody -- that serves any interests.
Monica Trauzzi: There are still so many concerns relating to fracking and recently the city of Buffalo, New York, banned fracking in hopes that other cities would sort of feel compelled to do the same and, in particular, they'd like cities that are sitting directly atop the Marcellus Shale to act in the same way. How concerned are you that you might begin to see city-to-city bans?
Kathryn Klaber: Well, it's a real conundrum because, on the one hand, a lot of the exploration in the Northeast is not happening in urban areas. It's happening in a lot of other places that are, frankly, very welcoming for this development because of the economics and the associated supply chain impacts that we're having. I think a ban like Buffalo's is one that is more influenced by a lack of understanding of this process. If an EPA study can help increase that understanding, I think that everybody benefits, but certainly if a city bans it in an area that lies atop a shale play, those city officials are taking away the private property rights of those residents in those locales. And that is where I think that policy goes from misguided to downright illegal.
Monica Trauzzi: How can surrounding communities necessarily trust a group like yours to ensure the safe extraction of natural gas when you're representing the interests of companies that are doing the work?
Kathryn Klaber: A very, very fair question. I mean personally I spent my undergraduate education and the entire first part of my career in the environmental industry. So I come to this probably having done more for the environment in the first 10 years of my career than most across their entire one. But I think more importantly, we have to look to our regulators, the kind of programs that are in place and have been in place way before we were talking about shale gas. The Clean Water Act and how it is rolled out throughout the states, the Clean Air Act and all the associated regulations that come along with that, RCRA, any federal program that has resulted in state regulations is, by and large, affecting this industry and then we're putting new regulations in place. So I think if the public takes a look at the regulatory programs that are in place at a state level, that's the assurance, that's the place to get that security. Our industry and my association is very much here to answer those questions, to work side-by-side with all the stakeholders to understand how the process is really done. If you don't get on a well site it's a little hard to picture how this actually happens in real life and we're helping to the tune of hundreds per year, for each of my member companies taking people out on these well sites. We're here for the education.
Monica Trauzzi: I mean it sounds like the industry is being aggressive about extraction. Is the extraction being done at the expense of the surrounding communities?
Kathryn Klaber: Absolutely not. I mean when you say aggressive, I think it's been so much more in the news, but you look at any individual homeowner is still using gas the way they did before. The supply is up, but the cost is down, so you're not seeing -- it's not aggressive more than what's happened in the past. It's simply I think we're paying a lot more attention to it, which is, I think, important to get this industry more broadly understood and understand what an incredible role it can play in our energy profile in this country.
Monica Trauzzi: So talk a bit more about the link between the price of natural gas and then what we're seeing on the ground.
Kathryn Klaber: Right, supply and demand, kind of Economics 101, as the shale revolution has swept this country, we've got a quantity of natural gas, higher than has ever been tracked before by the Energy Information Association -- Administration. So you've got so much more gas results in lower costs. That's made it more affordable to use gas, natural gas as a vehicle, as a transportation fuel. So a lot of additional interests in fleet vehicles, in putting that infrastructure in place. Certainly, gas is a source of electricity, electricity generation. Those kind of plants are coming online or coming back online and as that use increases we may see a little bit of an uptick in the cost or in the price. But, overall, you've got a lot of supply and that's keeping prices steady, predictable, and relatively low.
Monica Trauzzi: What could we see in terms of jobs benefits coming out of the region?
Kathryn Klaber: Well, we've done, several years running now, an economic impact study of just the Pennsylvania portion of just the Marcellus. And remember, there's different shale plays and display itself is five states. But we looked at as many as 90,000 new jobs by the end of the year last year. Given the community impact that I see when I'm out on the road, I find it hard to believe that it's not twice that just because of the number of kinds of businesses that are now involved, from water testing firms to steal plants that have got an entire supply chain themselves that are benefiting from both the steel in the well and in the gathering lines, to environmental consulting firms to on-site security firms. You go through the entire supply chain and you see a wealth of job creation and it's really having an impact on the communities where we're operating.
Monica Trauzzi: We'll end it right there.
Kathryn Klaber: Good.
Monica Trauzzi: Thank you for coming on the show.
Kathryn Klaber: Thank you.
Monica Trauzzi: And thanks for watching. We'll see back here tomorrow.
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