The CEOs of four the top natural gas drillers in West Virginia say the future of the industry is looking bright despite low natural gas prices.
At the Independent Oil and Gas Association of West Virginia winter meeting Wednesday, a panel of CEOs from Consol Energy, Antero Resources, EQT and Noble Energy spoke to recent and expected success in the growing Marcellus shale gas play. The four business leaders shared their insights on the future of the gas industry and trends within the state.
"They had a lot of good news for West Virginia, particularly with the gas prices significantly declining the past few years," said John Haskins, IOGA president. "They've not backed out, they've not backed up and all of these companies are saying they will continue to drill in West Virginia."
Despite near historic lows of natural gas prices in the U.S., the CEOs of the four companies all remained optimistic. Most of the continued growth of the "Marcellus boom" has been driven by shifts into wet gas markets.
Wet gas is methane gas that is rich with other valuable gases and liquids as well, such as ethane, pentane and butane.
"How do we work through that?" Paul M. Rady, chairman and CEO of Antero Resources, asked rhetorically. "Well, we're continuing to drill and we're going to drill through that, but we're going to move our rigs a little more on the rich side."
David L. Porges, chairman, president and CEO of EQT, said his company was also looking at wet gas resources, but added that the key to keeping up demand would be introducing more natural gas electrical generation capacity.
"There is no way to do the numbers and conclude that anything other than generation is going to be the single biggest source of demand growth for natural gas in the foreseeable future," Porges said.
He also acknowledged the value of natural gas vehicles and other natural gas products but emphasized power generation was the key.
J. Brett Harvey, president and CEO of Consol Energy, said he predicts a move from coal- to gas-fired plants in the next few years. Meanwhile, he said, coal exports will likely increase.
"Old plants are going to be shut down. New plants are going to be built," Harvey said. "We think in the next seven years or so, a lot of gas plants are going to be built. Those gas plants are going to replace coal plants."
A part of the success in West Virginia, Harvey said, has been not only the resource availability but also the business climate.
"When I first came to this part of the country, West Virginia wasn't known to be supportive of business," Harvey said. "That's all changed, and things are going to happen in West Virginia."
Charles Davidson, chairman and CEO of Noble Energy, said Noble wanted to move into a place that is business friendly, fiscally sound and had predictable regulation.
"We've come to conclusion this is a great place to do business, certainly in terms of our industry, in terms of industry, in terms of natural gas, it's a very exciting business and we have a great future in front of us," Davidson said.
Overall, Harvey said, energy in form of natural gas or coal from West Virginia will be a dominating player in the U.S. economy.
"If the United States were the energy bunny, you all know what that is right, where would the batteries be?" Harvey said. "In West Virginia, where the energy comes from. Think about that, a lot is going to happen here."
Each of the business leaders emphasized success despite low price of natural gas.
"We didn't go into this business for this year," Harvey said. "We went into it for the next 50 years."
Noble Energy's Davidson echoed similar statements about the longevity of the Marcellus gas play.
"We're here for the long run. We didn't invest in Marcellus because we thought we could make a dollar in the next year or two," Davidson said. "We invested in the Marcellus because we saw this was a gas basin that would be around for decades."
Some challenges do remain, however. Paul M. Rady, chairman and CEO of Antero Resources, said he is "cautiously optimistic" about receiving permits. He noted that most of the concern about new regulations in West Virginia has been addressed.
"I think our people are feeling more positive every week as the permits are forthcoming from the DEP. The last thing we want is a rig parked along the roadside, waiting on a location. That is going to be expensive," Rady said.
Porges said there is a need for more infrastructure such as pipelines, compressor stations, processing facilities and fractionation facilities.
Each of the CEOs also talked about developing the resources responsibly so as to maintain public confidence in the industry.
"If you're in the energy business, you need to show that you're bettering people's lives, or honestly, the rest of the world will feel like they don't need you," Davidson said.
All content © Copyright 2000 - 2012 WorldNow and WVSTATE. All Rights Reserved.