Doing business with Range, The Upside of Downstream, The Future of Shell in Beaver County, and an Update from PA DEP
EKT Interactive NE representatives attended the Energy Inc conference at the David L. Lawrence Convention Center in downtown Pittsburgh on August 14th. The conference consisted of several very informative panel discussions followed by lunch and a keynote speaker.
Panel #1 – Doing Business with Range Resources
Moderator: John Applegath – VP of Southern Marcellus Shale Division, Range Resources
Range started to commercialize the Marcellus Shale formation in 2004, has invested over $3 billion to date in Marcellus, Utica, and Upper Devonian shale layers. Range estimates there is 100 years of drilling to be done.
Dawn Fuchs – CEO, Weavertown Environmental
Took over Weavertown from her dad when he retired. Weavertown does cleanup and disposal of drilling waste and spills along with offering training courses in operations and H2S hazards. Always be available 24x7x365, never be late, always deliver what you promise, try to differentiate yourself from your competitors. They hire and train about 70 people per year and have increased their capital budget from $2 million to $4 million per year. They emphasize no spills, no shortcuts. Always looking for CDL drivers and techs willing to work long hours for good pay.
Don Donahue – President, Falcon Drilling LLC
Don bought Falcon Drilling of Indiana, PA about 2 years ago, now has 16 drilling rigs and 250 employees. Need good employees and provide good training. Need constant equipment upgrades – all their rigs are now less than 2 years old. Their rigs are made locally in West Chester, PA.
Dan Deiseroth – Executive VP, The Gateway Engineers
Dan led the effort to convert Gateway from a traditional civil engineering firm to a major engineering firm for the local oil and gas industry. They do GIS-based surveying, geo-technical studies, structural engineering, traffic studies, road design, and pipeline design. They rely heavily on local relationships and a base of loyal customers. They serve mainly the Butler, Allegheny, and Washington County corridor. They do lots of small projects, have a great emphasis on safety in all their design and operations work, and have built a project management culture. They now do much more field work, less office work, their fleet is now 3x larger (all 4 wheel drive vehicles). Gateway had to change their cell phone provider to get better coverage in their work area.
Summary: John urged the firms in the audience to find out where you fit in.
Range has only 250 employees at Southpointe and 5000 subcontractor employees – a 20:1 ratio. Start by working for a subcontractor and take advantages of opportunities up and down the food chain. Network whenever you can, attend trade shows, build relationships with purchasing agents. Range has had a 30% turnover in subcontractors during the past 2 years so there are opportunities out there.
Panel #2 – The Upside of Downstream: How shale gas chemicals will fuel growth in Western PA
Moderator: John Hanger – Special Counsel, Eckert Seamans
Dr. Anthony Cugini – Director, National Energy Technology Laboratory (NETL)
Dr. Brian Gleeson – Director of the Center for Energy, University of Pittsburgh
Dewitt Peart – President, Pittsburgh Regional Alliance
This panel had a short discussion about the Shell cracker plant leading to a rebirth of the regional industrial base due to the abundance of shale gas, gas liquids, and proximity to markets in the Northeast. They felt the NETL and local universities could help by bringing new technologies that lower capital investments and increase efficiency of industrial processes.
Panel #3 – The future of the Shell plant in Beaver County
Dennis Nichols – Commissioner, Beaver County, PA
Beaver County, which is northwest of Allegheny County and Pittsburgh, is home to 171,000 people. A new era began on March 15, 2012 when Shell announced they had selected the Horsehead property in central Beaver County as the potential site for a new $2 billion ethane cracker plant. Workers in Beaver County are experienced in iron, steel, coal, glass, pottery, and zinc manufacturing and will adapt well to the new chemical industry. We have major transportation resources – highways (I-376), nearby Pittsburgh airport, river transportation, rail (Conway Yards), and a county owned bus company (Beaver County Transit).
Beaver County offers low real estate taxes and tax incentives through PA’s Keystone Opportunity Zone with 10-15 year tax abatement. Educational institutions include 15 school districts, BVIU, PA Cyber School, Lincoln Park Performing Arts Center, CCBC, Geneva, and a Penn State Branch Campus.
Dennis said this Ethane Cracker plant is the largest private investment in Beaver County in 50 years. Shell selected the Horsehead site because:
- 300 contiguous acres of flat land in Potter Twp.
- Suitable footprint for desired plant size
- Tri-modal transportation – highways, rail, and river
- Availability of wet gas nearby
- Proximity to east coast markets
He expects the results will be:
- 450 permanent industrial jobs
- 10,000 construction jobs
- 18,000 ancillary jobs
- $2 billion investment in plant
- $4-6 billion total investment in the area
Paul Ayoub, PhD – Project Manager – New Business Development for Shell
Paul has spent his entire career (22 years) with Shell, most recently as a commercial project manager. Shell has 90,000 employees in 80 countries and consumes 2000 bbl of petroleum feedstock per minute. The current PA group has 900,000 acres under lease and is headquartered in Warrendale, PA.
In addition to gasoline and lubricants, Shell produces 8 million tons / year of chemicals – 5 million tons of which are derived from ethane. About half of the ethylene users in the US are within 500-600 miles of the Beaver County site (NE US and Chicago area).
In the proposed plant, ethane is heated to 1600 F at 20-25 psig where it is cracked to ethylene. The product is then compressed to about 600 psig using large compressors then the various products (hydrogen, fuel gas, ethylene, propane, butane, and naphtha) are separated by distillation at -100F. About 70% of the US ethylene production is converted to polyethylene for resins, plastic pipe, coatings, and films. The remainder is converted to ethylene oxide and monoethylene glycol for PET bottles, polyester fabrics, and anti-freeze.
Session #4 – Alisa Harris
Special Deputy Secretary, External Affairs for PA DEP
DEP is working to implement the recommendations of Gov. Corbett’s Marcellus Shale Advisory Commission. Act 13 was much more than just implementing the impact fee on gas wells, it tightened existing regulations and provided funding for additional staff at several state agencies. DEP is now working on proposals to revise PA Act 78, the main PA regulations for oil and gas wells.
The Pennsylvania Energy Development Authority provided $250K to help fund a geothermal heating system for a campus of Chatham University in Pittsburgh. State government is also funding several solar and bio-diesel projects. They are trying to provide some assistance where needed – not pick the technology winners and losers.
Alisa mentioned AquaAmerica is planning to convert 20 dump trucks and 60 vans to CNG see http://www.ngvjournal.com/pt/mercados/item/9184-aqua-america-to-convert-portions-of-its-fleet-to-cng
PA expects to provide $20 million over 3 years for CNG conversion of vehicles with grant award dates in Dec 2012 and July 2013. See the DEP web site for details http://www.portal.state.pa.us/portal/server.pt/community/act_13/20789/natural_gas_vehicle_program/1157504
Kerry Campbell at DEP is studying coal – gas conversion strategies for commercial power generation, contact him for details.
About EKT Interactive
EKT Interactive, Inc is a leading provider of customized, large-scale, interactive safety and operations training programs for the oil & gas industry. Our web-based e-learning program, accessible at your convenience, saves time away from the job and travel costs. Online learning modules are developed by field-experienced oil and gas instruction experts using proven web learning applications that closely match classroom effectiveness.