The north-east is producing huge amounts of fuel from shale formations but environmentalists have vowed to halt pipelines
Cabot Oil & Gas once had six rigs drilling in Pennsylvania. Now there is one. The company is a prolific natural gas producer in the Marcellus shale, the hydrocarbon-drenched rock beneath the Appalachian mountains. Exploration in places like Cabot’s acreage in rural Susquehanna County transformed the US north-east from a footnote in gas markets to a source larger than Qatar.
But it also led to a glut that caused gas prices to crash. Cabot’s lone green rig, flying a tattered US flag, is boring more wells, adding to the surfeit. So gas companies have embraced a new challenge: moving the fuel to where the people are.
“We’re bringing more to the surface than we ever thought possible,” says George Stark, external affairs director for Cabot, en route to the hilltop drilling site. “But we don’t have the necessary capacity to take it away. Now we’re talking to pipeliners: ‘Could you take our gas away?’”
The shale industry has started what it calls Marcellus 2.0 — an all-out push to market the region’s gas. This will involve selling the virtues of gas to power companies and factories, but the main thrust will be laying pipelines up and down the east coast. At a shale gas conference in Pittsburgh last week — headlined by Donald Trump, the Republican presidential candidate — a key theme was “connecting the marketplace through infrastructure”.
There is just one hitch: the east contains some of the US’s most densely settled areas. While these towns represent a huge potential market they are prickly over the idea of hazardous infrastructure running beneath their land. Pipeline companies accustomed to having their way in Texas have received a harsh welcome in states such as New York and Connecticut. Amid rising controversy, billions of dollars of projects have been delayed, denied or cancelled.
“The farther north and east you go, the more challenging it becomes. I think it’s a combination of population and the organised environmental consciousness,” says Bill Yardley, president of US transmission at Spectra Energy, a Houston-based operator of some of the biggest pipelines in the north-east.
For years, the unconventional drilling that propelled the increase in gas output in the north-east has been criticised by
environmentalists worried about water supply and air quality.
But the issue of pipelines has brought together a broader group of opponents, from landowners upset about companies using compulsory purchase (known as “eminent domain” in the US), to open-space advocates wanting to preserve habitat, to climate campaigners aiming to keep fossil fuels beneath ground.
The fierce opposition comes after years in which natural gas was viewed as a weapon in the war on carbon emissions. Burning gas emits about half the carbon dioxide of coal. As shale production drove down prices, gas took the place of coal at power plants and contributed to a 12 per cent decline in US energy-related carbon emissions between 2005 and 2015, according to the Energy Information Administration.
As recently as 2014, President Barack Obama was hailing gas as a “bridge fuel” to wean the US off more polluting sources as it adopted clean technologies such as solar and wind power. Until 2010 the Sierra Club, a US environmental group, was promoting gas as part of its Beyond Coal campaign, an effort partly funded by Chesapeake Energy, a leading Marcellus producer.
These days, Sierra Club chapters are the nemeses of the pipeline companies. Mr Obama outlined a diminished role for gas when he unveiled a climate plan last year, favouring renewable energy instead. Leaks of methane, the main component of natural gas, from wells, pipelines and distribution systems have received more scrutiny, as it is 84 times more potent as a greenhouse gas than carbon dioxide.
Now that low gas prices have slowed the fracking boom — 22 rigs are drilling in Pennsylvania, down from 109 five years ago, according to services company Baker Hughes — environmentalists have booted up their own version of Marcellus 2.0. Their target: pipelines.
“If you can stop a pipeline, you’re kind of cutting the industry off at its knees,” says Karen Feridun of Berks Gas Truth, an activist group in Berks county, Pennsylvania. The movement was energised by the Obama administration’s rejection last year of Keystone XL, the proposed crude oil pipeline from Canada. This month the White House halted construction of Dakota Access, an oil pipeline, on federal land.
“If we go ahead and build out our natural gas infrastructure, we have no chance of dealing with climate change. The Marcellus is a huge global warming machine,” says Bill McKibben, founder of the 350.org climate change group who led the fight against Keystone XL.
Production from the Marcellus and Utica shales of Pennsylvania, West Virginia and Ohio has been nothing short of astonishing. Volumes reached 22bn cubic feet a day in February, a 17-fold rise in less than a decade. After it began liquefied natural gas exports from shale this year, the US now competes with Qatar, the world’s biggest LNG exporter.
“The growth in the Marcellus shale has brought the US into the global market for natural gas,” says Eric Brooks, energy analyst at Platts Analytics.
Pipelines have historically run south to north across the US to serve the big urban markets. In 1951 the Transcontinental Gas Pipe Line reached West 134th Street in Manhattan, bringing supplies from Texas to New York City. Now, Transco’s owner, Williams, is investing billions to allow the pipe to also run north to south.
A study for the industry-backed INGAA Foundation estimates that between 2015 and 2035 the US will lay 18,000-29,000 miles of transmission pipeline, plus up to 179,000 miles of smaller gathering lines which fetch gas from wells. The US is already home to more than 300,000 miles of transmission lines, equal to 120 trips between New York and Los Angeles.
In Pennsylvania, gas gathering lines alone are on track to cover 1 per cent of the land area by 2030, according to a pipeline task force. “We are in the midst, obviously, of a wave of energy development that is unlike any other in the state’s history,” John Quigley, then Pennsylvania environment secretary, said last year.
The state, the map of which is dotted with place names such as Oil City and Carbon County, has a long history of producing energy. Not all residents are thrilled by the latest boom, however.
Denis McNamee and his wife retired to a farmhouse overlooking a meadow in Susquehanna, Pennsylvania. In February, the Constitution Pipeline company threatened him with a contempt of court ruling after he refused to allow its contractors to cut trees on his land. Now his garden is thick with felled birch and stakes tied with pink ribbons, marking the pipeline’s path, 200ft from his porch. “I call it eminent disdain. It’s been that way from day one,” he says.
It had been proposed that the $1bn Constitution line, led by Williams and 25 per cent owned by Cabot, would run 126 miles from Pennsylvania to New York state. The project has federal approval but in April New York governor Andrew Cuomo’s administration denied it the necessary water permits, halting progress. The venture’s backers have appealed in court.
In central Pennsylvania, Williams is awaiting federal approval for Atlantic Sunrise, a $3bn, 183-mile pipeline that would feed shale gas south into the Transco pipeline. Cabot has committed to using capacity on the line, helping it deliver to customers, including one that would ship LNG to Japan.
“Why should people be losing their property when this is going to be exported?” says Ann Pinca, an activist in Lebanon County, Pennsylvania. Williams has already stacked acres of pipe near the Atlantic Sunrise right of way, aiming to put it in service by late next year.
The schedule for the PennEast pipeline, which would run from Pennsylvania to the New Jersey suburbs, has slipped to late 2018 following resistance from local officials and environmentalists. On Friday its developers made 33 route changes but the New Jersey Sierra Club was unmoved. Shirley Turner, a New Jersey state senator, warns that the line would cross open space preserved with taxpayer funds. “This will turn out to be money wasted if we don’t stop that pipeline now,” she said at a rally last month.
If we go ahead and build out our natural gas infrastructure, we have no chance of dealing with climate change
– Bill McKibben, 350.org
In Boston, the police say 137 people have been arrested this year while protesting against a new section of Spectra’s Algonquin pipeline, including Karenna Gore, a daughter of former vice-president Al Gore. In August, the Massachusetts supreme court invalidated a policy allowing gas utilities to pass the cost of pipeline projects to their customers, a setback for the Access Northeast project led by Spectra, which recently agreed to be acquired by Enbridge of Canada.
Growing band of adversaries
Interstate gas projects must receive approval from the Federal Energy Regulatory Commission. It has authorised 887 miles of gas pipelines this year but does not keep figures for schemes it has not approved. Even as Ferc approves projects, state and regional authorities have become more receptive to pipeline adversaries.
“Permitting issues are becoming a bigger problem everywhere,” says Frank Ferazzi, general manager of Williams’ eastern interstate pipelines. Environmental groups, he adds, are “well-funded, they’re well-organised and they’ve been extremely active”.
The energy industry says gas makes an inappropriate target because it can quickly generate power when solar or wind resources are lacking. And when cold weather grips New England, the region relies on foreign LNG and fuel oil to run its power plants. “The opposition has created an environment where we’re burning more oil in the middle of winter in order to serve electric generators,” says Spectra’s Mr Yardley.
Some in the environmental community acknowledge that gas is an improvement on oil and coal, and a crucial backstop for renewables. But they say that a pipeline building spree would lock in consumption for decades, undermining gas’s usefulness as a “bridge” fuel leading to cleaner technologies. Jonathan Peress of the Environmental Defense Fund points out that a typical gas pipeline can last 50 years or more, with financing backed by long-term contracts.
Investors warn that a rush to build could leave too many pipes. Matt Sallee, portfolio manager at $15bn fund manager Tortoise Capital Advisors, says that while the north-east suffers “very constrained” pipelines today, those on the drawing board could lift capacity well above anticipated production levels.
“If everything gets built, would we be oversupplied?” he asks. “The answer is yes.”
When Donald Trump addressed a shale gas conference in Pittsburgh last week, he said fossil fuel infrastructure projects were mired in a “regulatory limbo”.
“Now if I’m president, they’ll happen quickly. I can tell you that,” the Republican presidential nominee told the crowd. “Happen very quickly — you’ll be amazed how quickly they’ll happen.”
Such pledges will not necessarily help Mr Trump win Pennsylvania — a key battleground state where Hillary Clinton is leading the polls. The state’s stunning growth in energy production has taken place far from voters. About 55,000 people worked in natural gas extraction or industries that serve it during the first quarter of 2016, according to the state’s latest estimate. That is less than 1 per cent of all non-farm jobs in Pennsylvania.
Terry Madonna, director of the Franklin & Marshall College Poll, says the gas industry fails to rank as an issue because wells and equipment are in rural areas. “It’s out of sight, out of mind,” he says.
Now that more pipelines are moving gas to cities, the industry is increasingly visible. “You have people who live near several of these things and they don’t have time to handle everything coming at them at once,” says Alex Bomstein, senior attorney at the Clean Air Council in Philadelphia.
Mrs Clinton asserted this year that after she imposed new regulations as president there would not be “many places in America where fracking will continue to take place”.
However, the Democratic candidate’s campaign website says gas “can play an important role” in reducing energy costs and pollution. It says she promotes financing for pipelines that would help households abandon heating oil as a winter fuel.
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