Friday, August 28, 2009

Burgh Energy Report

Increasing demand for energy in China should be news in Pittsburgh. A big natural gas deal between China and Australia is also of interest. And just over the two weeks I've failed to log an energy report, America's natural gas reserves have been all over the news:

The biggest source of greenhouse-gas emissions is electricity generation. Coal, the cheapest fuel, currently produces America’s baseload power: coal-fired plants run constantly to meet basic demand, with natural gas switched on when demand is higher. But gas could play a bigger role: there is a third more gas-powered than coal-fired capacity available. A reasonable carbon price would mean that gas plants would be switched on more often to replace coal. And in the longer run carbon prices will rise under Waxman-Markey, as the House bill is known. This could make gas the preferred fuel for baseload power—and make building old fashioned coal plants uneconomic.

The natural gas industry is making a big political push in the United States and President Obama's green policy narrative would seem to position the White House as behind it. There are plenty of advocates in Congress, as well. This is an economic boon for Pittsburgh:

Many of the Barnett Shale’s biggest operators are shifting resources toward what they see as an amazing opportunity in the Appalachian Basin play, which runs through parts of New York, Pennsylvania and West Virginia. It appears the core area – the richest area – is in southwestern Pennsylvania. ...

... The Marcellus has many advantages, but perhaps the greatest is its proximity to a developed natural gas market.

The northeastern U.S. is the largest and most developed gas market in the world, so there is a price differential where you don't have to pay for the pipeline cost of bringing it up from the coasts, [Terry Engelder, a professor in the Department of Geosciences at Penn State University,] said.

Also, Texas-based companies are already engaged in philanthropic giving:

In addition to being a leader in the development of the Marcellus, Chief also has made a commitment to helping the local communities where it operates prosper and grow. In May, Chief announced a $402,000 donation over the next three years to help fund an anti-gang mentoring program operated in the Pittsburgh Public Schools. In January, Chief donated $50,000 to help families struggling to pay their home heating bills in several Pennsylvania counties. Chief has also funded scholarships, bid on livestock at county fairs and made donations to local fire departments and emergency providers, ensuring continued education and providing safety gear.

I imagine that the investment in regional communities will only grow. The drilling companies are anxious to develop a positive public image. There will be sites in state parks, among other environmental concerns. Not everyone will welcome the coming boom with open arms and managing this natural gas rush will be difficult. Perhaps Chief and others will pay off the City of Pittsburgh's crushing debt?

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