Thursday, March 31, 2011

Stars Aligning For Pittsburgh

“Natural gas has been the most hated energy commodity of the past several years,” Holland said. That said, natural gas has been priced regionally and is starting to be priced on a worldwide basis, something Holland thinks will speed up as the world reacts to the nuclear energy problems currently playing out in Japan. “We’re still a couple, three years from [liquid natural gas] becoming part of the global energy trade, but we’re getting there every day.”

<---End Update--->

For the Marcellus Shale play, yesterday was full of good news. President Obama sent a strong signal to the natural gas industry. The market's response was overwhelmingly positive:

But [Obama] did include a couple of pearls that investors are paying attention to: a pledge to have federal agencies buy only alt-fuel vehicles by 2015 and a promise to expand U.S. oil exploration and production.

The former notion has kicked the natural gas complex higher, led by Westport Innovations, a maker of natural gas engines. Westport is up more than 13% on heavy volume. Clean Energy Fuels is up nearly 9% and Fuel Systems Solutions is up more than 7%.

To summarize, the federal government will get behind the effort to increase domestic demand for natural gas. Apparently, the nuclear disaster in Japan and the unrest in the Middle East trumps the public concern about groundwater contamination from mining shale (particularly the Marcellus Shale) for gas. Geopolitical events are conspiring to push through a favorable policy for hydrofracking.

Where does that leave Westinghouse and the nuclear industry? Surprisingly, all systems are a go:

For the United States, nuclear power has become an export industry. And here in western Pennsylvania, production is going full tilt.

Westinghouse, which two years ago moved into a 750,000-square-foot office complex here, looks more and more like Boeing or General Motors, a company that designs crucial parts, makes some and farms out the manufacture of others, and integrates components from all over the world. The four Chinese reactors have generated about 5,000 jobs in the United States, at Westinghouse and related companies, said Aris Candris, chief executive of Westinghouse Electric. The company had hoped for many reactors to be under construction in this country by now, he said, but “overseas projects are growing a lot faster than we are and are picking up the slack.”

Energy demand in developing countries is such that there is ample appetite for the hazard risks associated with nuclear power. Furthermore, Westinghouse is in a position to learn from Japan and build a much safer reactor. Contracts abroad are booming and show no signs of slowing down. In fact, exports should increase.

The future for energy jobs in Southwestern PA just got a lot brighter. Go ahead and roll the dice on Pittsburgh. It is a strong bet to attract a lot of talent over the next few years.

1 comment:

Paul Wittibschlager said...

Nice article in today's Pittsburgh Post-Gazette about storage tank fires at Chesapeake Energy well sites. To quote a small portion of the article:

"Both events caused significant threats to public health."

Be careful what you wish for. Development that does not respect the environment and social fabric of the community will devastate that community over time. The developers are generally pure capitalists with no long term interest in making a sustainable community. It does not matter if you're drilling for gas or building strip shopping centers in the suburbs.

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