The Marcellus Shale industry shouldn't discount new regulations outright, according to the head of one major midstream player.
With new gathering lines snaking across the Appalachian Basin and local municipalities crafting increasingly restrictive zoning codes, companies should be willing to consider beefing up pipeline safety programs like the Pennsylvania One Call System, and backing a statewide zoning standard, Martin Fritz, president of EQT Midstream, told an audience in Pittsburgh on Wednesday.
But, Fritz said, companies must also be willing to engage people "one-on-one" to clear up misconceptions about the industry.
Fritz believes growing opposition to Marcellus Shale development is a result of the region not being used to the amount of industrial activity it's seen over the past few years. "It's key to be a good corporate citizen and establish the outreach programs or your projects will get held up. You and your employees must also educate our neighbors on a grass roots basis," he told the audience at Hart Energy's Midstream Marcellus conference, presented by Midstream Business magazine.
EQT is one of the oldest and most active companies in the Marcellus Shale, holding 3.5 million acres, 5.2 Tcfe of proved reserves and 32 Tcfe of total resource potential. It's also one of the few integrated players in the region. EQT Midstream owns 11,670 miles of pipeline -- including the 770-mile Equitrans Pipeline -- 256,000 horsepower of compression and 63 Bcfe of storage.
The industry might see natural gas as being cheap, clean, abundant and American, but Fritz noted that many in the public -- include the people living among development -- view it as dangerous, polluting, unregulated, noisy and carpetbagging.
While he doesn't expect highly opinionated people on either side of the debate over development to ever change their minds, Fritz said, "What I've found in my community is that there are a lot of folks in the middle, and they're confused."
Companies can't depend solely on industry groups like the Marcellus Shale Coalition because "many times, frankly, they're perceived merely as industry propaganda," he said. "If we're going to be effective, it's going to come down to each of us."
That means companies should "acknowledge that this is an industrial process and mistakes will happen," but also show how "effective safety and environmental practices are good for business and obtaining domestic energy is critical to our economy."
"I've spoken with nonindustry folks, who literally had "Drill, Baby, Drill" signs in their yards in the last election, who are now very concerned about Marcellus based on what they now read and hear," Fritz said. "While a lot of these concerns have been focused on the production companies, the focus is now shifting to midstream companies also."
Pennsylvania and West Virginia do not have as much existing transportation infrastructure as Texas or Louisiana, so midstream companies are scrambling to build thousands of miles of gathering line to support new wells across the Marcellus Shale.
Fritz said many residents don't realize that explosions like the one in San Bruno, CA, took place on utility pipelines and not gathering lines, and that gathering lines are still statistically the safest way to move natural gas over long distances.
While state and federal pipeline notification systems, like 811 and One Call, have made a "huge difference," Fritz believes those programs need to increase penalties for violators and repeat offenders and remove exemptions for municipal utilities.
Because of local opposition, Fritz said, local governments are becoming increasingly restrictive, especially for midstream operations. He noted that some zoning codes restrict compressor stations and pipelines to a single location in town.
"I think you're going to see more of those," he said, meaning that project timelines will expand.
Fritz said he believes in free enterprise "until there are problems" that need to be addressed. If you say "absolutely no" to regulation, he said, "you become perceived as irrational and then you get perceived as being part of the problem."