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Industry Execs Attack Natural Gas Opposition

Energy industry leaders, while directly challenging the opposition, called on the more than 1,600 people attending the Shale Gas Insight 2011 conference in Philadelphia Wednesday to help promote a national energy policy that significantly expands the role of natural gas.

The opposition was represented by several hundred protesters gathered outside the Pennsylvania Convention Center for the conference sponsored by the Marcellus Shale Coalition.

Chesapeake Energy Corp. CEO Aubrey McClendon made a distinction between the protesters and the attendees.

"I'm going to call you 'factivists,' because those people outside consider themselves 'fracktivists,'" he said on the first day of the conference. Among the facts McClendon touted:

"Remind me what value have the protesters outside created. What jobs have they created?" McClendon said. "You know the answer and so do I. So it's time that we contrasted what we do for a living with what they do for a living."

Going on the attack, McClendon said the current natural gas boom "disrupted the dreams of a few who would like to live in a fantasy world with no fossil fuels," adding that if protesters wanted to protect water resources, they would talk about roadway salt and agricultural run-off with the same "outrage" they talk about natural gas development.

After stories of contaminated water supplies in northeastern Pennsylvania ended up being traced to bad well casing, McClendon said the industry helped the Pennsylvania Department of Environmental Protection draft stricter regulations. "Problem identified. Problem solved. That's how we do it in the natural gas industry," he said.

Asked if he was dismissing the concern of property owners, McClendon said Chesapeake now pre-tests water wells within 2,500 feet of its proposed drilling sites and found that 30% are contaminated by naturally occurring migration.

The protest involved several hundred people on the sidewalks outside the conference hall listening to speakers for several hours, and featured signs such as "Drilling Kills Jobs: Tourism, Recreation" and "Frack Causes Earthquakes."

Over and over on the first day of the conference, executives said the industry must become proactive.

"We as an industry must take charge," Range Resources Corp. CEO John Pinkerton said.

As he transitions away from leading one of the most active shale operators in the country, Pinkerton said that by failing to promote natural gas, the country could hamper the industry just as it is yielding benefits.

Some now believe the United States is more energy-rich in natural gas than Saudi Arabia is in crude oil, "but having this resource, as huge as it is, is not enough. To take full advantage of this energy resource we must develop a more robust domestic market for it," Pinkerton said.

Failing to develop that market, he said, could not only have negative environmental and political implications domestically, but could lead to "gas being exported to users abroad" and that "U.S. natural gas could lose out to foreign supplies, whose development is a mere matter of time."

With almost 20 years in his position, Pinkerton is the longest-serving CEO of any energy company in the country worth more than $1 billion. "That tells me it's time to step aside," he said (see Shale Daily, June 28).

Once President Jeff Ventura takes over as CEO next year, Pinkerton -- who said he is "far too young to retire" -- will become executive chairman, a role he said he plans to use to promote natural gas on a large stage.

While criticizing federal officials for failing to develop a national energy policy, Pinkerton praised the work of some states, particularly Pennsylvania, but added that industry should not wait for the federal government to take action.

Pointing to the interstate highway system and the transcontinental railroad, Pinkerton said "a case could be made for government funding of certain infrastructure" for natural gas development. He specifically mentioned the mass conversion of vehicle fleets as one potential area for public sector investment, but added that since "our government is out of money," the private sector "must find ways to do this on our own." The federal government can aid this effort by "allowing the good guys to do their business and cracking down on the others," Pinkerton said.

One way of "allowing the good guys to do their business" is by making sure that regulations don't overwhelmingly restrict industry or "pick winners and losers" in the energy game, according to CONSOL Energy CEO Brett Harvey.

"We're naive to think that low-cost energy did not build this country. We're naive to think that other countries won't compete with us with low-cost energy and probably less environmental standards than what we have," he said.

The energy game isn't just between fossil fuels and renewable fuels, either, Harvey said. CONSOL is a leading producer not only of conventional and unconventional natural gas, but also coal in the Appalachian region.

"I've seen the debate even between coal and natural gas," he said. "It doesn't make any sense. We built a great country on coal, and natural gas has a great place right alongside it and a stronger growth pattern going forward."

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