The public debate over shale gas came to a head in Philadelphia last week, as industry executives touted their achievements, government officials praised and criticized those developments, and protestors shouted from the street outside the two-day Shale Gas Insight 2011 conference hosted by the Marcellus Shale Coalition (MSC).

Energy industry leaders called on the more than 1,600 people in attendance at the Pennsylvania Convention Center to push for a national energy policy that significantly expands the role of natural gas, saying the fuel would create jobs, improve the economy, promote national security and lead to a cleaner environment. Meanwhile, several hundred protesters outside said that shale development would kill jobs, harm people and destroy the environment.

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.

McClendon said Chesapeake employs around 12,000 people; has paid some $16 billion in lease bonuses, royalties and taxes in the past five years; and is redirecting at least $1 billion to stimulate demand for natural gas (see NGI, July 18).

“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.”

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 be proactive in battling opposition.

“We as an industry must take charge,” Range Resources Corp. CEO John Pinkerton said. By failing to promote natural gas, the country could hamper an industry just starting to yield benefits, he said. “To take full advantage of this energy resource we must develop a more robust domestic market for it,” Pinkerton said.

Failing to do so, he said, could lead to “gas being exported to users abroad” and the “U.S. natural gas could lose out to foreign supplies, whose development is a mere matter of time,” in addition to economic and environmental impacts.

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 NGI, July 4a). 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.

Although Pinkerton approves of public sector investment in natural gas infrastructure, he said that the current economic climate in Washington, DC, means the private sector “must find ways to do this on our own” and added that the government could help by “allowing the good guys to do their business and cracking down on the others.”

The government can help by not picking energy winners and losers, according to CONSOL Energy Corp. CEO Brett Harvey (see related story). “We’re naive to think that low-cost energy did not build this country,” he said. “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.”

The game isn’t just between renewable and nonrenewable fuels, he said. CONSOL produces both natural gas and coal, and Harvey said proponents of the two fuels are often at odds. “It doesn’t make any sense,” he said. “We built a great country on coal, and natural gas has a great place right alongside it and a stronger growth pattern going forward.”

But for industry to win over the public, it must hold itself to higher standards that could push some smaller players out of the shale game, according to Paul Smith, head of North American operations for Talisman Energy Inc.

“In the eyes of our stakeholders, I am a firm believer that all of us in this industry are only as good as the operator with the lowest standards, and this poses a major challenge in a fragmented industry with hundreds of shale gas operators,” he said. “I believe further industry consolidation is inevitable, as industry and regulators come together to raise the bar.”

Many operators now disclose the chemicals they add to hydraulic fracturing fluids, but “local regulators will need to enforce disclosure in order to force reluctant players to join the rest of the industry,” he said (see related story).

The industry should also strive to recycle 100% of the water it uses “and nothing less,” a goal that Talisman has “almost achieved” in the Marcellus, Smith said. But, he added, the U.S. Environmental Protection Agency could help matters by making it easier to permit and use injection wells to eliminate the need for water disposal facilities.

The conference wasn’t all cheers, though. “This industry, frankly, has been a great disappointment to me,” former Pennsylvania Gov. Ed Rendell told the crowd.

Rendell said he continues to support shale development, but believes the industry “screwed up” by not offering to pay a natural gas severance tax, by not incorporating its subsidiaries in Pennsylvania and by amassing a history of violating state environmental standards (even if, he said, those violations aren’t always as severe as industry critics claim).

Despite receiving applause, the message did not go over well. “The former’s governor’s attempt to rehash issues that have long been resolved is stale and outdated,” MSC President Kathryn Klaber said following the speech.

Rendell supported a severance tax proposal that passed the state House but later died in the state Senate (see NGI, Oct. 25, 2010). A tough economy put a hole in the Pennsylvania budget this year, and to avoid raising taxes lawmakers cut many services (see NGI, July 4b). Rendell suggested that the industry proactively request a tax for itself.

“The fact that the shale companies do not pay a severance tax has become well known by virtually every advocacy group in the Commonwealth, and it is the whipping boy for those groups,” he said.

But Pennsylvania Department of Environment Protection Secretary Michael Krancer said the state gets visitors from around the world looking to learn from its standards and enforcement. “I think Pennsylvania has the model program in the United States and the world with respect to the regulation and oversight of this industry,” he said.

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