It didn’t take long for Kathryn Klaber to seize the benefits of her four-year role as CEO of the Marcellus Shale Coalition (MSC), announcing just months after resigning the position that she would launch a consulting firm aimed at enhancing the business performance of energy companies and others with a stake in shale gas development.
This time, though, the Pittsburgh native is casting a wide net and looking beyond the Appalachian Basin. She hopes to make the producers, suppliers, transportation companies and others with something to gain during the nation’s latest energy renaissance more profitable and better-suited to handle the complex political, regulatory and very public challenges of a high-profile industry.
Klaber has moved on after having built the MSC from its infancy into a well-respected regional organization with hundreds of members in the industry (see Shale Daily, July 29, 2013). On Wednesday, she announced the launch of her latest venture, The Klaber Group, which will provide its clients with everything from energy and economic policy experience to corporate benchmarking and water management planning.
“I wrapped up my tenure last fall with the coalition after four years, and after taking that from its inception to being a very effective organization by many accounts, what I was finding was a lot of the advice and information provided to our members had a lot of value to individual companies concerning how they go about their work,” Klaber told NGI’s Shale Daily during a break from a schedule of meetings and other business on Friday. “The interest from clients and potential clients was there. There is huge demand.”
Already, Klaber said, her new consulting firm has a “nice book of business.” In Pennsylvania alone, as production has pushed ever-higher, increasing by more than 70% in recent years, the industry faces new challenges as it develops the Marcellus and other formations at an astonishing pace. Those challenges are nuanced, Klaber said, ranging from political issues, to a growing regulatory framework and regional concerns over water and environmental degradation.
The Klaber Group will help clients manage public risks. On its website, the firm cites a McKinsey study that estimates that the business value at stake from government and regulatory intervention is enormous: about 30% of earnings for companies in most industries. The firm will work with clients to manage those risks and leverage opportunities created from public-sector actions, registering to advance client interests with both legislative and executive branches of government across the country.
At the MSC, Klaber said she was heavily involved in benchmarking to help companies better understand how they’re performing on certain metrics, like water management, to reduce transportation challenges and resolve logistical issues or provide better data management, a service the group also will offer to interested clients.
“Really, every company I’m working with now and expect to work with in the future had some connection to the MSC or my time at the Allegheny Conference and the Pennsylvania Economy League,” Klaber said. “I look forward to working with companies who face a lot of the same opportunities and challenges across the country and beyond.
“That’s what has been a very important part of my transformation from the MSC — which did have a strong footprint in Appalachia — it’s given me the direct experience of going through a developing shale play and addressing the major issues that need to be attended to,” she added. “That first-hand experience in the Marcellus is very transferable to other basins being developed today. Someone recently asked if I would be interested in doing work in Mexico with what they’re trying to do there. There’s no shortage of places trying to emulate what Pennsylvania has done.”
For now, Klaber is working with individual partners like Ron Pettengill, who are experts in their respective fields. She’s also working on a number of projects with organizations such as the Blue Water Growth firm and the Pittsburgh-based law firm Babst Calland. But as development escalates in shale plays across the country, she said full-time staffers could eventually join her at the firm in the future.
“Katie has recognized that water management in the current environment has moved from not just the tactical but to the strategic,” Pettengill said. “Efficient water management, especially for shale producers, can help drive profitable results.”
To that point, Klaber said water planning goes beyond conventional use-store-dispose thinking. She cited an instance in 2012 when producers voluntarily stopped delivering their water to treatment plants in Pennsylvania and opted instead to look at different disposal methods or how to better reuse the resource. Klaber said that instance was an example of how operators wanted to be “a part of the solution and not the problem.”
“We’ve gone from managing one water stream to a finite number of outlets and challenges are different in every part of the country,” she said. “We have to start thinking holistically about how we are going to sort, treat, reuse and even sell water for use in the industry. We have to start solving some of these legacy problems and the Klaber Group can be a partner in putting together these kinds of solutions.”
Closer to home, with clouds seemingly forming over the industry in Pennsylvania, as lawmakers float more severance tax proposals to replace the state’s impact fee and a recent decision on Act 13 that poked a hole in centralized regulation (see Shale Daily, Dec. 20, 2013), Klaber said the lessons learned in the state have applications far beyond its borders.
“Pennsylvania has really stood out as a place where this industry can flourish. What we’re facing right now with Act 13 is uncertainty as to what the returns are going to be like going forward,” she said. “That doesn’t mean Pennsylvania is out of the running for all this capital, but it’s a call to action from those who have benefited from the Marcellus to stand up and make things clear so policy makers can have support to make the right decisions.”
As the unconventional industry continues to evolve in the U.S., Klaber said infrastructure, processing and cracker plants will become regional matters, “because they’re not just going to carry and process gas from one state.”
“We have to look at these challenges elsewhere and in Pennsylvania as not just the challenges of one state or one place,” she said. “We have to look at these things as problems that will affect the country as a whole, and our firm is well-positioned to overcome these increasing challenges.”
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