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Natural gas: Why we all have a stake

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A well written and insightful piece of prose, written for an Ohio Newspaper, that is well worth the time to read.
Newsflash-- New York State is NOT the center of the universe. The gas and oil we use must come from somewhere and as New Yorkers we pay a big price for our limited political insights, socially and economically. Our state would be far better off if we harvested the gas under our feet and took advantage of the reduced costs we would experience, together with dramatically increased tax revenues, that could benefit all of us.JLCpulse
Written by  Mike Jacoby in Zanesville Times Recorder  OpEd. 8/12/2012

If you have read a newspaper just once in the past nine months, you probably are aware of some pretty dramatic developments in the American energy market. Sadly, too often, I think the coverage misses the underlying significance of the economic and geopolitical shifts occurring in front of our eyes.

A relatively new technology, horizontal drilling, has been combined with an old technology, hydraulic fracturing, to unlock natural gas and oil from dense shale formations more than a mile below the ground, all across the country. As a result, we are enjoying the lowest natural gas prices in a decade and predictions of a bountiful supply and low prices far into the future.

Perhaps the biggest natural gas reserves are to our east in the Marcellus Shale in Pennsylvania, West Virginia and far eastern Ohio. The Utica Shale, which lies below roughly the eastern third of Ohio, holds great promise because of its mix of natural gas, natural gas liquids and petroleum found in the formation. These resources have the potential to greatly assist the region and the country.

The economic benefits are far-reaching. Billions of dollars already have been paid to Ohio landowners for mineral leases by natural gas and oil exploration and production companies. Ohio manufacturers are hiring workers to supply pipe, compressors, tanks, and trucks for the industry. Muskingum County's own Producers Service Corporation is building a new fleet of trucks. Eastern Ohio, including Muskingum County, is benefiting from the location of service companies that support the exploration and production companies. Local large manufacturing companies such as AK Steel are benefiting from a large supply of affordable natural gas to produce steel at competitive prices.

Dresden Energy, owned by AEP subsidiary Appalachian Power, opened a more than $300-million natural-gas-fired power plant south of Dresden earlier this year. Utilities are building new natural-gas-fired plants to maintain reliable power service as aging coal-fired plants are going off-line because of a combination of environmental regulations and prohibitive capital costs to upgrade the plants. As the electric bill impact of these retirements starts to show up, the low price of clean-burning natural gas now and in the foreseeable future helps offset that impact and eases the pain for Ohio and the country.

Aside from economics, I think we all need to be reminded of our stake in having a supply of these fuel sources close to home. The majority of people reading this column probably rely on natural gas to heat and, with growing frequency, power their homes and businesses. Again for most people, gasoline (refined from oil) fuels our vehicles. We should not disengage our comfort and convenience from the true costs of these resources.

The supply chain for these fuels historically ties us to global conflicts in places I dare say we would care very little about otherwise. For decades, American servicemen and servicewomen have died, and trillions of U.S. dollars have been spent on the other side of the world because American national security was irrevocably tied to our energy dependence.

Domestic natural gas and oil from shale is shifting the balance of power, as measured by energy supply. Shale gas is the major contributor to the U.S. becoming the largest producer of natural gas -- so large that we are shifting to exporter rather than importer status. The challenge for oil is greater, but the Bakken Shale already has made North Dakota the second biggest oil-producing state. As reported in the Wall Street Journal: the U.S. Energy Information Administration predicts that by 2020, half of the crude oil we consume could be produced domestically, and 82 percent will come from this hemisphere. The oil cartel OPEC has predicted by 2035 its member countries might not export any oil to the U.S.

The onslaught of stories about the pros and cons of shale drilling will continue. I encourage people to seek facts and context. We all have a stake in the outcome. I think responsibly regulated natural gas and oil production from shale has the ability to be an even greater job creator for Ohio and a significant contribution to America's goal of energy independence. We need more of both.

Mike Jacoby is the executive director of the Zanesville Muskingum County Port Authority.

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