US shale-gas fracking is on the verge on reinvention 

monetery
The Monterey formation in California is just one of many sites that drove the US shale boom

They call it the “doghouse”. In the cramped, metal booth, a hundred feet off the ground, Minor Miller spits a pinch of Copenhagen Long Cut tobacco into a polystyrene cup.

His hand fidgets around the control stick but his gaze barely moves from the drilling-rig floor. There, a steel top-drive spray-painted with the stars and stripes of the US flag lowers a 30ft steel pipe into mud-blackened hands at the drill hole. It will attach to two others before following a thorny-looking drill head as it bores deep below the rolling green of Pennsylvania’s hills.

This drill can reach depths of one mile before the steel tentacle snakes out horizontally as far as five miles away from where Miller mans the control stick. Outside the doghouse, the smell of fuel hangs in the air as 700 gallons of oil-based mud flood into the bore hole every minute to pump the earth back to the surface. It is a 12-hour shift but Miller didn’t make the 900-mile move from Arkansas not to stake his claim to the American shale gas dream. “I don’t mind, I’m here to work,” he says.

The area is thought to be the largest gas field outside of the Middle East, and last year produced over five trillion cubic feet of gas. More importantly, it has played host to a global energy revolution.

Hydraulic fracturing represents the single most important technological driver in shaping the global energy industry this century, by enabling drillers to unlock the enormous reserves once thought to be inaccessible in the layers of shale beneath the earth’s surface.

They call it the doghouse
They call it the doghouse Credit: Ty Wright

The shale pioneers descended on the gas-rich corners of the US, in North Dakota, Texas and Pennsylvania, in a 21st-century answer to the gold rush. From 2005 shale gas production rose every year for a decade. The process transformed the United States from an energy importer to a global oil and gas powerhouse.

But by 2015 the rush of cheap US oil and gas toppled the global energy order, building a glut of supply that triggered the most brutal oil market downturn in history and threatened to snuff out the US oil and gas boom. Opec stood back to watch the shale boom destroy itself as hundreds of rigs shut down under the pressure of falling prices. In the Midwest, few things are done by halves. Not even the boom and bust cycle.

This site is one of 40 dotted through the shale-rich Marcellus formation, which runs through the 60m acres of northern Appalachia. The current rig count is a quarter of the number in the area when prices were at their best, but double where things were at their worst. 

Like Miller, many working in the Marcellus basin are not from the local area. “Most of us aren’t,” says one worker on the edge of a fracking site just a few miles from Miller’s rig. The name badge sewn on to his overalls reads Ron H. He is from Arizona. Beside him is Anthony B, a legal graduate from Florida.

“I was sick of office jobs,” he shrugs. “One of my friends from college called me up and got me into this. That was three years ago.”

At the shale boom peak, as many as 170 shale gas sites in the Marcellus basin fetched prices of $5 per million British thermal unit (MMbtu), supporting over 20,000 jobs. Miller, Ron H and Anthony B have clung on to work even as the Marcellus workforce has plunged to 2,000.

“There’s still money to be made for those who want it,” says Amanda, a pharmacy chain sales assistant in a nearby town. “Shale work still pays well. And some of these guys are working 80 hours a week.”

On the streets, passers-by still relay the tales of those who struck it lucky by selling land to the fracking giants. Some fetched up to $80,000 (£61,000) an acre. Others less, when it emerged that the mineral rights had been severed from the land deeds decades before. Another lost it all by selling up in exchange for a share of the shale revenue – only for the wells to come up empty. Overall the well-kept streets and grand homes of Waynesburg stand as testament to the wealth created by the shale business. So too a town born of the boom.

“None of this was here three years ago,” says Lori Cuervo, the owner of an upmarket gift store on Southpointe’s Main Street. The town is eerily pristine; a living Hollywood film set that sprung up on the disused grounds of a former mental institution to cater to the corporate characters of the shale boom. Rice Energy, EQT, Noble Group. They are all clustered together with petrochemical companies in a town of their making.

Rig hands thread together drilling pipe
Washington in Pennsylvania has also become a hotspot for natural gas drillers Credit: Ty Wright

Eventually the street gives way to luxury apartment blocks and hotels, almost indistinguishable from each other. Then, the manicured green of a golf course.

“This is all shale money,” Cuervo says with an arched eyebrow. The legal firm upstairs may have been forced to move during the downturn as work dried up, but the pace of life is beginning to pick up again.

“We’re just waiting for oil prices to come up again. Not too much, though. We still need to put gas in our cars,” she says.

The price plunged to less than a dollar after the deluge of supply hit the market, and today stands at around $2/MMbtu. It will take at least five years for a significant recovery.

Gas might not sell for as much as it did, but the tight profits and cheap prices have attracted technology firms and petrochemical makers, which use derivatives of the hydrocarbon to create the building blocks of modern life.

“Today shale fracking is a very tech-based industry. At these prices players are making very thin profit margins so you need to be extremely efficient,” says Nick Steinsberger, a godfather of the original fracking boom and architect of its reinvention.

He said that in the glory years Marcellus shale gas was sold for between $5 to $6/MMbtu. “But it’s not going back there any time soon,” he says.

The petrochemical boom has its epicentre in the US but it stretches out to the UK too.

“There is just so much gas being produced. In the Marcellus basin alone frackers produce two and a half times what Britain uses in a day,” he adds.

“Of course, we can export some of that. But it could also be used to fuel petrochemical plants here.” 

Royal Dutch Shell is one of many chemical makers eyeing new plants in the shale-rich region, which could kick-start the local economy. Petrochemicals is a widely misunderstood and overlooked industry, which nonetheless resonates across the energy and manufacturing sectors. 

By refining crude oil or natural gas, chemical engineers produce the building blocks still used to manufacture most man-made products. Environmental activists could be forgiven for not realising that gas-derived polymers are a key ingredient in the paint they use to print anti-fracking slogans on banners and T-shirts. Renewable energy campaigners have propylene and ethylene to thank for the turbines and panels that generate power from wind and sun.

Ineos, the chemicals giant owned by billionaire industrialist Jim Ratcliffe, believes its shale licences in the North and East Midlands could still prove transformational for the shale-rich areas by drawing manufacturers towards the well-spring of shale.

In the meantime, it is importing US ethane in the form of compressed gas via eight ships that shuttle back and forth to bring the boom to its refinery at Grangemouth in Scotland. Of course, it would be easier to frack for shale gas in the licences it holds in Scotland. 

But Ineos’s dreams were dashed earlier this month after Holyrood effectively banned fracking north of the border.

Privately those at the company believe it is a politically motivated stunt to defend their power against anti-fracking Labour Party candidates. Publicly, the company says the move is scuppering the chances of an industrial boom similar to that seen in Pennsylvania.

Jim Ratcliffe, the boss of Ineos, and David Mundell, Secretary of State for Scotland
Jim Ratcliffe, the boss of Ineos, and David Mundell, Secretary of State for Scotland at the Grangemouth plant as the first ship carrying shale gas from the US arrived in the Firth of Forth last year Credit: Getty

“If you go back 20 years to 1997, manufacturing made up around 23pc of GDP in the UK and Germany. This is still at a similar level in Germany, but in the UK it has fallen to 6pc,” says Tom Crotty, a senior board director at Ineos.

“Now, this is not to talk down the success of our financial services sector but it’s worth noting that those jobs are mainly centred in the South East.”  

An industrial reawakening in the UK would see job creation across the country to bring a national rebalancing of the economy.

The economic rationale is there. But so too is the emotional vehemence with which many oppose fracking. The US is home to doubters too, but with more private money to be made than in the UK their calls for caution are lost in the intoxicating ring of the shale jackpot machine.

Beth works in a local hardware store, after the funding for a two-year study into the impacts of fracking ran dry. 

She is unconvinced that the benefits felt by the few are enough to justify the environmental risks that may be faced by the many.

“We didn’t find anything that could be directly linked to the shale drilling,” she says carefully.  “There were some strange things we saw in the results, which we wanted to have a closer look at, but we didn’t have enough grant money.

“I don’t begrudge those people who have made a lot of money from this. Many of them were farmers and it has been a difficult time for them.  But not everyone has benefited from shale, and we just don’t know what the long-term impacts might be.”

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