Tuesday, August 02, 2011

Shale Gas Rocks the World in Youngstown, Ohio

From Amy Myers Jaffe's article in the Wall Street Journal last year "Shale Gas Will Rock the World":

"We've always known the potential of shale; we just didn't have the technology to get to it at a low enough cost. Now new techniques have driven down the price tag—and set the stage for shale gas to become what will be the game-changing resource of the decade (see map above of shale gas areas in the U.S.).

I have been studying the energy markets for 30 years, and I am convinced that shale gas will revolutionize the industry—and change the world—in the coming decades. It will prevent the rise of any new cartels. It will alter geopolitics. And it will slow the transition to renewable energy."

An article in today's Wall Street Journal "Left for Extinct, a Steel Plant Rises in Ohio" highlights some new ways that shale gas is rocking and changing the world of Ohio:

"Demand for steel tubes is being fueled by natural gas drilling in the Marcellus Shale. That has brought life to Youngstown, an Ohio steel town that had lost thousands of jobs over the decades. On the edge of the Mahoning River, where once stood dozens of blast furnaces, more than 400 workers are constructing what long has been considered unthinkable: a new $650 million steel plant. When complete, it will stand 10 stories tall, occupy one million square feet and make a half million tons of seamless steel tubes used in "fracking" or drilling for natural gas in shale basins.

France's Vallourec & Mannesmann Holdings Inc., one of the world's largest makers of steel tubes for the energy market, has decided to build the plant here next to an existing facility for two main reasons. Youngstown has an experienced steelmaking work force and the city is at the door of the Marcellus Shale, a natural-gas basin beneath New York, Pennsylvania, West Virginia and Ohio.
Shale drilling, with its network of horizontal pipes, consumes huge amounts of steel tubes and pipe. Steel also is needed to build rigs and excavators for extracting gas.

Meanwhile, increased natural-gas production helps push gas prices lower. That makes steelmakers, which use natural gas for heating, more competitive in global markets as energy costs decline. Forging companies, which make components for drilling equipment and other machines and tools, rely almost entirely on natural gas to heat ovens to 2,300 degrees.

"They need natural gas to make products, which are needed to get the gas that services them," says Roy Hardy of the Forging Industry Association trade group. 

The outgoing mayor admits, "I never envisioned a new steel mill in Youngstown." 

MP: But that was before the shale gas revolution, Mr. Mayor! 


At 8/03/2011 7:13 AM, Blogger rjs said...


At 8/03/2011 8:03 AM, Blogger Colin said...

Note the new steel plant is nonunion.

At 8/03/2011 8:27 AM, Blogger David said...

Please don't abuse the lexicon the term is "frac'ing" NOT "fracking".
The term is an abreviation for the term fracturing, no K in fracturing.

At 8/03/2011 8:39 AM, Blogger Mark J. Perry said...

David: I think you might be fighting a losing battle on that issue, "fracking" is now in common use (WSJ, NY Times, etc.), and nobody is using "frac'ing," except maybe industry folks?

At 8/03/2011 10:07 AM, Blogger Buddy R Pacifico said...

This comment has been removed by the author.

At 8/03/2011 11:57 AM, Blogger Benjamin Cole said...

Moreover, natural gas is easily converted into methanol, currently selling for $1.38 a gallon.


Cars can run on methanol, or CNG.

I salute the shale gas drillers of North America.

At 8/03/2011 12:13 PM, Blogger Mike said...


I read your link and I still don't see where the scam is.
Even IF the price to extract raises by (their doom numbers) 50% over traditional natural gas, the price to produce a megawatt hour would still be just slightly higher than hydroelectric. About the same as onshore wind...and far, far cheaper than the rest of the green energy sources.

At 8/03/2011 12:17 PM, Blogger Buddy R Pacifico said...

"They need natural gas to make products, which are needed to get the gas that services them," says Roy Hardy of the Forging Industry Association trade group."

This might be an example of a perfect harmonious relationship unless the federal government interferes with the forging industry by these iniatives:

1. New EPA natural gas burning restrictions.

2. OSHA reinterpreting Noise Standard Enforcement.

3) National Labor Board overreaching its function by responding to union demands without considering private industry concerns.

At 8/07/2011 7:17 AM, Blogger VangelV said...

Once again Mark you concentrate on the hype rather than the reality. It is one thing to point to a single company and show that it can make money from drilling its shale gas properties. But when you engage in talking about the aggregate you need to show that the industry is making a profit from shale gas production. There is no data to support that claim. I have cited CEOs talking about moving from shale gas to shale oil because of the negative returns on gas. I have cited well production data showing that the EUR numbers were not supported by the real data. I pointed to the financials that showed large negative cash flows. But all I read on this site is the usual hype that may actually get some poor fools to invest in ventures that make no sense.


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