November 29, 2008
Eastern gas fuels 'a little gold rush'
Drilling rises in Marcellus shale
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HOUSTON, Pa. - Illuminated drilling rigs glow for miles from atop flattened hills when night falls in this rolling farm and coal country in southwestern Pennsylvania.

Tanker trucks back up traffic on two-lane roads, and Texans wearing heavy coats and muddy boots fill Shelley's Pike Diner at lunch as landowners hope royalty checks will make them rich.

The deteriorating economy and a drop in natural gas prices has slowed a rush to snap up mineral rights to the thick, black rock called Marcellus shale, which stretches deep underground from West Virginia to New York state and could become the nation's most prolific natural gas reservoir.

Drilling goes on, though, as exploration companies seek to make their investments pay off, changing places like Houston, an old iron and steel town near Pittsburgh, which has become the epicenter of the exploration boom.

Even amid the nation's economic troubles, the companies have a powerful incentive to keep going. Natural gas produced and sold in the East commands a higher dollar than the gas now extracted and transported from fields in Texas, Louisiana and other mid-continent states.

"It's in the middle of the best place in the world to sell gas," said John Pinkerton, chairman and chief executive of Range Resources Inc., of Fort Worth, Texas.

Range Resources and several other major players say they even plan to increase their drilling in 2009, helping the Marcellus shale region avoid the bigger pullbacks happening in other, more established gas fields in places such as Texas and the Rocky Mountains.

So far, several dozen wells have been hooked up to pipelines that carry the gas to customers, said Penn State University geoscientist Terry Engelder, but that number could climb into the hundreds within a year, as companies extend pipelines and hook up the more than 400 wells that officials in West Virginia and Pennsylvania say are completed or almost complete.

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