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Nicholas 'Corky DeMarco: W.Va. is in position to soar

CHARLESTON, W.Va. -- At a time when the national unemployment rate stands at 8.3 percent and 24 million Americans are unemployed, under-employed or have given up looking for work, West Virginia finds itself in an enviable position.

Unlike many other states, we are blessed with abundant natural resources that can be harnessed to create jobs and increase U.S. energy security. One key to West Virginia's energy potential is technology, especially hydraulic fracturing which is unlocking oil and natural gas from deep hard-rock formations, including the Marcellus Shale.

Today, the United States has more natural gas and oil than was estimated just a decade ago. The use of hydraulic fracturing in the Marcellus and other shale formations has prompted the U.S. Energy Information Administration to estimate that the United States has about a 100-year supply of natural gas. As supplies have increased, the price of natural gas has fallen below $3 per thousand cubic feet, helping consumers and energy-intensive industries control their costs.

Hydraulic fracturing also is credited with increasing U.S. oil production. The EIA projects the United States will produce 6.7 million barrels of oil per day by 2020, up from 5.5 million barrels per day in 2010. And increased domestic oil supplies could have an impact on prices, which once again are rising.

"For years, analysts have worried that known oil reserves have peaked, so that prices will keep rising," writes Peter Orszag of Citigroup. Hydraulic fracturing "could change that dynamic," he adds.

If Orszag is correct, oil prices could decline and the United States could be poised to take control of its own energy destiny. With the right policies, including approval of the Keystone XL pipeline, American consumers could have a future without fear of 1970s-style oil embargoes or the saber-rattling of foreign despots. And by producing more of its own oil and natural gas, it could create 1.4 million jobs without a government handout, according to a Wood Mackenzie study.

Jobs are sorely needed. As blogger James Shott at Observations has pointed out, although the government reports that 243,000 Americans found work last month, more than four times that many people -- 1.177 million -- gave up looking for jobs. Federal Reserve Chairman Ben Bernanke recently told the House Budget Committee that the problem of long-term unemployment is "particularly troubling."

While increasing oil and natural gas production will not solve all of the nation's jobless ills, it could provide steady, well-paying employment for workers in energy-rich areas. Here in West Virginia, 35,000 jobs already are supported by the oil and gas industry, and another 7,000 could be created, according to a West Virginia University study.

Furthermore, the state has taken steps to prepare for technology-driven energy development. It has enacted new regulations and environmental protections and imposed a severance tax to ensure that West Virginia residents benefit from the production of the state's energy bounty. We also are competing aggressively for a multi-billion dollar ethane cracker, which is expected to create another 2,000 construction jobs, 200 direct permanent positions and additional chemical manufacturing positions as buildout follows.

The only thing that stands in the way of West Virginia's dominance in energy production is fear -- fear of unfounded and exaggerated reports of groundwater pollution allegedly caused by hydraulic fracturing. Despite the claims of anti-fracturing groups, the U.S. Environmental Protection has found no confirmed cases of groundwater contamination caused by the fracturing process.

At the annual meeting of the prestigious American Association for the Advancement of Science, experts at the University of Texas Energy Institute reported on their study of claims of groundwater contamination. They said: "We found no direct evidence that hydraulic fracturing itself . . . was a cause for concern." There have been surface spills and other mishaps caused by human error, and they have been successfully mitigated.

Nevertheless, the penalties for spills and other accidents can be very costly and companies do not prosper by making mistakes, so it is in their self-interest to drill and fracture wells in a sound environmental manner.

The benefits of hydraulic fracturing and energy development far outweigh the risks. By embracing hydraulic fracturing's potential, West Virginia -- and the country as a whole -- can transition to a brighter energy and economic future and retain technological superiority around the globe.

DeMarco is executive director of the West Virginia Oil and Natural Gas Association.


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