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50 Infrastructure 1 (2010-2011)

handle is hein.journals/infrastr50 and id is 1 raw text is: ABA SECTION OF PUBLIC UTILITY, COMMUNICATIONS AND TRANSPORTATION LAW Vol. 50, No. 1, Fall 2010 The Emerging Impact of Shale Gas Resources By John W. Rowe and Ed Fortunato he first natural gas well in the United States was a shale gas well. In 1821, a 27-foot well was dug deep into a Devonian shale formation in Fredo- nia, New York, and the gas was piped through a wooden pipe to the town to illuminate its streets. In 1839, a geological survey team found gas in a shale formation outside the town of Marcellus, New York, and named it Marcellus Shale. The Marcellus Shale formation begins in central and western New York, and travels through central and western Pennsylvania into West Virginia. Originally, the formation was not considered viable due to the depth of the formation-almost twice as deep as others in the area. Today, 170 years later, we have moved from 27-foot- deep wells shoveled straight into the ground to wells that are thousands of feet deep and drilled horizontally. Technological advances allowed for the rediscovery of Marcellus Shale in 2008, and have since provided the drilling capability to extract large amounts of natural gas at competitive prices. In fact, the Marcellus Shale discov- ery in 2008 marks the beginning of a paradigm shift in long-term gas production according to Terry Engelder, a professor of geo- sciences at Penn- sylvania State University.' This shift represents a move away from importing natural gas into the east- ern United States and towards John W. Rowe Ed Fortunato john W Rowe is the chairman and chief executive officer, and Ed Fortunato is the manager of proprietary trading and fun- damental analytics at Exelon Corp. in Chicago, Illinois. domestic sources and international exports. Shale is a fine-grained sedimentary rock that may contain high concentrations of natural gas. Shale gas is a growing source of current and future natural gas supply in the United States and currently represents about 17 percent of total U.S. supply.' The Pennsylvania Depart- ment of Environmental Protection (Pa DEP) stated that Marcellus Shale production could contribute up to 10 percent of the total U.S. natural gas supply by 2014. Deregulation of Natural Gas and Electric Industries The natural gas and electric industries are very simi- lar both in structure and operation. Prior to deregula- tion, local natural gas and electric utilities handled all three phases of the business (supply, transmission, and continued on page 8 ALSO INSIDE: Net Neutrality: Point and Counterpoint . . . PAGE 3

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