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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

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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