Shale drilling boom a bust for some Western Pennsylvania towns
John Mollenauer has viewed the prosperity raining on western Washington County from the Marcellus shale boom with all the longing of a kid staring through a candy store window.
He’s watched the demand for new homes soar in Cecil and North Strabane.
He’s seen high-end restaurants, hotels and retail outlets spring up to meet the needs of a burgeoning population in Peters.
And he’s looked on as dozens of gas companies set up camp in ultra-modern, glass-and-steel office buildings, generating more jobs than they can fill.
But Mollenauer, 79, in his second year as mayor of Charleroi, has heard barely a whimper of that boom in his struggling river town or anywhere else in eastern Washington County.
It’s all part of the “great shale divide” that some say has split the county into the haves and have-nots.
“We don’t see people clamoring to fill jobs or hotel accommodations in the Mon Valley,” Mollenauer said. “We don’t see that coming our way.”
“I call (Interstate) 79 the Mason-Dixon Line,” said state Rep. Peter Daley, D-California. “We live in the state of the Mon Valley, and they (residents of the western part of the county) live in the state of Washington County.”
Growth and decline
The numbers tell the story.
Since 2000, North Strabane has had its population jump by 35 percent to 13,580, while Cecil, home to the sprawling Southpointe business and residential complex, has experienced a 17.4 percent increase to 11,459. The changes are largely attributed to a surge in gas-related jobs.
A trip down two main roads in the western part of the county — Interstate 79 and Route 19 — shows housing developments springing up everywhere, along with billboards seeking applicants for gas drilling positions.
Caravans of tanker trucks hauling water and sand to drilling sites are constantly on the move, and license plates from oil-rich Texas and Louisiana are evidence of the influx of workers who are putting their drilling skills to work in Western Pennsylvania gas fields.
“We’re going crazy. … We did 20 (home building permits) in January. We never did 20 homes in the month of January,” said Don Hindman Jr., a building code official in North Strabane, where 112 permits were issued for single-family homes in 2013, followed by 150 last year.
Nowhere is the growth more apparent than at Southpointe, the 800-acre complex that is home to 300 companies. Drilling giants Range Resources, CONSOL Energy, Chesapeake Energy and Columbia Gas have set up sleek, contemporary-looking headquarters in there for the past several years. Since 2009, 15 office buildings have been completed at Southpointe, and work is under way on a 34-acre Main Street complex that will feature a 1,400-square-foot Town Center Boulevard with retail space and offices. Luxury homes and apartments are taking shape all over the complex. By the time the project is completed this year, developers estimate 12,000 people will work each day at Southpointe.
“Southpointe has been a huge factor in the growth, if not the stabilization, of Western Pennsylvania. For years we were tracking losses of jobs,” said Jake Ploeger, president of PJ Dick Industrial, a division of PJ Dick, a leader in the construction industry.
“They were on a steady pace throughout the years; shale has just increased that pace,” he said. “I shudder to think what this region would be like without oil and gas.”
Charleroi, Donora and surrounding Monongahela River towns never recovered from the collapse of the steel industry in the late 1970s.
In Charleroi, a year after the town’s only supermarket closed — a Save-a-Lot discount grocer — officials have been unable to lure a replacement.
And Donora, a town plagued by boarded-up storefronts on its main drag, holds out hope that a bank branch will open. Its last bank left town in 2013.
A credit union executive told officials last month that he could not open a branch there because the potential for lucrative loans and mortgages did not exist in the town where the median annual income is $30,849, below the national median level of $53,046.
The towns’ aging residents must travel several miles on Interstate 70 and across the river to Westmoreland County to bank and buy food. The journey has proved troublesome for some, impossible for others.
“What are we doing wrong?” Charleroi Manager Donn Henderson asked. “Every time I read about all this prosperity, I think, ‘How has it helped Donora, Charleroi, Brownsville?’ ”
Mollenauer and Henderson know it’s an uphill battle to turn around their town, where the median home price is $53,938, compared with $260,445 in Cecil.
Tracing the problem
Part of the problem is the type of gas found beneath the Mon Valley, one official said.
Much of the gas in the Mon Valley is the less desirable “dry” gas, according to Washington County Commissioner Harlan Shober. The more sought-after “wet” gas can be found west of Interstate 79.
Dry gas contains methane but little else. Wet gas, meanwhile, contains methane, butane and ethane. These liquid natural gases can be separated and sold on their own, making drilling for wet gas more profitable.
The distribution of impact fees — a $50,000 levy on each large well and $10,000 on smaller ones — tells the tale of where the gas lies. Since the state enacted the fees in 2012, Washington County has received more than $16 million, and communities such as Cecil, North Strabane and Peters outpace Mon Valley towns in getting the money, which can be used for expenses related to natural gas development, such as construction, maintenance and public infrastructure, water and sewer systems and more.
Signs of progress
County officials say the Mon Valley is making gains.
County Commissioner Larry Maggi said a small shale “cracker” plant at the site of a former Wheeling-Pittsburgh steel mill (now an industrial park) at Allenport has been discussed.
A shale cracker extracts ethane from gas and processes it into ethylene, which is then sent to manufacturing facilities where it’s used as a key component in making plastics, resins, adhesives and other synthetic materials.
Frac Water Resources, which supplies water to Marcellus shale drillers, is in the same industrial park along with two sand companies that supply hydraulic fracturing. Water and sand are pumped into wells under high pressure to crack the shale and open cracks, the process commonly referred to as “fracking.”
Frac Water Resources employs 10 people, said its owner, Lue Ann Pawlick, who plans to add two water delivery sites in the region this year.
Maggi is confident that growth will come — but slowly.
“This is a work in progress. It’s a slow process,” he said.
One local expert agrees.
“The shale revolution will continue,” said Bob Strauss, professor of economics and public policy at Carnegie Mellon University. “The country needs the natural gas.
“I’m not surprised that some activity in the Mon Valley is starting to move a little bit,” Strauss said, “but we’re sort of a Rip Van Winkle — always 30 years out of date.”
Craig Smith is a Trib Total Media staff writer.