Shale gas activity fuels growth for Valley companies

Brian Pedersen//August 28, 2012

Shale gas activity fuels growth for Valley companies

Brian Pedersen//August 28, 2012

The process of extracting natural gas from land in these areas has given a boost not only to oil and gas companies, but Lehigh Valley law firms, engineers and material suppliers.

“As more of the core product is produced in Pennsylvania, it will grow – it’s just a matter of identifying opportunities and going after them,” said Jack Pfunder, executive director and CEO of the Manufacturers Resource Center in Bethlehem.

The Pennsylvania Recycling Markets Center Inc. recently formed a business partnership to collect and recycle plastic well pad liners from gas drilling sites in the Marcellus Shale region.

Two Lehigh Valley companies are benefiting by partnering in the venture. WellSpring Environmental Services LLC, headquartered in Orwigsburg, and Ultra-Poly Corp., based in Portland, invested a combined $4 million in research and development.

The center said the venture will reclaim millions of pounds of marketable plastic, slowing the consumption of landfill space, and reduce truck traffic around drill sites.

For companies not located in the Marcellus Shale region, which covers portions of Western Pennsylvania, it can be a tough market to break into. Yet some are finding their niche.

Pfunder said there is a lot of interest from Lehigh Valley companies wanting to get work in that industry, but added that it’s “a difficult industry to crack.”

It’s too big of an industry not to want to get work from, added Pfunder.

Law firms such as Fitzpatrick Lentz & Bubba of Center Valley are acquiring clients, primarily property owners who have tapped into unexpected wealth.

“From our standpoint, we represent a good number of people who may not live there but need to negotiate leases,” said Joseph Fitzpatrick, senior partner at FLB. “They found themselves in a very good financial situation.”

Often, these property owners are getting hundreds to tens of thousands of dollars from gas companies looking to drill at or around their properties which happen to be rich in natural gas.

“They didn’t know they had it five years ago,” said Fitzpatrick.

The firm also provides representation for development that’s going to occur, including housing and retail as a result of the Marcellus Shale drilling.

“We are doing a lot of work for property owners and developers,” said Fitzpatrick. “We also get people from Berks and Lehigh Valley who own land out there.”

For people getting large sums of money, the estate and tax planning forms can be quite complex, said Fitzpatrick, whose firm has practitioners who concentrate in those areas. There’s also an increase in cross referrals, he added.

Matthew Malozi, regional manager for RETTEW Associates Inc., an engineering firm with an office in Allentown, oversees development in the Marcellus Shale region.

About three years ago, RETTEW made the decision to get involved with the work occurring in the Marcellus region so the firm set up offices in Athens and Pittsburgh, Pa. and the Utica Shale region of Ohio, said Malozi.

Although RETTEW’s Lancaster headquarters is based south of the Marcellus region, Malozi said a whole sub-economy has sprouted in the shale region. With a new influx of workers that require housing, hotels, stores and commercial space, many companies are locating in these areas and require engineering services.

“They are hyper-conscious about safety and following regulations to a T,” said Malozi, referring to the companies extracting natural gas from these regions.

His company provides safety consulting, ensures Department of Environmental Protection regulations are followed, and provides pipeline design, site design and engineering.

RETTEW is also investing heavily in safety training. It has hired four full-time staff for internal safety training for the company’s clients.

RETTEW has also created a subsidiary it calls RFI to treat the water that is used in these operations.

“If it wasn’t for our ability to serve the energy producers, we could not have grown as fast as we have,” said Malozi.

From 2011 to 2012, the firm leapfrogged from No. 415 to No.166 on Engineering News Record’s list of the Top 500 Fastest Growing Firms.
Malozi expects the Marcellus growth to continue. Even though it has slowed in Northeast Pennsylvania, it will bounce back, he said.

The unexpected productivity of the wells and the mild winter has helped to secure growth. As confidence in the shale economy increases, more companies will feel confident in investing in the Marcellus Shale industry, according to Malozi.

“There’s a 100-year supply in various parts of the country,” said Malozi.

As a result, it could create a major shift for a lot of truck fleets and transit companies if they decide to invest in natural gas vehicles, he added.

“That could be the real boom to the state economy,” said Malozi. “If the price is low and it presents a cleaner alternative to oil and gas, we would assume those investments would be made.”

With Shell planning to locate an “ethane cracker” plant in the western part of the state and the potential to build infrastructure for natural gas refueling stations increasing in Pennsylvania, this type of growth could continue for quite some time.

On March 15, Shell Chemical LP signed a land option agreement to evaluate a site in the Appalachian region for a potential petrochemical complex. The site is located in Potter and Center Townships in Beaver County near Monaca, according to the company’s website.