Peacock Tales • Fall 2018
By: Aaron W. Smith
Pennsylvania is known as the Keystone State and it could be said that Pennsylvania is the keystone on the long arch of the global energy industry. Innovations have been spurred by Pennsylvanians, from the first commercial oil well drilled by Col. Joseph Drake to William Zagorski, the Baldwin Borough native who helped piece together the Marcellus Shale geologic data and horizontal drilling technology that continues to place Pennsylvania at the forefront of reshaping the world’s energy economy.
Since Drake’s Well first struck oil in what is now Titusville, Pennsylvania in 1859, Pennsylvania has been a driver of the global energy industry. Pennsylvania helped to light the world by decreasing the cost of kerosene and moving the world away from whale oil as the dominant fuel for home lamps. The rush to transport this new valuable energy source pushed innovation and in 1865, the first pumped oil pipeline in the world was constructed from Pithole, Pennsylvania, roughly 5 miles to the Miller Farm Railroad Station. By the end of the 1920s, pipeline construction grew to over 115,000 miles in the United States. As oil became the dominant source of home lighting, industries continued to grow, increasing employment opportunities in the many fields related to discovery, processing, transporting and consumption of oil. The commercial production of oil that began alongside Oil Creek in Titusville brought with it affordable and accessible light to homes across the country, and sparked an industrial age that would increase the country's manufacturing economy from $3 billion dollars in 1869 to $13 billion by 1900.
As crude oil continued its rise to dominance as the world’s fuel source, the abundance of bituminous coal under Western Pennsylvania would propel the United States to lead the world in steel production, including the production of steel rails for railroads. Utilizing coked bituminous coal and Henry Bessemer’s “Bessemer Converter," Andrew Carnegie revolutionized steel production in the United States, streamlining production and decreasing its previously sizable cost.
The United States, led by Pennsylvania, grew steel production from 380,000 tons in 1875 to 60 million tons by 1920. Pennsylvania’s coal also helped to fill the United States' growing appetite for electricity. America’s power plants relied upon this abundant resource to fire its ovens through the end of the 20th Century and to fill the United States' growing appetite for electricity.
Then, in 2004, Pennsylvania witnessed a game-changer. Although hydraulic fracturing (“fracking”) has been around for decades, it wasn’t until early 2004 that industry leaders realized that similar technology could potentially be used to extract trillions of cubic feet of natural gas from the Marcellus Shale formation in Pennsylvania, Ohio and West Virginia. In 2007, the new technology was introduced to the public, and the results of the fracking efforts in the Marcellus Shale Formation made Wall Street take notice. Investment capital began to flow into Pennsylvania as numerous companies joined in the exploration and production of natural gas. With these industries came job growth, and according to a 2016 study by the Pennsylvania Department of Labor and Industry, an estimated 52,531 Pennsylvanians work in natural gas extraction industries. By combining fracking technology with the vast natural gas reserves of the Marcellus Shale, Pennsylvania sparked a shale revolution that will transform the United States into the world’s largest exporter of natural gas by 2022.
With the rise in production of natural gas in the region, manufacturing, production, and chemical industries are taking notice. In mid-2016, Royal Dutch Shell committed to building an ethane petrochemical complex in Beaver County, Pennsylvania, an investment in construction of at least $6 billion dollars that will create 6,000 construction jobs and 600 permanent jobs once completed.
Pennsylvania’s multifaceted history of industriousness and entrepreneurship in the energy industry has provided numerous advances in technology as well as economic growth. As developments in technology continue and new industries sprout, Pennsylvania is well-positioned to move forward as the tip of the spear in transforming the United States into an energy powerhouse built for the 21st Century and beyond.
For over 60 years, the lawyers of Peacock Keller's Energy Group have counseled clients on a wide variety of energy-related matters. We have been here, in Southwestern Pennsylvania, to assist our energy clients and will continue to be here long into the future.
Peacock Keller, LLP • 70 East Beau Street • Washington PA 15301 • 724-222-4520