Centre County's Marcellus shale lies thick with gas, but most of the drillers with local landholdings are shifting their attention to other areas of Pennsylvania. In fact, only 51 Marcellus wells have been drilled in Centre County as of January 2011, representing a small fraction of the 2,596 Marcellus wells drilled in the state since 2005.

About half of all Marcellus wells have been drilled in Bradford and Susquehanna counties, on the New York border. Greene, Washington, Fayette and Westmoreland counties, in the southwestern part of the state, have also seen drilling on a much larger scale than Centre County.

A lack of midstream infrastructure is the major factor holding up drilling in the county, according to Bob Watson, associate professor emeritus of petroleum and natural gas engineering at Penn State.

"Companies that have been developing Marcellus shale have been favoring areas where transportation for their gas is readily available, particularly in the northeast and southwestern parts of the state," Watson says.

Companies working to lessen the shortage in midstream capacity include Superior Appalachian Pipeline, which is planning a 14.5-mile pipeline in Centre County, and Houston-based Anadarko Petroleum Corp., which hopes to construct a 30-mile line through Centre and Clinton counties.

"What we're doing (in Centre County) is going in and drilling the wells, then waiting on the midstream capacity to catch up," says Anadarko Petroleum Corp. spokesman, Matt Carmichael. "It's one of the many challenges all Marcellus shale operators are facing, but we're very hopeful that we can continue to ramp up our capacity over the course of the next year."

Drilling a Marcellus well is expensive, costing millions of dollars, and all but the largest companies hesitate to make such a big investment without the immediate ability to recoup their money. Building new pipeline is also costly, with an average price of about $1 million per mile.

A lot of factors go into figuring out the best course of action, says Susan Oliver, a spokeswoman for Williams Cos., a drilling and midstream company that controls thousands of acres of leases in Centre County.

"In some cases, somebody else has midstream already in place that you can basically tap into. Sometimes you have to build a whole new gathering system. It's a big factor. Every company takes a look at it, asking themselves, 'What's the most sensible business arrangement?'" she says.

"It's not an easy decision. The concerns of the community and landowners, environmental factors, the geology of the land, all the regulatory and permitting requirements, all that comes into play when you start developing a gathering system."

Complex process

Installing a new pipeline in Pennsylvania is not a simple process, as the hilly, rocky topography complicates the placing of pipe, as do the state's ample wetlands and natural areas, which are protected by state and federal regulations.

The many regulators with oversight of pipeline construction also can slow down the buildout process. Interstate pipelines are regulated by the Federal Energy Regulatory Commission, and intrastate projects are controlled by the Department of Environmental Protection. In addition, other regulators with a voice in the permitting process include the U.S. Army Corps of Engineers, the U.S. Fish and Wildlife Service, Pennsylvania's Department of Conservation and Natural Resources, as well as the state's Game Commission and Fish and Boat Commission.

On the local level, permits for new pipelines are reviewed by local authorities—for example, the Centre County Conservation District inspects pipeline permits for erosion and sediment pollution controls.

Going forward, permits could take even longer to process. Due to the recent recession, state and local budget constraints have taken their toll, and might continue to do so during the next few years, according to conservation district manager Bob Sweitzer.

"Receiving a tidal wave of permits could be a concern," he says. "We had to eliminate a position last spring because of the economic downturn, so we have currently two erosion-control resource conservation coordinators who are responsible for monitoring erosion and sediment-pollution control. If there's a lot of permit activity, including the gas pipelines, staffing levels could certainly be a concern."

Centre County's Marcellus reserves have proven themselves ample, ensuring more major infrastructure projects will occur, says Bob Riga, general manager of marketing at Spectra Energy Corp., a pipeline company. But pipeline construction has been delayed because exploratory drilling didn't happen here until later than in other parts of the state, he says.

"What you often see is a Catch-22 situation, where producers need to know there's pipeline capacity available before they drill ... but at the same time, pipeline companies want to know there's going to be gas available before they put pipe in the ground."

Now that mineral rights to most of the Marcellus shale land in the county have been leased, companies are sharing more information to get a fuller picture of the gas reserves there. That's finally speeding the process up, he says.

Most of the pipelines planned for Centre County will transport gas north into Clinton and Clearfield counties and the major storage basins in that area. Major gas transportation pipelines, such as Williams Cos.' Transcontinental Gas Pipeline, Spectra Energy's Texas Eastern Transmission, Dominion Resources Inc.'s Dominion Transmission and National Fuel Gas Supply Corp.'s pipelines, all have major lines leading into and out of the storage fields. Then they source out the gas to the major East Coast markets of New England, New York, New Jersey and Philadelphia.

New projects

Sandra James, a spokeswoman for National Fuel, says her company has several projects planned to increase its carrying capacity for Pennsylvania's Marcellus gas, including an 82-mile pipeline to run through Cameron, Clearfield and Clinton counties.

"The current pipeline capacity in the area is approximately 8.3 billion cubic feet per day. The anticipated market production by 2020 is 5- to 6 billion cubic feet more than that, so there's definitely a need for that additional capacity," James says.

National Fuel will spend $260 million on the project, but that's just a portion of the billions of dollars in pipeline-related construction expected in the coming years. All that spending will be felt at the local level, James says.

"That one pipeline creates 375 jobs during each phase of construction. You'll have people staying in hotels, impacting the local economy in so many ways," she says.

And National Fuel is not the only midstream enterprise to benefit the community in a big way. According to a fact sheet supplied by the company, Spectra Energy makes annual property tax payments of some $500,000 to Pennsylvania communities in which it maintains facilities.

Gas pipelines also necessitate the construction of processing plants and relay stations, which require permanent staffing even after they come online. There has also been some construction of water pipelines to transport fresh water to gas well sites and transport wastewater away from the site during the well-stimulation process.

Watson, of Penn State, calls the Marcellus shale play an "opportunity" for Centre County, but warns it's still too early to know exactly what's going to happen locally.

"Everybody is making these big predictions, but people have to take a few deep breaths," he says. "It's still a very new undertaking. We're still trying to get a handle on how good or bad the wells here are. That will determine how the play will play out."