Is the Boom Over?
Recently I was at a hearing in a rural town in southwestern Pennsylvania before a magistrate for a business dispute. After the hearing, the judge and I got to talking and it came up that I worked as a landman and for a Pittsburgh law firm in mineral title in the past year. His train of thought was clearly broken up by a burning question and he asked, "So, do you think it's over? Or is it ever coming back?" By "it" the judge was referring to the shale gas boom that has changed the face of the area around Pittsburgh and the surrounding states over the past 10 years.
This is a question that, like many other aspects of the oil and gas industry, most of us northeasterners are not quite used to. I can't say how many confused looks I've gotten at the term landman in conversations with people in this area, but in any room with at least one Texas accent I've got at least one guaranteed easy conversation topic. Similarly, the people in this area just are not accustomed to industries coming, growing, busting, and then returning again. Again, if you spoke to anyone who has worked in the oil and gas industry for more than 20 years they'd be able to tell you about the boom and bust cycle that is expected in a volatile and internationally driven industry. These same people can likely tell you about the past slumps where companies consolidate and jobs are trimmed off companies large and small. However these past slumps and the current slump included, are based on the drop in oil prices and not the natural gas we have all come to know well in this region. The problem now is that the shale boom was so productive and efficient in not only producing gas, but in generating more effective technology to continue the process in the future. Now we have a glut of international oil supply without space to store it all domestically, and a glut of domestic natural gas supply here at home without the means of exporting it to keep the demand high. It's a truly tight spot to be in for those who work in the industry, and not exactly the best time for others to advocate alternative energies either with prices so low. It is however, a great time to regulate and dig in as far as the regulatory structure is concerned, to prepare for the next wave of activity to come crashing in.
We are now in that portion of the cycle where companies consolidate power, invest in technology, and get ready for when the next price rise calls for their unique stance in the market. The industry boom generated the local money and new drilling technology that will be ready for the next boom in oil when companies have the wiggle room again to invest in gas output. Hopefully the excess money that was generated will allow for technology to continue progress in a clean energy future and not just on perpetuation of the current regime. Regardless of the form of progress, we should all still be looking ahead at an energy future where we can avoid the external costs of expected disaster and overuse all together. I think the initial boom is certainly over, but the industry is here and will be here for our lifetimes. Though it's a financially difficult time to be a part of the business, it's a perfect time to be a part of the effort to improve its performance internally and for the sake of the public good.
