Jun 23, 2016 4 min read

PITTSBURGH — A surplus of supply suppressed natural gas prices for more than a year, causing some U.S. producers to curtail or halt operations. The industry consensus is an oil and gas rebound won’t occur until the last quarter of 2017.

Carmine Difiglio does not dispute that, but stressed there are many factors that play on the price of oil, including the current production decline of OPEC countries.

“Oil prices are volatile,” he said. “It’s the brittleness of the oil market that causes prices to stay low. I think the volatility will continue.”

Difiglio, deputy director for Energy Security with the Department of Energy, was the keynote speaker Thursday morning during the closing session of the DUG East Conference and Exhibition at the David L. Lawrence Convention Center. It featured 17 speaker sessions over two days and featured more than 250 exhibitors from the drilling industry and its supply chain partners.

Hart Energy of Houston presented the event, which began Tuesday evening with a networking event at the Pirates-Giants game at PNC Park and continued with two days of energy talk. Speakers included Timothy Dugan of CONSOL Energy, Ray N. Walker Jr. of Range Resources and Toby Rice of Rice Energy.

The annual conference ended a little before noon Thursday.

Kicking off the final day, Difiglio touted the shale gas industry in remarks before about 150 people. He showed on an accompanying Powerpoint graphic that shale gas was responsible for only 5 percent of all U.S. dry gas produced in 2004, then jumped to 56 percent in 2015. That, he added, was the peak of U.S. natural gas production, and Pennsylvania, Ohio and West Virginia were the top-producing states.

“Marcellus and Utica continue to be the most productive for gas,” Difiglio said. “They’re setting the standard for the rest of the industry. The Permian (Basin in Texas) looks like it’s the equivalent of Utica. The Bakken (Formation in North Dakota) is a little more challenged.”

During a Q-and-A session following his remarks, Difiglio was asked whether the cutback in drilling may be affected by extended permitting processes. He denied that.

“It’s not the policy of the Obama administration to hold up permitting,” the DOE official said. “The administration is making headway with its policies on the use of natural gas.”

He said the development of more ethane cracker plants could be a boost to the liquid natural gas industry, noting that three are being considered in the tri-state portion of the Appalachian Basin – one each in West Virginia, Ohio and, of course, Beaver County.

Difiglio, however, declined to discuss the Shell Oil cracker plant that has been approved for Potter and Center townships, about 35 miles north of the city of Washington.

“I’m not familiar with the local circumstances. I just don’t have an answer,” he said of a massive facility where work is expected to begin in about 18 months, with operations starting early next decade.

Other nations are behind the United States in natural gas development, and Difiglio said he isn’t concerned about any of them trying to catch up.

“The U.S. isn’t afraid of other countries developing their own shale resources. There are challenges above and below ground (private mineral rights). Countries like Poland have above-ground problems. China is a much bigger question mark. China is suffering some economic issues and relying on natural gas imports. But I think in the future, China will be a producer of shale gas.”

The man who is responsible for energy security in this country believes energy is, indeed, secure and probably will remain so.

“We will see that U.S. gas prices will be lower than any other place in the world,” Difiglio said.