Innovation On Tap

The oil and gas industry hasn’t always communicated well its message or the muscle it brings to the American economy. Dan Dinges, CEO of Cabot Oil & Gas Corporation, sat down with Profile to set the record straight and give us an update on how the industry is reshaping the nation’s energy prospects.

It’s been reported that the United States is on track to become the world’s largest oil and natural gas producer ahead of Russia. What does this mean for the industry and for Cabot in particular? 

Dan Dinges: The distinction as the world’s top producer is the result of a list of innovative, social, and technological accomplishments that have allowed an oil and gas renaissance to take place in America. This renaissance has been the catalyst for the global restructuring of the energy business. The results are affecting decisions and capital allocation throughout the world. The effects on manufacturing, power generation, and transportation are significant, not to mention the geopolitical implications. Domestically, the energy industry has not only helped the US trade imbalance, but we have also provided jobs both directly and indirectly, and significantly reduced the out-of-pocket expense for the energy needs of every American.

What kind of innovations are coming from in the field, and which in particular are shaping Cabot’s operations?

Dinges: Cabot, along with the industry, continues to provide innovative, environmentally friendly processes and services to effectively produce oil and gas. Cabot implemented best-practice procedures to drill and case our wells; we recycle 100 percent of our drill and completion fluids in our Marcellus operations; we reduce our footprint with multiwell pad drilling; we have used field gas and compressed natural gas (CNG) for drilling and completion operations, displacing the use of diesel fuel; and we are in the process of converting our truck fleet to cleaner burning CNG. All of these efforts make a positive improvement to our ability to deliver environmentally friendly natural gas for energy use.

How has the industry made social improvements?

Dinges: As an industry, we have been challenged to communicate and educate the general public on what procedures and practices we employ to deliver oil and natural gas. We have made significant progress, and we will continue with this effort. Though some will always remain skeptical of our industry, with time, the facts and benefits of what we do should prevail. Some of the benefits we all realize today are a much cleaner environment with the increasing use of natural gas. In fact, the Energy Information Administration recently reported that, in 2012, the United States recorded its lowest level of CO₂ emission since 1994, which was a result of power plants switching to natural gas from coal. Additionally, job creation, along with energy cost savings, are enjoyed by all and provide enhanced quality of life. This message is starting to resonate with those who approach our industry with an objective perspective.

And what’s new on the technology side?

Dinges: The well site is the best place to start. We’ve been able to implement significant technological enhancements that strengthen our ability to get oil and gas out of the ground, decrease the space between our wells, increase the rate of penetration, and reduce our footprint. As I previously mentioned, our industry is recycling water, increasing the use of natural gas in our operations, and implementing new products and processes to be more environmentally friendly.

Is this technology unique to the United States, and is that the reason it should surpass other countries in this area?

Dinges: As recently as 10 years ago, there was virtually no production that was coming from shale, and that is still the case for many countries around the world. The infrastructure—pipelines, local distribution networks, etc.—and the personnel necessary to implement the development of shale just aren’t available in many countries right now. Additionally, the geology and the geography have to be right. For example, there may be producible shale in say, Siberia, but there aren’t many people there and there certainly isn’t the infrastructure to deliver for individual use. Thanks to innovation by both the service industry and the operators in the industry, we have created technologies and implemented myriad ideas and methodologies in the United States to extract oil and gas from shale, and we have an existing infrastructure to produce it in a scalable way and deliver the product for the end user.

Let’s talk for a moment about the other portion of your business, oil. Is this renaissance of natural gas production edging out oil as our fuel of choice, and is your business plan responding to that?

Dinges: For the foreseeable future, oil use in the United States will remain as the primary feedstock for transportation and the petrochemical business. However, for future power generation, industrial/manufacturing and residential use, natural gas will be displacing coal as the primary energy source. Natural gas is significantly cleaner burning than coal. Additionally, CNG will be making advances in the transport area as infrastructure continues to grow and more vehicles are on the road. Cabot’s portfolio produces approximately 94 percent natural gas and 6 percent oil.

There have also been reports of a talent gap in the oil and gas industry. Is this affecting operations at Cabot?

Dinges: I don’t have the same sense I had six to eight years ago of our industry being short on talent. If you go back several years to the beginning of the shale revolution, the average age of our industry was approaching 50, and we did not have substantial interest from college-aged students to attend technical schools around the country in the disciplines of engineering, geology, and land. Since that time, all of our peers, Cabot included, have spent a great deal of time in universities hiring. And due to the renaissance I previously mentioned, student interest has grown. These young professionals are generally hired first as interns and then as full-time employees out of college. Additionally, we have created several hundred thousand new career opportunities in all phases of our business, both direct and indirect. I think our business is not only providing current job opportunities for our young people, but I see our industry continuing to provide career opportunities for the foreseeable future.

If you had to impart one message to the average person about oil and gas, what would it be?

Dinges: Our industry is dynamic and one of the most innovative, technologically advanced industries in the world. The energy industry is an essential participant to provide opportunities and to enhance the quality of life not only for the citizens of the United States, but also for many others throughout the world. We strive to provide an affordable product, oil and natural gas, to the public in the most environmentally conscious matter.