Plant to process natural gas

Five years and $700 million after Range Resources Corp. determined the Appalachian Basin, specifically Southwest Pennsylvania, could be the country's next natural gas production hot spot, "cool" processing of the fuel from local wells has begun.

Fort Worth, Texas-based Range has partnered with MarkWest Energy Partners LP of Denver to open a refrigerated processing plant in Chartiers, Washington County. Range is providing natural gas from some 30 drill sites located in the Marcellus Shale formation.

The plant can handle up to 30 million cubic feet per day of what's called "wet" natural gas. Wet gas includes a number of other gases that must be separated prior to shipping to homes through nearby interstate natural gas pipelines.

Both companies are trying to capitalize on what some natural gas industry experts believe could be the country's largest onshore natural gas field, Appalachia's Marcellus Shale formation.

Geologists have known about the Marcellus for years, but there never was an economical way to extract it commercially. Recent advances in drilling, specifically horizontal drilling, and well completion techniques being used in other shale areas, such as the highly successful Barnett Shale formation in Texas, allow explorers to crack the shale and extract what's believed to be huge potential.

"This plant enables us to really ramp up production," said Jeff Ventura, a Penn Hills native and Range's president and chief operating officer, Monday during a tour of the company's Marcellus Shale operation at the Southpointe office park in Cecil, Washington County.

MarkWest is spending $200 million to building this and two other plants off Route 519, three miles north of Houston to handle Range's production.

The plants will be dedicated to Range's natural gas production. Ventura said the company expects to be producing by the end of next year up to 100 million cubic feet of natural gas daily. One million cubic feet of natural gas is enough fuel to handle the needs of an average Pittsburgh-area home for more than 10 years.

"This plant makes the Marcellus Shale play real," said MarkWest CEO Frank Semple.

Range and MarkWest are among a number of local, regional and national companies probing the Marcellus formation. Marcellus Shale is a layer of shales typically 5,000 to 6,000 feet below the surface, running from the southern portion of New York, through much of Pennsylvania, into eastern Ohio and through most of West Virginia.

Estimates vary, but some surveys place recoverable natural gas from the entire Marcellus region in the 200 trillion cubic feet to 500 trillion cubic feet range, enough gas to handle all of America's natural gas needs for more than 10 years.

Range alone has control of 850,000 acres of land primarily in Pennsylvania.

In addition to processing Range Resources' natural gas, MarkWest looks forward to selling natural gas liquid products once the other facilities are completed. The company also is signing deals with other companies to offers its services elsewhere in Appalachia.

"Long-term, we're looking at processing 150,000 gallons per day of propane, and 50,000 to 60,000 gallons per day of other liquids, which we will move by truck, pipeline and eventually by rail," said Randy Nickerson, MarkWest's chief commercial officer.

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Combined bank may use less office space

PNC Financial Services Group's $5.6 billion acquisition of National City Corp. could result in the combined bank occupying less office space than it now does in the Pittsburgh market, real estate experts said Monday.

But the pendulum could swing the opposite way if PNC consolidates in Pittsburgh any of National City's operations from its base in Cleveland.

And it may take time to find new uses for bank branches that PNC closes, experts believe.

National City leases 162,000 square feet at the 20-story National City Center on Stanwix Street, Downtown, and an additional 275,000 square feet at Allegheny Center on the North Side.

But it recently put more than 50,000 square feet at the Downtown site and 100,000-square-feet at Allegheny Center on the market for sublease, said Jeremy Kronman, commercial broker with CB Richard Ellis/Pittsburgh.

"National City already has done some downsizing, so I'm not sure anything really will change with the merger," said Kronman, who is in charge of leasing at National City Center.

Reed Smith LP, one of the city's largest law firms, is said to be interested in subleasing all of the available National City Center space.

According to a report by Grubb & Ellis Co., Pittsburgh's office vacancy rate declined to 15.5 percent as of Sept. 30 from 16 percent at the end of June.

The Pittsburgh office market could benefit further if PNC consolidates office functions here, Kronman said. "I think moving operations of another bank to Pittsburgh could be very positive, although maybe not so for Cleveland," he said.

Many of National City's retail branches are in prime locations, said Ned Doran, of GVA Oxford, the commercial leasing arm of Oxford Development Co. He worked with National City in recent years to find sites, including offices in Shadyside and Squirrel Hill.

National City operates 158 retail branches in Allegheny, Armstrong, Beaver, Butler, Fayette, Washington and Westmoreland counties, and PNC has 96 offices.

Alternative uses could include professional offices, medical facilities and fast food or small retail stores, Doran said.

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Region bucks trend on jobs

Despite economic woes nationally, the Pittsburgh region showed signs of growth in September, with 7,000 more jobs compared with a year ago and a drop in the unemployment rate, the state said today.

"That means Pittsburgh is continuing to buck the national trend, since most major regions lost jobs in September. Many regions have lost literally tens of thousands of jobs in the past year, both in the Rust Belt and Sun Belt," said Harold D. Miller, president of Future Strategies LLC, a Downtown-based consulting firm.

The number of nonfarm jobs in the seven-county Pittsburgh region rose to 1,159,400 last month, according to the state Department of Labor and Industry. On a month-to-month basis, the region's jobs count in September increased by 10,400 from August.

"The real significant number is the 7,000-job increase from September 2007 to September 2008," Miller said, because the single-month increase is due to back-to-school employment.

The jobs data, however, was collected before the nation's economic crisis intensified, so figures may look different in October and November, Miller said.

The region's unemployment rate in September was 5.4 percent, a two-tenths of a percentage point decline from 5.6 percent in August. All seven counties in the region -- Allegheny, Armstrong, Beaver, Butler, Fayette, Washington and Westmoreland -- experienced a drop in the unemployment rate in September, the state said. In September, Pennsylvania's jobless rate was 5.7 percent and the nation's was 6.1 percent.

A separate survey found that employment among those living in the region rose by 6,000 to 1.157 million in September from August, and by 10,000 compared to year ago. The increase in residential employment could be an indication people from other regions are coming to the Pittsburgh area in search of work, Miller said.

The jump in September's job count can be traced to a rise in jobs at colleges and universities, which rose to 38,200 from 32,500 in August, and local government jobs, which include school districts, increased by 11,000 to 55,000 in September from August. Transportation and warehousing, which includes school bus drivers, jumped by 3,300 to 44,600 in September from August.

Without the seasonal bump of employment in schools and universities, the region's jobs count "would be relatively flat, or a small decrease," said Frank Gamrat, senior research associate at the Allegheny Institute for Public Policy, a think tank in Castle Shannon.

The monthly jobs increase shows how important education is to the region's economy, Gamrat said. From September 2000 to 2008, the region's goods-producing sector lost about 33,000 jobs, while the health care and education sectors gained a similar amount, he said.

"If it wasn't for education and health care, this area would be in trouble, We've turned ourselves into a medical center. It kind of helps to buffer the negative effects of the recession," Gamrat added.

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PNC must integrate National City, sell branches, realign work force

When PNC Financial Services Group combines with National City Corp. next year, the Pittsburgh area will still have about 9,000 jobs between them, analysts said Monday. They just won't all be the same jobs and the same people.

Many of their branches will be sold to other banks, which would likely hire National City or PNC workers, said the analysts. Other National City workers might transfer to Pittsburgh to process the transactions that will come with the acquisition.

PNC announced the buy of National City, the nation's eighth-largest bank, on Friday for about $5.6 billion in a government-assisted merger. Cleveland-based National City has about $98 billion in deposits, compared with $82 billion of PNC.

"Pittsburgh won't lose jobs in this," said PNC Chief Executive James Rohr after the deal was announced.

Rohr said PNC will not retain all of National City's 158 branches in the seven-county Pittsburgh market. But he declined to say how many would be added to PNC's 96 branches here.

"We will consolidate some branches and sell a few," said Rohr. "We'll have some time to do that."

PNC spokesman Fred Solomon said yesterday that the bank will spend the next 23 months evaluating National City branches and other assets, and then integrating the two organizations.

PNC can finance the deal from the $7.7 billion it's getting for selling preferred stock to the U.S. Treasury. It is part of the government's $250 billion program to stabilize the nation's banking system, including support for acquiring troubled banks such as National City.

The future is less clear for National City's non-branch workers. About 250 of the bank's area employees work at the regional headquarters on Stanwix Street, Downtown. Many others -- the bank won't say how many -- work at Allegheny Center on the North Side in mortgage, human resources, security and other bank operations.

PNC would not say whether, or to what degree, PNC might ramp up its mortgage business by adding National City's home-mortgage business. Currently, PNC only writes such loans for the customers in its branches.

Analysts believe PNC will need to sell branches because it would control too high a concentration of deposits -- nearly 53 percent -- in the seven-county region. According to the Federal Deposit Insurance Corp., PNC now has 37 percent, and National City, ranked second, holds 15.5 percent.

"That's a huge concentration to have that much pricing power," said Derek Ferber, a research analyst with SNL Securities, Charlottesville, Va. "To acquire the No. 2 bank and push it to almost 53 percent is going to set off an alarm to regulators that PNC is going to have to divest some deposits."

Federal Reserve rules say 35 percent is generally the limit for deposit concentration.

Several banks are interested in branches PNC will put on the block, said Robert Wagner, senior vice president of securities firm Ferris Baker Watts' office in Mt. Lebanon. He singled out Fifth Third Bank and First Commonwealth Bank, among others.

"That would be one of the alternatives we would consider for enhancing our presence in this market," said Fifth Third Bank's Western Pennsylvania market President James "Jay" Ferguson III. Based in Cincinnati, Fifth Third has 13 branches in this region.

"Our ideal structure would be 45 to 50 branch locations here over the next four years," said Ferguson.

First Commonwealth, based in Indiana, Pa., in fact, filed a shelf registration yesterday to sell $100 million in common stock. Proceeds will be used, in part, "to support the continued growth" of the bank, it said. A bank spokesperson could not comment, citing securities regulations.

Huntington Bancshares Inc. of Columbus, could buy branches from PNC. Huntington, which has nearly 30 branches in Allegheny, Washington and Westmoreland counties, "is always looking for ways to increase customer convenience," including addition of branches, said Vincent Locher, president of Huntington Bank's Pittsburgh market.

Other analysts wonder if bank regulators will enforce antitrust guidelines very much, given today's financial crisis, and instead allow higher deposit concentrations than in the past.

"I think some of the old guidelines of antitrust and market concentration have kind of taken a back burner," said Frank Barkocy, research director of Mendon Capital Advisors, N.Y.

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Wall Street workers flee to small-town security

ALBANY, N.Y. -- Bankers and brokers looking to escape the financial meltdown are scrambling to relocate their families, possessions and rarified talent far from Wall Street to places such as Florida, Chicago, Milwaukee, Virginia and Asia.

Travis Lacey left investment bank Jeffries & Co. and Wall Street behind in September to work for Baird in Chicago. He also left behind the nagging sense of worry that had plagued him since his company had started announcing layoffs earlier in the year.

"Anyone in that environment, you never know what's going to happen," Lacey said. "There are a lot of good bankers that unfortunately are at the wrong place at the wrong time, especially in New York."

Corporate headhunters say Wall Street's malaise will lead to a permanent talent loss for New York. It could help small boutique firms become bigger players with employees they would never have been able to lure from the city long-regarded as the world's financial capital.

Former Wall Streeters also tend to bring clients with larger net worth -- another potential long-term blow to firms trying to recover from the meltdown -- so boutiques and middle market firms stand to reap the profits. In turn they deliver something that's elusive on Wall Street: stability. Jobs in the financial sector can pay anywhere from $100,000 to well into the seven-figure range depending on location, experience and the size of a firm, said Kimberly Bishop, vice chairman of Slayton Search partners, a Chicago-based headhunting firm.

"There's some talent available to some companies that wasn't available before," she said.

Wall Street workers who are thinking about relocating need to be flexible about income, Bishop said. Some junior Wall Street workers may be able to get more senior positions in smaller firms, getting comparable or better pay. But many more will make less while benefiting from a cheaper cost of living outside of New York City.

New York is the top paying state for personal financial advisers, with an average salary of $131,660, according to the U.S. Bureau of Labor statistics. Colorado followed, paying an average of $119,590, then Massachusetts, with an average pay of $116,170, according to the 2007 occupational employment survey.

Idaho was the lowest paying state for financial advisers, paying an average of $50,980. West Virginia, North Dakota, Alaska, Nebraska and Kentucky all follow, paying an average below $60,000 a year for the same job.

Middle market and boutique firms are also appealing because they offer increased job responsibility and freedom, said Peter Kies, a managing director at Robert W. Baird, a Milwaukee-based middle market firm.

"As every round of cuts occurred, we got an increasing flow of resumes," Kies said. "You can have a Wall Street kind of experience and live in Richmond, Milwaukee or Chicago."

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Fed eyes another rate cut

WASHINGTON -- As the economic wreckage piles dangerously higher, the Federal Reserve is prepared to ratchet down interest rates -- perhaps to their lowest point in more than four years -- with the hope of relieving some of the pain felt by many Americans.

The convergence of a housing collapse and a lockup in lending has created the worst financial crisis in more than a half-century. Alan Greenspan, who ran the Fed for 18 1/2 years, called it a "once-in-a century credit tsunami," and conceded that he made mistakes that may have aggravated the economy's slump.

With a recession seen as inevitable, if not already under way, any Fed rate cut would be aimed at cushioning the fallout.

Vanishing jobs and shrinking paychecks have forced consumers to cut back sharply. Millions of ordinary Americans have watched their 401(k)s and other nest eggs shrink and the value of their homes drop, making them feel in even worse financial shape. In turn, businesses have cut back on hiring and other investments as customers hunker down and credit problems make it harder and more costly to get financing.

"These are sobering times," said Paul Kasriel, chief economist at Northern Trust Co.

All the problems have been feeding on each other. So far, Fed Chairman Ben Bernanke and his colleagues haven't been able to break the vicious cycle, despite hefty rate reductions and a flurry of unprecedented steps aimed at getting credit flowing more freely again.

Bernanke says he'll use all tools to battle the crisis.

To that end, Fed policymakers are widely expected to lower the central bank's key interest rate at the conclusion of a two-day meeting Wednesday -- their last session before the November elections.

Investors and some economists predict the central bank will drop the rate by half a percentage point to 1 percent. If that happens, it would mark the lowest rate since the summer of 2004. Others, however, think the rate will be cut by a smaller, quarter-point to 1.25 percent.

In turn, rates on home equity, certain credit cards and other floating-rate loans tied to commercial banks' prime rate should drop by a corresponding amount. A half point reduction would leave the prime rate at 4 percent; a quarter-point cut would drop the rate to 4.25 percent. Either way, the prime rate would be the lowest in more than four years.

The Fed hopes that lower rates will spur people and businesses to spend again, helping to brace the wobbly economy.

Stashing Cash at Higher Rates

Home, business owners harness solar power

Phillip N.H. Smith worked on an experimental solar-powered house when he was a student at the Massachusetts Institute of Technology in 1951.

Now, the retired Copperweld Corp. chief executive and his wife, Martha, want to use some of the sun's energy to power their Fox Chapel home. They plan to install solar panels on the roof of an attached garage, once a state subsidy for alternative energy equipment becomes available.

"This is a chance for us to see what we can do," he said.

Hundreds of home and business owners and even local governments have been pricing solar panels, small wind turbines and other energy-making systems in the three months since Gov. Ed Rendell signed into law a bill that, for solar equipment, would cut costs by 35 percent.

The federal renewable energy and energy efficiency tax credit program recently was expanded, meaning even more potential savings.

Homeowners like the Smiths are waiting for the state Department of Environmental Protection to write the rules for Pennsylvania's program, specifying what types of home and small-business systems are covered and how and where they can be installed, department spokesman Charlie Young said.

Similar incentives in other states, such as Maryland, have increased solar panel installations dramatically. So far, almost 2,300 people have signed up for DEP's e-mail notifications about the program, Young said, and the program could be running by early next year.

Contractors who install solar rooftop panels are seeing an uptick in inquiries. "We have 200 potential customers -- a lot are waiting to see what the rebates are," said Rich Foltz, president of Vox Energy Solutions in McCandless.

"We go out every week and do proposals. People are just starting now to get educated, and they say they're doing the research and waiting for the rebate. I compare it to buying a $60,000 car for $40,000 -- who wouldn't take the deal?"

About $100 million has been earmarked for state rebates for solar installations at residences and small businesses, Young said. Another $25 million is to be available for wind and geothermal equipment.

The recent renewal of federal investment tax credits for solar power, once capped at $2,000 for a residential system, could cover another big part of the costs. The new federal incentive is 30 percent of the project cost, Young said, though state officials are unsure at this point how the two programs might overlap.

Costs vary for home solar systems. Foltz said an average, 2,200-square-foot home with two adults and two children uses about 9,000 kilowatt hours each year.

A system that could "zero out" electricity bills for that home might cost $40,000 to $50,000, and involve as many as 24 solar panels. Foltz added the financial benefits of solar panels vary greatly, depending on the price of electricity in the region.

Steve O'Hare just bought four more 120-watt solar panels at around $600 each for his Shadyside home, adding to the two he installed a few years ago. They feed electricity to a battery that powers the garage and outdoor lights, plus his tools and a dehumidifier in the basement.

His family's electric bill was around $80 a month without the panels. "Now, it comes in at $50," said O'Hare, who owns rental properties and restores older homes. "I'm very pro-solar alternative and I'm trying to get all my neighbors interested. Even if they put a couple panels up, it would offset their electric bills."

Much of consumers' new interest in solar, wind and other systems, in fact, is rooted in worries about rising electric bills in the next two years.

State officials have warned some utilities could raise their rates by 40 percent or more as the capped prices imposed under the state's deregulation law in 1996 expire, and demand for power increases.

Most of Vox's solar installations have been in the center part of the state, but the company started servicing Western Pennsylvania early this year, Foltz said. So far, it's put about four systems online in the Pittsburgh region.

Conservation Consultants Inc. plans to double the solar panel array on the roof of its South Side building, said Ann Gerace, executive director. The nonprofit promotes environmental responsibility through programs such as home energy audits.

The expanded system should produce 10 percent of the energy used in the building, where 55 people work. And because utilities have to buy excess power produced by solar systems, Gerace said, "We figure when we're not here on the weekends, we might as well give it back and let Duquesne Light pay us for it."

The Smiths had been considering solar panels for their home for years. What convinced them was a four-day power outage last year that ruined all their refrigerated and frozen food, and forced them to replace an older refrigerator that never recovered, Martha Smith said.

The couple say they might put a small wind turbine on their three-acre lot on a hilltop, to help power the electric-heated house where they raised six children.

More immediately, Martha Smith intends to go solar on the local roads. She ordered a Solar Bug vehicle for $15,000 from Free Drive of Bozeman, Mont., that should be delivered in November.

Resembling a miniature golf cart with one seat in front and one in back, the electric-powered car has a roof full of solar panels.

Smith said she's been promised the second car the company produces, and she's ordered a vanity license plate: "Sunbug2."

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