Transcript of Energy Conference Call on US Steel, Storage and Carbon Sequestration, Hydrogen, and Aged Appalachian Natural Gas Assets with Anya Litvak

Aug 18, 2023

On August 16, The Capitol Forum held a conference call with Anya Litvak, energy reporter at the Pittsburgh Post-Gazette, to discuss her work on the energy industry in Appalachia. The full transcript, which has been modified slightly for accuracy, can be found below.

DANIEL SHERWOOD:  Good morning, everyone, and welcome. Thank you so much for joining The Capitol Forum’s Conference Call here with Anya Litvak, Energy Reporter at the Pittsburgh Post-Gazette, for a conversation surrounding her reporting. Thank you for joining us, Anya.

ANYA LITVAK:  Happy to be here. Thanks.

DANIEL SHERWOOD:  I’m Daniel Sherwood, Energy Editor here at The Capitol Forum. And I know we’re all looking forward to today’s call. I’m just going to do a few little housekeeping things and a brief intro and then we’ll get started.

So today we’ll be focusing on some breaking news briefly touching on U.S. Steel being approached for a buyout and then this tragic explosion in Plum Township. And then we’ll talk about Equitrans’ storage assets, EQT’s hydrogen plans and more – time allowing.

So for those of you dialing in, if you do have questions for us, please email them to and I’ll try to get to them before we wrap. That’s and capitol is spelled with an “o”. You can also try to use this chat box here on the side and we will be monitoring that. I know I’ve received a couple of questions about carbon storage and the CO2 market. And so we’re going to try to touch on that in the context of Appalachia. And then any other discussions will remain ongoing, of course.

So Anya’s work is comprehensive and she writes often. I’ve been reading her work for a decade now. And she’s so often ahead of the curve and able to do these deeper and more intricate dives on the prominent companies that make a name for themselves in the Appalachian energy complex. So I’m very excited, Anya. I wanted to say to you before we got started about the specifics and the substance of your reporting, what brought you to this space? Because I honestly don’t know. We’ve been in the same circles for so long, but I would love to hear kind of the genesis of what makes you so interested in energy.

ANYA LITVAK:  Yeah, it’s kind of a silly story. It’s not like I grew up wanting to do energy. I started out as a government reporter. So I think like every journalist, you get out and you’re like, I want to do politics and hard-hitting stuff like that. And I spent a few years as a county government reporter in Central Pennsylvania, and I wanted to have none of that ever again. And so there’s a position that opened up to do energy business. And I thought, oh, this will be nice and free of politics. [laughs]

So I started doing that in 2008, which, as I’m sure you know, is sort of the beginning of the Marcellus Shale revolution in Pennsylvania. And it was absolutely fascinating. It was not free of politics, as you may have guessed, but it was an interesting blend of science and economics and social policy and all of these developments happening at the same time. Learning about them as they’re happening was really interesting. And I got sucked in. And 15 years later, I think the more you know about something, the more you’re interested in it. So as far as I’m concerned, I’m not qualified to do anything else at this point. So here I am, a very loyal energy reporter.

DANIEL SHERWOOD:  That’s awesome. Yeah, it’s like the Bethany McLean of the Marcellus Shale. That’s great and makes sense. And similarly, I think my obsession over LNG and gas was also inspired by the advent of hydraulic fracturing and horizontal drilling. And so, now here we sit.

ANYA LITVAK:  Here we are.

DANIEL SHERWOOD:  Well, that’s great context. I’m glad to know that. So now, fast forward and you’re right in the thick of it. We were talking right before the call started about what a week that it’s been. I just wanted to touch briefly—I know this is slightly manufacturing a little bit outside of our wheelhouse, but still something that you were covering. I have to do an honorable mention for former TCF intern that shared some of that limelight with you. So would you care to just quickly update us on that huge story in the steel sector. U.S. Steel’s moving all over the place. So, we’d love to hear about your reporting there.

ANYA LITVAK:  It was really interesting. Before I do that, I should preface this. I was sitting at my computer screen completely plastered to this explosion, this house explosion, that happened in Plum Township, because it’s a fascinating story and obviously it has something to do with gas. And so I’m sitting there trying to figure out what went on. And I see this very cryptic message come through from U.S. Steel saying, hey, just wanted to let you guys know we’ve launched a strategic review. We’re not going to talk about it anymore. But we got some unsolicited offers, just putting that out there, on Sunday at noon.

And so immediately you think, okay, something’s up. And so, then a couple of hours later, Cleveland-Cliffs releases a statement and says, yeah, actually we’re the ones that made a bid for U.S. Steel. And we offered them what would have amounted to something like a $7.3 billion valuation. And they said no. They said it was unreasonable. So, we’re going public because we think that U.S. Steel shareholders should know that we’re offering a 43 percent premium. And then a couple of hours later, U.S. Steel puts out another message. This is all Sunday. This is not market trading days. This isn’t via SEC filings.

So, they put out another message saying, yeah, Cleveland-Cliffs just didn’t want to do a non-disclosure agreement as a standard. Sort of implying what did they have to hide? Why wouldn’t they want to do this? Why are they trying to pressure us? And the story kind of went from there.

Then the next day, they got another offer, which was even more curious. It’s an all-cash offer from a company that we haven’t heard about in a couple of years, used to be a player in the steel industry in West Virginia, sold to a Russian company at some point. And so this guy says, I can make you an offer for an even bigger premium. And I asked, okay, how are you going to finance it? And he responded, I have the money. And so, U.S. Steel stock in the meantime went all the way up. It finished the day Monday at like 37 percent up and everybody’s sort of riding high on this. But we still really don’t know what’s happening. If this is a game that U.S. Steel is playing in order to get a better price or if there are actual multiple offers coming in right now that we don’t know about. Sort of corporate intrigue at this point.

And here we are today just waiting to see if there are any more offers, waiting to see if this sort of iconic company is going to leave Pittsburgh. Or, as everybody on Twitter seems to think, waiting to see if Elon Musk is behind this deal so that he can get the X ticker for himself.

DANIEL SHERWOOD:  Which that would be insane. I know, I love that rumor and it’s seemingly completely unsubstantiated. But hey, Elon could use a steel company too. That’s great.

ANYA LITVA:  If he wanted.

DANIEL SHERWOOD:  Exactly. Well, fantastic. And thank you for that. And so before you were saying, before that kind of interrupted your brain flow, you were looking in this explosion in Plum Township. And first of all, I want to say obviously an incredibly tragic development. And just in following, this is in line with some of the work that you’ve been really on top of the ball of, of what are the real impacts of some of these more aged assets?

Now, we’re not sure how this started. I saw today that the home where the explosion initiated, they were having hot water heating issues. So there’s so many different things that it could be. So I’m not sure how much we can even posit about that. And I know this wasn’t your story, but you did contribute to it. And just to the degree that we can kind of get an understanding of where we are, what your reaction is and where you think this could be headed. Obviously, again, with that huge caveat of we don’t know the cause yet, but just what’s it look like in the rough timelines and how long it takes the different bodies to understand these types of things and what’s going on? To the extent that you’re familiar with it. And I think that will serve as a really natural transition to what you found when you looked into the Rager gas leak.

ANYA LITVAK:  Yeah, totally. The reason I was looking at it is because unfortunately, this isn’t the first time that that’s happened and it has happened two other times in Plum Township, which is admittedly a large township near Pittsburgh, where this explosion took place. And this explosion was particularly tragic because five people died. So the immediate stories are very much about the people and how the neighborhood is grieving.

And I’m sort of in the background looking up DEP records. And when something like this happens, I immediately pull up the map of oil and gas infrastructure and abandoned mines. And virtually anywhere you do that in Southwestern Pennsylvania, you’re just going to get a whole bunch of dots showing producing wells, showing old wells, showing pipelines, sometimes showing abandoned mines, showing productive mines. And that is essentially why these investigations sometimes take many years, not just because it’s hard to figure out whose gas caused the problem, but it then gets caught up in years of litigation. And by the time we know something, it’s out of sight, out of mind.

So, I try to keep on top of that. And I think you’re right. What this reminds me a little bit is an explosion that happened in Greene County in 2018. And that was a house that blew up that was sitting on top of, as I just said, with all of these things, a permitted mine, an abandoned mine, a bunch of storage wells, some producing wells, pipelines, the natural gas system. And looking at that case, it gives me a little bit of a map to how to investigate what’s happening in Plum, which will happen over the next couple of years. It won’t be soon.

DANIEL SHERWOOD:  Fascinating and tragic. I mean, I was watching some of the local outlet reporting of just the residents on the ground. And, I mean, it’s impacting so many properties. And even people whose houses didn’t get burned down, like they can’t move back in yet.

Another thing you brought up in our pre-conference was how this report was just released this week from a Pennsylvania state body, I believe, about the health impacts of fracking. And it’s kind of interesting. Like, on one hand, it’s like here are the impacts of the legacy of extractive industries, whether it’s coal or gas or all sorts of different ways you can use those assets. And now to another thing we’re going to be talking about is the re‑implementation of some of these assets as it relates to carbon, as it relates to hydrogen.

And I think it’s like, yeah, we need to figure out the possible health impacts of fracking. I’m not saying that’s not important. But I think that on the other hand, you see impacts that are quite obvious, are quite apparent. And again, in this case, for this precise case, it might not have been an abandoned well. It could have been a faulty piece of equipment inside of the house.

But even in the sense that this investigation will go on for years, and as you say it kind of almost grows out of sight, out of mind, it demonstrates that there’s some more issues here at play if we can’t even kind of quickly isolate the problem—okay, hey, it shouldn’t be commonplace in my mind that whenever you look it up, there’s all these dots and all of these kind of suspects that could easily lead to something like this or just stray methane in your basement. Because it can be a complication of a number of factors. You could have a faulty hot water furnace. And if there’s not a methane leak in that basement from an abandoned something nearby, you’re going to have a lot lower chance of an explosion.

I’m glad that you’re looking at it. I know we got a lot of questions about it. And I kind of see your point. You know, you have U.S. Steel in the headlines. You have this in the headlines. It’s a big headline week. And these are the type of headlines that you wish to not see.

So can we transition to Rager? So, there was no rupture and no fatalities that I’m aware of but recently there was a very large methane leak that was traced back to an Equitrans storage facility. And that’s the same company that’s operating and constructing the Mountain Valley Pipeline. And initially, I kind of raised it to our own team of like, hey, I think this could have a material impact on the company beyond just the Mountain Valley Pipeline. And a lot of people with expertise in the sector said, no, this is going to be nothing. And then it ended up hitting their balance sheet, multi‑million dollars’ worth of remediation and ongoing regulatory process.

So I just wanted to set the stage as far as this is an environmental story as much as a business story. And then you may remember, we did a whole call kind of reviewing what you had found as far as the jurisdiction of the regulatory oversight of those assets are. So, I’d love to hear kind of a refresher on that. Well, it was awesome. And it shows the first of its kind nature that we’re dealing with these types of assets while we’re still at the same time covering them as kind of central to how we can be a part of the hydrogen hub or whatever it is. So I’d love to hear more about that investigation that you did.

ANYA LITVAK:  Sure. I’ll give you a little refresher on that. So, it was in November when a storage well that had been drilled, I think something like 50 years ago as a production well, maybe a little bit longer. I can’t remember now. Oh, it was drilled in 1965. There it is.

So, it was drilled as a production well and it had been turned into a storage well when the reservoir sort of ran dry. That well was heard venting with such a ferocity that people thought it was like a jet engine, which is the exact term that people use after a pipeline rupture. Everybody describes that jet engine sound. So you would imagine that well would have been venting a lot in order to produce that sound, especially since it’s in a pretty rural area. And indeed, it was.

It ended up taking two weeks to bring that well under control. During that time, I think it lost something like 1.3—was it 1.3, 1.29, something like that—billion cubic feet of gas, which is an astonishing amount. It’s a leak that was the biggest recorded leak in Pennsylvania that they know of.

And the question was, well, what happened? Why did that happen? Why did it take so long to plug? Why did it take two weeks? In fact, they had multiple attempts. They couldn’t kill it.

And the whole saga is still playing out. I was looking at the PHMSA website. And just this May, they reached a consent order with Equitrans that said, oh, you have to do a root cause analysis. You have to tell us what you’re going to do with the temporary plugs that you set for this and a couple of others. It’s still going. So, it’s not resolved. It’s not the kind of thing that we’re going to know about for a while. But regulators in Pennsylvania and operators, they have to learn from these lessons right away. So it’s interesting to see how that’s playing out here.

DANIEL SHERWOOD:  It’s wild. And I remember when this first hit the kind of media cycle the PA DEP really played this slightly more proactive – I don’t know if it’s because of the new leadership or what, but they were kind of like we’re going to clamp down on this. And then all of a sudden, they kind of receded into the shadows.

And definitely something that stuck out to me in your article is, similar to what you were saying about Plum and Greene County, these overlapping assets, abandoned well here, pipeline there, active mine here. And how difficult it’s been for them to even kind of trace the ownership of this. And you highlighted some language. I think it was from a regulatory notice of violation. I can’t remember though. And something to the effect that there is an incredibly large number of issues flagged where there was structural integrity issues and things where it’s like, wow. These are old and these have not been properly maintained. And again, the reason I think how they continue to be that much more relevant is because they seem central to this thesis of this kind of pending energy transition – converting Appalachia fossil assets to production and storage assets with less carbon-intensive resources.

So, if we could just cover some of these proposals and these ideas from these natural gas, predominantly natural gas, players in Appalachia of this kind of green energy transition. Before we talk about Diversified, I’d love to hear you mentioned like the CNX ammonia plant, and I think EQT’s hydrogen plans. I’d love to hear more about those plans and how they’re related to their current business models.

ANYA LITVAK:  Sure. Yeah, I find this infinitely fascinating. First of all, I find the idea of ownership of resources really interesting. Because it seems like for every new wave of resource development or sort of technological development, you have to figure out, well, who owns that stuff? For the new thing that we’re going to be pulling out of the ground or putting into the ground, who owns it? Who has the liability? Who has the sort of long‑term responsibility for it?

And just to set this up, so there is quite a big push to start transitioning certain industries to run on hydrogen as opposed to things like fossil fuels, coal or natural gas, and to produce that hydrogen in this region, in Appalachia, what’s been proposed is a bunch of—or at least some so-called gray, I’m sorry, blue hydrogen plants, which is steam methane, reforming plants that take natural gas and crack it and make hydrogen as a result. And then all of the CO2 emissions that come from that process would be captured, and then you’d have to dispose of them somehow. So they would be stored underground in these vast reservoirs that the state of Pennsylvania believes exist. Although, they have never been tested. And to this day, we’ve never had a test well drilled to see if this could happen here. But the wide belief is that it’s possible.


ANYA LITVAK:  Yeah, we’ve done, I mean, I think the theory is—and I don’t have any reason to doubt it because I’m not the engineer who has made the sort of modern energy revolution happen. But the theory is we kind of know how to work at different temperatures and pressures underground. We’ve done it for 100 years. We’ve continuously innovated to pull different things out and to control how we put things in.

So why not do the same with CO2? Or if we produce hydrogen, why not store hydrogen underground as well? This is the new wave that everybody’s really excited about. And so that raises the issue of how do you make sure that when you’re putting CO2 or hydrogen or anything else underground, what do you do with the Swiss cheese subsurface that we already have? And how are you going to monitor that these things aren’t interacting kind of thing?

DANIEL SHERWOOD:  That’s a good question.

ANYA LITVAK:  Yeah. So that’s where these faults—and I don’t mean geological faults, although that also plays a role—but that’s where mistakes or accidents that happen that we know about, they raise all these issues because it’s our way of exploring what could happen.

DANIEL SHERWOOD:  Yeah. I mean, I think you highlight an interesting aspect of industry’s plans. Because, I mean, to our earlier point—and I think this is kind of the through line with connecting the aged aspect of the inventory of the assets to this new wave, this new energy revolution—because it’s in theory on the back of sometimes the same geology and sometimes the same assets, if not overlapping assets. And if this takes us two years to figure out how methane might get from an injection well here to a water source there, how can we be so sure that that won’t happen with hydrogen?

And I don’t know. This is a rhetorical question, but I wonder, it seems a little worrisome to me that the Department of Energy is dispersing billions of dollars of funds to Occidental and pals to direct air capture, to say, yeah, we can make blue hydrogen here. When to your point, there’s not been a test well that could demonstrate that the geology works the way that it does with hydrogen or for carbon dioxide. So there’s a lot of questions and a great place for us to be, a lot of stuff for us to figure out what’s going on.

ANYA LITVAK:  Well, I should clarify. So there’s not been a test well in Pennsylvania, a commercial test well, in Pennsylvania. There have been in other regions. But because geology is so specific, you can’t really make generalizations. So you have to drill into that strata.

Now, what I think is really interesting is that, yeah, the DOE is making all this money available and there’s a lot of excitement and there’s a lot of hype. But recently, I was reading through the comments that were submitted for the EPA’s proposed carbon pollution from power plants rule. And what was interesting there is that some of the same people that are really excited about it are writing to the EPA saying, hey, this stuff is many, many years away. This is not commercially viable technology, carbon capture, carbon storage. We’re years away from this being something we could implement. So kind of slow your roll on requiring that over the next 10 to 15 years because we’re not there yet. So on the one hand, DOE funds, sometimes funds, very, very nascent demonstration, proof of concept effort. So we shouldn’t take this to mean this is going to happen tomorrow.

DANIEL SHERWOOD:  That’s right. And I would agree. I would heed that cautionary tone because it’s right on. Because yeah, of course, you’re excited about direct pay tax incentives in some instances from the federal government, on the one hand. Where on the other hand, you don’t need to implement anything yet. So that wouldn’t be the first time. So yeah, it’s a great place for us to watch.

I know we’re already at the 11:30 mark, or beyond it, because of these technical difficulties. So thank all of us for bearing with us. I did get a couple of questions, Anya. I’m just sifting through them. And let me just ask you one, and feel free to defer. But I did get something about the ability for the renewable industry to kind of get a foothold in the region. And I remember you and I and just emailing back and forth, we discussed something about different renewable projects in the queue. So I mean that’s tangentially, if not directly, related. And you can take the question as generally as you want, of course. But people are interested about what that looks like on the ground as far as renewable getting more of a foothold in the region.

ANYA LITVAK:  Yeah, well, it’s funny. On the ground, ground, it looks like more renewable projects going in. I was just looking at an email from the University of Pittsburgh having a ribbon cutting for a new solar facility that they had signed a long-term contract with that was built there. So there are projects going in. The entire solar industry, for example, has been waiting for years for some kind of state legislation that increases the renewable requirements in the state. So we have these alternative energy portfolio standards that say if you’re a utility, X amount of your electricity supply has to come from alternative sources. And that X amount was very big at the time that the law was signed and is now one of the smallest among states. And so there’s been a years long movement to increase that.

Now, Governor Shapiro has indicated that he would be supportive of that. And the solar community’s pretty excited by that. But I’ve also seen that happen in previous years. So until it’s enacted, I don’t know. In the meantime, solar developers and land developers are tying up a lot of land, especially in rural parts of Pennsylvania, in wait of this or in wait of Pennsylvania finally starting to trade in RGGI, which, as you know, is now on hold because there are legal challenges to it. So there’s interest and there’s a lot happening sort of on the ground. But I think they’re waiting for bigger policy moves in order to incentivize it.

DANIEL SHERWOOD:  I see. That makes sense. Thank you for that.

ANYA LITVAK:  Yeah, let me add one more thing. I think this is really interesting. I remember speaking with somebody who’s in the solar industry who was telling me that when the Pennsylvania—when Team PA, which is kind of like a public/private partnership that does economic development for the state—they formed this hydrogen consortium. And it was like, this is our energy policy going forward. Everybody get on the hydrogen train kind of thing. And this person was telling me, we should be invited. We should be part of it. And when she asked to be part of these efforts, crafting the energy policy, the response was, well, solar can fit into the hydrogen economy too.

So it wasn’t like, let’s see if we can make an energy policy around renewables or around all these different sources and see how hydrogen and solar fit in. It was like our money is on hydrogen and everybody sort of has to pick a place in that hydrogen economy, which, for what it’s worth, Pennsylvania thinks is quite diverse and has a lot of opportunities for everybody.

DANIEL SHERWOOD:  Yeah, hydrogen hype is real. There’s a reason why fossil dependent companies like it so much. And there’s a reason why this is—it’s not a new tech. There are some very legitimate issues in the production of it, the transportation of it, the safe storage and safe usage of it, that we have not gotten anywhere close to figuring out.

The most kind of substantive discussion in the hydrogen space is whether or not they should stop using the coloring codes because it seems too much like a marketing ploy. That’s where we’re at with hydrogen in my mind. So that’s a very interesting anecdote indeed. And yeah, I love watching these kind of smaller upstarts here. And so, I think that’s why there’s all these eyeballs on the Exxon/Denbury deal. I’ve thought that Denbury has a very long fairway, really ever since it emerged from bankruptcy, just because it’s kind of the only operator that does what it does in the way that it has such a huge EOR operation and CO2 footprint. But because everything is so nascent. It’s for Exxon’s taking.

So I think you’re going to continue to see this increase in interest and whether it’s direct or capture or green hydrogen production. But kind of like you’re seeing now with this huge downturn in wind turbine processing and that industry, it’s like there’s a lot of things that need to be proven out here. And I think people like to paint with a broad brush. And that’s how you can often get lost. A lot of detail gets lost like that.

So thank you, Anya, for bringing your details to us and helping us understand these issues and bearing with my connectivity issues as well. So thank you very much. I feel bashful about that. But thank you to everybody else for joining us. And please, if you don’t already follow Anya on the socials or just subscribe to the Pittsburgh Post-Gazette because her work is unrivaled. So thank you again for joining us. And that will be a wrap for today.

ANYA LITVAK:  All right. Thank you very much for having me on. You’re very kind and I always appreciate the words that you give me.

DANIEL SHERWOOD:  So until next time, Anya, Adios. Thanks again.