A study released Wednesday, commissioned by the Marcellus Shale Coalition and conducted by three Penn State University energy policy experts, offers a striking view of the massive economic benefits produced by the Marcellus natural gas fields, which stretch from Western New York, through much of Pennsylvania, and into parts of West Virginia and Ohio.
The study, titled “The Pennsylvania Marcellus Natural Gas Industry: Status, Economic Impacts, and Future Potential”, focuses, as its title suggests, on the Marcellus field’s impact on the state of Pennsylvania. The economic trends are uniformly positive, the study finds. Continued investment in the recovery of natural gas from the Marcellus field could be an historic boon for the state’s economy.
Development of the Marcellus natural gas formation will yield more than 40,000 new jobs in Pennsylvania by next year, the study finds. By 2020, the industry could support a quarter million jobs in Pennsylvania, and could inject more than $12 billion into the state’s economy.
The project’s economic benefits will extend far beyond the workers directly involved with natural gas production, the report stated.
Many people are required to identify lease properties, write leases, and conduct related legal and regulatory work. Seismic surveys also require manpower, local business services, and other provisions. Once a prospective site is identified, site preparation and drilling begins and with it the need for services, labor, and other locally supplied activities. If natural gas is found in commercial quantities, infrastructure, such as well production equipment and pipelines are installed, which again stimulates local business activity. Finally, as production flows from the well, royalties are paid to landowners. These expenditures stimulate the local economy and provide additional resources for community services, such as health care, education, and charities.
The report estimates that Pennsylvania’s natural gas industry could produce 17.5 billion cubic feet of natural gas per day by 2020, which would comprise nearly a quarter of the nation’s natural gas supply.
Perhaps more striking than these numbers is the fact that no one saw them coming. “The volume of natural gas that our industry is producing here in Pennsylvania, with a limited number of wells on line, is something that no one could have predicted a decade ago,” said MSC chairman Ray Walker in a news release.
So what is responsible for the amazing increase in recoverable natural gas? By most accounts, improvements in technology have allowed mining companies to tap previously unreachable reserves. Natural gas mining technology has been increasing at such an impressive rate, in fact, that Penn State’s projections on last year’s yield significantly underestimated how much gas would be recovered.
The “nearly 2 billion cubic feet per day” recovered from Marcellus in 2010 was “substantially higher than our previous projections because Marcellus producers are employing advanced well stimulation techniques that are dramatically increasing well productivity.”
MSC president Kathryn Klaber also told reporters on Wednesday that natural gas producers have been “doing more with fewer wells,” due in part to “the ability to reach higher yields from some of the hydraulic fracturing improvements.”
Of course there are plenty of Americans, in Pennsylvania and elsewhere, who are skeptical of – even outright hostile to – hydraulic fracturing. Potential contamination of underground drinking water supplies remains a concern, despite the Environmental Protection Agency’s conclusion that the practice “poses little or no threat” to drinking water. Fracking is subject to both federal and state regulations and there have been no instances of contamination to drinking water where the process has been used to recover 7 billion barrels of oil and over 600 trillion cubic feet of natural gas.
Still, Walker said in the news release, “we understand that our greatest responsibility is continued environmental stewardship, transparency and providing a safe workplace for our employees and the community.”
The Marcellus Shale Advisory Commission, created by Republican Pennsylvania Governor Bob Corbett, is slated to release its policy recommendations soon, though a date has not yet been set. Those recommendations are expected to include an impact fee to help communities affected by increasing natural gas development nearby.
The MSC also endorsed that measure. “It’s our organization’s position that a reasonable, competitive impact fee that takes the dollars back to the communities in which we’re operating is probably the right model to move forward with,” Klaber said.