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Submitted by Lou Santoni, president and CEO of the Greater Binghamton Chamber of Commerce, and

Brian Sampson, executive director of Unshackle Upstate

On Friday, July 8, the Department of Environmental Conservation released an updated draft of the Supplemental Generic Environmental Impact Statement (SGEIS). This document clearly and thoughtfully addresses the multitude of safety concerns related to high-volume hydraulic fracturing. And while a final draft of the SGEIS won’t be completed until later this year, this revised draft is a sound blueprint that will enable drilling to occur safely and promote economic development.

We strongly believe that developing the Marcellus Shale will energize New York’s economy for decades to come. A recent report published by The Public Policy Institute of New York State, Inc. found that for every 300 natural gas wells developed annually in the Marcellus Shale, 37,500 jobs could be created. The report also points to the fact that in 2010, 48,000 private sector jobs were created in Pennsylvania. Considering that the average annual wage for jobs associated with natural gas exploration is $79,184, this influx of good-paying jobs would be a huge lift to the Southern Tier’s economy.

Tapping this abundant energy source also could generate significant revenues on the state and local levels. According to a 2010 study by the American Petroleum Institute, by drilling more than 400 wells over the next four years, natural gas development can generate $283 million in state and local taxes. Given New York’s economic crisis, you’d be hard-pressed to find any state or local official who isn’t interested in securing additional tax revenues.

Ensuring that natural gas is developed in a safe and responsible manner is equally import. On numerous occasions, Governor Cuomo and DEC Commissioner Martens have both signaled that the SGEIS strikes a balance between reviving our economy and protecting the environment. It’s encouraging to see that the rhetoric of those opposed to the development of natural gas has not influenced the judgment of Albany’s key leaders.

Along with those recent assurances, Environmental Protection Agency administrator Lisa Jackson stated that she was “not aware of any proven case where the fracking process itself has affected water…” during a U.S. House Oversight Committee hearing in late May. The latest draft of the SGEIS also states the following: “No documented instances of groundwater contamination are recorded in the Department’s files from previous horizontal drilling or hydraulic fracturing projects in New York.” There’s no doubt that New York’s energy developers have a tremendous track record of safety and are committed to operating within the guidelines set forth by the state and federal government – which once in place, will be the strictest in the nation.

As the DEC and other stakeholders continue to move towards the safe development of the Marcellus Shale, it’s important to recognize the gravity of this opportunity. Harnessing this homegrown resource will create tens of thousands of jobs, generate billions of dollars for the state’s economy and provide energy consumers with cleaner, more affordable energy.

Stacey Duncan

Manager, Government Relations

July 21, 2011

Another great read for those interested in what having the courage, wisdom and imagination to take advantage of opportunity can mean to a state, a region, a country.

Highlights From New Marcellus Shale Study: “Prolific Marcellus Could Soon Lead US in Natural Gas Production”

A new study released yesterday sheds light on the robust economic impact that the responsible development of clean-burning, American natural gas continues to have throughout the Commonwealth. Conducted by Penn State University researchers, the analysis underscores how far-reaching, genuine and sustained the growth is associated with Marcellus Shale natural gas production, particularly for Pennsylvania consumers and taxpayers, as well as local small businesses along the supply chain that support the industry.

JOB CREATION, ECONOMIC GROWTH, TAX REVENUES

  • “Penn State report even more bullish on Marcellus Shale”: An updated Pennsylvania State University economic study of the Marcellus Shale gas boom is even more bullish than past reports, projecting that Pennsylvania could supply a quarter of the nation's natural gas by 2020. The industry-sponsored study, which will be released Wednesday, says that Marcellus natural gas production is outpacing predictions made only a year ago. Production from Pennsylvania wells, which already supply more fuel than is consumed in the state, could multiply eightfold by the end of the decade. "Our estimates suggest that in 2020 the Marcellus industry in Pennsylvania could be creating more than $20 billion in value added, generating $2 billion in state and local tax revenues, and supporting more than 250,000 jobs," said the authors associated with Penn State's department of energy and mineral engineering. (Philadelphia Inquirer, 7/20/11)

 

  • “Marcellus shale added $11.2 billion to economy, report says”: Development of the Marcellus shale added $11.2 billion to the state's economy last year and may mean a $12.8 billion boost this year, according to an industry-backed study detailed at a U.S. Steel facility in Duquesne. It also supports a growing number of jobs, 140,000 through last year with prospects for another 16,000 this year, according to the Penn State University study commissioned by the Marcellus Shale Coalition. "The Penn State study clearly highlights the impact (of natural gas production)," said coalition president Kathryn Klaber. (McKeesport Daily News, 7/21/11)

 

  • “Penn State forecasts boom for Marcellus Shale”: Thanks to the Marcellus Shale development, the amount of natural gas produced in Pennsylvania could nearly triple within the next decade, according to an industry-funded report. … The Penn State report said the total tax impact from drilling in 2010 was $1.08 billion in state and local taxes and $1.43 billion in federal taxes. In 2010, Marcellus development in Pennsylvania accounted for $11.2 billion in so-called "value added," according to the report. … During 2010, the industry supported nearly 140,000 jobs in the state, the report said. By 2020, that value-added figure could jump to $20.2 billion per year and the supported jobs could total 256,000 -- all to produce more than 17.5 billion cubic feet of gas per day. (Pittsburgh Post-Gazette, 7/21/11)

New Marcellus Shale Study Featured on Fox News' Special Report With Bret Baier


Click HERE to watch this segment online.

  • “Marcellus Shale natural gas production jumps, as job opportunities skyrocket”: At its current rate of increase, the prolific Marcellus Shale of Pennsylvania could soon lead the United States in natural gas production while employing hundreds of thousands of people, according to a recent study by Penn State. On Wednesday, PennState released a study by the College of Earth and Mineral Sciences … showing a strong support for the regional economy and a major boost to jobs in the area. (Oil & Gas Journal, 7/20/11)

  • “New industry report says Marcellus production up”: Investment in the Marcellus Shale natural gas field is growing faster than expected in Pennsylvania, with both the number of wells drilled and the amount of gas extracted soaring between 2009 and 2010, according to an industry-sponsored report released Wednesday. Gas production quadrupled during the one-year period. ... The report estimates that this year's production will be more than 2 1/2 times last year's, and projects steady growth through 2020. … Total Marcellus spending is projected to rise to $12.7 billion this year from $3.2 billion in 2008, according to the report. It also claims robust employment growth, with about 60,000 jobs in 2009 growing to nearly 140,000 last year. The industry projects it will have more than 156,000 employees this year. (Associated Press, 7/20/11)

 

  • “Growing industry Report spells out economic impact of Marcellus Shale”: By the year 2020, the Marcellus Shale could become the single largest producing gas field in the U.S., supplying one quarter of America's natural gas. In just five years, the industry drilled 2,300 wells into Pennsylvania's Marcellus. Estimates are that gas drilling will be a $12.8 billion industry this year, supporting more than 156,000 jobs, generating $1.2 billion in state and local tax revenue and paying about $1.6 billion in leases and royalties, according to an industry report released Wednesday. (Washington Observer-Reporter, 7/21/11)

 

  • “Shale gas boom for PA, not NY”: An new industry-sponsored report of the economic opportunity from natural gas drilling in Pennsylvania has got to have all the various stakeholders -- energy companies, reasonable environmentalists, lease-holders and of course politicians -- smiling today. According to the Marcellus Shale Coalition, Pennsylvania could lead the nation in natural gas production by 2020. The total economic impact of natural gas drilling from the Marcellus Shale could exceed $12 billion for 2011, the report concludes. "In 2011, Pennsylvania could produce nearly 3.5 billion cubic feet per day of natural gas, making the Commonwealth a net exporter of natural gas right now. This development could support more than 156,000 jobs and generate $12.8 billion in economic activity in Pennsylvania alone. By 2020, according to the study, Marcellus development could support 256,420 jobs," reports the study. (New York Post, 7/21/11)

 

  • A study funded by the natural gas drilling industry on Wednesday said Pennsylvania's economy will get a $12.8 billion boost from drilling this year, more than double the amount from 2009, while reaping nearly 140,000 jobs. … The study, funded by the industry group Marcellus Shale Coalition, measured investment and expenditures minus salaries at $4.7 billion in 2009 and $11.1 billion last year, forecasting a rise to $14.5 billion in 2012. (Reuters, 7/20/11)


“MARCELLUS MULTIPLIER” SUPPLY CHAIN

  • “Study Examines Economic Impact Of Marcellus Shale Industry”: Drilling in the Marcellus Shale is generating tens of thousands of jobs, according to a new Penn State study. … The study estimates 140,000 jobs – directly and indirectly – are dependent on the industry. “These are all jobs that but for the presence of this industry would not exist,” Kathryn Klaber, a spokesperson for the Marcellus Shale Coalition, said. (KDKA-TV, 7/20/11)

 

  • The booming natural gas industry in Pennsylvania is benefiting U.S. Steel Corp., which makes line pipe, trucking companies like PGT Trucking Inc. of Monaca that transport it, and a host of other businesses, representatives said on Wednesday. "This is a really good story for a lot of businesses," said Douglas Matthews, senior vice president of U.S. Steel's tubular operations. "We're starting to see an increase in jobs and a relocation of people back to Pennsylvania." A supply chain of local manufacturers is developing to support the gas industry, Matthews said. … They are examples of a "cascading impact" on the state's economy since 2009 from the explosion of activity in the Marcellus shale natural gas reserves, said Kathryn Klaber, executive director of the Marcellus Shale Coalition. … Another company that has benefited from the Marcellus shale boom, Dura-Bond Pipe Inc. of Export, plans to build a pipe-coating plant at the site of the former Duquesne steel mill, said Jason Norris, vice president of commercial tubular products. The operation will create about 75 jobs, Norris said. (Pittsburgh Tribune-Review, 7/21/11)

 

  • Marcellus Coalition Executive Director Katie Klaber tells Gas Business Briefing the data show fewer wells being drilled that had been projected, but at a greater cost per well and with more gas, on average, flowing from each hole. … “But if you spend more per well that’s more money to the service companies and other businesses to create jobs.” (Gas Business Briefing, 7/21/11)

 

  • "As the largest domestic pipe producer in North America, U.S. Steel is well positioned to serve customers who are working to develop shale natural resources," said Douglas R. Matthews, USS vice president-tubular operations. (McKeesport Daily News, 7/21/11)


ENERGY SECURITY; CONSUMER, LANDOWNER BENEFIT

  • “Penn. shale gas output to more than double in 2011”: Natural gas production from Pennsylvania's Marcellus Shale should reach the equivalent of 3.5 billion cubic feet per day this year, more than double 2010's output, according to new research by a trio of Pennsylvania State University professors. The study, released Wednesday, further estimates that production in the state from the deeply-buried rock formation will rise to the equivalent of 6.7 billion cubic feet per day in 2012 and 17.5 bcfe in 2020. That level of production would make the Pennsylvania basin the largest supplier of natural gas in the U.S., able to meet about 25% of the country's demand, said Kathryn Klaber, who heads the Marcellus Shale Coalition, an oil and gas industry advocacy group. (Dow Jones/MarketWatch, 7/20/11)
  • Fmr. PA DEP sec. John Hanger: “Pa Marcellus Production Numbers Are Humongous! No Ponzi Scheme”: The United States Senate held a hearing yesterday to review the charges made by the disgraced NYT gas reporter that shale gas is a ponzi scheme but meanwhile in the real world Pennsylvania Marcellus gas production will reach in 2011 3.5 billion cubic feet per day or approximately 6 per cent of total US gas supply. At least that is the conclusion of 3 researchers at Penn State University in a report with other eye-popping production numbers that was commissioned by the Marcellus Shale Coalition. … Pennsylvania is on course to produce 1.2 trillion cubic feet this year and clearly will reach annual gas production of 2 trillion cubic feet before 2014, the year that I thought the 2 trillion cubic feet milestone would be achieved. These are real and humongous production numbers. (“Facts of the Day” blog, 7/20/11)
  • “New Numbers Show PA Gas Production Will Lead Nation”: Pennsylvania has become a net exporter of natural gas and could become the nation’s leading gas producer. A report released Wednesday by the Marcellus Shale Coalition, an industry group, says their production for 2010 was higher than expected. Penn State University researchers conducted the study, which was commissioned by the Coalition. (State Impact/NRP, 7/20/11)
  • “Study: Marcellus gas could provide 25% of US supply by 2020”: Advanced well stimulation techniques used in the Marcellus Shale to "dramatically" increase well production have forecasters scrambling to keep up with just how massive levels of production could reach. In July 2009, a Pennsylvania State University study said Marcellus production could reach 4 Bcf/d by 2020. In 2010, an updated version of the study said 13.5 Bcf/d by 2020 was in play. Now, the third rendition of the Penn State study forecast that production could hit 17.5 Bcfe/d in 2020 if gas prices do not drop. (SNL Energy, 7/20/11)
  • Pennsylvania is now a net exporter of natural gas, and has the potential to account for 17.5-billion cubic feet of natural gas, per day.  President of the Marcellus Shale Coalition, Kathryn Klaber, says that would be one-quarter of the nation’s natural gas production. … Kathryn Klaber says PA’s shale industry has blown its projections out of the water.  “At the beginning of 2010, it was projected that Pennsylvania would be producing a billion cubic feet equivalent  per day by the end of 2010, and we saw that it was double that.” (Radio PA, 7/21/11)
  • “Pennsylvania Gas Output Exceeds Expectations”: The explosive development of the Marcellus Shale gas formation has exceeded expectations and placed Pennsylvania on track to become the second largest producer in the country in the next few years, according to a new Pennsylvania State University analysis. At the end of 2010 there were nearly 1,500 gas wells in Pennsylvania — where most Marcellus activity has been concentrated to date — producing a combined total of nearly 2 billion cubic feet of gas per day. … Klaber’s organization touted the analysis as proof that the shale drilling boom is likely to benefit local economies, particularly in southwestern Pennsylvania. (Energy Intelligence, 7/20/11)
  • “PA soon to be net exporter of natgas: report”: The report’s lead author, Tim Considine, director of the Center for Energy Economics and Public Policy at the University of Wyoming, says his projections are conservative. “The wells in Northeast Pennsylvania are tigers,” Considine tells GBB. (Gas Business Briefing, 7/21/11)
  • Pennsylvania Marcellus wells produced an average of 300 million more cubic feet per day of natural gas and petroleum liquids in 2010. … They now estimate the Pennsylvania Marcellus could produce 17.5 billion cubic feet per day by 2020, "which would make the Marcellus the single largest producing gas field in the United States, if real natural gas prices do not fall significantly," they wrote. … Marcellus Shale Coalition president Kathryn Klaber called the study results "dramatic." She pointed to sections of the report that link the highest Marcellus production areas in the state to lower than average unemployment and higher than average local tax revenues. "Pennsylvania now is producing more natural gas than it's consuming," she said. "These findings underscore the longevity, the sustainability of this resource in Pennsylvania for generations to come." (Citizens Voice, 7/21/11)
  • That 17.5 billion would rank Marcellus Shale as the No. 1 supplier of natural gas in the United States, enough to provide one-fourth of the nation's natural gas needs. … The report said that, as a result of Marcellus Shale development, natural gas prices in Pennsylvania dropped 12.6 percent in 2010. That decrease resulted in Pennsylvania consumers saving nearly $633 million on utility bills, the report said. (Pittsburgh Post-Gazette, 7/21/11)
  • The study found that companies paid about $1.85 billion in lease and royalty payments in 2010. That figure is expected to fall this year to about $1.5 billion, and then rise again in 2012. (Associated Press, 7/20/11)
  • The study found that in just five years, the Marcellus has become so profitable that by 2015 Pennsylvania Marcellus drilling could be producing more than 12 billion cubic feet of gas per day, second only to Texas in natural gas production, and transforming Pennsylvania into a major exporter of natural gas. Klaber said the industry is producing more gas with fewer wells and believes it is a direct function of longer laterals giving drillers the ability to reach higher yields. "With those higher yields come higher royalties paid to landowners," she said. The study forecasts that by 2020 there will be nearly 2,500 wells with an output per day of 17.5 billion cubic feet. If natural gas prices do not fall significantly, the Marcellus will be the single largest producing gas field in the U.S. (Washington Observer-Reporter, 7/21/11)
  • All Excerpts from Marcellus Shale Coalition publication. Canonsburg, PA

Business Council: Drilling Means Dollars And Jobs For Upstate

Posted by: This email address is being protected from spambots. You need JavaScript enabled to view it. - Posted in the Journal news Online, Politics on the Hudson on Jul 14, 2011

The Business Council of New York State said in a report today that natural-gas drilling in the Marcellus Shale could generate more than 37,000 jobs in the state through the drilling of about 300 wells.

The report, from its research arm, the Public Policy Institute, is the latest report from the business sector to tout the financial benefits of hydraulic fracturing in the Southern Tier.

“This report details the long lasting economic impact that Marcellus Shale development can bring to New York’s Southern Tier,” said Heather Briccetti, acting-president of The Business Council. “As the Department of Environmental Conservation focuses on the environmental aspects of Marcellus Shale exploration, it is important that New York also consider the economic impacts. The report stresses that a balanced approach to natural gas extraction in the Marcellus Shale will lead to thousands of new jobs, real property tax benefits and increased tax revenue.”

The report compares job growth in Allegany, Steuben, Chemung, Tioga and Broome counties with the job growth in a similar region in Pennsylvania where the drilling is underway. The New York counties had a job loss of 0.3 percent, while the Pennsylvania counties had job growth of 4.7 percent.

The report also says local governments would benefit from new tax revenue, estimating that one well in the Marcellus Shale in Owego would generate $345,025 in property taxes.

Gov. Andrew Cuomo was asked in Orchard Park, Erie County, earlier today about the state’s position on natural-gas drilling. He said the preliminary report from the state Department of Environmental Conservation balanced the needs of trying to boost the economy and protecting the environment.

“The DEC did a report that strikes a balance between protecting the environment and economic development. Basically the DEC said they believe you can drill with the right precautions and regulations in the right areas,” Cuomo said.

Drilling for Jobs What Marcellus Shale Could Mean for NY

How shale gas is eroding petroleum pricing power. This research document is a good read for those interested in the US becoming energy independent. JLCPulse

North America's abundant natural gas resources have begun to weaken Russia's influence on Europe's energy supplies and could counter Iran's influence as an energy supplier, according to research by the Baker Institute Energy Forum at Rice University.

However, to tap the full benefits that unconventional gas can bring to the United States, a "stable investment climate with regulatory certainty" is essential, according to "Shale Gas and U.S. National Security."

"In particular, the United States will need to adopt policies that ensure shale gas exploitation can proceed steadily and predictably with sound environmental oversight," said energy experts Kenneth B. Medlock III, Amy Myers Jaffee and Peter R. Hartley. The report was published by the Energy Forum at the James. A. Baker III Institute for Public Policy, which promotes "informed and realistic" policy on energy-related challenges. It was sponsored in part by the U.S. Department of Energy.

The trio assessed the impact of domestic shale gas development on energy security and national security, emphasizing the geopolitical consequences of growing shale gas supplies. "Natural gas -- if not disadvantaged by government policies that protect competing fuels, such as coal -- stands to play a very important role in the U.S. energy mix for decades to come," said the authors.

Growing domestic shale gas supplies already have "played a key role in weakening Russia's ability to wield an 'energy weapon' over its European customers by increasing alternative supplies to Europe in the form of LNG [liquefied natural gas] displaced from the U.S. market."

Abundant supplies also have dropped the price, which in turn "lowers the cost of initiatives to diversify the American automobile fleet to run on non oil-based fuels, such as electricity and compressed natural gas," they said.

Bountiful U.S. gas supplies have caused a "ripple effect around the globe, not only through displacement of supplies in global trade but also by fostering a growing interest in shale resource potential in other parts of the world," wrote Medlock and his colleagues. These impacts "are likely to expand over time."

LNG supply that now is being diverted to European and Asian buyers has "immediately presented consumers in Europe with an alternative to Russian pipeline supplies" and "is exerting pressure on the status quo of indexing gas sales to a premium marker determined by the price of petroleum products."

The authors were able to demonstrate that U.S. shale gas could help abate the geopolitical power now wielded by key "petro-states" as global energy use shifts to natural gas. "Specifically shale gas will play a critical role in diminishing the petro-power of major natural gas producers in the Middle East, Russia and Venezuela and will be a major factor limiting global dependence on natural gas supplies from the same unstable regions that are currently uncertain sources of the global supply of oil."

According to the authors, expanding worldwide shale gas output would:

  • Virtually eliminate U.S. requirements to import LNG for at least two decades;
  • Reduce competition for LNG supplies from the Middle East, which would moderate prices and spur increased gas use;
  • Combat the potential monopoly power of a "gas OPEC" or a single producer such as Russia to exercise dominance over European consumers;
  • Reduce Russia's gas market share outside of the Former Soviet Union from 27% in 2009 to about 13% in 2040;
  • Reduce the future share of world gas supplies from Russia, Iran and Venezuela; these nations were expected to account for about 33% of global gas supply in 2040 and now will account for about 26%;
  • Reduce the opportunity for Venezuela to become a major LNG exporter;
  • Reduce U.S. and Chinese dependence on Middle East gas supplies; and
  • Reduce Iran's ability to use "energy diplomacy" to strengthen its regional power or to buttress its nuclear aspirations.

Shale gas development in the United States has benefited from North America's "unique" market structure, which may not have occurred if such a regulatory structure were not in place, said the trio.

"Unbundling of capacity rights from facility ownership makes it possible for a producer to access markets through a competitive bid for pipeline throughput capacity," said the authors. "Absent this, many of the small producers that first ventured into shale might not have been willing to do so, specifically because access to markets could have been limited. This is inherently a problem in most other markets globally, where pipeline capacity is not unbundled from facility ownership and large incumbent monopolies control much of the transportation infrastructure."

Another issue that may confront U.S. shale gas producers is a change to tax policies in the upstream sector, which could "render investments in shale exploration and production unprofitable at current prices," said the authors.

"The richness of the U.S. shale gas play owes its roots to small, independent energy companies [that] took on the risk to pioneer early entry...in the 1990s." Those producers are "helped" by several tax rules, including the intangible drilling cost, or IDC, expensing rule, which if changed "would greatly constrain smaller risk-taking firms that engage in the kinds of investment programs that brought the shale play to fruition."

Central New York Oil and Gas Co.'s (CNYOG) proposed MARC-I Hub Line Project, which would deliver additional Marcellus Shale and Trenton Black River natural gas to Northeast markets, may not be needed, according to the Environmental Protection Agency (EPA).

A favorable environmental assessment of the MARC-I Hub Line Project recently issued by the Federal Energy Regulatory Commission (FERC) (see Shale Daily, June 2) "does not clearly explain to the public why the existing gas pipeline distribution network is not sufficient for providing access to interstate markets for Marcellus Shale natural gas, and why a new pipeline on new alignment through largely undeveloped and forested land needs to be constructed," EPA said in a recent filing with FERC [CP10-480].

"It is difficult to understand why natural gas distribution could not be accomplished in the absence of the MARC I Line," EPA said.

The project, which is estimated to cost $200 million, calls for the construction of a 39-mile, 30-inch diameter pipeline in three counties in northeastern Pennsylvania -- Bradford, Sullivan and Lycoming -- as well as well as the installation of a 15,300-hp Northern Compressor Unit at CNYOG's NS2 Compressor Station in Bradford County, and a 16,360-hp Southern Compressor Unit at CNYOG's M1-S Compressor Station in Sullivan County (see Daily GPI, Aug. 10, 2010). The project would have approximately 550,000 Dth/d of firm capacity, and is targeted for service in the fall of 2012, according to the company.

The proposed MARC-I Hub gas transmission line would connect to Tennessee Gas Pipeline's 300 Line and Transcontinental Gas Pipe Line's Leidy Line, as well as existing Stagecoach laterals that tie in with Millennium Pipeline. The project would clear the way for gas produced in the northeastern Pennsylvania counties to be stored at CNYOG's Stagecoach Gas Storage facility near Oswego, NY.

EPA also said it was concerned about "potentially significant impacts to the environment and public health" that could come with construction of the MARC-I Hub Line. "No matter how effective the best management practices and mitigation measures are, the construction of this pipeline triggers questions about effects on water quality, aquatic resources, air quality, wildlife and their habitat and forested landscapes, among other environmental and cultural values," EPA said in its filing.

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