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Marcellus Industry Study: PA Could Lead Nation In Natural Gas Production By 2020
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At current rates, the Marcellus Shale formation could become the leading supplier of natural gas in the United States within a decade, according to an analysis released today entitled “The Pennsylvania Marcellus Natural Gas Industry: Status, Economic Impact, and Future Potential.”
Taken in tandem with projections released earlier this year by the U.S. Department of Energy, the report shows that the Pennsylvania Marcellus could produce approximately a quarter of America’s natural gas by 2020.
Conducted by researchers at Pennsylvania State University and commissioned by the Marcellus Shale Coalition, the new study analyzes production data and industry investments, as well as the overall economic impact natural gas development from the Marcellus Shale is having Pennsylvania.
“Just a few years ago, Pennsylvania relied heavily on other states for natural gas to fuel our economy. That dependence is no longer, though, as Pennsylvania is now a net natural gas exporting state,” said Kathryn Klaber, president and executive director of the MSC. “And soon, the natural gas produced in Pennsylvania can help meet a quarter of our nation’s demands. This is a truly remarkable milestone; one made possible by the dedicated efforts of the men and women who work each day to responsibly develop the Marcellus’ clean-burning natural gas resources.”
The study projects that Pennsylvania’s Marcellus Shale has the potential to produce 17.5 billion cubic feet of natural gas per day (6.4 trillion cubic feet annually) – representing nearly one-quarter of America’s annual natural gas production in 2020, according to U.S. Department of Energy estimates.
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 and generate $20 billion in added value to Pennsylvania’s economy.
“The responsible development of the Marcellus Shale’s abundant resources continues to fundamentally reshape regional and global energy markets,” said Ray Walker, MSC chairman and senior vice president of Range Resources. “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. And while this development is creating tens of thousands of jobs, we understand that our greatest responsibility is continued environmental stewardship, transparency and providing a safe workplace for our employees and the community.”
In addition to analyzing the broad economic impacts of Marcellus development, the study also evaluates the effect shale gas production is having on energy costs for Pennsylvania consumers. The researchers determined that natural gas prices dropped 12.6 percent in 2010 – attributed largely to expanded Marcellus development – saving consumers in Pennsylvania nearly $633 million on their utility bills.
“Large-scale development of the Marcellus is reshaping the economic landscape of Pennsylvania,” concluded Drs. Timothy J. Considine, Robert Watson, and Seth Blumsack, authors of the study. “Strategies and policies that encourage growth of the Marcellus gas industry will generate significant economic and environmental benefits for the Commonwealth of Pennsylvania, transforming Pennsylvania to a net natural gas exporter while creating hundreds of thousands of jobs and generating billions of dollars in additional output, income, and tax revenues.”
Key Findings
-- During 2010, the Pennsylvania Marcellus Shale natural gas industry triggered $11.2 billion in economic activity, generated $1.1 billion in state and local taxes, and supported nearly 140,000 jobs.
-- The Pennsylvania Marcellus industry is projected to generate more than $12.8 billion in economic activity in 2011, leading to more than $1.2 billion in state and local taxes and supporting more than 156,000 jobs.
-- As a result of Pennsylvania Marcellus production, residential electricity and natural gas bills across the Commonwealth are $245.1 million lower [$217.4 million from lower natural gas bills and another $27.7 million from lower electricity bills].
-- In 2010 alone, natural gas companies paid over $1.6 billion in lease and bonus payments to Pennsylvania landowners.
-- By 2015, Pennsylvania’s Marcellus Shale could produce more than 12 billion cubic feet per day, second only to Texas in natural gas production.
-- Marcellus Shale natural gas production could reach 17 billion cubic feet per day in 2020, potentially allowing the Marcellus to become the single largest producing gas field in the United States, if real natural gas prices do not fall significantly.
The complete study is available online. An executive summary of the study is also available.
Reaction To Report
Sharon Ward, Director of the Pennsylvania Budget and Policy Center, issued the following statement in response to an industry-funded study on the Marcellus Shale's economic impact:
"This is the third study conducted by Penn State faculty on behalf of the natural gas industry into the economic impact of the Marcellus Shale. We are pleased to see that Penn State has made it clear this time that the study is sponsored and funded by the natural gas industry, not the university.
"Overall, we welcome the gas industry's contribution to Pennsylvania's economy, but with this study, the industry continues to overstate the economic benefits and underestimate the costs of increased drilling in the Marcellus Shale.
"The study overstates the number of jobs supported by the industry. It states that 140,000 jobs (2.4 percent of the state workforce) are supported by the industry, but jobs data from the state Department of Labor and Industry show that less than 19,000 people were employed directly in core Marcellus Shale industries at the end of 2010.
"The study also inflates the amount of tax dollars generated by the industry. The study attributes $1.1 billion in state and local taxes to industry activity in 2010. This is much higher than a recent Department of Revenue report that attributed $219 million in 2010 state tax payments to the gas industry and its affiliates.
"The study also suggests that a drilling tax or fee will deter investment in the Marcellus Shale. That has not been the case in places like West Virginia, Texas and Arkansas. All three states have drilling taxes and led the nation in new gas wells in 2010 - well ahead of Pennsylvania, without a drilling tax.
"Policymakers and the public need good data to understand the impact of Marcellus Shale drilling and how we can best maximize its benefits for the people of Pennsylvania. Unfortunately, this study misses that opportunity."
Marcellus Study Shows More Growth, Critics Question Results
Shale Jobs Windfall Debated Industry Study: Marcellus Economic Impact Dramatic |
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7/25/2011 |
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