Socio-Economic-Historical/Quality of Life Aspects of Gas Drilling
Susan Christopherson from Cornell presented preliminary results of Cornell study at a Legislative Briefing in Albany on 11/18/10
Marcellus Shale Gas Drilling: What Does it Mean for Economic Development?
Preliminary findings on the Economic Consequences of Natural Gas Extraction in the Marcellus Shale
SUSAN CHRISTOPHERSON, CORNELL UNIVERSITY, SMC23@CORNELL.EDU
View Slides from the briefing: Christopherson preliminary
Following the briefing, Christopherson appeared on Capitol Pressroom — Listen to the audio:http://thecapitolpressroom.org/the-capitol-pressroom-program-for-november-18-2010/
Jannette M. Barth, Ph.D.; Senior Economist, Pepacton Institute LLC; President, JM Barth & Associates, Inc. Jm.email@example.com Edward C. Kokkelenberg, Ph.D.; Research Fellow, School of Industrial and Labor Relations, Cornell University;Professor Emeritus, Department of Economics, Binghamton University; firstname.lastname@example.org; Timothy Mount, Ph.D.; Professor of Economics, Cornell University; Tdm2@cornell.edu Letter to Governor Cuomo on 2011 revised SGEIS chapter on Economic and Social impacts of shale gas drilling.
“A COMPREHENSIVE ECONOMIC IMPACT ANALYSIS OF NATURAL GAS EXTRACTION IN THE MARCELLUS SHALE.” Principal Investigator, Professor Susan Christofpherson, Cornell University.
I. There will be a briefing/news conference Thursday, November 18, 9:00-10:30 AM, Room 711A, Legislative Office Building, Albany, N.Y., to present early results from this study.
II. Based on the research New Yorkers for Sustainable Energy Solutions Statewide (NYSESS) has done on this issue, we expect central highlights to include:
1. The two extant economic impact studies extensively referred to as supporting shale gas development in the dSGEIS for Marcellus (Broome County study and Penn State study), are essentially fatally flawed as as documents for public policy guidance; they do not address both positive and negative impacts. A number of analysts have previously come to this conclusion.
2, When regions/counties with and without natural gas production are compared on a variety of socio-economic dimensions, the gas counties do not show any overall advantage and may be at a long-term socio-economic disadvantage. Again, several other analysts have reached this conclusion
3. Energy costs to residents of gas producing states do not decrease with increases in production: no local energy advantage. This matter also was addressed by Senator A. Thompson a year ago with industry representatives and they could not confirm any local advantage.
4. Taking these together, one could conclude that New York has considerable planning and policy development yet to do before any shale gas drilling starts.
Stanley R Scobie, Ph.D., Principal, NYSESS, 607.669.4683 [NYSESS is not organizing or sponsoring this briefing, and is providing information solely for the benefit of the community]
Summary of Christopherson’s Presentation by Janette Barth: https://gdacc.files.wordpress.com/2010/11/barth-on-christopherson-sum.pdf
- Economic study on gas drilling is full of holes By Jannette M. Barth • November 18, 2010, Barth, a resident of the Town of Hancock in Delaware County, has a doctorate in economics. http://www.pressconnects.com/article/20101118/VIEWPOINTS02/11180309/1120/nletter01
- UPDATE:Harrisburg Hires Bankruptcy Counsel,Gets Fiscal Advice. (updates with Assured motion, requests for comment) By Romy Varghese OF DOW JONES NEWSWIRES (What happened to the Economic Boost from PA Gas Boom?). 11/10/10
- Americans (Sort of) Love Fracking.The Northeast’s shale-gas boom is being domesticated. HOLMAN W. JENKINS, JR. WSJ Oct. 6, 2010 https://gdacc.files.wordpress.com/2010/10/wsj-holman-10-6-10.doc
- Lycoming College Opinion Poll on Shale Gas Development in NE PA Oct. 2010
- When a Drilling Rig Moves in Next Door. NYT 11-7-10
- Environmental Advocates of NY- Climate of Change 6-2010 Argues for Clean Energy and Clean Jobs to Help NY Economy
- Headwaters Economics Fossil Fuel Extraction as a County Economic Development Strategy Are Energy-focusing Counties Benefiting
- Economics of Energy Extraction
- Coffman-THE REAL COST OF HYDROFRACKING by Steve Coffman
- Barth, Unanswered Questions About the Economic Impact of Gas Drilling in the Marcellus Shale 3/27/2010
- Comparison of NY & PA Employment Statistics
- Fort Worth Budget Shortfalls 7-17-10
- Jacquet (2009) Social-Economic Impacts See final chapter for comparison between NY and other areas.
- Hancock And The Marcellus Shale 2009 Study done by Columbia University workshop on the economics of the gas/oil industry, tax subsidies, export/inport, interviews with residents, etc.
- Open Door Impact Great in Drilling Areas. Pittsburgh Tribune-Review. Aug. 5, 2010.
- Marcellus Summit Binghamton 3/18/2010
- Walking the Land Where the Drilling Rigs will Go http://www.nytimes.com/2009/07/28/opinion/28tue4.html?_r=1&emc=eta1
- Chesapeake pays $1.3 billion in PAVoices of Central PA Compiled stories/pictures of Change Created by Shale-gas Extraction
- Although not yet online, the Aug 23 and 30, 2010 issue of Newsweek with an international theme has a story on p. 7 “The Professional Class Flees Russia” by Owen Matthews. It decries the flight of business people, lawyers, accountants because of rampant corruption and thieving bureaucrats. It concludes with a statement that what is needed is “modernization and a strong and prosperous future founded on real business and innovation–not just on pumping oil from the ground.”
- American Petroleum Institute. The Economic Impacts of the Marcellus Shale:Implications for New York, Pennsylvania, and West Virginia July, 2010
- Penn State Poll of Attitudes toward Gasdrilling
- Freudenburg, William R. and Wilson, Lisa, J. “Mining the Data: Analyzing the Economic Implications of Mining for Nonmetropolitan Regions.” Sociological Inquiry, Vol. 72, No. 4, Fall 2002, 549-75.
- Energy Department says natural gas supplies continue to expand, remain above five-year levels. By: The Associated Press 09/16/10 7:50 AM PDT
- Natural gas stockpiles grew more than analysts expected last week, the government said Thursday.
- Publications list from ROUSE
- GREED: Attempts to milk gas industry put rental community at risk. December 29, 2010 – By DAVID THOMPSON GREED – SunGazette.com | News, Sports, Jobs, Community Information – Williamsport-Sun Gazette.
- Chesapeake building more ‘man camps’ in Bradford County. November 18, 2010SAYRE, Pa. (AP) —
- Hoping to ease a housing crunch, a natural gas drilling company has built a dormitory-style housing facility and training center for its workers in northern Pennsylvania. The dormitories in Athens Township, Bradford County, were built by Chesapeake Energy Corp. The complex can hold about 280 workers and includes a cafeteria, recreation center and laundry facilities. The Oklahoma City-based energy company, the largest stakeholder in the gas-rich Marcellus Shale region, plans to hold a grand opening on Thursday. A drilling boom in the Marcellus has led to a housing shortage and skyrocketing rents. Some housing advocates say lower-income residents have been priced out of the market.
- “Cheaspeake officially opens housing, training facility: “…Steve Evans, who is the senior security officer for Chesapeake’s local operations, noted that the new housing and training facility represents a “substantial financial commitment” to the local community…The fencing around the facility provides a way for the company to keep an accurate count on how many individuals are in the complex at any given time, said Evans…” ” (The Morning Times) (PA)- http://www.morning-times.com/articles/2010/11/19/local_news/doc4ce67e5117adf316460953.txt
- RV park for natural gas workers planned in Canton Twp. Dec. 9, 2010 Full story: Daily and Sunday Review. An RV park for workers in the natural gas industry is being planned for Canton Township, according to the Bradford County Planning Commission. http://thedailyreview.com/news/rv-park-for-natural-gas-workers-planned-in-canton-twp-1.1074378
- The Energy Department said natural gas inventories held in underground storage in the lower 48 states increased by 103 billion cubic feet to 3.267 trillion cubic feet for the week ended Sept. 10. The inventory was 5.3 percent less than last year’s level of 3.45 trillion cubic feet and 6.2 percent more than the five-year average of 3.075 trillion cubic feet, the Energy Information Administration said in its weekly report. Analysts expected inventories to increase by 88 billion cubic feet to 92 billion cubic feet, according to a survey by Platts, the energy information arm of McGraw-Hill Cos. Natural gas lost 12.9 cents at $3.866 per 1,000 cubic feet on the New York Mercantile Exchange.
- Economic Viability of Shale Gas Drilling
Where the Gas Money Goes
“Approximately 80% of the economic benefit of shale gas drilling would leave New York State tax free . . . “
1. Cost = 80% of the cost goes out of state
Capital intensive with equipment (rigs, etc.) owned almost entirely by out of state contractors and rented on a day-rate, or hourly rate
If they move rigs back and forth between NYS and Pa., (less than 6 months in each) the owner should be able to avoid paying NYS tax on income
Most of the skilled crews (on the rigs) are from out of state, stay in motels and sent pay-checks back home, will not relocate to pay NYS tax.
Most of the suppliers – drill pipe, seismic, fracking chemicals – are from out of state.
So that’s 80% + of the cost
2. Revenue = 75% + leaves the state at low/no tax
Ownership of the working interest = 75% + , ie. the operator =- Cabot, Norse, Chessie, etc.
(Some of the land owners are out-of-state, so some of that royalty income goes out of NYS. )
Almost all of the operators are domiciled out of state, so no NYS corporate income tax
And no NYS severance tax = since there is none . . .
The wells are typically owned by LLCs or LPs – which would pay a reduced tax rate.
If the gas is transfered at cost from the LP to the out-of-state parent, then the LP could book no profit in NYS = tax = zero.
What does that leave NYS ?
All of the pollution.
Plus some rather tedious debates about “the multiplier effect” of the peanuts left in the state.
Which wold consist of some hotel/motel bed tax
Some sales tax from liquor stores and strip joints
And a glimpse of property tax on the fast-decline wells.
Income tax from locally owned frack trucks.
Plus property tax on the compressor stations, the tank yards, gas separation plants, frackwaste treatment centers.
Mr. Northrup is a retired oil executive who lives in Cooperstown for part of the year.
- We must not let gas firms decide for us. Ithaca Journal. By Lisa Wright • October 5, 2010, 12:00 am
Boom and Bust Cycles:
- Bakken Play: Boom or Burden? Aug. 10 (Montana/North Dakota)
- Tillman-Boom & Bust in Petroleum Industry Aug. 2010
Historic & Cultural Preservation
Marcellus Shale Site Development: Best Practices for Preserving Historic and Archaelogical Resources. PA Historical & Museum Commission
Land, Water Preservation
From The Pike County Courier: NORTHEAST Pa — Property owners may make money from leasing to Marcellus Shale gas drillers, and they may also find their property can’t be financed for a new mortgage.
“There are a lot of properties with leases in this area,” Rudalavage notes. She adds, when it comes down to obtaining a mortgage on those properties, “more and more of [the banks] are saying, ‘no, no, no.’”
…Wells Fargo would not be inclined to fund a property with a gas lease. In a memo, a top executive at the bank writes it would be “very difficult to obtain financing due to the potential hazard.” The memo continues, “Also if the Gas Leasing is new to the area there are too many unknowns.” One of the unknowns, according to the executive, is what the lease would do to “the marketability of a property.