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Report: Shale Brings Opportunities, Challenges to Pennsylvania

Pennsylvania is growing more slowly than the rest of the nation, but the expansion of Marcellus Shale natural gas operations will provide significant opportunities to the state in coming years, according to a report issued by the Pennsylvania Department of Community and Economic Development (DCED).

The 2010 State Land Use and Growth Management Report, prepared by DCED's Governor's Center for Local Government Services (CLGS) and PB Americas Inc., builds on the work of a similar 2005 report, providing an assessment of statewide and regional growth patterns, an evaluation of major land use issues and recommendations for the state to impact future growth and development patterns.

"Marcellus Shale natural gas, not foreseen in the 2005 report, is a major issue today," said CLGS Executive Director Fred Reddig.

Among the state's most promising employment opportunities is Marcellus Shale natural gas production, DCED said. "As the Marcellus Shale industry increases it is expected that more jobs and income should reach local residents."

Marcellus production "has already become one of the most rapidly growing industries in Pennsylvania," with the number of wells drilled in the state jumping to 1,177 in the first 10 months of 2010, compared with 763 in all of 2009 and 196 in 2008, according to the report.

But impacts from Marcellus activities, which are likely to include the need for more housing, increased demand on schools, community services and facilities, "elevated crime and social tension," will need to be addressed, DCED said.

"Because most natural gas activity is occurring in rural communities with relatively small local economies, the scale and significance of natural gas-related economic impacts could be much higher in Pennsylvania than in other parts of the country," according to the report.

"Sudden expansion in the natural gas industry is introducing environmental, infrastructure, economic and social impacts, as well as an influx in population to primarily rural areas of the state," according to the report. Bradford, Susquehanna and Tioga counties -- currently three of Pennsylvania's most productive Marcellus counties -- "are likely to continue as 'hot spots' for Marcellus Shale activity in the next several years."

But "government fiscal capacity to deal with these matters is declining at both the state and local levels," according to the report. In 2008 nearly half of Pennsylvania's municipalities and more than half of the state's cities were operating at a deficit.

DCED recommends providing financial and technical assistance to help local governments address the impacts of Marcellus Shale activity and the natural gas industry. Other recommendations include initiating a state effort to integrate natural resource and farmland protection programs, and strengthening infrastructure financing programs.

The 2005 report and data gathered prior to the current recession (pre-2008) indicated that "Pennsylvania was developing but not growing." The amount of developed land increased 131% between 1992 and 2005, while the state's population grew just 4.5%. During 2008-2009 the state's economy declined, unemployment increased (from 4.4% in June 2007 to 8.1% in September 2010) "and development activity dropped precipitously," according to the report.

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