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Marcellus Royalties Expected to Be 'Boon' to Pennsylvanians

June 30, 2008
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Exploration and production companies are looking to the Marcellus Shale and seeing dollar signs; so are Pennsylvania landowners whose acreage sits atop the shale and its gas reserves.

Penn State's Workforce Education and Development Initiative, a collaboration of the Outreach Workforce Assessment Center and the College of Education Institute for Research in Training and Development, has released its forecast of the potential impact of increased royalty income from the Marcellus.

"There's no question, Pennsylvania landowners will benefit from royalty income earned," said Rose Baker, program manager for the Workforce Assessment Center. "The ripple effect on the rest of the state economy might be equally impressive."

According to the center, for every $1 billion in royalty income received by Pennsylvania residents each year from 2008 through 2011:

Estimates of the shale's value, which primarily runs below Ohio, West Virginia, Pennsylvania and New York, have been put at around $1 trillion. In Pennsylvania the Marcellus Shale reaches the northern tier of the state as far east as the Scranton area and as far south and west as Somerset County and the Pittsburgh area. The shale lately has gotten long looks from gas producers because of improved horizontal drilling techniques, which are unlocking huge gas reserves in unconventional shale plays across North America (see NGI, April 7).

However, Pennsylvania appears to be aware that gas development can come at a cost and is watching producer activity accordingly. Recently the operations of two companies were suspended by regulators for alleged violation of Pennsylvania's Clean Streams Law (see NGI, June 9).

Statewide, Pennsylvania is expected to see a boon from landowner royalties. The personal income they may generate is expected to translate into more purchases of goods, increasing the output of Pennsylvania industries and improving the income of state workers, which in turn attracts more workers to the state, the center said.

"Royalties are likely to be substantially greater than upfront checks," said Tom Murphy, educator with Penn State Cooperative Extension. "Landowners are coming in looking for unbiased information to make sound decisions as they explore these newfound opportunities."

In the last few months, statewide public meetings offered by Penn State Cooperative Extension educators on natural gas exploration and leasing have been standing-room-only events. Landowners have been interested in learning whether their properties sit above a treasure of natural gas and how they might be able to sell drilling rights. Although gas leases have been around for years, the money offered per acre has risen dramatically, especially since a recent study by professors from Penn State and the State University of New York at Fredonia discovered much more gas than was originally thought.

For more information on Penn State's Natural Gas Exploration and Leasing Program and upcoming landowner information sessions, visit www.naturalgas.psu.edu. For a copy of the center's brief, visit http://PA-Royalty-Gas.notlong.com.

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