Calling development of the Marcellus Shale play "a great opportunity" for New York, the Public Policy Institute of New York State Inc. (PPI) said a scenario where 500 gas wells were drilled every year in the state would create 62,620 jobs, $2.7 billion in added value and $1 billion in local, state and federal tax revenue.
Meanwhile, two shale geology experts say three counties in New York's Southern Tier -- Broome, Tioga and Chemung -- will produce the most natural gas if the state's de-facto moratorium on high-volume hydraulic fracturing (fracking) is lifted.
In its July report, "Drilling for Jobs: What the Marcellus Shale could mean for New York," the PPI announced its support for lifting the moratorium and said it was crucial for New York to consider the economic benefits of developing the Marcellus.
"Significant economic benefits achieved in Pennsylvania provide clear evidence of the investment and job growth related to shale development," the PPI said, adding that 48,000 private-sector jobs were created in Pennsylvania in 2010. "It would be unreasonable for New York state government to disregard the economic benefits that are being achieved below the state line in Pennsylvania."
The PPI found that in Pennsylvania, annual wages in six core Marcellus Shale employment categories -- including roustabouts, petroleum engineers, engineering managers and truck drivers -- averaged $73,159 in 2010, $27,400 more than the statewide average for all industrial jobs. Oil and gas companies also paid more than $1.1 billion in state taxes since 2006.
"In a time when New York's economy is slowly returning to fiscal stability after the devastating global recession, such tax benefits would be invaluable to the Empire State," the PPI said.
Citing state Department of Labor statistics, if the moratorium on shale gas development remained in place, New York could lose thousands of jobs by 2018. Specialty trade contracting would be hit hardest with 10,660 jobs lost, while truck transportation (5,000), rental and leasing services (4,130), and heavy and civil engineering construction (1,710) would also lose jobs. Those job losses translate to $2,267,929 in lost employee wages, $5.46 million in added value and $2 million in local, state and federal tax revenue, the report said.
But if the moratorium is lifted, the economic picture becomes much rosier.
According to PPI estimates, 12,524 jobs would be created if 100 wells were drilled every year in New York, adding $546 million in value and $200 million in tax revenue. At 300 wells per year, the number of jobs created jumps to 37,572 with $1.6 billion in added value and $600 million in tax revenue.
"Not only will developing the Marcellus Shale result in increased revenue and private-sector job growth, it will remove some individuals from unemployment rolls and expand the tax base, helping to ease the burden on state government and taxpayers," the PPI said.
Although the report does not address environmental concerns over Marcellus Shale development, its figures assume there will be no drilling in the watershed of New York City.
"We recognize that protection of public health and environmental resources -- especially public water supplies -- will be a crucial element of the state's regulatory program for shale gas exploration," the PPI said. "However, given New York's history of adopting some of the most strict environmental standards in the nation, we expect the state's regulation to assure the safe development of hydraulic fracturing in New York's Southern Tier."
Cherie Messore, spokeswoman for the Independent Oil & Gas Association of New York (IOGA), said the group affirmed the PPI's findings.
"It's always very encouraging to have our beliefs affirmed that economic growth for New York state is just at the tip of our fingers," Messore told NGI's Shale Daily on Tuesday. "We're anxious and eager to start seeing the results. We've looked at the direct hires in Pennsylvania. When you look at all of the indirect business growth as well, it's very encouraging for our state's economy and overall well being."
In an interview with the Ithaca Journal, geologists Terry Engelder and Gary Lash said that if the moratorium is lifted in New York, drilling would more than likely start in the three aforementioned counties.
"There are certain geologic parameters that determine the economic qualities of gas shale," Engelder, a professor at Pennsylvania State University, told the newspaper. "In New York state, the combination of these parameters is optimal under Broome, Tioga and Chemung counties."
Lash, a geosciences professor at SUNY-Fredonia, concurred. "I think Broome County, especially the southern half of Broome County, holds a lot of promise. The Marcellus is deep and it's quite thick. It borders on Susquehanna County [PA], where there's been a lot of success."
Engelder added that New York isn't likely to produce as much natural gas as Pennsylvania.
"That's largely because the geological parameters are even better in Pennsylvania than in New York," Engelder said. "But nevertheless, I think that those three counties in southern New York State will benefit greatly."
Messore said IOGA hasn't done a study to determine which counties in New York would be the most productive, but said the geologists' opinions on the three counties "appears to be consistent. It's literally over the state border from the sweetest spots [for natural gas drilling] in Pennsylvania."
The New York Department of Environmental Conservation (DEC) released its recommendations on fracking on June 30 (see Shale Daily, July 5). Among the recommendations were requiring full disclosure of fracking chemicals and a ban in all primary aquifers, the watersheds of New York City and Syracuse, and all state-owned land, including state parks. The DEC is set to begin a 60-day public comment period on its recommendations this month.