New York Gov. David Paterson's proposed plans to lay off hundreds of state employees could be scuttled at the Department of Environmental Conservation (DEC) if permitting fees from new Marcellus Shale wells were dedicated to staffing, the Independent Oil & Gas Association of New York (IOGA) said Monday.

Under the governor's budget proposal state agencies may be hit with huge staff reductions, including the loss of 200 DEC positions, the IOGA noted. However, enough funding could be generated in permit fees from new gas wells to "immediately retain existing field inspectors and employ dozens of new inspectors if permitting and drilling is expedited and allowed in the Marcellus Shale formation."

Based on DEC's current permit fee structure, revenue "from 300 wells alone would generate $1.284 million and support the salary and benefits for at least 12 new employees (based on $100,000 per employee) for one year. This calculation is based (conservatively) on a well with an average length of 8,000 feet," said the IOGA.

"It's an unfortunate and ironic twist that the same agency that should benefit greatly from increased drilling activity in New York is currently facing major layoffs, partly because the state is not yet allowing this activity," said IOGA Executive Director Brad Gill. "A major solution to the economic despair of New York state and its residents is a mile below our feet, yet science and history has been trumped by politics and a campaign of misinformation and exaggeration."

If each of the 300 wells used in IOGA's calculations "had four additional horizontal runs of 3,000 feet each from the same well pad, which is plausible, the state would collect another $1.488 million in permit fees -- enough for 14 additional employees at the DEC. And many of these well pads support six or eight horizontal legs, further increasing the revenues to the state."

If New York were able to duplicate the drilling activity in the Pennsylvania portion of the Marcellus Shale, where nearly 2,000 wells were permitted in 2009 and an estimated 2,500 are permitted by the end of this year, "it would generate a minimum of $6.28 million in permit fees for 2,000 boreholes of 8,000 feet, and upwards of $10.7 million if 2,500 boreholes were drilled to 10,800 feet," the IOGA noted.

"While this would be enough money to fund these employees for one year, revenue from increased taxes resulting from overall economic impact would easily be more than enough to sustain the retention of DEC staff," Gill said. "New York must move expeditiously to tap this natural resource in a safe, efficient and environmentally sound way."

According to the U.S. Bureau of Labor Statistics and calculations by NGI, the general unemployment rate in Pennsylvania has increased since January 2008, while the employment rate of the Pennsylvania mining and logging industries has also steadily increased.