Drilling Means Billions For the Mountain State
By CASEY JUNKINS Staff WriterArticle Photos
WHEELING - Activity from Marcellus Shale drilling boosted West Virginia's economy by $1.3 billion in 2009 and led to the creation of 13,249 new jobs, an American Petroleum Institute study finds.
With drilling and leasing now spreading throughout the state, the industry could create as many as 22,928 new Mountain State jobs in 2011 while paying as much as $221 million in state and local taxes.
In collaboration with the institute, Penn State University professor Timothy J. Considine prepared the research, officially known as "The Economic Impacts of the Marcellus Shale: Implications for New York, Pennsylvania and West Virginia." During a Wednesday press conference prior to the release, he said, "Marcellus is a very exciting development for East Coast energy."
The Marcellus Shale field stretches from New York through West Virginia. The total area is roughly 95,000 square miles, which is 19 times larger than the 5,000-square-mile Barnett Shale area in Texas. The recoverable reserves in the Marcellus field could be as high as 489 trillion cubic feet, which would place the Mountain State in the middle of the second largest natural gas field in the entire world.
Chesapeake Energy, AB Resources, Trans Energy Inc. and CNX Gas Corp. are just some of the companies currently leasing Northern Panhandle land for Marcellus exploration and drilling. These companies have signed landowners to contracts for wide-ranging lease and royalty payments. Current local lease contracts range from as low as $5 per acre to at least as high as $3,600 per acre, with production royalties ranging from 12.5 percent to 18.75 percent.
In terms of lease payments and royalties, drilling companies in 2009 paid West Virginia property owners $657.6 million and $30.9 million, respectively. These amounts dwarf the $475.2 million and $18.2 million drillers paid Mountaineer landowners in 2008, the study shows.
West Virginia state and local governments gained $109.5 million from Marcellus activity in 2009, highlighted by $36.6 million paid in sales taxes. Direct industry employment was responsible for 8,436 jobs in 2009. The remaining 4,813 are credited to economic activity by those directly working for the industry, such as workers spending money in retail stores.
The study uses three scenarios in predicting future activity: low, medium and high. The categories are differentiated based on factors such as market for natural gas, the viability of wells drilled and state regulations.
In the high development scenario, the research indicates there could be as many as 22,928 new jobs in West Virginia in 2011. Even in the low range, those new employment opportunities should reach 11,405.
For state and local taxes, high range projections show the governments will receive $221 million in 2011, while the low-case scenario has the governments gathering $114 million.
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Wheeldog
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07-23-10 11:36 PM
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Folks, I have been doing a bit more research into shale gas potential and profitability. I sure hope none of you have invested your life savings in shale gas ventures.
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Wheeldog
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07-23-10 12:29 AM
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Former, where to start? Globally, the discovery rate for oil peaked in the 1960s at just under 60 billion barrels per yr. It has been a prolonged decline since with current finds at about 8 bil. barrels per yr. In effect, we are consuming roughly 3 barrels of oil for every new barrel being discovered. The stated "potentially" recoverable oil in tar sands and shale kerogen exists more on paper than in barrels. Both have proven to be far less productive than early estimates, especially shale deposits. Most discovered oil deposits will never be tapped due to excessive expense, environmental difficulties and geopolitical issues. Insofar as OPEC is concerned, particularly Saudi Arabia, the reserve figures they publish are, at best, highly questionable.
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formerohvalleyresident
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07-22-10 10:22 PM
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Dog, the eia dot gov site is down tonight (GOVERNMENT WEBSITE: FAIL!) but I can say that the Gas and OIL PROVEN Reserves have been continuously UNDERESTIMATED since 1940. If I recall, it was .199 Trillion cubic feet in 1940 and is now over 2,600 TRILLION CF!! Here is one quote I can find: Natural Gas Further, CRS notes the 2009 assessment from the Potential Gas Committee, which estimates America's future supply of natural gas is 2,047 TCF-an increase of more than 25 percent just since the Committee's 2006 estimate. At today's rate of use, roughly 90 percent of which is produced domestically, this is enough natural gas to meet American demand for nearly 90 years. You can cast all the fear and doubt you want, you cannot back it up with FACT. The PROVEN world reserves in GAS and OIL have INCREASED over the years in spite of vastly INCREASED consumption. Yes, maybe harder to get, but the technology gets better to compensate.
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Wheeldog
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07-22-10 8:31 PM
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"Best graphics I have seen in a fairy tale in a long time," Former. Former, have you ever known a gold prospector? I have met several over the years, and virtually all have told me that they have this fabulously rich claim that will produce unimaginable riches - just as soon as they get enough money to really go into large scale production. Most were being honest in that they actually believed what they were saying and had put in lots of their own money. Some had found gold, but it was so scattered and difficult to mine that it was uneconomical. I only knew one who actually did hit it rich. Think, how much commercial gas has been develop so far? Why are the gas drilling companies spending so much time trying to raise money to drill? I have a hunch that ten years from now the amount of gas coming out of the ground will be far less than the pie in the sky claims now being tossed around.
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Mchaz2009
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07-22-10 8:23 PM
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If it's such a fairy tale why are there over 100 drilling rigs from out west on the east coast?? Fracing is very effective at extracting the hydrocarbons, and the gas although in sandstone is in more quantity in the shale. And guess what, my company alone is looking at hiring about 50 people locally if they'd get off their b u t t and look for the work.
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formerohvalleyresident
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07-22-10 7:32 PM
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So, Dawg, this Whipkey #2 4.45 Million cubic feet/day is a fairy tale? Best graphics I have seen in a fairy tale in a long time. Private Sector: SUCCESS! "Dirty" Harry Reid just gave up on Cap and Trade! Government: FAIL!
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formerohvalleyresident
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07-22-10 7:26 PM
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The rest of the story: "Natural gas production in the Marcellus Shale region—if developed—could create 280,000 new American jobs and add $6 billion in new tax revenues to local, state and federal governments over the next decade, a new study released today finds. “One of the biggest opportunities to create jobs and increase America’s energy security lies within the Marcellus Shale region,” said Jack Gerard, president and CEO of the American Petroleum Institute. “Pennsylvania, New York and West Virginia have enough natural gas to create hundreds of thousands of well-paying jobs and provide Americans with a stable, domestic energy source for generations to come.”
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Wheeldog
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07-22-10 6:32 PM
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I suggest reading the article, "The Shale Gas Fairytale Continues" in the July 18 edition of the Financial Times. The author carefully researched the rather extravagant claims of huge profits and production potential of the Marcellus Field. In effect it says that there is far more hype than gas in this deposit. Shale gas is extremely difficult and costly to extract requiring a much higher price than now exists. Fracting is much less effective in extracting shale gas than it is in tapping sandstone gas. The gas rush has everyone excited and pumped up expectations of enormous payoffs. It might be wise to cool off for awhile before going on a spending spree.
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oldsteelmaker
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07-22-10 5:57 PM
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So, boxer, those gas rigs are figments of our imaginations, huh?
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boxerboy
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07-22-10 2:06 PM
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Stats in the story are provided by the Petroleum Institute. No possible misinformation or conflict of interest here...
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formerohvalleyresident
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07-22-10 12:27 PM
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Great! Coal and Gas are REAL energy fuel not pie in the sky. Let's compare those 13,249 REAL jobs versus the essentially ZERO jobs from Solar and maybe 50 jobs from wind and the ZERO from nuclear since it is illegal in the state of WV, created in spite of BILLION of $$$ from the taxpayer subsidies. Now 13K manufacturing jobs would generate way more trickle-down jobs, and some of these jobs are likely to decline once the flurry of drilling stops. But it creates a base of jobs to service and maintain the drilling sites, collect the gas, etc. that will stay. Wealth has always come from the earth's resources in WV. Private Sector: SUCCESS!
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