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."
Article Photos
St. Mary’s, W.Va.-based Trans Energy Inc. is
producing 4.45 million cubic feet of natural gas per day from its Whipkey No. 2
Horizontal Marcellus Shale well near Cameron.
(Photo provided)
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.