Sustained Outrage

New York report outlines drilling’s benefits, costs

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Diane Beeny from New Jersey holds up a sign protesting against hydraulic gas drilling, or “fracking,” outside the Philadelphia offices of PA Governor Tom Corbett Wednesday, Sept. 7, 2011. The several hundred activists and homeowners who gathered outside the convention center where an industry conference was being held, and then marched through center city, claim that fracking and shale gas drilling in general have led to polluted air and water and made people sick. (AP Photo/Mark Stehle)

While anti-drilling activists were holding protests and Chesapeake CEO Aubrey McClendon was calling people names,  the folks at the New York Department of Environmental Conservation were releasing the final version of their detailed report on large-scale natural gas fracking.

The New York Times summarized the lengthy report this way:

Natural gas drilling using a controversial technique known as hydraulic fracturing could create up to 37,000 jobs and generate from $31 million to $185 million a year in added state income taxes for New York at the peak level of well development, according to analyses in a report commissioned by the New York State Department of Environmental Conservation that was released on Wednesday.

But communities in south-central and southwestern New York, on or near the Marcellus Shale, where most new drilling is expected, would pay a price for the local economic bonanza.

Included among the negative impacts the report outlines are large-scale industrial activity, heavy truck traffic, more spending on police and fire protection and higher housing prices due to the expected influx of workers.

The report outlines the potential economic benefits this way:

Total direct construction employment is predicted to range from 4,408 full-time equivalent (FTE) workers under a low-development scenario to 17,634 FTE workers under an average development scenario. These employment figures correspond to the annual construction of 413 horizontal and vertical wells under the low-development scenario and 1,652 horizontal and vertical wells under the medium-development scenario.

At the peak of activity, employment in jobs operating well pads and related work is expected to range from 1,790 FTE workers under the low-development scenario to 7,161 FTE workers under the average development scenario.

The proposed drilling also could generate indirect employment in other sectors of the economy. Indirect employment impacts are expected to range from an additional 7,293 FTE workers under the low-development scenario to an additional 29,174 FTE workers under the average development scenario.

It also has a detailed discussion (see here and here) of the potential negative impacts on the environment and nearby communities:

Although horizontal drilling results in fewer well pads than traditional vertical well drilling, the pads are larger and the industrial activity taking place on the pads is more intense. Also, hydraulic fracturing requires chemical additives, some of which may pose hazards when highly concentrated. The extra water associated with such drilling may also result in significant adverse impacts relating to water supplies, wastewater treatment and disposal and truck traffic. Horizontal wells also generate greater volumes of drilling waste (cuttings). The industry projections of the level of drilling, as reflected in the intense development activity in neighboring Pennsylvania, has raised additional concerns relating to community character and socioeconomics.

Some of these conclusions reminded me of the Obama administration Department of Energy expert panel’s conclusion:

Intensive shale gas development can potentially have serious impacts on public health, the environment and quality of life – even when individual operators conduct their activities in ways that meet and exceed regulatory requirements. The combination of impacts from multiple drilling and production operations, support infrastructure (pipelines, road networks, etc.) and related activities can overwhelm ecosystems and communities.

The Subcommittee believes that federal, regional, state and local jurisdictions need to place greater effort on examining these cumulative impacts in a more holistic manner; discrete permitting activity that focuses narrowly on individual activities does not reach to these issues.

From a West Virginia perspective, though, the really remarkable thing is that New York regulators performed this sort of analysis in the first place.

Of course, New York has something called State Environmental Quality Review, which requires the sponsoring or approving governmental body to identify and mitigate the significant environmental impacts of the activity it is proposing or permitting. West Virginia environmental groups have long called for passage of such a law here, but the Legislature has never thought that weighing the costs and benefits of things like coal mining or natural gas drilling was worthwhile.

New York regulators are proposing a series of changes to ease the impacts of large-scale natural gas drilling, but if you listen to the CEO of Chesapeake Energy, folks who are concerned about the industry’s impacts are nothing but a bunch of extremists.

There are a bunch of stories out there about Chesapeake CEO Aubrey McClendon’s comments today at an industry conference in Philadelphia. Here’s the Associated Press take:

The chief executive of one of the top U.S. natural gas producers has delivered a blistering rebuke of critics of shale gas drilling, calling them “extremists” engaged in “unfettered fear-mongering.”

Now, Chesapeake is clearly a big player in this industry, ranking second in a list recently compiled by ProPublica, which reported:

Chesapeake calls itself the most active driller in the country, with operations in 15 states, from the Rockies to Texas to Pennsylvania. The company is a good example of how “independent” doesn’t necessarily mean small. As of last year, the company owned an interest in 45,800 wells, of which 38,900 were primarily gas wells.

Chesapeake has built itself as a gas company, but it is increasingly looking for “liquids-rich plays,” according to its annual report. Gas wells generally produce oil and other hydrocarbon liquids as well in varying amounts, depending on the geologic formation. With oil prices high and gas prices low, many companies are seeking more wells that are oil- and liquids-rich, particularly in North Dakota, southern Texas and Pennsylvania.

Also, according to that report:

Aubrey McClendon, the chairman and CEO, is also the company’s founder. He has the unusual option of purchasing a small stake in every well the company drills . He received $21 million in total compensation.

Continue reading…

The Gazette’s Alison Knezevich has a piece online now about the new website that is aimed at making state government revenues, budgets and spending more transparent.

You can visit the site here, and please if you do post any thoughts you have on whether it works well and is truly transparent. As Alison explains in her story:

… The project was spurred by a failing grade that West Virginia received in March on a transparency scorecard designed by the U.S. Public Interest Research Group, a national, non-partisan watchdog group.

Of course, Auditor Glen Gainer and gubernatorial candidate Earl Ray Tomblin couldn’t resist putting their pictures on the site.

Secret meetings, Sept. 2, 2011

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This week’s State Register contained no meetings that violated the public notice requirements of West Virginia’s open meetings law.

As we’ve reminded folks before, the West Virginia Open Governmental Proceedings Act requires agencies to send meeting notices to the Secretary of State in time for notices to appear in the State Register five days prior to a scheduled meeting. Every week, we list the agencies that didn’t comply, thanks to the Secretary of State’s office, which kindly marks those agencies with an asterisk in the list of meetings published each Friday in the Register.

And if you’re interested in government transparency, it’s worth checking out the story by the Gazette’s Phil Kabler today about possible changes in the way meeting notices are required to be done.

We’ve talked a lot on this blog about whether the estimates of jobs that could come from a Marcellus Shale gas drilling boom in West Virginia have been overstated (see here, here,  and here).

Now, there’s a fascinating study out from Penn State that looks at whether the drilling boom in Pennsylvania provided the sorts of jobs that industry boosters said it would. The Post-Gazette reported:

Jobs related to natural gas drilling in Pennsylvania’s Marcellus Shale field were about half what previous studies had estimated for 2009, but the industry still supported about 23,500 jobs that year, according to a new study issued by Penn State researchers.

“It’s still big numbers,” said Timothy W. Kelsey, professor of agricultural economics with Penn State’s College of Agricultural Sciences, and one of the study’s authors.

“It’s just not as big as what the industry is talking about.”

Also, the Post-Gazette said:

The study, issued Monday by the Marcellus Shale Education & Training Center, a partnership of the Pennsylvania College of Technology and the Penn State Extension, also said that about half of the land being leased by drillers was owned by people living in those counties in 2009 — the rest was owned by people or firms based out of state or elsewhere in Pennsylvania, or owned by the state itself.

That means much of the leasing and royalty money derived from drilling goes out of the county in which the drilling takes place, according to the study.

It’s an economics phenomenon known as “leakage” — money that looks as if it is benefitting a particular area is actually going elsewhere. And it’s not an economic phenomenon native to gas drilling: Coal interests, limestone and gravel deposits and other mineral-related economic activity is subject to the same kind of leakage.

The Penn State study is available online here.

Interestingly, the Post-Gazette notes:

The study was paid for by funding from state Department of Community and Economic Development and money from Penn State and the Pennsylvania College of Technology.

Readers may recall that the business boosters at West Virginia University produced a gas industry-funded study touting the potential economic benefits of the Marcellus Shale to our state.  Perhaps Senate President Earl Ray Tomblin, acting as governor, will ask his state Development Office or WVU or someone to produce a study similar to the Penn State one — a study that will tell us if the industry’s impacts have kept up with their predictions.