Post by melody on Apr 11, 2014 16:27:29 GMT -5
MULTI-STATE SHALE RESEARCH COLLABORATIVE RELEASES CASE STUDIES OF FOUR MARCELLUS SHALE DRILLING COUNTIES
4/11/14
By Kimberly Hess, PLS
The Multi-State Shale Research Collaborative this morning released four case studies of shale drilling activities in four counties across Pennsylvania, West Virginia, and Ohio. Speakers concluded that the prophecies of the shale boom were exaggerated by the industry and the detriments were understated.
Sharon Ward, Director of the Pennsylvania Budget and Policy Center, explained the collaborative undertook a comprehensive assessment of the benefits, costs and impacts of shale drilling in four counties – Greene and Tioga in Pennsylvania, Wetzel in West Virginia, and Carroll in Ohio – with a particular focus on employment, income, crime, housing, and road and traffic impacts. She noted the case studies did not look comprehensively at environmental impacts. She said the four counties have a relatively high concentration of wells, are rural, and are economically vulnerable. Ward reported all four counties’ biggest concern was regarding heavy truck traffic and the related effects of that traffic. She added that Carroll, Greene, and Tioga especially were all transformed by shale development and saw economic benefits, such as increased income from jobs and leases. She reported the impact on overall employment was generally limited, but sectors like mining saw growth. Ward also identified a number of costs associated with the drilling, such as increased rents, increased road repair costs, and increased demand for human services. She said local officials were unprepared for these demands and had few tools to manage the growth. Regarding Wetzel County, Ward said West Virginia saw little economic benefit and fewer impacts, but she noted property tax collections grew because that state assesses property taxes on gas reserves and equipment. She also noted Tioga County had a natural gas bust, as the drilling industry pulled out of that county pulled out almost as quickly as it went in.
Ward recommended that policymakers acknowledge the negative impacts of the industry, such as higher costs and increased demands on local governments, as well as the positives. She also said gas development should be adequately taxed so the industry foots the bill and local governments need better information and more levers to manage impacts. She referred to the successful models of Wetzel’s oil and gas task force and the allocation of a portion of Pennsylvania’s impact fee to affordable housing.
Sean O’Leary, Policy Analyst with the West Virginia Center on Budget and Policy, provided an overview of the case study of Wetzel County, which he said is the state’s second biggest gas producer. He noted Wetzel saw a 6000 percent increase in gas production since 2000 and most of the gas drilling in the county is in conventional wells. He discussed the economic impact of leases and royalties payments, noting that West Virginia has a minimum royalty of 12.5 percent, and reported the overall impact is unclear because a small number of landowners hold a large number of leases in the county. O’Leary also said the impact on jobs was fairly small, noting that about 470 jobs were added from 2009 to 2012, and less than two percent of all jobs in the count are in oil and gas and unemployment is over 10 percent. He said a lot of jobs in the industry are going to out of state workers, which could be why impact so limited. He indicated many of the job gains were in the service industry, which will not bring a whole lot of economic development. Additionally, the county did not see a population boom but has seen an increased demand for temporary housing. O’Leary indicated the only major impact in Wetzel has been related to increased traffic and truck traffic, but with increased property tax revenue the county has been able to address road concerns and community revitalization projects. He concluded by discussing the positive role of the county’s gas and oil task force, which is a citizen advisory panel that holds public meetings once or twice a month to talk about issues and give feedback to the industry.
Amanda Woodrum, Researcher, Sustainable Development with Policy Matters Ohio, highlighted the findings in Carroll County, which has half of the producing wells in the state. She reported fracking brought increased economic activity, as seen especially in the increase in sales tax revenue, but some oil and gas industry practices detract from the benefits. She said the standard industry leases are a bad deal for non-savvy landowners and far fewer jobs have been realized than were promised at the outset. Unemployment in Carroll is 8.3 percent, which is lower than it was but still not as low as it was before the recession. Woodrun stated only 3,000 jobs were created and a number of those are filled by out of state workers and many others are low-wage jobs. She said the influx of out of state workers lead to increased demand for housing, which lead to more money for landlords, but also rent prices spiked above what local people can pay. Like other counties, Carroll saw negative impacts from truck traffic, such as congestion, accidents, and road damage. The county also saw increased costs for emergency services and had environmental concerns due to the large amounts of water used for fracking, the lack of regulations requiring that water to be recycled, and earthquakes from deep injection wells. She reported that Ohio is becoming the dumping ground for fracking waste due to the lack of regulations. In conclusion, Woodrun said, the industry fell short of the initial promises and had a greater cost to the environment and community. She acknowledged it is not realistic to stop the industry, but recommended that Ohio increase its severance tax to five percent and use the extra revenue for better regulation and oversight of the industry, to protect landowners and citizens, to invest in infrastructure to use the energy locally and diversify the energy portfolio, to ensure more local hiring, and to require health insurance for dangerous mining-related jobs.
Ward provided an overview of the findings in Pennsylvania. She stated drilling activities were disruptive in both Tioga and Greene Counties, but things are returning to normal in Tioga as the industry moves out. She said noted the positives of increases in royalty and leasing income, but said some of those benefits are mitigated by the fact that landownership in Greene County especially is concentrated in few hands and a lot in nonresidents. She reported employment grew by more than 30 percent in mining, construction, leisure, and hospitality industries and the unemployment rate is below the average in Greene. On the downside, Ward reported, Greene has a history of conventional gas well development and its economy has become even more mineral dependent and more vulnerable to downturns in the economy. She said the most significant impact was an increase in crime, an increase in out of state workers that drove up rents, an increase in homelessness, more children were put in foster care because families unable to find adequate housing, more high school students dropping out for jobs in the industry, emergency room visits increased, increased demand for early intervention services, more heavy truck traffic, road repair budgets grew, and police expressed concerns they did not have adequate capacity to enforce weight regulations.
Ward said both counties were unprepared for the level of activity, had little control and were trying to catch up. She recommended better recordkeeping and zoning laws and said Pennsylvania should reinstate local property taxes on oil and gas reserves.
Frank Mauro, Executive Director Emeritus of Fiscal Policy Institute of New York, said the four case studies lay the groundwork for quantifying the costs associated with shale drilling. He reiterated that employment effects were lower than prophesized, suggesting that the exaggeration was to minimize or avoid fair taxation, effective regulation, and careful examination. Additionally, he said, the real costs of drilling were minimized by the industry. He said the employment impacts were small relative to the economy of the whole and jobs have gone substantially to out of state workers. Mauro also noted the environmental and health concerns, pointing out that even when there are laws people continue to dump waste.
The speakers then responded to questions from the media.
What do we take away from this for New York?
Mauro replied the most important thing is there are a lot of complications, but these case studies show the costs are real and calls for a fuller environmental, economic, social impact analysis. He said indicated New York can learn from the lessons of these counties.
As a means to combat the impacts, has there been any traction on multistate severance tax approach or efforts to impose property in Ohio or Pennsylvania once production established?
Ward confirmed the collaborative has asked the governors of the three states to come together around a taxing structure that includes a severance tax at a rate no lower than West Virginia’s and does not include the credits and reductions proposed in Ohio. She said that idea is gaining traction, but the collaborative has not received any discussion with policymakers. Regarding property taxes, Ward noted efforts in Pennsylvania to try to change the law to once again subject oil and gas reserves to local property taxes, but that has not been successful to date. She opined local governments would be interested in seeing that change.
Wendy Patton, with Policy Matters Ohio, said Ohio is focused on the severance tax, “but in pause mode.” She said the industry submitted a proposal and the governor responded and expressed hope that discussion will be renewed in the fall. She said Ohio needs a larger source of income to address impacts of the size that Ohio is seeing.
Did you find the impacts in other shale plays, like the Barnett, were accurate when used to preview the impacts seen here?
Ward said the collaborative looked at the various studies done on impacts in the west and the Barnett shale, but also wanted to look at “more home grown concerns” and drew heavily from the testimony given by local officials about the impacts they were seeing.
Stephen Herzenberg, Executive Director of the Keystone Research Center, pointed out that the western drilling areas are less densely populated then the Marcellus Shale drilling areas, which contributed to the differences between the two shales.
What was the employment growth in Greene so much more dramatic than that of Wetzel?
O’Leary counted the growth in Wetzel was not minimal, at ten percent, but it wasn’t enough to transform the county like some would have expected.
Herzenberg also pointed out that there were additional jobs related to pipelines in Greene County. He indicated he would research the question further.
Is the increased sales tax revenue in Carroll County enough to offset some of the costs experienced?
Woodrun confirmed sales tax revenues have been higher, but not high enough to cover costs. She pointed out local governments have seen cuts in their state funding over the past few years. Woodrun also pointed out that initial spending blitzes from signing bonuses have ended.
Patton confirmed this, and said the immediate needs for infrastructure are very big ticket items, like water and sewer facilities and road expansions, which need to be funded with statewide taxes.
There is heightened awareness of environmental impacts in West Virginia following the chemical spill, has the environmental impact been felt in other states?
Woodrun said awareness has not been as heightened in Ohio and she remarked on the need to forge middle ground on costs and benefits and determine what can be done better.
Ward added that the case studies did not specifically address environmental issues, but she said there have been a number of environmental concerns in air emissions and water contamination in Pennsylvania. She also noted an effort to revise environmental regulations.
Does Carroll County have road use agreements with drilling companies and how effective are they?
Woodrun confirmed such agreements are in place and they are definitely helpful. She said, however, such agreements do not completely address problems such as an increase in accidents.
Patton also noted long-term concerns of how local governments will be able to afford the cost to maintain the upgraded roads, which will be higher.
4/11/14
By Kimberly Hess, PLS
The Multi-State Shale Research Collaborative this morning released four case studies of shale drilling activities in four counties across Pennsylvania, West Virginia, and Ohio. Speakers concluded that the prophecies of the shale boom were exaggerated by the industry and the detriments were understated.
Sharon Ward, Director of the Pennsylvania Budget and Policy Center, explained the collaborative undertook a comprehensive assessment of the benefits, costs and impacts of shale drilling in four counties – Greene and Tioga in Pennsylvania, Wetzel in West Virginia, and Carroll in Ohio – with a particular focus on employment, income, crime, housing, and road and traffic impacts. She noted the case studies did not look comprehensively at environmental impacts. She said the four counties have a relatively high concentration of wells, are rural, and are economically vulnerable. Ward reported all four counties’ biggest concern was regarding heavy truck traffic and the related effects of that traffic. She added that Carroll, Greene, and Tioga especially were all transformed by shale development and saw economic benefits, such as increased income from jobs and leases. She reported the impact on overall employment was generally limited, but sectors like mining saw growth. Ward also identified a number of costs associated with the drilling, such as increased rents, increased road repair costs, and increased demand for human services. She said local officials were unprepared for these demands and had few tools to manage the growth. Regarding Wetzel County, Ward said West Virginia saw little economic benefit and fewer impacts, but she noted property tax collections grew because that state assesses property taxes on gas reserves and equipment. She also noted Tioga County had a natural gas bust, as the drilling industry pulled out of that county pulled out almost as quickly as it went in.
Ward recommended that policymakers acknowledge the negative impacts of the industry, such as higher costs and increased demands on local governments, as well as the positives. She also said gas development should be adequately taxed so the industry foots the bill and local governments need better information and more levers to manage impacts. She referred to the successful models of Wetzel’s oil and gas task force and the allocation of a portion of Pennsylvania’s impact fee to affordable housing.
Sean O’Leary, Policy Analyst with the West Virginia Center on Budget and Policy, provided an overview of the case study of Wetzel County, which he said is the state’s second biggest gas producer. He noted Wetzel saw a 6000 percent increase in gas production since 2000 and most of the gas drilling in the county is in conventional wells. He discussed the economic impact of leases and royalties payments, noting that West Virginia has a minimum royalty of 12.5 percent, and reported the overall impact is unclear because a small number of landowners hold a large number of leases in the county. O’Leary also said the impact on jobs was fairly small, noting that about 470 jobs were added from 2009 to 2012, and less than two percent of all jobs in the count are in oil and gas and unemployment is over 10 percent. He said a lot of jobs in the industry are going to out of state workers, which could be why impact so limited. He indicated many of the job gains were in the service industry, which will not bring a whole lot of economic development. Additionally, the county did not see a population boom but has seen an increased demand for temporary housing. O’Leary indicated the only major impact in Wetzel has been related to increased traffic and truck traffic, but with increased property tax revenue the county has been able to address road concerns and community revitalization projects. He concluded by discussing the positive role of the county’s gas and oil task force, which is a citizen advisory panel that holds public meetings once or twice a month to talk about issues and give feedback to the industry.
Amanda Woodrum, Researcher, Sustainable Development with Policy Matters Ohio, highlighted the findings in Carroll County, which has half of the producing wells in the state. She reported fracking brought increased economic activity, as seen especially in the increase in sales tax revenue, but some oil and gas industry practices detract from the benefits. She said the standard industry leases are a bad deal for non-savvy landowners and far fewer jobs have been realized than were promised at the outset. Unemployment in Carroll is 8.3 percent, which is lower than it was but still not as low as it was before the recession. Woodrun stated only 3,000 jobs were created and a number of those are filled by out of state workers and many others are low-wage jobs. She said the influx of out of state workers lead to increased demand for housing, which lead to more money for landlords, but also rent prices spiked above what local people can pay. Like other counties, Carroll saw negative impacts from truck traffic, such as congestion, accidents, and road damage. The county also saw increased costs for emergency services and had environmental concerns due to the large amounts of water used for fracking, the lack of regulations requiring that water to be recycled, and earthquakes from deep injection wells. She reported that Ohio is becoming the dumping ground for fracking waste due to the lack of regulations. In conclusion, Woodrun said, the industry fell short of the initial promises and had a greater cost to the environment and community. She acknowledged it is not realistic to stop the industry, but recommended that Ohio increase its severance tax to five percent and use the extra revenue for better regulation and oversight of the industry, to protect landowners and citizens, to invest in infrastructure to use the energy locally and diversify the energy portfolio, to ensure more local hiring, and to require health insurance for dangerous mining-related jobs.
Ward provided an overview of the findings in Pennsylvania. She stated drilling activities were disruptive in both Tioga and Greene Counties, but things are returning to normal in Tioga as the industry moves out. She said noted the positives of increases in royalty and leasing income, but said some of those benefits are mitigated by the fact that landownership in Greene County especially is concentrated in few hands and a lot in nonresidents. She reported employment grew by more than 30 percent in mining, construction, leisure, and hospitality industries and the unemployment rate is below the average in Greene. On the downside, Ward reported, Greene has a history of conventional gas well development and its economy has become even more mineral dependent and more vulnerable to downturns in the economy. She said the most significant impact was an increase in crime, an increase in out of state workers that drove up rents, an increase in homelessness, more children were put in foster care because families unable to find adequate housing, more high school students dropping out for jobs in the industry, emergency room visits increased, increased demand for early intervention services, more heavy truck traffic, road repair budgets grew, and police expressed concerns they did not have adequate capacity to enforce weight regulations.
Ward said both counties were unprepared for the level of activity, had little control and were trying to catch up. She recommended better recordkeeping and zoning laws and said Pennsylvania should reinstate local property taxes on oil and gas reserves.
Frank Mauro, Executive Director Emeritus of Fiscal Policy Institute of New York, said the four case studies lay the groundwork for quantifying the costs associated with shale drilling. He reiterated that employment effects were lower than prophesized, suggesting that the exaggeration was to minimize or avoid fair taxation, effective regulation, and careful examination. Additionally, he said, the real costs of drilling were minimized by the industry. He said the employment impacts were small relative to the economy of the whole and jobs have gone substantially to out of state workers. Mauro also noted the environmental and health concerns, pointing out that even when there are laws people continue to dump waste.
The speakers then responded to questions from the media.
What do we take away from this for New York?
Mauro replied the most important thing is there are a lot of complications, but these case studies show the costs are real and calls for a fuller environmental, economic, social impact analysis. He said indicated New York can learn from the lessons of these counties.
As a means to combat the impacts, has there been any traction on multistate severance tax approach or efforts to impose property in Ohio or Pennsylvania once production established?
Ward confirmed the collaborative has asked the governors of the three states to come together around a taxing structure that includes a severance tax at a rate no lower than West Virginia’s and does not include the credits and reductions proposed in Ohio. She said that idea is gaining traction, but the collaborative has not received any discussion with policymakers. Regarding property taxes, Ward noted efforts in Pennsylvania to try to change the law to once again subject oil and gas reserves to local property taxes, but that has not been successful to date. She opined local governments would be interested in seeing that change.
Wendy Patton, with Policy Matters Ohio, said Ohio is focused on the severance tax, “but in pause mode.” She said the industry submitted a proposal and the governor responded and expressed hope that discussion will be renewed in the fall. She said Ohio needs a larger source of income to address impacts of the size that Ohio is seeing.
Did you find the impacts in other shale plays, like the Barnett, were accurate when used to preview the impacts seen here?
Ward said the collaborative looked at the various studies done on impacts in the west and the Barnett shale, but also wanted to look at “more home grown concerns” and drew heavily from the testimony given by local officials about the impacts they were seeing.
Stephen Herzenberg, Executive Director of the Keystone Research Center, pointed out that the western drilling areas are less densely populated then the Marcellus Shale drilling areas, which contributed to the differences between the two shales.
What was the employment growth in Greene so much more dramatic than that of Wetzel?
O’Leary counted the growth in Wetzel was not minimal, at ten percent, but it wasn’t enough to transform the county like some would have expected.
Herzenberg also pointed out that there were additional jobs related to pipelines in Greene County. He indicated he would research the question further.
Is the increased sales tax revenue in Carroll County enough to offset some of the costs experienced?
Woodrun confirmed sales tax revenues have been higher, but not high enough to cover costs. She pointed out local governments have seen cuts in their state funding over the past few years. Woodrun also pointed out that initial spending blitzes from signing bonuses have ended.
Patton confirmed this, and said the immediate needs for infrastructure are very big ticket items, like water and sewer facilities and road expansions, which need to be funded with statewide taxes.
There is heightened awareness of environmental impacts in West Virginia following the chemical spill, has the environmental impact been felt in other states?
Woodrun said awareness has not been as heightened in Ohio and she remarked on the need to forge middle ground on costs and benefits and determine what can be done better.
Ward added that the case studies did not specifically address environmental issues, but she said there have been a number of environmental concerns in air emissions and water contamination in Pennsylvania. She also noted an effort to revise environmental regulations.
Does Carroll County have road use agreements with drilling companies and how effective are they?
Woodrun confirmed such agreements are in place and they are definitely helpful. She said, however, such agreements do not completely address problems such as an increase in accidents.
Patton also noted long-term concerns of how local governments will be able to afford the cost to maintain the upgraded roads, which will be higher.