Study: Drilling in Pa. a $3.77B stimulus

Drilling for natural gas in the Marcellus shale has pumped hundreds of millions of dollars into the Pennsylvania economy, a study by Penn State University concluded.

The study concluded the Marcellus gas industry provided a “direct economic stimulus of $3.77 billion” to the Pennsylvania economy while generating $389 million in state and local taxes and creating more than 44,000 jobs.

That, said the head of the Western Slope Colorado Oil and Gas Association, sends a message to the rest of the industry, especially in western Colorado.

“The Penn State study is a strong message to western Colorado’s congressional representation,” said Dave Ludlam, executive director of the association in Grand Junction. “Shielding the region’s natural gas industry from punitive federal regulation is a good use of political capital and will help return real working capital to western Colorado.”

The Marcellus Shale Gas Coalition provided funding for the study.

The outlook for the Marcellus gas industry is more robust than had been anticipated, the study’s authors concluded.

Spending plans discussed with companies in the industry suggested the Marcellus shale could generate more than $8 billion in 2010, including more than $785 million in state and local taxes, and cause job gains to double to more than 88,000. The rate of growth is expected to taper off in 2011, but the industry is expected to bring in nearly $1 billion in tax revenues to Pennsylvania and provide 100,000 jobs.

“By 2015, the Pennsylvania Marcellus could be producing more than 7 billion cubic feet per day, substantially exceeding all gas output from offshore federal waters,” the study said.

Other findings by the study’s authors included one that every $1 spent by the industry generates $1.90 of total economic output.

The report — by Timothy Considine, professor of energy economics at the University of Wyoming; Robert W. Watson, associate professor emeritus professor in the Department of Energy and Mineral Engineering at Penn State; and Seth Blumsack, assistant professor of energy policy and economics at Penn State — said Marcellus production could grow to nearly $13 billion cubic feet per day, making Pennsylvania second only to Texas in natural gas production.

The Marcellus shale is promising enough that Williams, the biggest producer in the Piceance Basin of northwest Colorado, last week announced it had acquired 42,000 acres in northeastern Pennsylvania, bringing its Marcellus shale holdings to approximately 94,000 acres. The acquisitions are expected to add nearly 1.3 trillion cubic feet of total net reserves to the company’s assets.

Williams has one rig currently working in Pennsylvania, spokesman Jeff Pounds said.

The new assets in Pennsylvania won’t deter Williams from continued exploration and production in the Piceance Basin, he said.

“The Piceance continues to be a very important area for us,” Pounds said. “We refer to it as our world-class resource.”

Williams could have as many as 20 rigs drilling in the Piceance this year.


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