Ilya Marritz covers business for WNYC.
Disagreement Over How Much Gas, Employment Fracking Would Bring to NY
Wednesday, November 16, 2011
Tonight, New York State regulators will hold the first of four public hearings on the Cuomo administration’s proposal to permit and regulate the natural gas drilling technique called high-volume hydraulic fracturing and horizontal drilling, or “fracking.” Drilling could begin as soon as early 2012.
While much of the discussion has focused on the environmental hazards, there is also debate over the economic benefits of fracking, and even the amount of gas contained in the Marcellus Shale, a vast underground geologic formation stretching from West Virginia through Ohio and Pennsylvania to New York’s Catskill mountains.
The Economic Lift: Pro and Con
Drilling proponents point to the infusion of money and jobs the industry would bring to poor areas of upstate New York. A study by the conservative Manhattan Institute figures that every well drilled in the Marcellus Shale could create $4 million in economic benefits. The business-friendly Public Policy Institute of New York claims that upstate drilling could create 15,500 direct jobs (in engineering and construction) and 47,120 indirect jobs (which include those in hotels, restaurants, goods and services) in five gas-rich upstate counties, based on the projection that 500 new wells are drilled each year.
But according to the environmental group Food and Water Watch, those figures are over-optimistic. FWW’s own study assumes that drilling would create only 6,000 jobs when a more realistic “multiplier effect” is used, and notes than many of these jobs would go to temporary, out-of-state specialists.
One place to look for evidence of the kind of job growth New Yorkers could expect is Pennsylvania. The Pennsylvania Department of Labor reports that in areas with extensive gas drilling, 160,000 jobs disappeared between 2008 and 2011, a figure partly attributable to recession. But in the same period, the region added 10,900 jobs directly related to gas drilling.
The Pennsylvania numbers are source for a report produced for New York State’s Department of Environmental Conservation (DEC), the same agency that will eventually permit and regulate drilling in New York.
The DEC believes between 13,000 and 26,000 jobs could be created, lease-holders could take in hundreds of millions of dollars, and local and state governments would reap big windfalls through property taxes and other measures.
While industry groups generally support these findings, there are critics. Former MTA economist Jeanette Barth says that the DEC study doesn’t include the negative effects gas drilling could have on other industries, such as tourism and agriculture, by raising labor costs and despoiling soil and water. She also echoes the FWW’s worry that the jobs created by oil and gas development tend to be temporary.
How Much Gas Is There Anyway? It’s Not So Simple
Since the fracking boom began, supporters of Marcellus Shale drilling have touted it as one of the world’s largest gas reserves, leading The Marcellus Shale Coalition to anticipate that the formation could become America’s largest source of natural gas within the decade.
But a the U.S. Geologic Survey, which regularly re-assesses oil and gas resources, found the Marcellus contains enough untapped natural gas (84 trillion cubic feet) to meet total current U.S. demand only for about four years. (The figure excludes wells currently in production or ready to begin production).
That estimation is far short of the figure offered earlier by the Department of Energy (400 tcf) about sixteen years’ supply. The Department of Energy uses a broader measure of the resource, but the new USGS number could cause DoE to lower its own estimates.
The difference is not merely one of number-crunching. Gas drillers are required by law to report their own estimated reserves to investors, and to make public any factors that could affect profitability, such as the potential for lawsuits. The New York Attorney General, Eric Schneiderman, is now examining reports by several gas drillers to their investors.
Separately, the Securities an Exchange Commission has urged several gas drillers to revise or alter their statements to investors to better describe how they use fracking.