New Study Finds Natural Gas in Marcellus Shale Region Worth 280,000 Jobs, $6 Billion in Government Revenue

WASHINGTON, July 21, 2010—Natural gas production in the Marcellus Shale region—if developed—could create 280,000 new American jobs and add $6 billion in new tax revenues to local, state and federal governments over the next decade, a new study released today finds.

“One of the biggest opportunities to create jobs and increase America’s energy security lies within the Marcellus Shale region,” said Jack Gerard, president and CEO of the American Petroleum Institute.  “Pennsylvania, New York and West Virginia have enough natural gas to create hundreds of thousands of well-paying jobs and provide Americans with a stable, domestic energy source for generations to come.”

The study, “The Economic Impacts of the Marcellus Shale: Implications for New York, Pennsylvania, and West Virginia,” by Timothy J. Considine, Ph.D. of Natural Resource Economics, expands on a recent Pennsylvania State University study, which found similar economic benefits from developing the Marcellus region—a layer of shale rock underneath much of western Appalachia, from southern West Virginia into southwestern, central, and northeastern Pennsylvania, and the southern tier of upstate New York.

Natural gas production in the Marcellus grew considerably during 2009 adding 57,000 new jobs mostly in Pennsylvania and West Virginia. “This new analysis predicts that many tens of thousands of more jobs could be created in the coming years if public policies do not drastically limit production,” said Considine. "Under the best scenarios the development of Marcellus could mean $24 billion in total economic value to the region, which would positively impact all sectors of the economy including the service industry, construction, manufacturing, health care, and education.”

The study also examines factors that could limit the benefits of natural gas development in the region, including: a possible severance tax in Pennsylvania; the current de facto moratorium on horizontal drilling in New York, estimated at $11 billion dollar in lost economic output; and the effects of a challenging tax and regulatory climate in West Virginia.

"Maintaining production growth is like running on a treadmill. Slowing down drilling and production would negatively impact employment and economic growth. If governments pursue policies that encourage the development of natural gas, the ultimate benefits to the economy, the tax base, and society would be significant,” said Considine.

The study finds that natural gas development stimulates the economy through business-to-business spending and via payments to land owners. The process involves exploration, drilling, building gas processing plants, and pipeline construction. These activities require goods and services from many sectors of the economy, including construction, transportation, iron and steel, and engineering services. Natural gas companies also pay lease and royalty payments to land owners, who in turn pay taxes and spend income on goods and services.

For complete text of the survey and more information - including survey methodology - please go to: The Economic Impacts of the Marcellus Shale: Implications for New York, Pennsylvania, and West Virginia

Updated: July 22, 2010