Archive for the 'Economics of Gas Production' Category

Tangible Economic Benefits From Marcellus Shale Beginning to Emerge

In a struggling economy nothing would be more noticeable than private capital investment from a strong industry, generating jobs.   And so it goes in this timely article from the Williamsport Sun-Gazette, cataloguing the specific areas of development activity and new employment emerging in Lycoming County.  The article can be accessed by clicking here.

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Penn State Study Forecasts Marcellus Shale Impact

$3.8 billion in value added, 48,000 jobs and $400 million in state and local tax revenue are the predicted 2009 financial impacts of the Marcellus Shale development in Pennsylvania, according to a study by Professors Considine and Watson of the Dept. of Energy and Mineral Engineering, College of Earth & Mineral Sciences of The Pennsylvania State University.  The study is entitled:  An Emerging Giant: Prospects and Economic Impacts of Developing the Marcellus Shale Natural Gas Play and was released on July 24th.

Among the other findings are:

  • Each Marcellus well generates $6.2 million in economic impact
  • In 2010 more than 1000 wells are expected to be drilled
  • Marcellus producers spent about $3.09 billion in 2008 and most of it was spent in Pennsylvania on supplier and landowner payments
  • Development of the Marcellus resource is in the “ramping up” phase.  Drilling nationwide in the first quarter of 2009 was DOWN 21% from last year, while drilling in Pennsylvania appears to be UP 22$ during the first five months of 2009
  • Pennsylvania drilling activity has far exceeded West Virginia’s, which the study attributes in part to the low tax climate in Pennsylvania compared to West Virginia, which has a gas severance tax of 5% + 4.7 cents per mcf and a property tax on oil and gas equivalent to about 5% of gas sales.
  • Imposition of the presently proposed severance tax in Pennsylvania would result in an 11% decline in IRR, 30% reduction in wells drilled and a reduction of $880 million in tax revenue collected (in present value) between 2009 and 2020.

Click here for a link to the study.

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News Item: Shale Development a Bright Spot in a Difficult Price Enviroment

If you don’t already read the Fort Worth Star-Telegram you’ll benefit from this article summarizing recent comments bearing on Marcellus Shale production and related issues.  Prices are low but interest in Marcellus Shale persists.  Pipe capacity could be a problem going forward.  Speculation on the likelihood of severe tax changes in the gas production realm.  You can read the article by clicking here.

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