Marcellus Shale Watch

In a recent case, the Pennsylvania Commonwealth Court held that certain municipal regulations of gas drilling could not be challenged directly in state court but rather were under the exclusive jurisdiction of the municipal board.  As such, these regulations could only be challenged by application to the municipal government and a hearing before the applicable municipal government board, followed by possible appeal to state court.  The result is a potentially longer time for review of validity challenges to local ordinances involving gas drilling, unless the challenged ordinance is clearly an operational regulation.  For a summary of this case click here.

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$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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The Pennsylvania Council of Professional Geologists is hosting a networking and education program on July 14th in Scranton for professionals involved in the Marcellus Shale-related professions.

This 3-hour Educational and Networking Program is intended to provide a review of key concepts and issues, including geology, anticipated environmental concerns, and Pennsylvania regulations related to exploration and drilling of the Marcellus Shale. The course format includes a 45 minute presentation and then a question and answer session with a panel of experts.

The course is designed for environmental, geologic, and engineering consultants, attorneys, land developers, public officials, and anyone who is aware of the press about the Marcellus Shale. It is for those who wish to develop a basic understanding of what this resource is, why it has become important at this time, and what the benefits and concerns are related to exploitation of this resource.

For more information on this event, click here.

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