Boon or Bust Part VII: Regulations, taxation differ in New York and Pa., but economic benefits prevail from developing n

Editor’s Note: This is the last in a seven-part series on natural gas drilling gleaned from a staff outing to Pennsylvania last December.

DIMOCK – After publishing more than 200 articles in The Evening Sun about natural gas since 2005, it’s clear that Chenango County’s lawmakers and landowners – both pro-drilling and anti-drilling – have been informed of the natural gas industry’s pending move into New York and the controversial hydraulic fracturing process.

That’s more than could be said for people living just over New York’s border in Susquehanna County, Pa. While both states have abundant water and feed into concentrated, high population, major metropolitan areas, little information about public health, environmental and economic consequences of drilling into the Commonwealth’s natural gas rich Marcellus Shale was disseminated before drilling began. Seemingly Pennsylvania was unprepared for the scope of the drilling activity and its effects on the landscape and population.

When it became obvious back in 2008 that energy companies were targeting the Marcellus Shale, an economic and industrial development authority in Bradford and Susquehanna Counties did educate itself. Members paid a visit to Texas where development was already underway in the Barnett Shale play. Since then, the authority has played an active role in helping create jobs and facilitate investment in the region.

However, as we’ve reported, drilling-related accidents have occurred in Dimock and elsewhere in Pennsylvania, some say because companies weren’t being regulated enough. While Cabot Oil and Gas Company agreed to settle with the 18 Carter Road residents whose drinking water wells were allegedly contaminated, it remains to be seen what further illness and environmental damages may be claimed against the industry in the future.

Pennsylvania isn’t the only state that ran full throttle into the nation’s natural gas rush and later suffered some of the pitfalls. Hydrocarbons and other potentially harmful chemicals used to free the natural gas from 5,000 to 8,000 feet underground have been blamed for polluting water in Louisiana, Wyoming and, just last week, even in New York.

On Friday, a group of Elmira-area residents filed suit against a gas company that drilled into the Trenton Black River shale formation several years before the Marcellus Shale became a household word. They say their drinking water wells have too much methane.

All of these drilling-related accidents and allegations spurred a federal Environmental Protection Agency study into the effects of the high water volume, horizontal drilling method. While states so far, including New York, have opted to abide by their own environmental regulations, a growing number of people concerned for their long term health and the earth’s are asking for the federal regulation. The EPA study’s release date was just recently pushed forward from 2012 to 2014.

Perhaps it was the more laissez faire attitude in Pennsylvania when it came to developing its gas reserves in the Marcellus. After all, the Commonwealth has vast experience in oil drilling and, in its heyday a generation ago, was the nation’s leader in coal mining. The difference could also be that there is less population per square foot than in New York and a more economically diverse and regulatory intense climate here.

When technological improvements in hydraulic fracturing in 2005 made releasing natural gas held in tight shale formations economically possible and a nearly simultaneous report came out of Penn State that approximately 500 trillion cubic feet of natural gas was contained within the Marcellus Shale, the industry and state stood up and took notice. As of April 2009, the U.S. Department of Energy has estimated that Pennsylvania’s Marcellus may contain enough natural gas to supply United States demand for about 14 years.

As a result, by 2008, 195 Marcellus wells had been drilled. The number ballooned to 1,400 last year, with about half of those in land that lies just over the border in Susquehanna and adjacent Bradford counties. Based on this proximity and gas industry lease activity, it is obvious that the Marcellus will be just as desirable under New York’s Southern Tier.

The energy industry is expected to create nearly 212,000 jobs across the Commonwealth over the next decade. In 2009, Marcellus development was responsible for the creation of 44,000 jobs. To date, landowners have received more than $1.7 billion in royalties and lease payments from Marcellus producers. And this production has also generated close to $400 million in state and local sales tax receipts – with that number expected to double this year.

Pennsylvania Department of Environmental Protection Secretary John Hanger has gone on record in support of his state’s lead in natural gas development, claiming that there hasn’t been one case in which the mixture of 99.5 percent water with sand, soap and chemicals used in fracturing have come up and into the groundwater. Problems in Dimock were improper structure and construction of the well which allowed methane to leak into the water, he reported.

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