Community & Economic Implications of Marcellus Shale Development

Transcription

1 Community & Economic Implications of Marcellus Shale Development Kathryn J. Brasier, PhD Timothy W. Kelsey, PhD Dept. of Ag Econ & Rural Sociology, Penn State University

2 Outline Penn State Extension Brief background on Marcellus Shale Economic impacts Community impacts Taking Action

3 Extension s Educational Role on Marcellus We re not talking BTUs or how to drill rather we address what Marcellus is influencing Marcellus affects most of the other issues Extension addresses and we have strong expertise on these issues Need for honest broker & neutral info source

4 Evolution of Extension s Marcellus Program 2001 Initial focus on landowners & individual leasing decisions Heads Up trainings for key groups Marcellus wasn t on many peoples radar screens! Transforming to specific content-focused programs Natural gas wells & drinking water Workforce development Economic & community implications Local government & planning Business development Financial management Fund-raising implications for non-profits Legal issues for landowners Forest & wildlife implications & BMPs Etc!

5 Penn State Cooperative Extension Resources Website & e-newsletter Primers Marcellus Shale: What Local Government Officials need to Know Natural Gas Exploration: A Landowner s Guide to Leasing Land in Pennsylvania Natural Gas Exploration: A Landowners Guide to Financial Management Short Fact Sheets Webinars (general; business; other)

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8 A Few Background Concepts Scale of this is BIG Hundreds of thousands of acres $1.46 trillion recoverable gas in PA (PA economy is $355 billion as measured by earnings) ~$2 million landowner share per well (80 acre spacing) Resource-based economic development; when it s gone, it s gone Local impact- multiplier effects if keep dollars local

9 1. Timing, Scale & Pace Drive Impacts Three Phases of Natural Gas Development Development Phase (Short Lived/Labor Intensive) Well-pad and Access Road Construction Local collection pipeline Construction Drilling of the Well Fracturing of the Well Reclaiming some Disturbance Production Phase (Long lived & Small Labor Force) Trucking Water and condensate from Well Site Monitoring Production Occasional Well Work-Overs (partially re-drill/re-frac) Reclamation Phase Dismantle and Reclaim well-sites Source: Jacquet

10 Number of Workers Number of Workers PA Statewide Possible Direct Workforce, by Phase = Development phase jobs = Production phase jobs If 30 years of active drilling Wells drilled a year start to decline If 50 years of active drilling Year Year Duration? Likely shorter in individual communities Assumes 30 year active life per well 2,500 wells drilled /year pace. Labor requirements based upon MSETC per well workforce estimates Source: Kelsey, 2011

11 Hub & Spoke Development Pattern Nature of the work means workers & work sites shift frequently Several support hubs being created in state Worker housing Business headquarters Supply and equipment maintenance & storage Specialized manufacturing etc Workers/supplies/equipment flow from these hubs to counties with drilling Distribution of jobs between hubs & spokes?

12 Percent Change in Population,

13 What we re seeing in Pennsylvania PENNSYLVANIA S ECONOMIC EXPERIENCE

14 Pennsylvania s Economic Experience through 12/2011 Lots of hype and political argument Lots and lots of activity at local level Secondary data show more hiring, lower unemployment, higher average wages in Marcellus counties Impacts are across all sectors Higher state tax collections (sales tax, income tax) Higher state gov t costs (though no estimate) Little change in local government tax collections Higher local government costs

15 1. Business Activity Impacts Drilling each Marcellus well requires: About 420 individuals Across 150 different occupations 13.1 full time direct jobs for first well on a pad full time direct jobs for each subsequent well on a pad Once drilled: Every 100 dry gas wells generate 19 long-term fulltime jobs, Every 100 high-btu gas wells generate 39 long-term full-time jobs Source: MSETC Workforce Needs Assessment

16 Natural Gas Workforce Requirements By Category Landmen/Realty 5% Supervisors 5% Inspectors 1% Engineers 3% Welders 3% Timber Logging 1% Cartog/GIS 1% X-Ray 1% Semi-Skilled Tech. 6% Lawyers 4% Paralegal 1% Geologists 3% General Office 20% Heavy Equipment 17% CDL 10% Gen. Labor 20% Source: MSETC Workforce Needs Assessment

17 Impacts on Businesses, 2010 Bradford & Washington Counties Because of natural gas drilling Percent responding Yes All Responses Bradford County Washington County Have your business activities changed? 17% 22% 9% Have your annual sales increased? 28% 32% 23% Have your annual sales decreased? 3% 3% 2% Has the number of regular non-gas customers increased? Has the number of regular non-gas customers decreased? 7% 10% 3% 3% 3% 2% Source: Ward, Kelsey, et al Survey of 1,000 businesses in each county; 31% response rate Funded by PA Dept of Community & Economic Development

18 Impacts by Type of Businesses, 2010 Bradford & Washington Counties Percent responding Yes Business Activities Changed? Annual Sales Increased? Bradford Wash. Bradford Wash. Construction 35% 16% 27% 15% Wholesale Trade 28% 20% 33% 50% Retail Trade 25% 8% 44% 28% Financial, Insurance, Real Estate 28% 10% 50% 40% Business Services 20% 6% 33% 16% Eating & Drinking Places 29% 0% 38% 33% Hotels & Campgrounds 80% 50% 100% 50% Source: Source: Ward, Kelsey, 2011

19 2. Royalty Income Impacts Local spending Local investment Charitable giving Opportunities for leaving a Legacy?

20 Economic & Workforce Questions Businesses Existing local businesses benefit? New local businesses? Attract outside businesses? Workers & Residents Local residents HAVE the skills? Locals LEARN the skills? Youth LEARN the skills & stay? Newcomers to move into county?

21 Natural Gas Lessors Experience A significant number people leasing did not do much background work to understand the implications of their decision. Only 32% reviewed any educational materials Only 30% attended educational workshops on leasing Only 28% talked with an attorney prior to signing the lease Only 26% are working with a financial advisor to help manage lease and royalty dollars

22 County Level Economic Impact? No published studies so far (but five in progress) Much more leakage due to regional and specialized nature of development - hubs doing well Clear there is a positive job and income impact but not in proportion with spending When is activity part of the local economy?

23 Major Economic Impact Questions Who is benefitting? Where are the jobs located? How much economic benefit remains in communities with drilling vs. going elsewhere? What can communities do to capture the benefits? (mineral rights; hiring; purchasing; companies) Who is bearing the costs? What are the costs? (no good studies so far) (environmental costs; government costs; social costs; property values; workforce retention & impacts on other businesses; opportunity costs; etc) What happens after the Boom? (e.g. long run implications )

24 COMMUNITY IMPACTS RESEARCH SUMMARY

25 Research and Outreach Projects Community Impacts: Case studies Brasier, Filteau, Goetz, Jacquet, Kelsey, McLaughlin, Stedman, Rhubart Community Satisfaction & Change: Household Survey Willits, Brasier, Filteau, Jacquet, McLaughlin, Stedman Community Task Forces Brasier, Filteau, Goetz, Jacquet, Kelsey, McLaughlin, Stedman, Rhubart Marcellus Family Project McLaughlin, Martin, Davis, Brasier, Gunsallus Community Dialogue Project Brasier, Kelsey, Whitmer Establish baseline conditions for longitudinal study Document early stage perceptions, impacts Describe variability of impacts Describe risk perceptions, institutional trust Identify collective responses to risk Identify effective dialogue models Increase capacity for dialogue

26 PA Counties in Case Studies, Surveys Household Survey Household Survey and Case Study *New York Counties: Broome, Chemung, Delaware, Schuyler, Steuben, Sullivan, Tioga, and Tompkins.

27 Case Study Summary County Region Rural/ urban* Wells drilled Interviews Bradford NC Rural Washington SW Rural** Lycoming NC Rural** Greene SW Rural Susquehanna NC Rural Westmoreland SW Urban Year *Center for Rural PA definition where rural = < 284 persons per square mile **lies within a metropolitan statistical area

28 Household Survey Sample of 6000 households in 21 PA counties and 8 NY counties Mail survey conducted Oct March out of 5479 valid surveys returned (35%) Willits, F.K., K. Brasier, M. Filteau, J. Jacquet, D.K. McLaughlin, R. Stedman Community Satisfaction and Change: A Study of Communities in the Marcellus Shale Region. University Park, PA, Penn State.

29 Early visible, tangible effects Concerns about future effects Effects on place RESEARCH SUMMARY

30 Economic Impacts Economic effects Employment in industry, related businesses Personal income, leasing/royalty income Issues Competition for workers, materials Localized inflation reported Economic future in rural places Workforce education Stem brain drain Agriculture: save it or kill it? [Company] has put their headquarters here. So that provides opportunities for skilled labor and white collar jobs It will change some of our youth. so far there have been a lot of new millionaires in this area Are millionaires going to milk dairy cows? Source: Community Impacts Case Study Interviews

31 Infrastructure Transportation and roads Public safety Traffic Crime Housing Displacement of disabled, low-income families Stress on human service agencies, court system, schools You can t swing a dead cat in our county right now without hitting a water truck. for our homeless programs we would put people up at the local hotels and we wanted to put someone up two weeks ago and the next available room is [four months later]. So there is no short term housing. Source: Community Impacts Case Study Interviews

32 Local Society Population growth and change in rural areas Increased diversity of communities Potential for changing composition of social networks population increase of about 1800 people in one month. by comparison, Our biggest influx of people.is hunting season.... a lot of the workers who are coming here have no ownership and therefore they don t feel the need to take care of this area. they don t care if they trash the place or spend all their money on booze or whatever. Source: Community Impacts Case Study Interviews

33 Environmental Quality Issues mentioned: Public and private water sources Water quality Forest fragmentation Wildlife, habitat Air quality Recreation & tourism impacts Comparison to coal legacy... but the fact that there s millions of gallons of water being injected under ground at high pressure s gonna create some turbidity in some private wells Source: Community Impacts Case Study Interviews

34 Threat to rural identity, quality of life Social conflict Exacerbate social divisions Attachment to place and its natural and social amenities Effects on Place Source: Community Impacts Case Study Interviews... a lot of the workers have no ownership and they don t feel the need to take care of this area. they don t care if they trash the place or spend all their money on booze. they re [seasonal residents] not as concerned as the people who live here full time. If they re up here three weeks a year they don t have to worry about [it]. I ve turned down many opportunities to go other places and work for bigger pay it s such a beautiful and a pleasant place to live that I hate to see those values be degraded.

35 Quality of Community Features avail. of jobs 66% 25% 9% job training opp. 42% 38% 20% roads/streets 27% 35% 39% affordable housing 22% 37% 41% cultural events 25% 32% 43% freedom from crime 15% 28% 57% recreation opp 18% 25% 57% health care 13% 23% 64% public schools 8% 22% 70% drinking water 11% 18% 71% neighborliness 7% 19% 75% natural envir 5% 17% 78% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% poor neither poor nor good good Source: Community Satisfaction and Change: A Study of Communities in the Marcellus Shale Region.

36 Expectations of Changes from Marcellus Get better Stay same Get worse Don t know Good jobs 42% 34% 2% 23% Job training 30% 43% 4% 23% Roads/streets 10% 42% 31% 17% Affordable housing 9% 51% 20% 20% Recreation 5% 58% 16% 22% Neighborliness 4% 65% 10% 21% Natural environment 4% 30% 48% 18% Drinking water 3% 33% 41% 23% Crime/violence 3% 52% 23% 21% Overall quality of life 14% 48% 19% 20% Overall cost of living 9% 42% 28% 21% Source: Community Satisfaction and Change: A Study of Communities in the Marcellus Shale Region.

37 Context Matters Perceptions of social effects vary by: Social, cultural, economic history (esp. extractive) Speed, scale, and type of development Geographic location and proximity to infrastructure Human and social capacity to respond to change Examples: Most rural, with least infrastructure, w/o history of fossil fuel extraction => most visible change, most difficulty absorbing change Northern tier counties very proactive, seeking information Hubs with business infrastructure may be able to keep the dollars local Areas with seasonal residents and in-migration may have conflicting perspectives Source: Community Impacts Case Study Interviews

38 Individual Knowledge and Experiences RESEARCH SUMMARY

39 Marcellus Knowledge none or very little knowledge some but not much knowledge a good bit or a great deal of knowledge Environmental impacts 38% 31% 34% Impacts on water 41% 27% 32% Economic impacts 43% 29% 28% Social impacts 45% 31% 24% Gas drilling practices 59% 24% 17% Leasing 63% 23% 15% Impacts on local govt 65% 24% 12% Gas-related jobs or jobtraining opps 68% 22% 10% Govt regulations 71% 19% 10% 39% were aware of wells or pipelines within 10 mi of home Source: Community Satisfaction and Change: A Study of Communities in the Marcellus Shale Region.

40 Information Sources Contribution to knowledge from: At least some Media 61.6% Neighbors, friends, relatives 47.0% Internet 30.1% Natural gas industry 22.8% Landowner groups 21.5% Environmental regulatory agencies 20.3% Extension 19.1% Source: Community Satisfaction and Change: A Study of Communities in the Marcellus Shale Region.

41 Leasing Experience 44% (825) own land in Marcellus region 20% (382) own mineral rights 10% (183) have signed a lease Consider signing? Yes, I have already signed a lease Yes, I have not signed, but would consider it 10% 24% No, I would not consider it 27% Don t know 40% 1% (26) have had drilling or pipeline on land they own Source: Community Satisfaction and Change: A Study of Communities in the Marcellus Shale Region.

42 Overall attitudes: This could be a good thing - if it s done right Perceptions of risk Trust in managing institutions RESEARCH SUMMARY

43 How do you feel about natural gas extraction from the Marcellus Shale? 35% 33% 30% 25% 29% strongly oppose somewhat oppose 20% 15% 13% 16% neither oppose nor support somewhat support 10% 9% strongly support 5% 0% Source: Community Satisfaction and Change: A Study of Communities in the Marcellus Shale Region.

44 Overall Attitude by Region 0% 20% 40% 60% 80% 100% North central PA 15% 26% 60% Northeastern PA 24% 27% 49% SW/Pitt region 20% 34% 45% Central PA 19% 37% 45% Alleghenies 13% 44% 43% New York 31% 30% 39% Oppose Neither Oppose nor Support Support Source: Community Satisfaction and Change: A Study of Communities in the Marcellus Shale Region.

45 Perceptions of Risk Related to Marcellus negative impacts can be prevented (preventability) 58% 28% 14% only few benefit (equity) 48% 32% 20% benefits outweigh costs (cost-benefit trade-off) 31% 45% 24% worry about catastrophic accident (dread) 30% 38% 32% we know enough to move forward (understandability) 27% 44% 30% negative impacts can be fixed (reversibility) 22% 41% 37% 0% 20% 40% 60% 80% 100% agree neutral disagree Source: Community Satisfaction and Change: A Study of Communities in the Marcellus Shale Region.

46 OLS Model of Risk Perceptions Standardized coefficients Do own mineral rights -.068*** Have friends/family with gas drilling on their land.045* Ecological orientation.238*** Knowledge of environmental impacts.115*** Knowledge of economic and social impacts -.125*** Expectations re: environmental impacts (higher = get better) Expectations re: jobs (higher = get better) -.218*** -.184*** Trust in local environmental groups.112*** Trust in natural gas industry -.308*** Trust in science institutions -.079** Male -.084*** NY.047**

47 Institutional Trust scientists 72% 16% 12% extension 65% 19% 17% envir groups 57% 29% 13% DEP/DEC 57% 31% 12% NG industry 48% 40% 12% NG task forces 47% 33% 20% SRBC/DRBC 43% 25% 32% 0% 20% 40% 60% 80% 100% 'some' or 'great deal of' trust 'no' or 'very little' trust don't know Source: Community Satisfaction and Change: A Study of Communities in the Marcellus Shale Region.

48 Institutional Trust Natural Gas Industry State Regulatory Agencies State Government Fiduciary Responsibility Perception of fairness, consistent communication Direct behaviors (landmen) Asymmetry of information Lack of transparency Perceptions of motives Integrity Commitment to protect people Indecision about severance tax or how money might be allocated Fire-sale leasing of state land Ulterior motives Competence Can industry manage risks of new technology? Do they have capacity in time of tight budgets? Do they have needed expertise? Are they too reactionary? Source: Community Impacts Case Study Interviews

49 Attitudes toward Marcellus Shale Development Fracing is the face or point of conflict - but not the only issue - change to a place and environment Risk perceived holistically, across multiple dimensions What is at risk environment, community, place Effects of trust in critical institutions (industry, regulators, government and scientists) Polarization Don t forget the middle! Large group of people mixed or unsure about development Polarized groups have fundamentally different orientations toward natural environment and sources of trusted information

50 Opportunities and Challenges TAKING ACTION LOCALLY TO SHAPE IMPACTS

51 Educating the Community Strong need to help public understand what is occurring, implications, and what is being done to regulate Lots of uncertainty and misinformation is out there; and much is from one side or the other Need for balanced and accurate information Recognize both the emotional and fact components of peoples attitudes towards gas development both are valid and need to be acknowledged

52 Marcellus Task Forces Coalition of stakeholders focused on particular issue Variety of forms: Ad hoc vs standing Short vs long term Government run vs grass roots

53 Membership To what extent does the Leadership Team and Task Force membership: Represent all stakeholders? Provide visibility? Build credibility? Communicate broadly and openly? Explore options creatively? Provide diverse perspectives? Bring essential skills and knowledge? Draw in appropriate resources? Examples: Local elected officials County & municipal planning, other Local government agencies Conservation Districts Citizen, landowners, farmers groups Educational institutions, Extension Conservation districts Civic, nonprofit organizations Health and human service providers Industry and business organizations Fire, police, emergency responders Relevant state, federal agencies, legislators Environmental, sportsmen s groups Economic development organizations

54 What Does This Potentially Mean? Focus needs to be on future AFTER the boom, not just the present Focus needs to be on development in its entirety, not just well sites View Marcellus as a potential means to improve economy, social organization, human capital, physical infrastructure it is not an end in itself Need public engagement, social networks, collaboration, and communication to address the Long Run, and how Marcellus fits

55 ACKNOWLEDGEMENTS Projects described here were conducted by teams from Penn State, Cornell, and the Institute for Public Policy and Economic Development: Ted Alter, Matthew Filteau, Stephan Goetz, Jeffrey Jacquet, Tim Kelsey, Diane McLaughlin, Teri Ooms, Danielle Rhubart, Rich Stedman, Sherry Tracewski, Bunny Willits Funding provided by PSU College of Agricultural Sciences, Cornell University, the Appalachian Regional Commission, and PSU Marcellus Center for Outreach and Research