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Let’s embrace the Marcellus Shale opportunity

A colleague recently related a story to me. He was traveling to Towanda, Pa., and stopped in a fast-food restaurant. Throughout the restaurant were signs: "We No Longer Accept $100 Bills." He asked the teenager behind the counter the reason for the sign. "That’s what people have," she said matter-of-factly.
 
Towanda wasn’t always a place where $100 transactions-in places like fast-food restaurants-were common. Until a few years ago, Towanda’s claim to fame was its position as the seat of Bradford County with a population of around 3,500. In the past five years, that all has changed.
 
The reason? Towanda is in one of the sweetest spots in Pennsylvania for natural gas exploration in the Marcellus Shale. Since 2000, the population had been declining, and manufacturing jobs (the area’s largest employment sector) were shrinking. Natural gas exploration turned that around. The 5.9 percent unemployment rate in Towanda is lower than the Pennsylvania average and has declined from more than 7 percent just a few years ago. A new hotel has opened and is almost always at capacity. Restaurants-both locally owned and franchises-are thriving. Local contractors that had relied on road construction and government jobs are now busy with private oil and gas development. Farm properties are flush with money from the natural gas industry.
 
There’s a lesson in this for New York: Economic growth and prosperity can happen. Don’t fear what you don’t know or understand. Invest time and effort in community education and develop a workforce that can adroitly handle capacity. Above all, be open to success.
 
If we don’t heed this lesson, we risk missing the opportunity that Pennsylvania is enjoying.
 
Over the past several months, several small towns in New York have passed legislation to ban hydraulic fracturing. Not only is this shortsighted, it’s a gross misunderstanding of the role of the industry in our state. Natural gas wells in Western New York have been hydraulically fractured here since the late 1940s, without incident or harm to the environment. In the past several years, technology has increased the capability of this process. By drilling down to the shale layer (deep beneath any fresh water aquifer) and then drilling laterally, prolific gas deposits can be developed.
 
Yes, this process uses more water and there is a very small amount of chemical additive (much less than you think.) Most homes already have more harmful chemicals in them and we use more water to keep our golf courses green. Suspicious ears don’t want to hear that, and critics of industry are fast to shout about perceived health and environmental effects, without attributed facts or pure science. Those voices are the ones that get heard and are amplified.
 
In the meantime, Pennsylvania flourishes. Tourism, which environmentalists claim could be destroyed by natural gas development, increased by 29 percent in Bradford County last year, as more people flocked to local wineries and festivals. A few hours away from Towanda, Williamsport is the seventh-fastest-growing city in the nation. Real estate values have increased. The workforce there is growing rapidly. Where there were "For Sale" signs five years ago, there are now "Help Wanted" signs in busy storefronts.
 
New York has the chance to enjoy Pennsylvania’s success. Our state’s existing ad valorem tax on natural gas requires the operator to pay tax based on production for each well. This is a real property tax based on production and, unlike a strict severance tax, it allows the tax to remain in the county where the well is located. This revenue in turn supports essential services like county libraries, school districts, and fire and police protection. Tangentially, the state benefits too when more people get back to work and stay here. New businesses will open. Revenue will both flow to Albany and stick in communities. Communities will change and lives will be transformed-for the better-while our water stays clear.
 
Despite the opposition from environmental groups, opportunity for economic growth through industry has its allies. Recently the Business Leadership Forum in Buffalo brought together more than 150 business owners who are eager for business development. Five experts answered questions about how to engage a workforce and bring money into the state.
 
Back in Western New York, I passed a billboard on the Thruway last week. Its message was succinct and poignant: "When Buffalo succeeds, we all succeed." The same is true for Rochester and the Finger Lakes region. Let’s embrace the success that is Marcellus Shale development. Our state can make it so.

John Holko is president of Lenape Resources Inc. in Alexander. His firm is involved in the exploration, development, gathering and marketing of oil and natural gas resources.

3/2/12 (c) 2012 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or email rbj@rbj.net.

3 comments

  1. Good to know it’s not just the environmentalists being heard anymore. We all need to recognize how great this would be for the economy and people of New York!

  2. Wonderful article! New York needs something to revive its economy, create jobs, and save landowners drowning in property taxes. Natural Gas is the answer!

  3. Margie Campaigne

    If your neighborhood were under threat of pollution from toxic waste, 24/7 noise, ugly scars on its landscape, poisoned water, etc., would you fight against your neighborhood association’s efforts to study and halt the threat? Well, we ‘environmentalists’ are the neighborhood association for our corner of the earth. This article is very Pollyanna in its omission of some very damning evidence that fracking is a terrible idea. The money only lasts a few years. The gas companies are making more by trading leases than by drilling, since the price of gas is so low now. Plans are to export much of the gas found. I guess you have not been curious enough to watch the movie Gasland. It is shown fairly often around town. Or go to one of the many talks and hearings on fracking. For more info, you can also attend the 14th annual Sierra Forum on Thursday 4/19 at the Unitarian Church at 220 S. Winton Rd, talk at 7 pm, doors open 5:30 for food and networking.

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