SHALE Featured May June 2019 2

How Shale is Reviving Rural America

I became a fan of shale when I leased my property in rural Pennsylvania to a gas drilling company over a decade ago. I became an advocate when I saw how much shale was doing for counties unlike my own where the Delaware River Basin Commission has yet to approve hydraulic fracturing.

What I saw immediately, as a planning and economic development guy, was the greatest opportunity ever to simultaneously preserve what we love about rural America — its open spaces — while reviving its too often moribund economies.

The shale revolution has turned North Dakota, which I once cited as the example of a disappearing rural America, into an economic miracle of sorts. That much is fairly well known in a generic sense, but it’s up close that you really see how shale is reviving life in the rural outposts of our nation. And, up close to me is rural eastern Pennsylvania, where I live in the shadow of the Big Apple.

Residents of the New York metro area like our community, but mostly as a vacation land they’d like not to be changed so much. For them, it’s all about rural character.

We really like rural character too, but we need an economy that doesn’t depend solely on serving city folks food at $10 per hour when they stop in for a meal on the road. Shale has provided that.

Shale development, in fact, has changed everything in much of rural Pennsylvania. It has provided farmers with royalty money to reinvest in farms. It has created openings for a multitude of new businesses. It has created thousands of jobs, brought new revenue to municipalities, reinvigorated and reinvented community institutions and stimulated economic development in a myriad of ways.

Consider, first of all, the upfront lease payments and royalties. It was almost two years ago that Cabot Oil & Gas, for example, announced it had paid out to date some $1 billion in royalties and nearly $500 million in lease payments to Susquehanna County farmers and landowners.

That’s $34,500 for every man, woman and child living in the county from one gas drilling company. The money has shown up in new farm buildings, new houses, new equipment and new bank deposits. It has also preserved land in open space; no other form of economic development producing so much return from the land had so little land disturbance.

And that’s just the beginning. This same company has invested $4.6 billion in developing its wells. Along with that, it put $2.5 million into helping Lackawanna College expand into the county with a petroleum and natural gas branch campus and another $2.2 million into building a brand new hospital to replace the county’s old decrepit facility.

Bradford and Susquehanna Counties together also received some $11 million in impact fees (Pennsylvania severance tax version) in 2017 alone from gas companies. Springville Township (population of 1,641 people) received an additional $765,000 to add to its tiny budget.

That money has gone into such things as public infrastructure, emergency preparedness, stormwater management, environmental programs, social services, information technology and, especially, capital reserves. Moreover, this is on top of the money paid for road improvements to well sites.

Wages paid are part of that investment and they’re astounding. Average annual wages for Pennsylvanians with jobs in oil and gas extraction are 114.9 percent above the average for all industries, according to the U.S. Bureau of Labor Statistics. Jobs directly involved in drilling wells were 66.1 percent higher, support activity jobs were 43.5 percent and pipeline jobs were ranged between 64.9 percent and 66.4 percent higher. Those higher wages resulted in Susquehanna County growing its average weekly wage from 75 percent of adjoining Broome County, New York in 2004 (pre-shale) to 101 percent a decade later (post-shale).

Border counties provide very good comparisons on other scales as well. Between 2010 and 2017, manufacturing GDP in Pennsylvania’s Northern Tier grew 24 percent; while the New York Southern Tier’s grew but 1.5 percent. New manufacturing also includes new power plants and LNG facilities taking advantage of inexpensive shale gas in the vicinity.

The availability of that gas has also prompted the development of new gas distribution operations in small towns such as Montrose and Tunkhannock. This has stimulated still other activity, such as the brand new $11 million Tiffany Pines affordable/senior housing project in Montrose.

The farming sector in Bradford County, Pennsylvania shows similar trends. Agricultural Census statistics show that between 2005 and 2012 the number of farms increased 12 percent, the number of acres increased 15 percent, and the real estate values went up 25 percent.

Lodging opportunities have also increased as the industry moved into the area and company representatives needed places to stay when visiting field operations. New hotels have been built and these have provided new accommodations for other visitors such that tourism has grown at a faster pace than other traditionally recognized resort areas nearby.

Pipelines to move all this gas to urban and export markets have also created numerous jobs for rural and union workers, especially welders. The Pennsylvania College of Technology, Penn College for short, is training some of the workforce the shale gas industry needs. You can, in fact, get a 4-year degree in welding there. One of its graduates immediately started his own businesses and grossed $240,000 in its first year. Many others earn $150,000 per year.

Pipeline development also generates a lot of business for lodging and eating places as pipeline workers relocate to the area for extended periods. Shale opponents occasionally mock that aspect of construction employment but, as one pipeline union executive told a Marcellus Shale rally in Harrisburg a couple of years ago, he’d fed and sheltered his family for 40 years with such temporary work. It’s the nature of construction and it’s a major economic sector for any region, especially those in rural America.

Shale has, too, solved many environmental problems and improved rural environments in innumerable ways. As noted above, impact fees have gone to many environmental programs. Pipeline developers have worked with local environmental leaders to revegetate and maintain pipelines in ways that support wildlife living off browse or, like the Golden-Winged Warbler, depend on such a habitat to prosper. As another example, Range Resources is planting habitat for the Monarch Butterfly.

Finally, there is the fact gas wells developed on public property have produced new found revenue for schools in Susquehanna County, the Cross Creek County Park in Washington County, Pennsylvania State Parks and the Pittsburgh International Airport.

Such is the revival shale is bringing to rural Pennsylvania, rural Ohio, rural Texas, rural West Virginia, North Dakota and all of rural America; wherever shale is found and can be developed.

 

About the author: Tom Shepstone is the owner of Shepstone Management Company Inc., a planning and research consulting firm located in northeastern Pennsylvania. He has advised many counties in both New York state and Pennsylvania, as well as other states, on economic development strategies, especially as they relate to rural and agricultural areas. He is also the publisher of NaturalGasNOW.org, a blog focused on the same objective.

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