Economic Development and Opportunity

The development of natural gas from Marcellus Shale offers great potential for Pennsylvania's economic future, as well as the thousands of individuals and families involved in extracting this energy source from the ground. The Commonwealth currently imports almost 75 percent of the natural gas it uses every day. The Marcellus Shale formation holds enough recoverable natural gas reserves to not only serve Pennsylvania’s needs, but to turn the state into a significant exporter of energy, generating equally significant economic benefits.

Pennsylvania is starting the Marcellus Shale development with an already robust oil and gas industry, which has come a long way from the time of Col. Edwin Drake's first oil well near Titusville in 1859 and the nation's first rush to bring oil to the ground. The experience and infrastructure of this industry can be harnessed to benefit Marcellus Shale drilling activity.

Today’s Oil and Gas Industry

The Pennsylvania Economy League completed an economic evaluation of oil and gas activity in November 2008, studying the comprehensive impact generated by an industry poised for growth.

With a contribution of more than $7 billion annually, the oil and gas industry plays an important role in the state's economy today. From direct employment and compensation and beyond to suppliers and distributers, the industry brings a wealth of opportunity to small towns and large urban areas across the Commonwealth. The industry's direct economic impact, which includes drilling, extraction and support activities, brings in $4.5 billion each year. In addition, the increased demand for energy has brought this industry to the forefront of economic development.

These economic contributions are driven by the jobs and wages earned by working Pennsylvanians. More than 26,000 men and women hold full- and part-time positions that can be traced to direct, indirect and induced jobs supported by oil and gas development.

Oil and gas workers also earn competitive wages, with an average annual compensation of $63,000, a figure $20,000 higher than the average annual compensation of a private sector employee in Pennsylvania. These total industry wages of nearly $350 million each year are then infused into local and regional economies in the state.

Another large contribution is found in the industry's payments to landowners who lease property for oil and gas drilling activity. More than $200 million is given each year to landowners in the form of lease payments. Once a well is drilled and producing gas, landowners share in the benefits from royalty payments that are paid over the life of the well. These payments, made directly to property owners, are a dominant source of wealth and sustainment for property owners, particularly in rural counties. The payments have grown tremendously in recent years with the increase in production efforts.

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Opportunities for Employment

The high-paying jobs available today in Pennsylvania's gas industry are expected to multiply in the future, meeting the needs of gas companies' efforts to increase drilling and production across the state.

In addition to all of the jobs that go into directly operating gas drilling rigs, opportunities are also available in a number of professional and skilled areas, including:

  • Engineering and surveying
  • Construction and earthmoving
  • Equipment manufacturing, service and repair
  • Environmental permitting
  • Water transport/wastewater management
  • Well servicing
  • General labor
  • Legal, accounting and other professional services

The gas industry and its education and training partners are working to bring interested students into these fields, as the need is significant and will continue for many years, even decades, as the Marcellus Shale resource is fully developed.

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Opportunities to Come

The potential of the Marcellus Shale has not been realized – Pennsylvania is only in the infancy of the exploration and development process. Economic studies will be completed in early 2009 that will provide additional insight into projected future growth and benefits that can accrue across the state.

A smaller-scale comparison can be offered in a review of the recent experience in north Texas, where the Barnett Shale formation has been undergoing development for a little over a decade. The Barnett formation, at 5,000 square miles, pales in comparison to the size and potential of the Marcellus Shale formation, which extends 95,000 square miles and includes approximately 60 percent of Pennsylvania’s land mass.

A recent evaluation of economic activity in the Barnett Shale region found the following:

  • A total of 55,000 people are directly employed in the exploration and production of natural gas
  • An additional 108,000 jobs support those direct workers in a full spectrum of employment sectors
  • The gas industry contributes more than $10 billion to the region’s economy each year

With a land area spanning three states and almost 20 times the size of the five-county Barnett region, the Marcellus Shale provides an unparalleled economic opportunity for Pennsylvania and beyond.

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