“Our focus must be on getting this opportunity right. To make certain that Pennsylvania’s economy and workforce remain ahead of the curve in the increasingly competitive global economy requires common-sense solutions that encourage capital investment in the commonwealth.”
Pennsylvania’s prosperity has long been a function of its abundant natural resources — and the American experience has long been improved by their use. The commonwealth’s coal helped us win two world wars. Its oil helped power progress and improve our standard of living. And its timber helped form the backbone of our modern society.
Today, we’re leading the way once again with manufacturing of alternative energy technology. And because of the Marcellus Shale and other shale plays nationwide, we’re positioning ourselves to leverage the power of clean energy into thousands of jobs and billions in revenue for Pennsylvanians.
Of course, geologists have known about the Marcellus Shale for a long time — it’s 390 million years old, after all. But thanks to the combination of age-old techniques and new innovations along the way, natural gas reserves previously considered too deep and difficult to access suddenly are not. And considering energy security concerns and the difficult economic times in which we find ourselves today, these discoveries couldn’t have come at a better time.
As of this writing, Pennsylvania’s unemployment rate is still near double digits, and more than 400,000 residents are still out of a job. A recent Patriot-News article reports that “The economic impact of the drilling industry — particularly in rural areas of the state — is indisputable,” noting that the facts are “demonstrable.”
In an otherwise bleak economy, Marcellus Shale development will create nearly 90,000 jobs in Pennsylvania by the end of this year, according to researchers at Penn State, with nearly 211,000 jobs projected through the next decade.
And these aren’t just drilling rig jobs — railroads, engineers, building contractors, supply stores, diners, hotels, steel manufacturers and several other industries and small and medium-size businesses involved in our growing and robust supply chain are all experiencing a significant expansion of growth directly tied to Marcellus production. We call it the “Marcellus Multiplier.”
Our work also is generating billions of dollars in tax revenues and lease payments to Pennsylvania landowners. During the next year, continued Marcellus development will generate more than $1 billion in state and local tax revenues. In 2008 alone, our industry paid more than $1.8 billion in lease and bonus payments to Pennsylvania landowners. But there’s much more to be done, more jobs to be created and more stable supplies of homegrown, clean-burning energy to deliver to Pennsylvania consumers.
Yet as our production expands in Pennsylvania, the competition for the critical capital needed to produce a Marcellus well — each requires about $4 million — grows stronger and fiercer by the day. Other shale gas-producing states — particularly Texas, Oklahoma, Louisiana and Arkansas — want those investments, and those jobs, just as much as we do.
But we’re not just competing with other states for these opportunities. Poland, China, Canada and other foreign nations are working aggressively to secure the capital needed to expand their energy production, too. There’s a reason officials at the Kremlin read news clips from the Marcellus region every morning — and it’s not because they’re looking for coupons.
It’s no secret that our elected officials in Harrisburg are considering a new tax on shale gas production. Unfortunately, some don’t seem to understand that global competition for capital will react to the magnitude of the tax, evidenced by their consideration of a tax that would be the nation’s highest and least competitive.
In fact, it would be higher than West Virginia’s, which stands as one of the least competitive in the nation. And, as of last month, there were 16 horizontal rigs operating in West Virginia’s Marcellus and more than 60 here in Pennsylvania. That’s not a coincidence.
These far-reaching decisions — which will impact the commonwealth’s economy and ability to compete for decades to come — should not be made in isolation to fill a hole in the state budget; that’s the wrong approach and one that will carry several negative unintended economic consequences.
Our focus must be on getting this opportunity right. To make certain that Pennsylvania’s economy and workforce remain ahead of the curve in the increasingly competitive global economy requires common-sense solutions that encourage capital investment in the commonwealth.
Pennsylvania needs strong regulatory and competitive tax frameworks that encourage capital investment and job creation — not a massive, misguided and unprecedented tax that would drive critical capital and jobs to other energy-producing states and countries. This would dramatically undercut efforts that are helping to lower energy costs for Pennsylvania consumers, increase energy security for Americans and bring cleaner fuels to our environment.
As an industry, we are committed — each and every day — to ensuring that this historic opportunity is realized in ways that benefit each and every Pennsylvanian. Our hope, and expectation, is that our government also will work to ensure that this opportunity is realized for decades to come.
KATHRYN KLABER is the president and executive director of the Canonsburg-based Marcellus Shale Coalition.
