New Duke Study Highlights Positive, Local Marcellus Benefits

This week, researchers at Duke University’s Energy Initiative released a new study focused on the local benefits of tightly-regulated shale development. According to the report, shale development in the Commonwealth has had a “substantial” positive effect through boosting “the public finances of local communities and providing new revenues and resources.”

In Pennsylvania, the researchers determined this:

The local governments we examined in the northeast and southwest regions of Pennsylvania have experienced a range of net positive financial effects as a result of Marcellus shale development. The primary new revenue source for both county and township governments has been from the state’s impact fee.… This revenue has in some cases doubled the operating budgets of townships, and provided substantial new revenue for county governments.”

Here are key excerpts from the report (see pgs. 66-74):

NORTHERN TIER

  • Bradford County has seen the largest amount of Act 13 disbursements of any Pa. local government, providing roughly $15 million total from 2011 through 2012. These revenues allowed the county to pay off all of its outstanding debt, which stood at $6.2 million in 2011. The county also received roughly $2 million in leasing bonuses and drew royalties of roughly $10,000 per month in 2013.
  • Tax revenues for the Lycoming County increased by roughly $1.5 million per year from 2007 through 2012,107 and local officials attribute this in large part to Marcellus activity. … The overall impact for county finances has been a net positive.
  • In Tioga County, roughly $9 million in cumulative revenue from Act 13 disbursements over 2011 and 2012 allowed the county to make capital upgrades that it would not have otherwise been able to afford, such as improving EMS facilities and renovating government buildings. The county also received roughly $400,000 from a lease on county-owned land. … With total government expenditures of roughly $30 million in 2011, these new revenues are substantial.
  • The townships of Columbia, Dimock, Springville, and Sullivan each received Act 13 distributions in 2011 and 2012 of roughly $500,000 per year, essentially doubling the annual budget for each township. Some also saw increased revenue from permits required when natural gas gathering lines cross township roadways, along with leasing bonuses and royalties on township-owned land.
  • Other in-kind contributions have been substantial for some townships. Donations from operators helped pay for new fire trucks and other emergency service vehicles, along with donations of park equipment and signage. One noteworthy contribution came during a severe flood in 2010, when a specialized water pipe was washed away underneath a road in Dimock. Local officials described how a gas operator found the replacement part that the township was unable to locate, drove several hours to retrieve it, and repaired the damage within 24 hours. The affected road, which was an important artery for local schools, quickly reopened.

SOUTHWESTERN PA

  • Officials in all the local governments we visited in this region reported net positive financial impact from Marcellus development.
  • In Greene County, distributions from Act 13 totaled roughly $3 million per year in 2011 and 2012, representing 10 percent of the county’s annual revenues. … The county has seen substantial revenue from natural gas production on county-owned property, with leasing bonuses and royalties totaling roughly $1.2 million through late 2013.
  • Washington County’s Act 13 disbursements were roughly $4.5 million per year in 2011 and 2012. … The county has leased substantial acreage for Marcellus shale development and netted roughly $8 million in revenue from lease payments through June 2013. … The county has also received some in-kind donations from operators, such as a new running trail in a county-owned park estimated to be worth $750,000.
  • We examined six townships in Greene and Washington counties, which uniformly reported net positive financial impacts from Marcellus development. Just as in the Northern Tier, the primary reason for these net benefits were twofold: First, natural gas operators maintained and repaired the roadways that they affected and second, Act 13 disbursements allowed the townships to purchase new equipment and improve services.
  • Local officials…noted in multiple cases a variation on the theme: I wish I had a gas well on every road,” since repairs made after wells were completed often left roads in better shape than before drilling began.
  • Act 13 disbursements provided large new revenues to many of these townships. The six townships we visited received between $80,000 and $1 million per year in 2011 and 2012, allowing them to purchase new road maintenance equipment. For small townships with annual budgets sometimes in the range of $500,000 per year, this has been a major new revenue stream.
  • Another source of revenue for some townships has been from leasing bonuses and royalties, along with some increases in property tax revenue from new industrial facilities such as gas processing plants locating within township borders. Some townships where natural gas-related industrial facilities have located have seen new revenues from a locally-levied earned income tax, which is assessed on every worker in a given township.