2008-11-27 / Local & State

Oil And Gas Biz Booming In Pennsylvania

By Rick Stouffer PITTSBURGH TRIBUNE-REVIEW

PITTSBURGH (AP) - The number of new oil and natural gas wells drilled in Pennsylvania tripled between 2000 and 2007, with the state's 79,000 active wells making it thirdhighest among all states, according to a study released earlier this month.

Oil and gas generates more than $7.1 billion in annual economic impact, with more than 26,500 jobs directly and indirectly supported by the industry, the Pennsylvania Economy League study found.

The industry's direct economic impact last year totaled more than $4.5 billion, including taking oil and natural gas from the ground, the actual drilling of oil and natural gas wells, and support activities for oil and natural gas operations. Royalty payments made to landowners in 2007 alone totaled more than $200 million, according to the study.

The growing interest in the state's Marcellus Shale natural gas formation, which underlays some two-thirds of the state, is one reason for the growing boom.

"We looked at this study as a baseline for oil and natural gas activity in the state, pre-Marcellus Shale,'' said Kathryn Klaber, executive director of the Pennsylvania Economy League and a member of the study team. "You can't forget the industry has been contributing to the Pennsylvania economy for a very long time.''

Marcellus Shale is a layer of shale stone typically 5,000 to 6,000 feet below the surface, running from the southern portion of New York, through most of Pennsylvania, into Eastern Ohio and through much of West Virginia.

Some surveys place recoverable natural gas from the entire Marcellus region at some 400 trillion cubic feet, enough gas to handle all of America's natural gas needs for more than 14 years.

"The Energy Information Administration found that in 2006, natural gas production statewide averaged about 438 million cubic feet per day,'' said Terry Engelder, a Penn State University geosciences professor, and an acknowledged Marcellus Shale expert.

"Compare that to the initial natural gas output from the 12 wells that Range Resources Corp. has drilled, each producing 4 million cubic feet per day, or a total of 48 million cubic feet. That means these 12 wells are capturing 10 percent of all producing wells statewide.''

Engelder said even though the Marcellus wells' production rapidly declines after large initial natural gas outflows, Marcellus wells being drilled and planned rapidly will exceed the state's entire production just two years ago.

Some 2,000 companies operate at least one well in Pennsylvania, and more than 200 companies are operating 100 or more wells each, the study found. The data indicates that while Pennsylvania is not ranked among the nation's top states in terms of oil and natural gas reserves, it is among the top 20 oil producers and top 16 producers of natural gas, based on state Department of Environmental Protection statistics.

"We were surprised to see the geographic reach of the industry in the state,'' Klaber said. "Nearly every county had a company located there or activity there.''

Southwest Pennsylvania is right in the thick of the state's oil and natural gas industry. Last year, 2,926 permits to drill for natural gas were issued in the nine Southwestern counties, led by Westmoreland County's 612 permits issued.

Westmoreland, Armstrong, Indiana and Fayette counties were among the state's top 10 counties for number of new oil and natural gas wells drilled between 2000 and 2007, the Economy League study found.

The oil and gas industry pays substantially more than the average in-state private sector wage, the study revealed. The average wage paid by all oil and natural gas-related businesses in 2007 was $60,779, compared to the average for all private sector industries of $42,944.

The study was commissioned by the Marcellus Shale Committee, a group of oil and natural gas companies engaged in developing the natural gas resources within the state's Marcellus Shale formation. Members include Range Resources of Fort Worth, Texas, and Moon-based Atlas Energy Resources.

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