Guest Column by Rayola Dougher
Many jobs are created because the natural gas industry is investing a lot. In 2009, it spent $3.77 billion in Pennsylvania, according to a study by Natural Resource Economics.
The increase in tax revenue from shale gas development is also significant. The Pennsylvania Department of Revenue says natural gas development generated more than $1 billion in revenue for the state between 2006 and 2010, including corporate taxes, sales taxes and personal income taxes. The Natural Resource Economics study says the state could receive another $3 billion in taxes by 2020. This potentially eases the tax burden for all taxpayers.
How the state and federal government tax and regulate the industry will influence the pace of future development and the extent of benefits Pennsylvanians eventually realize. The state has been a watchful regulator on the environment, and the environmental impacts of natural gas development are being carefully managed.
The industry has upgraded its own standards and is meeting with local officials and the public throughout the state to explain how the exploration and production process works and to address any concerns.
A lot of focus has been on the hydraulic fracturing technology used to free the gas from the shale formations. The process, which has been used safely for more than 60 years in a million wells, involves injecting fluids under high pressure into a development well to release oil and natural gas trapped in shale formations. The fluids are more than 99 percent water and sand with selected additives, which might include a friction reducer similar to canola oil, a chemical such as chlorine to kill bacteria, and a lubricant similar to those found in personal care products. In general, the fracturing process creates cracks or fissures in the rock formations thousands of feet below the surface. The sand helps to “prop open” the fissures to allow the natural gas or oil to move freely to the well.
Before a natural gas well can be drilled, state regulatory authorities approve the engineering design and site plan. The well is surrounded by steel casing and layers of cement, which are mandated by state regulations to protect underground sources of water. Used fracturing fluids are recovered and disposed of according to state and federal laws, and, today, more and more operations are relying on recycling and reuse of water.
Pennsylvania has the good fortune to be sitting on top of massive supplies of a versatile, clean-burning fuel. It has just begun to enjoy the enormous benefits provided by development of this exceptional resource. And, along with the large amounts of shale gas produced in other parts of the country, Pennsylvania’s production is also helping to strengthen our nation’s energy security.
Rayola Dougher is a Senior Economic Advisor at the American Petroleum Institute
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