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Cornell researcher says NYS needs a plan for the Marcellus Shale

Emma Jacobs
Drilling in Pennsylvania has so far failed to yield a severance tax, but has caused headaches for some residents. What’s in store for New York State?

Susan Christopherson, an economic geographer at Cornell, has begun sharing early findings on the potential impacts of drilling in New York’s share of the Marcellus Shale. She’s trying to get away from a pretty standard way of calculating impacts, which is to measure how much will be spent on each well and multiply by the expected number of wells. Rather, she's trying to get to the nuts and bolts of what towns and counties with gas wells will experience.

The Innovation Trail caught up with Christopherson late last week to hear more about what drilling communities will look like if horizontal hydraulic fracturing gets underway. Here’s an excerpt of our conversation.

IT: First off, you’ve been saying that it looks like we should prepare for drilling to accelerate quickly.

SC: The reason for saying we should anticipate a front end loaded system is that that does seem to be happening in Pennsylvania. Many of the studies suggest that this is like a 60 year roll-out. Permits in Pennsylvania increased from 71 permits in 2007 to just under 2,000 in 2009, and from our perspective that’s not the kind of slow ramp-up that’s going to produce a very, very long period of gas production in the Marcellus Shale. That’s the kind of pattern that’s more likely to produce a kind of fast ramp up and production acceleration and within five to seven years perhaps, a sharp downturn.

IT: In your presentation, you have some charts showing population loss in New York and Pennsylvania that was higher for counties with a history of gas extraction. What can we draw from those?

SC: There could be a lot of reasons why that population loss occurs. For example housing prices tend to rise and labor costs tend to rise in rural counties where there is gas drilling. People who get royalty payments, they’re dairy farmers or something and could decide they don’t want to be dairy farmers anymore. They could leave. People could decide they want to move to cities instead of being in a high-traffic, rural, industrial environment. Another possibility is that because natural gas extraction tends to raise wages, it raises the cost of doing business in other industries, and so people who want to start those businesses say it’s going to cost too much for me to start my business here.

I think the implication of that is again a note of caution. People misunderstand this and natural gas industry people in particular become concerned and say you’re trying to attribute this to natural gas and essentially we’re not. We’re making a negative argument. We’re not saying this is not due to natural gas. But we’re also saying natural gas in these counties hasn’t produced some kind of big boom in these counties.

IT: So you’re almost acting as a fact-checker?

SC: Yeah, that’s a good way of putting it, we’re trying to look at all these factors and say now let’s try to be realistic so we can really anticipate what this is going to produce and how we can make the best of it and how we can mitigate the serious problems that are going to come from it too.

IT: So to gauge your general level of optimism, you’re saying there are a lot of questions, there a lot of concerns --

SC: Where would I come down? Right now I really genuinely am uncertain because there are jobs that are going to be created. There’s no doubt. In fact, already, the Southern Tier cities are feeling the impact of Marcellus Shale gas drilling. There’s population coming into the cities. There’s pressure in the housing markets. There’s truck traffic. There’re people shopping in Johnson City and Elmira and Binghamton. In part we’re benefiting from the fact that there aren’t cities in the northern tier of Pennsylvania. So right now we’re getting some of the expenditures without the drilling. I think that’s all to the good to tell the truth. But if and when the drilling starts, then there’s going to be an influx of population, there’s going to be a quick ramp-up of jobs.

I have a better idea now of what the problems are that face the communities so I really feel that the state and local governments have to be able to be prepared for this process. If this drilling is going to take place, I want it to benefit the Southern Tier, the cities in the Southern Tier, the rural areas, and the state of New York. I want this to be able to produce economic development and so I think what we need to learn from what’s happening in other places, including Pennsylvania and to anticipate where there might be problems, and also opportunities. We want to use this kind of resource as an economic development tool, not just providing jobs for the oil and gas industry, but using it perhaps to build manufacturing industries in the Southern Tier that would have natural gas or its derivatives as an input.

I think the moratorium in New York has given New York an opportunity to be more prepared if this is going to happen. There are going to be problems. There are going to be costs to communities. There are going to be potential environmental damage and we have to be prepared for that. I am a planner, so I think this is an opportunity to plan so that you mitigate the problems and can take advantage of the potential influx of capital into the region in a way that it will produce long-term economic development.

IT: There is this new moratorium and a lot of ongoing protest. Has that inhibited people’s ability to think about policy and planning when there’s still so much doubt about whether drilling can take place?

SC: At the beginning I thought, well this debate is really polarized, it’s really a problem. But as I’ve worked my way through this, I’ve begun to think that having this active debate has kept this issue alive not just in the Southern Tier but at the state level. I think it’s potentially made state policy makers think seriously about what’s going to happen, for good or for ill. If there hadn’t been this active debate and strong advocates on both sides I don’t think people on the state level would be thinking about this at all. They’re thinking, 'ok, well if there are people who are strongly against this and it goes forward, how are we going to mitigate the problems.' And if there’s a chance for them to learn about what the problems might be longer term then maybe they will start thinking about what kinds of measure the state needs to take in order to make this work for economic development for the long term.

I just think the active debate, while it has its downside has been positive in illuminating various dimensions of the issue, particularly because I think it’s made the Southern Tier more visible at the state level. I think that in Albany in general the upstate New York economies are an unknown. Legislators don’t pay attention to them. So this issue has kept the region of the Southern Tier front and center. It’s made the region and its economic development issues and its potential much more visible. And I think that’s all to the good.

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