Local Government: Community
Impacts from Industry
Development
Timothy W. Kelsey,
Professor of Agricultural Economics
Can Be Significant Community Issues
Local infrastructure
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Roads
Highway safety
Housing
Sewerage & water
Police
Emergency services
Schools
Human services
Traffic Changes – Bradford County
5-Year Daily Average vs. 2010 Daily Average
7000
6000
5000
5-Year Total Traffic Average
4000
5-Year Truck Traffic
3000
2000
1460
1300
1260
967
1000
310
247
274
277
0
SR 14, Seg 0310
South of Troy
SR 6, Seg 0320
West of Burlington
SR 6, Seg 0420
East of Burlington
SR 6, Seg 0500
West of SR 220 &
Towanda
Source: PennDOT Engineering District 3-0
Traffic Changes – Bradford County
5-Year Daily Average vs. 2010 Daily Average
6726
7000
6304
6008
5706
6000
5000
5-Year Total Traffic Average
4000
3947
3691
3565
5-Year Truck Traffic
3101
3000
2010 Total Traffic Average
2000
2010 Truck Traffic
1460
1300
1260
967
1000
310
247
274
277
0
SR 14, Seg 0310
South of Troy
SR 6, Seg 0320
West of Burlington
SR 6, Seg 0420
East of Burlington
SR 6, Seg 0500
West of SR 220 &
Towanda
Source: PennDOT Engineering District 3-0
Critical Elements Affecting Local
Impacts
1.
2.
3.
4.
Temporal nature of the activity
Spatial aspects of the activity
Capacity of local communities to respond
Larger policy context
1. Timing, Scale & Pace Drive Impacts
Drilling each Marcellus well requires:
• About 420 individuals
• Across 150 different occupations
• 13.1 full time direct jobs for first well on a pad
• 9.65-9.85 full time direct jobs for each subsequent
well on a pad
Once drilled:
• Every 100 dry gas wells generate 19 long-term fulltime jobs,
• Every 100 high-BTU gas wells generate 39 long-term
full-time jobs
Source: Brundage et al, 2011
Direct Workforce Over Time
If 10 years of
active
drilling
Number of
Workers
= Development phase jobs
= Production phase jobs
Wells drilled a year
start to decline
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30
If 25 years of
active
drilling
Number of
Workers
Year
Year
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30
Duration?
Assumes 30 year active life per well
2,500 wells drilled /year pace.
Labor requirements based upon MSETC
per well workforce estimates
Marcellus Wells Drilled in
Pennsylvania Counties, by year
450
Northern Tier
Wells Drilled a Year
400
Bradford
Lycoming
Susquehanna
Tioga
350
300
250
200
150
Southwest PA
100
Butler
Greene
Washington
50
0
Year
2. Spatial Nature of Development
Gas & oil development is more than just wells
• Multiple well pads – intense activity, but short run
until well is drilled
• Multiple supporting locations – intense activity,
lasts until all wells in area are completed
• Multiple specialized companies & workers.
Massive coordination task.
• Changing transportation patterns
• Communication
Travel Corridors & Nearby Municipalities
Municipalities near drilling experience impacts
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Traffic through corridor
Business growth
Land use change
Housing, water, sewer impacts
Municipalities at a distance from drilling can
experience impacts as well
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Worker housing
Supply yards
Truck corridors hauling supplies and materials
Water treatment facilities/injection for flowback fluids
Water sale trucking
3. Capacity for Communities to
Respond
• Small, rural communities with limited staffing
• New revenues due to the activity?
– Depends upon state tax laws
– Revenues may lag needs
– Uncertainty about future, length of play
• Spending often involves long term commitments
(& risk!)
• Education of local officials often isn’t enough
4.Larger Context Affects How
Communities Can Respond
Major questions:
• To what extent do benefits return to the
communities experiencing the activity?
• To what extent do communities have the
ability to make decisions?
Manifested in:
State policies
• Local & state taxation/impact fees (& where those dollars go)
– Mineral Trust Fund? General Fund? State? Local governments?
• Ability of local jurisdictions to zone or regulate
• Use of lease & royalty dollars from state owned land
• Monitoring & oversight
Federal policies
• Federal taxation (& where those dollars go)
• Use of lease & royalty dollars from federal land
• Monitoring & oversight
Final Thoughts
• Main economic impacts will remain only as long as
drilling occurs
• Must view as short term stimulus for economy
• Creates risks for public investments
• Need to think regionally, across communities
• Focus on increasing capacity of communities to
respond
• Consider impact of federal and state policies on
communities
Where to Learn More
• Brundage et al. (2011). “Pennsylvania Statewide Marcellus Shale
Workforce Needs Assessment.” Marcellus Shale Education and Training
Center, Penn College of Technology, Williamsport.
• Farren, Weinstein, Partridge & Betz. (2013). “Too Many Heads and Not
Enough Beds: Will Shale Development Cause a Housing Shortage?” The
Swank Program in Rural-Urban Policy, The Ohio State University
• Kelsey. (2014). “Unconventional Oil and Gas Development: Challenges and
Opportunities for Local Governments.” Choices 29(4).
• Kelsey, Metcalf, & Salcedo. (2012). “Marcellus Shale: Land Ownership,
Local Voice, and the Distribution of Lease and Royalty Dollars.” Center for
Economic and Community Development, Penn State University.
• Raimi & Newell. (2014). “Shale Public Finance: Local Government
Revenues & Costs Associated with Oil and Gas Development.” Duke
University Energy Initiative.
• Weber, Burnett & Xiarchos. (2014). “Shale Gas Development and Housing
Values Over a Decade: Evidence from the Barnett Shale.” USAEE Working
Paper.