Demand for energy
In the United States and around the world, demand for energy is growing significantly. Climate change and environmental regulations continue to push against the need for increasing energy generation. In the U.S., natural gas has become a popular alternative fuel source for power plants. It is also recognized for its ability to heat homes and serve as fuel for motor vehicles. Natural gas could greatly reduce the United States reliance on oil and coal. Natural gas plants produce about half the CO2 pollution of a typical coal plant, and modern facilities greatly reduce pollution from nitrogen oxide and sulfur dioxide, which contribute to acid rain. In addition to the environmental argument for natural gas, reserves have been found throughout the United States, decreasing our reliance on other countries for energy. Much of natural gas’ potential lies in our ability to capture it affordably and safely from deep shale formations throughout the U.S. One formation recently receiving a great deal of attention is the Marcellus Shale formation beneath large portions of New York. In this paper, the New York area provides an overview of the Marcellus Shale formation, noting advantages, disadvantages and potential financial impacts of developing this energy source.
Marcellus Shale is marine sedimentary rock in eastern North America. The shale has natural gas distributed throughout the rock and is identified as an unconventional reservoir of hydrocarbons or natural gas, because most oil and gas come from sandstone and limestone formations. The Marcellus formation spans about 600 square miles, beneath much of New York, Pennsylvania, Ohio, Maryland and West Virginia. It also extends under the Great Lakes and into Ontario, Canada. Until recently, it had been overlooked because a vertical gas well drilled through the shale would not yield enough to be economically feasible. The Marcellus Shale is nearly a mile or more below the surface, making it a very expensive target. Geologists estimate that the formation contains between 168 and 516 trillion cubic feet of natural gas. For comparison, New York uses approximately 1.1 trillion cubic feet per year, according to the Department of Environmental Conservation. One estimate predicts Marcellus could supply the entire U.S. for 30 years at its current rate of consumption.
Pennsylvania’s Marcellus Shale has the potential to produce 17.5 billion cubic feet of natural gas per day (6.4 trillion cubic feet annually) representing nearly one-quarter of America’s annual natural gas production in 2020, according to U.S. Department of Energy estimates. In 2011, Pennsylvania could produce nearly 3.5 billion cubic feet per day of natural gas, making the Commonwealth a net exporter of natural gas right now. This development could support more than 156,000 jobs and generate $12.8 billion in economic activity in Pennsylvania alone. By 2020, according to the study, Marcellus development could support 256,420 jobs and generate $20 billion in added value to Pennsylvania’s economy.
The advantage to the development of the Marcellus formation has several potential advantages. Currently, New York imports nearly all its natural gas. By developing the Marcellus formation, the state could reap significant economic benefits and become a natural gas exporter. Developing the Marcellus formation could pump billions into the upstate economy, creating jobs and stimulating investment throughout the state. This investment would undoubtedly have substantial downstream economic benefits for local businesses, landowners and workers in New York and provide new tax revenue.
The Independent Oil and Gas Association of New York projects that the discovery and potential use of natural gas could generate close to $11 billion in economic activity and around $2 billion in tax revenue by 2020. It would also be a source of hundreds of jobs for a region that has suffered greatly from the...
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