NATURAL GAS DRILLING: QUESTIONS RESIDENTS & LOCAL LEADERS SHOULD BE ASKING Part 2 of 3

Mike Lloyd is the Extension Educator/County Director of Ohio State University Extension in Noble County.  He authored the above-titled fact sheet and has generously given me permission to quote it as extensively as I see fit in a series of blogs I’m basing on his fact sheet.

I will quote it extensively because Mike Lloyd presents the various facets of inquiry well and doesn’t need anyone to translate his ideas.

He refers to both Utica and Marcellus shale as “Ohio shale” throughout.

Much of what the fact sheet covers relates to high-volume hydraulic fracturing with horizontal drilling to access deep shale formations, generally referred to as “fracking.”

Natural gas drilling and development had far-reaching and profound impacts in Texas, Wyoming, Colorado, Pennsylvania and West Virginia.  It’s important that Ohio’s citizens and local leaders consider as many of the related pros and cons as possible before embarking on drilling and developing.

The fact sheet highlights the issues, questions and concerns that residents and local leaders need to consider about natural gas and other energy-related development.

Economic and Fiscal Changes

With an estimated 141 trillion cubic feet in recoverable natural gas from just the Marcellus shale, the economic impacts of its development are expected to be extensive. The influx of income is expected to generate thousands of new jobs, spur population growth, and boost gross state product and real disposable personal income, particularly for those working within the industry and those with leased land.

Ohio tax law does provide for a severance tax for natural gas in the amount of 2.5 cents per 1,000 cubic feet of gas removed from the soils and waters of the state. Of the moneys received by the treasurer of state from this severance tax, 90% is credited to the oil and gas well fund; the remaining 10% is credited to the geological mapping fund.

Local governments do not share in the severance tax; therefore, any direct increases in tax revenue are unlikely to be realized by the local jurisdictions (municipalities, counties, townships, and schools) where the largest impact on local services is likely to be felt.

In addition, local businesses whose employees have similar skills to those used in natural gas production and extraction (such as diesel repair and welding) are likely to face worker turnover, difficulty with finding employees, and increased payroll costs.

Inflation, increased cost of living, and lack of services are problems confronting communities with natural gas development in other parts of the country.

Issues for Landowners

How can those who receive income from lease payments and royalties be prepared to manage this income? What systems can be put into place to encourage wealth management and succession planning? How will Ohioans who receive lease payments and royalties be encouraged to spend and invest locally, capturing more of the income for local growth and development? How will those who own forested or agricultural land be able to incorporate the natural gas development into their long-term plans for the land? Can those benefiting from this newfound wealth be encouraged to be philanthropic within their communities?

Considerations for Existing and New Businesses

How can local businesses compete for the new business opportunities arising from natural gas? How will local entrepreneurs meet the increased demand for goods and services? How will businesses in other economic sectors compete for key resources, such as land and skilled workers, that are in demand for natural gas development? How can these other businesses position themselves to be attractive for investment and growth stemming from new local wealth? How can the tourism industry—very important in some regions of Ohio shale—mitigate the impact of natural gas development on potential tourists’ perception of the region as well as availability of key resources (such as hotel space and campgrounds)? How can economic development efforts both build on growth in the natural gas industry and foster other local businesses to create strong, diverse, local economies that will be sustained after the drilling is completed?

Considerations for Workers and Workforce Development Programs

How can Ohio’s workforce position itself to be the first choice of employers to fill gas-related jobs? How can school districts, community colleges, technical schools, and workforce development agencies rapidly train the number of workers needed within the natural gas industry? How will workers in other industries, particularly in low-wage jobs in the retail and service sectors, adjust to the potential increased inflation and cost of living caused by worker demand within the natural gas industry? Will the relatively high wages paid by the gas industry make competing for high-quality labor harder for local businesses?

 Considerations for Local Government Officials

How can local governments (municipalities, counties, townships) plan for the potential increase in demand for local services, particularly with little or no additional revenue? How can local governments manage the revenue in a way that will increase their fiscal health and protect the interests of their citizens, both now and in the future? Do local governments have the capacity and planning mechanisms in place to anticipate and respond to land use and subsequent municipal service costs?

The impacts of Ohio shale development will most likely be felt longer than the term of a specific government official. How can a particular agency, organization, or officeholder be designated to assume responsibility for the coordination of natural gas is- sues within the municipality or county?

Source:  The Ohio State University Extension Fact Sheet, Community Development   CDFS-1282-12   June 20, 2012 Natural Gas Drilling:  Questions Residents and Local Leaders Should Be Asking, by Mike Lloyd

You can read the entire fact sheet at http://ohioline.osu.edu/cd-fact/pdf/1282.pdf

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