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Natural gas exploration could put a lot of money in the pockets of people in northcentral Pennsylvania, but it also has the potential to adversely impact the environment, infrastructure and the social well-being of the communities where it occurs.

That was part of the message delivered at a forum Wednesday at the Community Arts Center.

The forum, which was co-sponsored by the Penn State Cooperative Extension, the Williamsport-Lycoming Chamber of Commerce and Merrill Lynch and Co. Inc., was held to discuss the social and economic impact natural gas exploration could have on the region.

The forum featured presentations by Thomas Murphy, an educator with the Penn State Cooperative Extension, and Timothy Kelsey, a professor of agricultural economics for the extension.

Both men have done extensive research regarding natural gas exploration and have been part of an initiative designed to educate landowners throughout Pennsylvania about the benefits and pitfalls of gas exploration.

Natural gas exploration in Pennsylvania "is a big deal," Murphy said.

How big a deal?

According to Murphy, there is an estimated $500 billion worth of recoverable natural gas buried deep underground in Pennsylvania in a rock formation called the Marcellus Shale.

The formation runs in a wide arc through the center and western part of the state and includes portions of New York, Ohio, Maryland, West Virginia and Virginia, Murphy said.

Although the gas is not uniformly distributed across the state, it is believed there is a significant amount in Lycoming County and elsewhere in the northcentral region, he said.

The focus on the Marcellus Shale is due to similarities it has to the Barnett Shale formation in Texas. The Barnett Shale is the largest natural gas shale field in the United States, he said.

Because of the similarities, technologies used to extract gas from the Barnett Shale also may yield significant amounts of gas from the Marcellus Shale, Murphy said.

The region's close proximity to the largest natural gas market in the nation - the eastern seaboard and mid-Atlantic states - makes it even more appealing to gas exploration companies, he said.

Despite the fact that they are still not 100 percent certain they will be able to remove profitable amounts of gas from the region, gas companies are planning to invest $2 billion in the exploration for gas in the Appalachian Basin in 2008, he said. The basin runs from southern New York state to Tennessee.

Murphy admitted there are pros and cons to natural gas exploration.

On the positive side, gas development provides lease and royalty income to farmers and other landowners, he said.

Gas exploration can give a flagging real estate market a boost with an increase in home sales to gas industry transplants who move to the area, he said. Gas companies must rent office space, hotel rooms and equipment, buy gasoline for their vehicles and hire local companies to build roads and prepare drilling sites. Company employees shop at local retailers and eat in local restaurants.

The economic impact on local businesses may be felt for years to come, Murphy said.

However, municipal officials need to consider negative impacts, such as how the heavy equipment used for gas drilling will impact township roads. Officials should require companies to provide bonding in case roads are damaged and impose weight limits on local bridges, he said.

Because hydrofracturing, the method by which the shale is pulverized to release gas trapped in it, uses large amounts of water, agencies such as the Susquehanna River Basin Commission and state Department of Environmental Protection are concerned about how the industry will impact the region's fresh water supply.

Kelsey agreed that the potential for a financial windfall from gas exploration in Pennsylvania is very real.

But, he warned that people should understand that natural gas is a non-renewable resource that could be gone in 20 or 30 years.

"We need to think about how it builds us for the future, not just short-term," Kelsey said.

Both Murphy and Kelsey visited the Barnett Shale region to see how gas exploration affected the area. However, the shale formation is near the Dallas-Fort Worth area, which is an urban area and is much different than Lycoming County.

More telling was a visit to Wyoming, where Kelsey was better able to measure how gas exploration impacted a rural area.

In Wyoming, the gas industry provided locals with an opportunity to work at high-paying jobs with unlimited amounts of overtime. However, Kelsey saw that gas companies competed for labor with local businesses that were unable to pay as high a wage.

The influx of long-term gas field workers put a strain on the local housing stock, he said.

According to Kelsey, the nature of the gas drilling industry can bring with it social problems.

"With a transient male population, you are more likely to see DUIs, larceny, drug possession and other issues," he said.

When workers bring their families to the area, they increase school enrollment, for which some school districts may be unprepared, he said.

The state's tax laws prevent school districts and municipalities from capitalizing on income earned from gas exploration. Gas income is not subject to local taxes, corporate income taxes go to the state and earned income taxes are paid where a person lives, Kelsey said.

In the latter case, a municipality could not receive any earned income from a drilling operation within its boundaries if none of the workers lived in that municipality, he said.

A municipality that leases public land for gas exploration should be careful not to treat gas lease income and royalty payments as permanent income. That money should be used to make improvements to the community - for example, by improving local roads - not just to keep taxes down, he said.

Once gas revenue dries up, a municipality may have to increase taxes to make up the revenue it formerly received from gas, he said.

Communities also should understand how the gas exploration industry impacts other economic sectors such as tourism. This is especially true in Lycoming County, where the area's streams and mountains attract many visitors, he said.

"Encourage natural gas (exploration), but in ways that doesn't impact other parts of the economy," he said.