Gas exploration lures high-paying jobs

Add high-paying jobs to the economic benefits of the rush to release natural gas from the Marcellus Shale buried beneath Lycoming County.

One company with such jobs is set to open next month, and the Williamsport-Lycoming Chamber of Commerce is showing properties to other businesses that cater to the gas-drilling industry, according to Vincent J. Matteo, chamber president.

"This has the potential to have the biggest economic impact on this county and region in its history," said Matteo said. "I'm not saying it is, but it has that potential."

Echoing those thoughts, Dr. Timothy Kelsey, a Penn State professor, described how the natural gas boom could impact northcentral Pennsylvania's economy.

"This could be big," Kelsey said.

While most say the true impact won't be known until gas is actually flowing to market, they add that gas exploration could fuel the region's economy like nothing it has ever seen before.

Lycoming County lies atop the Marcellus Shale formation, which runs from the southern tier of New York through Pennsylvania and into Ohio, West Virginia, Virginia and Maryland. The formation is thought to contain hundreds of billions of dollars worth of retrievable natural gas.

That belief has companies clamoring to get local landowners to lease their property for gas exploration and is partly why those leases have gone from a few dollars an acre to thousands of dollars an acre in only a few years.

Old Lycoming Township officials recently saw gas leasing as an opportunity to raise money to keep municipal taxes down and leased 68.5 acres for $2,400 an acre.

The lease includes a 15-percent royalty payment should the property produce gas. Until recently, gas companies were paying 12.5-percent royalties - the minimum allowed by state law - and no more.

Local attorney Lester Greevy said he is seeing leases with royalty payments of up to 19 percent.

According to Matteo, most of the attention has been on how gas exploration will benefit landowners. The economic benefits are already reaching many other areas, he said.

Out-of-state gas industry crews are bringing business to local hotels, car rental agencies, restaurants and retailers, he said.

"We are already seeing the impact, starting with the inability to book a hotel room," Matteo said. "The hotels, for the most part, are full and a lot of them are booked months, and sometimes years, in advance."

"Drive by a (local hotel) during the week. It's almost impossible to see a vacant parking space," he said, adding, "Car rentals are up. Restaurant business is up."

"We're talking about a lot of people with cash in their hands, and that money is being spent locally," said Penn State Cooperative Extension educator Thomas Murphy.

According to Murphy, gas companies are hiring local contractors to build access roads and are buying materials to build those roads from local suppliers.

Local utilities such as water and sewer could benefit, as well.

According to Susquehanna River Basin Commission documents, gas companies are seeking to buy water for drilling operations from several local water authorities.

The commission requires gas companies to obtain permits to remove and use large quantities of water for operations such as hydrofracturing. Hydrofracturing - commonly called "fracing" - involves pumping pressurized water, sand and chemicals into the well to pulverize the shale and release the gas trapped in it.

Gas companies have opted to buy water from local authorities until permits can be obtained from the commission.

Williamsport Municipal Water Authority executive director David DiNicola said the authority is negotiating a contract to sell water to a gas company. DiNicola would not say how much the authority plans to sell the water for.

Selling water benefits the entire community by providing additional revenue that can be put back into the water system, DiNicola said.

"The advantage of purchasing water from a community water supply is that because we are a non-profit, any revenue we receive we put back into the (system) infrastructure," he said.

Waste-water treatment facilities may be able to raise additional revenue by treating waste water from drilling operations, DiNicola said.

Christine Maggi-Weigle, executive director of the Lycoming County Water and Sewer Authority, said gas companies have shown interest in having waste water treated at the authority's Old Cement Road facility.

"We are not prepared to take it yet and are not taking it yet," she said. "We are very interested in supporting the gas drilling industry for purposes of economic growth in our region, as well as for us."

Taking on additional customers will allow the authority to spread operating costs over a larger customer base, Maggi-Weigle said.

"We are looking at a $5 million to $6 million capital project right now," she said. "If we had another large customer to offset those costs, our customers might not even notice it."

At least two Texas companies - Range Resources and Chief Oil and Gas - have opened field offices in the Williamsport area.

But the best is yet to come, Matteo said.

"In mid-August, a company will open up that will bring a number of very high-paying jobs to the community," he said.

According to Matteo, the chamber has been busy showing commercial and industrial property to companies that support the gas drilling industry.

"We're dealing with (hydrofracing) companies, sand suppliers," he said. "Just this week, we showed potential sites to three service companies interested in coming here."

"The big impact down the road will be when the wells are drilled and the companies come in that serve the gas industry," he said.

Even if gas exploration companies don't spend another penny in northcentral Pennsylvania, the area will have benefited from their presence, said local attorney Greevy.

"Even if they left tomorrow, they gave this economy a hell of a boost," Greevy said. "Folks are making an awful lot of money, and no royalty checks have even been written yet."

"Starting around the first of the year or December, (lease) prices jumped to $750 an acre in the northeast part of the state," Greevy said. "More recently, we've seen prices topping $2,500 an acre and 15-percent royalties in Bradford, Tioga, Sullivan, Lycoming and Clinton counties."

Lease payments could pale compared to money paid out for royalties, he said.

Left out in the cold are municipalities and school districts that rely on real estate taxes for a large portion of their revenue.

There is nothing in the Pennsylvania tax code that allows real estate taxes to be assessed against natural gas removed from a property or thought to be contained on a property, Kelsey said.

Matteo agreed, adding that local municipalities will bear the burden of maintaining roads damaged by trucks hauling heavy drilling equipment and supplies.

"The laws in Pennsylvania are inadequate to handle this," Matteo said. "We need a way to allow local governement to recoup costs involved with (gas exploration). There is no mechanism, right now, where local governement can tax these properties."