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Haynesville

Another “Peak” Performance
It’d be easy to analogize the small group of analysts who continue to believe the world is imminently running out of oil and natural gas to the stranded Imperial Japanese soldiers who, upon being discovered in the jungles of Guam and Indonesia in the 1970s, refused to accept that the second World War had decades earlier come to a close.

It’d be easy to analogize the small group of analysts who continue to believe the world is imminently running out of oil and natural gas to the stranded Imperial Japanese soldiers who, upon being discovered in the jungles of Guam and Indonesia in the 1970s, refused to accept that the second World War had decades earlier come to a close.

Easy – but not entirely accurate. One of the key differences between these two groups is that the media actually take seriously the serial skepticism of the first, often parroting with QED-certainty the notion that America has only “three percent” of the world’s oil, for example, notwithstanding a growing and increasingly definitive body of evidence indicative of an American resource base of enormous, potentially even singular proportions.

But if you take a closer look at the arguments that undergird the peak-oil philosophy, you find an interesting and under-reported aspect that lies at its core: In most cases, these folks don’t actually argue that the world is physically short on oil and natural gas. They argue that these resources, even if they do in fact exist, can’t be produced economically over the long-term. Of course, whether the energy isn’t there or is — and just can’t be developed under a reasonable cost scenario – the skeptics often arrive at the same conclusions: we’re running out of the stuff, they say — at least the “easy” stuff — and thus need to restructure our entire economy in anticipation of that crash.

Thanks to the emergence of “tight” oil and natural gas reserves as an important source of U.S. fossil energy, though, the peak energy community finds itself today back on the defensive side of the ball. Plainly put, these guys simply weren’t prepared (in truth, were any of us?) for what would become possible virtually overnight, with plays such as the Haynesville going from a daily yield of precisely zero BCF in 2007 to more than 5.5 BCF a day today. In 2005, Pennsylvania produced less than 0.5 BCF a day despite drilling 3,600 new wells. In 2011, only 2,800 new wells were drilled – and only about half of them were actually brought online. And despite all that, the state produced more than 3.0 BCF a day of natural gas in 2011. Six times the volume of 2005, with 23 percent fewer wells drilled – all thanks to the Marcellus.

Of course, you won’t find any of this data in the article that appeared this week on Slate.com. The thesis of that piece, written by peak-oil exponent Chris Nelder – co-author of an entire book on all the great investment opportunities that will exist someday soon in a world without oil — is that projections of abundance associated with the development of natural gas from shale are overblown. In support of that position, he borrows heavily from the playbook of peak-oil analyst Arthur Berman, someone well known within the industry prior to this year, but whose status got a major boost this summer after The New York Times ran his research (and his quotes) on its front-page.

If you’ve never seen Mr. Berman present on this subject before, you don’t know what you’re missing. We had the privilege to sit right alongside him in a forum on shale organized last April by Cornell’s law school – and as this video will confirm (start at hour three), he’s very good at what he does. After his piece hit in the Times, we also had a chance to chat with him on the phone. He’s a good guy, and a smart guy. We think he’s wrong about shale. But the good news is: we won’t have to wait but two or three years to figure out who’s right.

As far as Berman’s argument goes, it tends to look a little like this: Data collected from the Barnett over the past 15 years suggests that not all shale wells are created equal; that some produce well-below their expected ultimate recovery (EUR) rates; and that optimistic projections about shale’s future contributions to U.S. energy supply will never be realized, in part because of the clash between low natural gas prices and high drilling and completion costs, and in part because the wells themselves, he argues, tend to peter-out after the first few years of production. Paradoxically, Mr. Berman appears to argue both that new shale wells won’t be productive, and that natural gas prices will remain at their historic lows. How both can be true, we’re not entirely certain of.

Unfortunately for the peak-oil crowd, these arguments tend to unravel pretty quickly when the scope of inquiry is broadened out to account for the performance of other shale plays (which isn’t to pay short shrift to the Barnett, which, at 5.0 BCF a day, is currently averaging more natural gas per month than at any point in its history). Notable in his Slate.com article, Nelder flatly ignores the volumes currently being produced in the Haynesville and Marcellus regions – suggesting that these plays aren’t sufficiently “mature,” and thus shouldn’t be included in his analysis.

But Art Berman hasn’t ignored the Haynesville. And to his credit, he’s been good enough to admit that his initial assessments of the play weren’t quite right, sort of. In April 2009, Berman wrote that it was “difficult to imagine that the Haynesville Shale can become commercial.” Only two months later, in June, Berman had changed his tune, saying that “I now think that the Haynesville Shale reserve estimates that I presented previously were too low.” Still, in a 2010 article, Berman suggested the Haynesville numbers were “disappointing.” In March 2011, the Haynesville became the top-producing onshore natural gas field in the United States, and now stands among the top five producing fields in the entire world. What a disappointment.

Despite holding firm to a less-than-sanguine view on the potential abundance of natural gas from shale, Nedler writes in his piece this week that “I am not anti-gas; neither is Berman.” And on that, we take a man at his word. Indeed, Berman wrote an entire post this summer laying out the reasons he supports the continued deployment of hydraulic fracturing.

But hey, it certainly didn’t escape our notice that this year’s annual conference of ASPO-USA (the trade association for peak-oil enthusiasts) in November hosted a panel discussion — moderated by Berman himself — featuring a who’s who line-up of anti-shale activists, including NRDC’s Amy Mall, Rob Jackson from Duke, and Tony Ingraffea and Bob Howarth from Cornell. ASPO member Roger Bezdek also presented at that conference; we had the pleasure of debating him in Miami back in Dec. 2010 (note: December in Miami > December in Washington). Peak oil guys like to say they’re not “anti-gas” – but Bezdek’s presentation, found on page 52 of this document, certainly seems to suggest otherwise, wouldn’t you say?!

Here’s the thing:  There’s nothing wrong with being a contrarian. Nothing wrong, or nefarious, or illegitimate, with offering up an alternative view on what the history might hold for shale. But there’s a big difference between forecasting that something won’t happen and actively working to ensure it doesn’t.

For those who continue to advance the view that natural gas from shale won’t pan-out as planned, professional reputations are at stake. To “win” this particular argument, peak energy proponents need the geology to turn out bad (that is, for oil and natural gas not to exist), or for the oil and natural gas that does exist to remain right where it is in the ground.

If these folks were confident of the first outcome, they wouldn’t need to involve themselves in the second. But they’re not. Which may be why you’re starting to see folks like Art Berman, a climate change skeptic, appear alongside environmentalist activists committed to stopping the development of shale wherever it’s being considered. At first glance, it would appear an unlikely association. But though the philosophies may differ, the end-goal of both groups is the same. To environmentalists, abundant natural gas from shale is a threat to renewables. And for the peakers, it’s a threat to the credibility of their prognostications. It’s really as simple as that.

So: Will the experts’ projections on shale end up translating into the type of real-world abundance that could help our country create thousands of family-supporting jobs, generate billions in taxpayer revenue, and deliver significant annual cost-savings to consumers? We hope it does, but we don’t know. Some in the peak energy community, it can be assumed, hope it doesn’t. But they don’t know either. If the point of the Slate article is to confirm this uncertainty, mission accomplished. But weren’t we all aware of that before the piece even ran?

When It Comes to Job Creation, The Facts Speak for Themselves

Organization committed to stopping hydraulic fracturing suggests real jobs created by real economic activity do not exist.

It’s one thing for groups opposed to the development of American energy resources from shale to suggest that the massive economic stimulus currently being made possible as a result of these activities is overstated – notwithstanding the fact that their own jobs as professional activists depend on these activities continuing.  But it’s a completely different thing to suggest that these jobs simply do not exist. Given all we continue to see in communities across the country where responsible shale development is taking place, it’s a statement that would make even Jean-Paul Sartre blush.

Unfortunately, that’s exactly what Food & Water Watch — which is a non-profit organization that accepts tax-deductible donations — has suggested with its latest report, which takes aim in particular at a recent study projecting massive economic growth for the state of New York if shale development is allowed to move forward. The broader implication, though, is that all economic models are all fundamentally flawed, so any projection of economic gain from energy development activity is, according to FWW, “dubious.”

Before we get to the many problems in FWW’s report, we thought it would be important to point out from the get-go the irony of Food & Water Watch accusing others of inflating data. This is the same organization, as you might remember, that inflated its own participation rates for an anti-hydraulic fracturing call-to-action, apparently in an effort to make its fundraising emails more appealing.

As to the report, our job here at EID is to read through the document so you don’t have to. What follows is a sampling of the questionable claims made by FWW, accompanied by a healthy dose of reality.

—

Food & Water Watch: “Local, state and federal policymakers should look to actual employment data, not dubious economic forecasts.” (p. 2 )

EID: As it turns out, the oil and gas industry – particularly those companies active in shale – has a very strong record when it comes to creating jobs, and an equally strong standing with respect to “actual employment data.” For example, a Financial Times article that was published the same day FWW released its analysis has the headline: “Oil shale boom boosts US jobs market.” Perhaps that was published too late to make it into the qualifying footnotes of FWW’s report.

But that’s far from the whole story. A study from IHS Global Insight found that in 2010, America’s independent oil and gas producers supported nearly 400,000 direct jobs nationwide, all while generating around $263 billion in gross economic output.

At the state level, the jobs numbers are also significant. In Louisiana, the oil and gas industry supports more than 310,000 jobs in the state, driven not only by offshore production by also the Haynesville Shale, the nation’s largest producing shale gas field. Production in the Barnett Shale in north Texas has created more than 119,000 jobs throughout the state. According to the Pennsylvania Department of Labor & Industry, the Marcellus Shale supports 214,000 jobs across the Commonwealth. In fact, the unemployment rates for Tioga (7.6 percent), Bradford (6.4 percent), and Susquehanna (8.1 percent) counties — three of the most significant areas in terms of Marcellus production — are all lower than the statewide unemployment rate for Pennsylvania. It’s also worth pointing out that the average salary for workers in the industry is roughly 64% higher than the statewide average for Pennsylvania. Even those working in ancillary industries make about 35% more than the Pennsylvania average income.

As for the job creation potential in New York, the state’s Department of Environmental Conservation (DEC) has estimated that as many as 53,000 new jobs could be created from the development of the state’s portion of the Marcellus Shale.

—

Food & Water Watch: Alleges that “fracking fluid migration underground” are among the “environmental and public health risks” of hydraulic fracturing and shale development. (p. 3 )

EID: This is contradicted directly by state regulators from across the country – including the head of the New York DEC – and President Obama’s own EPA Administrator Lisa Jackson has confirmed that the process has not contaminated ground water. The reality is that hydraulic fracturing has been used more than 1.2 million times over the past 60 years, not just for oil and natural gas, but for water wells, geothermal wells, and even by EPA as a clean-up tool at Superfund sites. It should be noted, though, that FWW’s source for this claim is none other than the New York Times series attacking the industry, a series that has been almost universally panned, not only by two notable Democratic governors but also by the Times’ own public editor.

—

Food & Water Watch: “[D]irect jobs are not created when royalty and lease payments are made.” (p. 5 ) FWW uses this baseless claim to conclude that “$2.02 billion of the $2.95 billion in in-state spending consisted of landowner payments and taxes. This leaves $930 million in in-state spending toward direct job creation.” (p. 6 )

EID: The billions of dollars injected into the economy each year in the form of royalty and lease payments associated with oil and natural gas development don’t play a role in creating jobs? That would probably come as news to the thousands of folks, many in unrelated industries, whose jobs can be directly tied back to royalty payments in Texas, as detailed in this study commissioned by the Fort Worth Chamber of Commerce last summer. But beyond that, there’s also an interesting sleight of hand here. FWW asserts that royalties and lease payments don’t create jobs, but then claims that “landowner payments and taxes” don’t create jobs either. But taxes are not lease payments; taxes are collected by the government. Without notice, FWW seamlessly broadens its interpretation of what constitutes royalties and lease payments to include taxes, then uses that dubious definition to undermine the economic impacts of shale development. But doesn’t tax collection require staff (i.e. jobs) too, ranging from tax attorneys and paralegals to auditors and other administrative staff? Is FWW suggesting these jobs don’t exist either?

—

Food & Water Watch: “Food & Water Watch conservatively assumed that at least half of the gas industry jobs would be filled by out-of-state workers if New York is opened up to shale gas development.” (p. 8 )

EID: FWW believes that if a company is not headquartered in a particular state, then most of the workers will also come from out of state. This is completely unsupported by the data. Of the thousands of new hires made by the industry in neighboring Pennsylvania, an overwhelming majority of the workers (71%) are from Pennsylvania. The industry has also spent more than $411 million over just the past three years to fund the repaving and improvement of local roads, as well as to enhance the state’s transportation infrastructure. This activity also requires workers, which means jobs in Pennsylvania for Pennsylvanians. Replicating this success in New York would bring similar benefits to the Empire State, particularly to areas that have experienced economic malaise for decades.

—

Food & Water Watch: “[A]n employment multiplier of 1.92 better estimates the potential total jobs across industries created by shale gas development in New York in 2015.” In the very next paragraph, FWW says the number of jobs created with that multiplier is “less than 1 percent of projected private sector employment in 2018 in the state of New York, which is projected to be 8,6975,730.” (p. 2)

EID: It’s ironic that FWW would criticize others for not understanding how to use a multiplier and then turn around and, in the very next paragraph, misuse a multiplier. As FWW says, the 1.92 multiplier is an assessment of the overall economic impact in 2015, yet the group suggests that the multiplier can easily be applied to 2018 as well, regardless of constantly changing economic realities. FWW takes an abstract employment figure (materialized without the use of “dubious” economic models), multiplies it by a number that they do not understand, and then divides the result by a broader employment figure for a completely different year.

—

Food & Water Watch: “[T]he oil and gas extraction industry has one of the largest employment multipliers of any industry”. (p. 9)

EID: We agree, and this is why there are thousands upon thousands of people across the country who have jobs, thanks to the responsible development of shale oil and gas resources. Look no further than North Dakota – which boasts the lowest unemployment rate in the nation (3.5%) and a budget surplus that could allow the state to eliminate its property tax – to see just how powerful an economic engine the oil and gas industry can be.

—

Food & Water Watch: “[J]ob creation in health and human services, presumably due to shale gas industry accidents, is included.” (p. 4)

EID: For a subtle jab, this gets a “nice try.” But as it turns out, everyone needs dentists, physicians and optometrists, even those who are in peak physical condition. Moreover, FWW may want to examine the available data. According to the Bureau of Labor Statistics, the incidence rate for injuries and illnesses among all industries is 3.8 per 100 workers. The oil and gas industry is less than a third of that, with a rate of only 1.2 per 100 workers.

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Oil and Gas are a ‘Major Engine’ for Growth in Louisiana

New study finds Louisiana leads the country in crude oil production, generating outsized economic benefits for the state.

We’ve pointed out many times before how responsible oil and gas production is a significant source of new job creation and new public revenues. Folks in Louisiana — a major oil and gas producing state — recognize this as well as anyone, but a new study detailing the benefits of energy development may even surprise people down in the bayou.

That study, authored by LSU Professor Emeritus Loren Scott and released by the Louisiana Mid-Continent Oil and Gas Association (LMOGA), reached the following impressive conclusions about oil and gas in Louisiana:

One additional important finding of the study is the multiplier of oil and gas employment; that is, the number of spinoff jobs created from each job created in the industry. In Louisiana, that multiplier is five. Put differently, each job created in the industry creates on average four additional jobs in support industries, including not only in oil and gas service firms but also in local restaurants, hotels, and other small businesses.

With well-established production both offshore in the Gulf of Mexico and in the northern part of the state in the Haynesville Shale (which earlier this year overtook the Barnett in Texas as the nation’s largest producing shale gas field), it’s clear that Louisiana has been blessed with massive oil and gas deposits. And with new shale plays constantly coming into focus — including the Tuscaloosa Marine Shale, which could hold seven billion barrels of oil — Louisiana is a state that appears well positioned for sustained future economic growth, thanks in large part to the responsible development of oil and gas resources.

**UPDATE III** NYT’s “Dewey-Defeats-Truman” Moment on Shale?

Posts Tagged ‘Haynesville’

Another “Peak” Performance

Friday, December 30th, 2011

It’d be easy to analogize the small group of analysts who continue to believe the world is imminently running out of oil and natural gas to the stranded Imperial Japanese soldiers who, upon being discovered in the jungles of Guam and Indonesia in the 1970s, refused to accept that the second World War had decades earlier come to a close.

Easy – but not entirely accurate. One of the key differences between these two groups is that the media actually take seriously the serial skepticism of the first, often parroting with QED-certainty the notion that America has only “three percent” of the world’s oil, for example, notwithstanding a growing and increasingly definitive body of evidence indicative of an American resource base of enormous, potentially even singular proportions.

But if you take a closer look at the arguments that undergird the peak-oil philosophy, you find an interesting and under-reported aspect that lies at its core: In most cases, these folks don’t actually argue that the world is physically short on oil and natural gas. They argue that these resources, even if they do in fact exist, can’t be produced economically over the long-term. Of course, whether the energy isn’t there or is — and just can’t be developed under a reasonable cost scenario – the skeptics often arrive at the same conclusions: we’re running out of the stuff, they say — at least the “easy” stuff — and thus need to restructure our entire economy in anticipation of that crash.

Thanks to the emergence of “tight” oil and natural gas reserves as an important source of U.S. fossil energy, though, the peak energy community finds itself today back on the defensive side of the ball. Plainly put, these guys simply weren’t prepared (in truth, were any of us?) for what would become possible virtually overnight, with plays such as the Haynesville going from a daily yield of precisely zero BCF in 2007 to more than 5.5 BCF a day today. In 2005, Pennsylvania produced less than 0.5 BCF a day despite drilling 3,600 new wells. In 2011, only 2,800 new wells were drilled – and only about half of them were actually brought online. And despite all that, the state produced more than 3.0 BCF a day of natural gas in 2011. Six times the volume of 2005, with 23 percent fewer wells drilled – all thanks to the Marcellus.

Of course, you won’t find any of this data in the article that appeared this week on Slate.com. The thesis of that piece, written by peak-oil exponent Chris Nelder – co-author of an entire book on all the great investment opportunities that will exist someday soon in a world without oil — is that projections of abundance associated with the development of natural gas from shale are overblown. In support of that position, he borrows heavily from the playbook of peak-oil analyst Arthur Berman, someone well known within the industry prior to this year, but whose status got a major boost this summer after The New York Times ran his research (and his quotes) on its front-page.

If you’ve never seen Mr. Berman present on this subject before, you don’t know what you’re missing. We had the privilege to sit right alongside him in a forum on shale organized last April by Cornell’s law school – and as this video will confirm (start at hour three), he’s very good at what he does. After his piece hit in the Times, we also had a chance to chat with him on the phone. He’s a good guy, and a smart guy. We think he’s wrong about shale. But the good news is: we won’t have to wait but two or three years to figure out who’s right.

As far as Berman’s argument goes, it tends to look a little like this: Data collected from the Barnett over the past 15 years suggests that not all shale wells are created equal; that some produce well-below their expected ultimate recovery (EUR) rates; and that optimistic projections about shale’s future contributions to U.S. energy supply will never be realized, in part because of the clash between low natural gas prices and high drilling and completion costs, and in part because the wells themselves, he argues, tend to peter-out after the first few years of production. Paradoxically, Mr. Berman appears to argue both that new shale wells won’t be productive, and that natural gas prices will remain at their historic lows. How both can be true, we’re not entirely certain of.

Unfortunately for the peak-oil crowd, these arguments tend to unravel pretty quickly when the scope of inquiry is broadened out to account for the performance of other shale plays (which isn’t to pay short shrift to the Barnett, which, at 5.0 BCF a day, is currently averaging more natural gas per month than at any point in its history). Notable in his Slate.com article, Nelder flatly ignores the volumes currently being produced in the Haynesville and Marcellus regions – suggesting that these plays aren’t sufficiently “mature,” and thus shouldn’t be included in his analysis.

But Art Berman hasn’t ignored the Haynesville. And to his credit, he’s been good enough to admit that his initial assessments of the play weren’t quite right, sort of. In April 2009, Berman wrote that it was “difficult to imagine that the Haynesville Shale can become commercial.” Only two months later, in June, Berman had changed his tune, saying that “I now think that the Haynesville Shale reserve estimates that I presented previously were too low.” Still, in a 2010 article, Berman suggested the Haynesville numbers were “disappointing.” In March 2011, the Haynesville became the top-producing onshore natural gas field in the United States, and now stands among the top five producing fields in the entire world. What a disappointment.

Despite holding firm to a less-than-sanguine view on the potential abundance of natural gas from shale, Nedler writes in his piece this week that “I am not anti-gas; neither is Berman.” And on that, we take a man at his word. Indeed, Berman wrote an entire post this summer laying out the reasons he supports the continued deployment of hydraulic fracturing.

But hey, it certainly didn’t escape our notice that this year’s annual conference of ASPO-USA (the trade association for peak-oil enthusiasts) in November hosted a panel discussion — moderated by Berman himself — featuring a who’s who line-up of anti-shale activists, including NRDC’s Amy Mall, Rob Jackson from Duke, and Tony Ingraffea and Bob Howarth from Cornell. ASPO member Roger Bezdek also presented at that conference; we had the pleasure of debating him in Miami back in Dec. 2010 (note: December in Miami > December in Washington). Peak oil guys like to say they’re not “anti-gas” – but Bezdek’s presentation, found on page 52 of this document, certainly seems to suggest otherwise, wouldn’t you say?!

Here’s the thing:  There’s nothing wrong with being a contrarian. Nothing wrong, or nefarious, or illegitimate, with offering up an alternative view on what the history might hold for shale. But there’s a big difference between forecasting that something won’t happen and actively working to ensure it doesn’t.

For those who continue to advance the view that natural gas from shale won’t pan-out as planned, professional reputations are at stake. To “win” this particular argument, peak energy proponents need the geology to turn out bad (that is, for oil and natural gas not to exist), or for the oil and natural gas that does exist to remain right where it is in the ground.

If these folks were confident of the first outcome, they wouldn’t need to involve themselves in the second. But they’re not. Which may be why you’re starting to see folks like Art Berman, a climate change skeptic, appear alongside environmentalist activists committed to stopping the development of shale wherever it’s being considered. At first glance, it would appear an unlikely association. But though the philosophies may differ, the end-goal of both groups is the same. To environmentalists, abundant natural gas from shale is a threat to renewables. And for the peakers, it’s a threat to the credibility of their prognostications. It’s really as simple as that.

So: Will the experts’ projections on shale end up translating into the type of real-world abundance that could help our country create thousands of family-supporting jobs, generate billions in taxpayer revenue, and deliver significant annual cost-savings to consumers? We hope it does, but we don’t know. Some in the peak energy community, it can be assumed, hope it doesn’t. But they don’t know either. If the point of the Slate article is to confirm this uncertainty, mission accomplished. But weren’t we all aware of that before the piece even ran?

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When It Comes to Job Creation, The Facts Speak for Themselves

Wednesday, November 16th, 2011

Organization committed to stopping hydraulic fracturing suggests real jobs created by real economic activity do not exist.

It’s one thing for groups opposed to the development of American energy resources from shale to suggest that the massive economic stimulus currently being made possible as a result of these activities is overstated – notwithstanding the fact that their own jobs as professional activists depend on these activities continuing.  But it’s a completely different thing to suggest that these jobs simply do not exist. Given all we continue to see in communities across the country where responsible shale development is taking place, it’s a statement that would make even Jean-Paul Sartre blush.

Unfortunately, that’s exactly what Food & Water Watch — which is a non-profit organization that accepts tax-deductible donations — has suggested with its latest report, which takes aim in particular at a recent study projecting massive economic growth for the state of New York if shale development is allowed to move forward. The broader implication, though, is that all economic models are all fundamentally flawed, so any projection of economic gain from energy development activity is, according to FWW, “dubious.”

Before we get to the many problems in FWW’s report, we thought it would be important to point out from the get-go the irony of Food & Water Watch accusing others of inflating data. This is the same organization, as you might remember, that inflated its own participation rates for an anti-hydraulic fracturing call-to-action, apparently in an effort to make its fundraising emails more appealing.

As to the report, our job here at EID is to read through the document so you don’t have to. What follows is a sampling of the questionable claims made by FWW, accompanied by a healthy dose of reality.

—

Food & Water Watch: “Local, state and federal policymakers should look to actual employment data, not dubious economic forecasts.” (p. 2 )

EID: As it turns out, the oil and gas industry – particularly those companies active in shale – has a very strong record when it comes to creating jobs, and an equally strong standing with respect to “actual employment data.” For example, a Financial Times article that was published the same day FWW released its analysis has the headline: “Oil shale boom boosts US jobs market.” Perhaps that was published too late to make it into the qualifying footnotes of FWW’s report.

But that’s far from the whole story. A study from IHS Global Insight found that in 2010, America’s independent oil and gas producers supported nearly 400,000 direct jobs nationwide, all while generating around $263 billion in gross economic output.

At the state level, the jobs numbers are also significant. In Louisiana, the oil and gas industry supports more than 310,000 jobs in the state, driven not only by offshore production by also the Haynesville Shale, the nation’s largest producing shale gas field. Production in the Barnett Shale in north Texas has created more than 119,000 jobs throughout the state. According to the Pennsylvania Department of Labor & Industry, the Marcellus Shale supports 214,000 jobs across the Commonwealth. In fact, the unemployment rates for Tioga (7.6 percent), Bradford (6.4 percent), and Susquehanna (8.1 percent) counties — three of the most significant areas in terms of Marcellus production — are all lower than the statewide unemployment rate for Pennsylvania. It’s also worth pointing out that the average salary for workers in the industry is roughly 64% higher than the statewide average for Pennsylvania. Even those working in ancillary industries make about 35% more than the Pennsylvania average income.

As for the job creation potential in New York, the state’s Department of Environmental Conservation (DEC) has estimated that as many as 53,000 new jobs could be created from the development of the state’s portion of the Marcellus Shale.

—

Food & Water Watch: Alleges that “fracking fluid migration underground” are among the “environmental and public health risks” of hydraulic fracturing and shale development. (p. 3 )

EID: This is contradicted directly by state regulators from across the country – including the head of the New York DEC – and President Obama’s own EPA Administrator Lisa Jackson has confirmed that the process has not contaminated ground water. The reality is that hydraulic fracturing has been used more than 1.2 million times over the past 60 years, not just for oil and natural gas, but for water wells, geothermal wells, and even by EPA as a clean-up tool at Superfund sites. It should be noted, though, that FWW’s source for this claim is none other than the New York Times series attacking the industry, a series that has been almost universally panned, not only by two notable Democratic governors but also by the Times’ own public editor.

—

Food & Water Watch: “[D]irect jobs are not created when royalty and lease payments are made.” (p. 5 ) FWW uses this baseless claim to conclude that “$2.02 billion of the $2.95 billion in in-state spending consisted of landowner payments and taxes. This leaves $930 million in in-state spending toward direct job creation.” (p. 6 )

EID: The billions of dollars injected into the economy each year in the form of royalty and lease payments associated with oil and natural gas development don’t play a role in creating jobs? That would probably come as news to the thousands of folks, many in unrelated industries, whose jobs can be directly tied back to royalty payments in Texas, as detailed in this study commissioned by the Fort Worth Chamber of Commerce last summer. But beyond that, there’s also an interesting sleight of hand here. FWW asserts that royalties and lease payments don’t create jobs, but then claims that “landowner payments and taxes” don’t create jobs either. But taxes are not lease payments; taxes are collected by the government. Without notice, FWW seamlessly broadens its interpretation of what constitutes royalties and lease payments to include taxes, then uses that dubious definition to undermine the economic impacts of shale development. But doesn’t tax collection require staff (i.e. jobs) too, ranging from tax attorneys and paralegals to auditors and other administrative staff? Is FWW suggesting these jobs don’t exist either?

—

Food & Water Watch: “Food & Water Watch conservatively assumed that at least half of the gas industry jobs would be filled by out-of-state workers if New York is opened up to shale gas development.” (p. 8 )

EID: FWW believes that if a company is not headquartered in a particular state, then most of the workers will also come from out of state. This is completely unsupported by the data. Of the thousands of new hires made by the industry in neighboring Pennsylvania, an overwhelming majority of the workers (71%) are from Pennsylvania. The industry has also spent more than $411 million over just the past three years to fund the repaving and improvement of local roads, as well as to enhance the state’s transportation infrastructure. This activity also requires workers, which means jobs in Pennsylvania for Pennsylvanians. Replicating this success in New York would bring similar benefits to the Empire State, particularly to areas that have experienced economic malaise for decades.

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Food & Water Watch: “[A]n employment multiplier of 1.92 better estimates the potential total jobs across industries created by shale gas development in New York in 2015.” In the very next paragraph, FWW says the number of jobs created with that multiplier is “less than 1 percent of projected private sector employment in 2018 in the state of New York, which is projected to be 8,6975,730.” (p. 2)

EID: It’s ironic that FWW would criticize others for not understanding how to use a multiplier and then turn around and, in the very next paragraph, misuse a multiplier. As FWW says, the 1.92 multiplier is an assessment of the overall economic impact in 2015, yet the group suggests that the multiplier can easily be applied to 2018 as well, regardless of constantly changing economic realities. FWW takes an abstract employment figure (materialized without the use of “dubious” economic models), multiplies it by a number that they do not understand, and then divides the result by a broader employment figure for a completely different year.

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Food & Water Watch: “[T]he oil and gas extraction industry has one of the largest employment multipliers of any industry”. (p. 9)

EID: We agree, and this is why there are thousands upon thousands of people across the country who have jobs, thanks to the responsible development of shale oil and gas resources. Look no further than North Dakota – which boasts the lowest unemployment rate in the nation (3.5%) and a budget surplus that could allow the state to eliminate its property tax – to see just how powerful an economic engine the oil and gas industry can be.

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Food & Water Watch: “[J]ob creation in health and human services, presumably due to shale gas industry accidents, is included.” (p. 4)

EID: For a subtle jab, this gets a “nice try.” But as it turns out, everyone needs dentists, physicians and optometrists, even those who are in peak physical condition. Moreover, FWW may want to examine the available data. According to the Bureau of Labor Statistics, the incidence rate for injuries and illnesses among all industries is 3.8 per 100 workers. The oil and gas industry is less than a third of that, with a rate of only 1.2 per 100 workers.

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Oil and Gas are a ‘Major Engine’ for Growth in Louisiana

Sunday, November 6th, 2011

New study finds Louisiana leads the country in crude oil production, generating outsized economic benefits for the state.

We’ve pointed out many times before how responsible oil and gas production is a significant source of new job creation and new public revenues. Folks in Louisiana — a major oil and gas producing state — recognize this as well as anyone, but a new study detailing the benefits of energy development may even surprise people down in the bayou.

That study, authored by LSU Professor Emeritus Loren Scott and released by the Louisiana Mid-Continent Oil and Gas Association (LMOGA), reached the following impressive conclusions about oil and gas in Louisiana:

One additional important finding of the study is the multiplier of oil and gas employment; that is, the number of spinoff jobs created from each job created in the industry. In Louisiana, that multiplier is five. Put differently, each job created in the industry creates on average four additional jobs in support industries, including not only in oil and gas service firms but also in local restaurants, hotels, and other small businesses.

With well-established production both offshore in the Gulf of Mexico and in the northern part of the state in the Haynesville Shale (which earlier this year overtook the Barnett in Texas as the nation’s largest producing shale gas field), it’s clear that Louisiana has been blessed with massive oil and gas deposits. And with new shale plays constantly coming into focus — including the Tuscaloosa Marine Shale, which could hold seven billion barrels of oil — Louisiana is a state that appears well positioned for sustained future economic growth, thanks in large part to the responsible development of oil and gas resources.

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**UPDATE III** NYT’s “Dewey-Defeats-Truman” Moment on Shale?

Monday, June 27th, 2011

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