Appalachian Basin

The Economic Power of the Marcellus in NY

The Joint Landowners Coalition (JLC) held an information session in Owego, NY, last evening concerning the state of natural gas development in New York State. Unlike Pennsylvania, New York is currently under a moratorium on horizontal drilling and hydraulically fracturing of wells in the Marcellus Shale. Mike Atchie, from Chesapeake Energy presented “Drilling 101” to the audience. Here is an animated video from that presentation:

John Holko, president of Lenape Energy, offered an economic perspective by calculating the benefits of drilling for all the residents in a typical community; regardless whether or not such residents own land. While everyone may not receive royalties payments directly, everyone benefits  from the lowering of taxes and John demonstrated that very persuasively. New York State’s real property tax structure allows for ad valorem taxes on the value of natural gas, which is not the case in some other states.  This tax provides a source of revenue  that stays in the community to support local schools, fire departments and other services.

Using real data from wells in adjoining Pennsylvania, Holko demonstrated to the audience how a single well in Owego could produce as much as $344,076 in real property taxes. He then further demonstrated the economic  benefits by building on a point Mike Atchie offered earlier, namely that most well pads today accommodate multiple wells drilled in various directions, sometimes as many as 6-12 wells.  Each well pays individual property taxes, turning each well pad into a tax factory for the community and, yet, the only thing that remains on the site when drilling is completed is a small collection of pipes and tanks, surrounded by open space.  What could be better?

Following the presentations, the audience had the chance to ask questions, some of which exchange is reported in this story.

UPDATE:  A recently released by Marist Poll suggests why New Yorkers ought to be interested in what Holko had to say:

A sizeable proportion of New Yorkers, including more than one-third of those under age 30, may soon be sending out change of address notifications, but those new homes will not be in New York State.  According to this NY1/YNN-Marist Poll, 26% of adults in New York State plan to move someplace else in the next five years while 67% say they will stay.  Just 6% are unsure.  Similar proportions of registered voters statewide share this view….

Of residents who expect to leave New York, more than six in ten — 62% — cite economic reasons like jobs, the cost of living, or taxes…

Nearly seven in ten registered voters statewide — 69% — want property taxes to be capped so that they do not rise more than two percent annually…

More than three in four employed adults in New York State — 76% — say it would be either very difficult or difficult to find a similar job about the same distance from their home if they lost their current position.

UPDATE: New video from John Holko explaining why taxes from Natural Gas drilling could bring revenue windfall for towns in NY.


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