The Marcellus Natural Gas Revolution is More Than Just Money
Susquehanna County resident and geological engineer, Chris Acker, tackles some of the myths surrounding natural gas development and discusses the reality of what it has done for his community.
Twenty-five years ago, I bought a scenic parcel of land in Montrose, Pennsylvania, Susquehanna County. I was working in New York City at the time as an energy economist after receiving a degree in geological engineering. My city friends would ask, “What’s in the country?” And I generally replied, “Cows, rocks and trees!” In fact this triad – dairy farms, quarries, and lumber – sustained the local economy, meager as it was. Later, I became a permanent resident and was able to run my own business from my house.
Then about five years ago, early data suggested that our region’s Marcellus Shale could represent one of the largest natural gas reserves not only in the United States, but in the world. These previously untapped reserves were made economically viable through technological advancements in horizontal drilling and high pressure hydraulic fracturing. Moreover, northeast Pennsylvania, and Susquehanna County in particular, sit atop one of the formation’s “sweet spots.” These choice locations produce extraordinary yields of nearly pure methane, the primary component of natural gas. Many competing firms were moving into the county, and after substantial research, I decided to lease my mineral rights to Cabot Oil & Gas.
Fast forward to today: Marcellus natural gas now supplies ten percent of the nation’s total demand. Just five short years ago, when production was in its infancy, no one would or could make such a delirious prediction. Astonishingly, current forecasts validated by measured production, now indicate that total Marcellus output could represent up to twenty-five percent of national supply by the end of this decade.
Of course, much controversy has also been generated by this revolution in energy supply, for example: accusations of widespread ground water contamination; indifference by greedy gas companies; and, even earthquake generation. It is vital, therefore, that landowners, local citizenry and the general public be fully informed about the issues and facts. Discouragingly, much negative opinion is based on prejudice and ignorance, willful disregard of the facts, and myths often created and certainly perpetrated by print and video media.
I personally continue in my extensive research. A wealth of information is available to all – just an internet click away, or in many cases, a short drive for those wishing to see the industry first hand and speak with landowners holding leases.
Sadly, widespread polarization is evident – often fact-less and impassioned at both extremes. Let me give you a recent example: the Associated Press ran an article on February 26, 2013, entitled Dreams of Gas Riches Fading for NY Landowners. It basically profiled several farmers near bankruptcy with property that had been in their family for generations. Their looming financial collapse could be averted by gas leasing or drilling, but this option is foreclosed due a New York State moratorium, in place for nearly five years. Here are two of the tamer comments found on the AP article’s web page:
“Cuomo should be impeached… he is one big lying snake,” and
“Natural gas is a time bomb waiting to destroy our state… turning New York into a toxic wasteland isn’t fair to anyone else.”
Dozens of comments follow, many similar in vitriolic nature, from both extremes of pro- and anti- gas development.
In a concerted effort to avoid the hysteria and stick to the facts, I’ve been doing rigorous research into all aspects of the natural gas industry for five years now at local, national, and international levels. Energy policy and economics have been my fields of expertise for many years, and it is gratifying to focus on the resources literally under my feet. Even with a modest amount of unbiased study, those against developing natural gas would find that it does not lay waste to the landscape, does not pollute groundwater and most certainly does not mean the end of life as we know it. I could write books on these topics.
For now, I wish to provide some insight at our local level – specifically Susquehanna County and Cabot Oil & Gas. As a resident/lessor and keen observer, I am intimately familiar with the details of our home-grown natural gas revolution. Here’s my take: It’s more than just the money.
- Cabot is in Susquehanna County for the long haul, decades in fact. Their corporate success is integrally tied to their lease holdings here; thus, Cabot has every incentive to drill responsibly and to work effectively with the landowners and the community at large. Most Cabot employees working in Susquehanna County also make their homes in the area. This is their community too, and they want to live in a clean, healthy, safe and attractive environment – just like everybody else.
- Farmers and dairy owners I personally know cherish their land above all else. None wish it or their communities compromised. They understand that gas development is allowing them to preserve their way of life on the land, now and for future generations.
- Responsible leasing can preserve heritage. A case in point: the Dennis farm in Susquehanna County can trace its rich African-American heritage back to 1793. Denise Dennis, an eighth generation direct descendant of the original owners, was earlier against natural gas development. After much study, she concluded that leasing her acreage with Cabot would allow for the farm’s long term rehabilitation and preservation. To that end, a Charitable Land Trust was endowed, and now this unique historical site will be preserved for generations to come.
- Benefits accrue not only to landowners but also to the community at large. For example, will can all look forward to improved healthcare. This year, Endless Mountains Health Systems will complete a new state-of-the-art hospital in Montrose to replace its outdated facility. Construction would not have been possible without the economic boost provided by the area’s natural gas industry in general and Cabot’s multi-million dollar donations in particular. As a personal note, this new hospital gives me great peace of mind. As I get older and inevitably require more medical care, I will not be compelled to seek top-notch care elsewhere.
- Another benefit to the community is the new library being planned with modern facilities and latest technology. A building site is already designated. When completed, the library will provide our local population, young and old, with better access to knowledge along with ample space for classes and other gatherings.
- In a direct benefit to homeowners, businesses, schools and the new hospital, Leatherstocking Gas Company was formed a few years ago with the tag line “Local Gas for Local People.” The company is installing retail pipelines in a number of our municipalities with supplies drawn exclusively from nearby Marcellus production. This will translate into dramatically lower heating bills for our chilly region, in fact, as much as two-thirds lower than petroleum-based fuel oil. Moreover, native Marcellus gas consumed locally and throughout the Northeast is, step-by-step, leading the United States closer to true energy independence.
- A little known fact: Susquehanna County’s population has remained essentially unchanged since the US Civil War and the census of 1860. This is due to historically limited economic opportunity. Now my friends with children are delighted that new, local job potential abounds. No longer will youth be obligated to move away for economic reasons as has long been the case.
The naysayers may neigh that I write this only because I have a lease with Cabot. Entirely false. My country acreage and home is integral to my life and happiness, and no amount of money could convince me to compromise my land or my family’s good health.
I’ve noted just a few of many community positives witnessed over the past several years. As a numbers guy too, I can’t resist these impressive dollar statistics. The recently enacted Drilling Impact Fee generated $204 million for Pennsylvanians in 2012. Estimated royalties paid to Susquehanna County landowners through 2012 total a stunning $300 million. Royalty payments in 2012 averaged about $4,000 for each of the county’s 43,000 residents – man, woman, and child. Moreover, annual royalties are likely to double and may triple in the next ten years as production increases. Furthermore, these bountiful royalties are not transitory as they will continue for decades. This influx of funds into our tight knit region will doubtless flow to many other worthy endeavors in the coming years.
Please allow me to emphasize again: it is much more than just the money. This energy revolution with which we are blessed is actually about preserving our family farms, our local food sources, our communities and our rich two hundred plus year history. It means better health care for all. Most importantly, it means keeping our families together and providing abundant opportunity and prosperity for all.