Study highlights Pennsylvania’s shale gas development boom

The rapid shale gas development in Pennsylvania’s Marcellus shale formation has presented both challenges and opportunities to local governments and communities. In particular, concerns that local governments might be entering a “boom and bust” cycle—similar to previous resource extraction experiences in Pennsylvania’s history—are on the rise.

A recent study, Getting the Boom Without the Bust: Guiding Southwestern Pennsylvania Through Shale Gas Development, released by the Environmental Law Institute (ELI) and Washington & Jefferson College’s Center for Energy Policy & Management confirms that the gas boom in Pennsylvania is still under way, and explores best practices that communities can implement to better protect themselves against a bust experience.

Boom cycle

Heightened industrial activity at the beginning of a resource extraction development usually induces an influx of workers into hosting communities, placing strains on the local government’s ability to provide public services, including healthcare and public education, and on the existing housing and public infrastructure, the study explains. When the resource development ends, which can occur abruptly, it often leaves behind a community struggling to cope with a variety of residual conditions that compromise its ability to offer a sustainable way of life to its residents.

The study’s researchers focused on southwestern Pennsylvania, center of the “wet gas” portion of the formation, and concluded that there are opportunities to plan ahead to preserve community and environmental health and to assure longer-lasting economic benefits.

The study looked at how the nearly 7,000 unconventional gas wells drilled in Pennsylvania since 2004 affect housing values, municipal tax bases, roads, job creation and retention, community health, and the environment, according to Diana Stares, director of the W&J Center.

“Communities seeking to avoid adverse effects can employ a number of best practices based on monitoring the pace and impacts of development on their local residents, water supplies, and roads,” said ELI’s James McElfish, study co-leader.

These practices include use of carefully crafted land use ordinances to address compatible and incompatible land uses, consulting with gas development companies in advance of their drilling activities to preserve community features, and planning for and funding community infrastructure needs with impact fees.

State impact fees

A key focus of the study was the distribution and expenditure of state impact fees assessed on the gas industry under Act 13, Pennsylvania’s law governing natural gas development. While county and local governments have begun to expect these fees, the amounts available are not likely to increase greatly, because of the declining formula set forth in the law.

“More than a thousand new unconventional wells would have to be drilled each year just to maintain the levels of funding currently distributed to local governments,” McElfish warned.

The study also emphasized the importance of reinvestment and wise expenditure of the impact fees received by southwestern Pennsylvania’s municipalities, especially for durable infrastructure that can support economic development.