Henrietta Post
  • Online Only: New York State's energy bounty

  • Ending the fracking moratorium in New York — where the unemployment rate is around 8 percent — would spur $11.4 billion in economic output for the state.

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  • When people think of energy-producing states, New York doesn't typically come to mind. That distinction belongs more to places like Texas and Alaska. But beneath New York is a reserve of clean-burning natural gas that, accessed safely and efficiently, could turn the Empire state into an energy exporter and create tens of thousands of jobs. 
    A vast black shale formation known as the Marcellus Shale runs from Ohio and Pennsylvania into southern and eastern New York. Trapped inside that shale is a tremendous amount of natural gas, anywhere from 168 trillion to 516 trillion cubic feet. To put this number in perspective, the top estimates would make the Marcellus Shale the second largest gas source in the entire world, behind only the South Pars field in Qatar and Iran.
    In some places, the shale is exposed at ground level; in others, it is more than 7,000 feet deep. The process for recovering gas inside of shale that deep is known as hydrofracturing, or "fracking" for short. In use since 1947 — often inside New York State — fracking involves pumping a mixture of water and sand into the rock under high pressure, breaking up the rock and releasing the gas for collection. There are no blasts or explosions involved in the process.
    Fracking has long been used to recover gas from sections of the Marcellus Shale in Pennsylvania and West Virginia, and the results speak for themselves. In 2009, according to researchers at Natural Resource Economics, using an input-output model developed by the Minnesota IMPLAN Group, the development of these sections yielded an estimated 44,000 new jobs, $389 million in state and local tax revenue, and $1 billion in federal tax revenue for Pennsylvania alone. West Virginia saw 13,000 new jobs and over $220 million in federal, state, and local tax revenue that year thanks to the fracking.
    Unfortunately, a moratorium on fracking in New York State is preventing oil and gas companies from accessing the state's section of the Marcellus Shale. Environmental groups have waged a fear campaign against fracking that has spooked legislators and citizens into maintaining the moratorium at a time when New York desperately needs new jobs and sources of revenue. But a look at the facts shows that the benefits of fracking far outweigh the dangers, which exist mostly in the minds of alarmists and lobbyists.
    Like any drilling process, fracking comes with risks if done improperly. Poor drilling technique can allow the gas released during fracking to escape and trickle down into groundwater supplies. But only one example of the threat has ever actually been documented, and it is more than 25 years old. Not a single incident had been reported before or since, despite over one million hydraulic wells in operation over the past 50 years.
    Page 2 of 2 - In one well-publicized case, the Colorado Oil and Gas Conservation Commission investigated claims of groundwater contamination and concluded it was caused by "naturally occurring methane — and that methane had nothing to do with fracking. Regardless, the Marcellus Shale gas rests far below any aquifers rendering a contamination scenario nearly impossible.
    Meanwhile, ending the fracking moratorium in New York — where the unemployment rate hovers around 8 percent — would spur $11.4 billion in economic output for the state, according to a recent study by the Manhattan Institute's Center for Energy Policy and the Environment.
    New York's Department of Environmental Conservation also published an economic assesment of the project, and  found that overall, the state would see significant profits from lease payments and increased economic activity.  From personal income tax receipts alone, according to the Department's report, the tax revenue that state and local governments stand to realize is between $31 and $185million. When corporate and general sales taxes are included this number is even higher.
    The Department of Environmental Conservation also concluded that at the project's peak, operations would be expected to generate between 13,491and 80,510 new jobs, both directly and indirectly, in a region that has lost 48,000 jobs in the past decade. No wonder the department found that fracking will have "a significant positive impact on the economy of New York State."
    In comparison, the economic damage resulting from the environmental impact of a typical shale gas well comes to $14,000.
    Indeed, given its safety and benefits, fracking is precisely the sort of energy production that environmentalists should be embracing. In the past five years, hydraulic wells have helped increase natural gas reserves in the U.S. by 30 percent, and they have increased onshore natural gas production by more than 20 percent. By increasing the amount of gas we can secure safely on land, fracking decreases our dependence on off-shore drilling, a practice the Obama Administration has been loath to allow since the BP spill of 2010. Coal must also compete against a cleaner rival in electric generation.
    If we allow the fracking currently under consideration to take place in New York — the same process now in use in other Marcellus Shale states — the entire operation could generate over $6 billion in tax revenue and nearly $25 billion in added value to the economy by 2020. Extending the moratorium only maintains a depressed economy and a bleak outlook for the unemployed.
    There is more than gas resting 7,000 feet below New York State; there are jobs and a better economic future for thousands and many more indirectly. It is time to let the Empire State tap those resources. 
    Robert L. Bradley Jr. is the CEO and founder of the Institute for Energy Research. His most recent book is "Edison to Enron: Energy Markets and Political Strategies" (Scrivener Publishing and John Wiley & Sons).
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