Natural gas is quickly becoming one of the most important contributors to the nation’s energy portfolio. Natural gas is a very versatile energy source and emits lower levels of carbon dioxide and other air pollutants than coal and oil. Natural gas will likely be an integral part of the nation’s energy future.
Natural gas production from shale formations is one of the fastest growing sources of domestic energy production today. One of the hotspots of this activity is the Marcellus shale, an area of 95,000 square miles that encompasses almost the entire state of West Virginia. While Marcellus shale gas development in West Virginia is still in its infancy, it is expected to develop rapidly, with far reaching impacts on the state. The state has already seen rapid growth in the production of natural gas. Severance tax collections from natural gas increased from $19 million in 1999 to $75 million in 2008.
A recent report
by the National Energy Technology Laboratory, part of the Department of Energy, projected the increase in Marcellus shale gas production in West Virginia, as well as its economic impact. According to the report, in 2008 299 gas wells were drilled, which contributed to $371 million in gross economic output, 2,200 jobs and $68 million in taxes. These numbers include the direct spending and jobs created by the industry, as well as the indirect impacts created as the spending circulates through the economy.
Due to projected increases in Marcellus shale gas production, these numbers are expected to skyrocket in the coming years. By 2020 the pace of drilling in expected to grow to 900 wells per year. The increase in drilling activity and accompanying industry expenditures is expected to generate an economic output of $2.9 billion, 17,000 jobs, and $872 million in state and local taxes.
While natural gas production may be a boon economically, it is not without its issues. Currently the state Department of Environmental Protection has only 18 inspectors, which according to DEP Secretary Randy Huffman,
is not enough to keep up with the pace of new wells. Huffman also suggests that the state needs a new regulatory system to properly permit and monitor the growing number of new wells. This comes as concern grows over the environmental problems linked to shale gas development, including air and water contamination, blowouts,
and the environmental impacts of the hydraulic fracturing process, in which millions of gallons of water, sand, and chemicals are pumped into the ground to break up the shale and release the gas.
Its clear that natural gas production is poised to play a significant role in West Virginia’s economy for many years to come, with many positive benefits. Less clear are the risks posed by further development to the environment and local communities. Therefore, it is very important that the natural gas industry, government agencies, environmental groups, and local communities work together to improve communication about, and develop regulations and practices that reduce, the environmental risks and impacts associated with shale gas development.