An Overview of the Economic and Environmental Impact on Yates County of

Natural Gas Drilling in Marcellus Shale

About the author - Robert E. Davis is an active member of The Committee to Preserve the Finger Lakes and creator and editor of its website.

He retired from P&G in 1993 as Research Manager for New Products Worldwide. He was involved in product safety and environmental issues throughout his career at P&G. He was P&G's Market Research Group Supervisor for Packaged Soaps and Detergents in the late 1960's and 1970's during the controversies over the impact of phosphates and NTA on water quality.

After retiring from P&G, he founded Product Development Systems, Inc. and later became a Vice President and Officer of Market Facts, Inc. He is on the Editorial Board of the Journal of Product Innovation Management. Articles by him have appeared in journals in the United States, Canada, and Europe

This is to provide an objective, factual and balanced summary of the likely impact on Yates County of natural gas drilling in Marcellus shale.

Gas companies have leases on 1342 properties in Yates County. The leases are concentrated in the southeast part of the county.

The size of natural gas well sites tends to shrink over time. For the Marcellus shale formation underlying Yates County, it is reasonable to expect 320-acre or 160-acre sites initially. Eventually some areas in the county may experience drilling on 80-acre or even 40-acre sites. Assuming 3.0 wells will be drilled on each site, about 4000 wells will be drilled in the county over time. Perhaps more will be drilled if the number of leases increases.

Drilling a single well is a very large industrial activity that takes about three weeks for over 400 workers in almost 150 occupations to complete. The total hours worked by these individuals are the equivalent of 11.53 full‐time, direct jobs over the course of a year. (The industry definition of a full-time equivalent is based on working 260 days [or 2,080 hours] a year.)

The large scale of drilling will bring an influx of people into the county based on experience elsewhere. There has been a significant increase in the population of the gas fields of Texas, Wyoming and Arkansas largely because of the demand for workers. The same kind of growth can be expected in Yates County, accompanied by significant economic growth.

The benefits of drilling are mainly economic and can be divided into direct and indirect impacts.

• As more wells are drilled, more jobs will be created. For every 100 wells in production, 15 to 20 full time production jobs will be created. For Yates County, this could translate to hundreds of new jobs in the post-drilling production phase. However, workers imported from outside of the region who have the prerequisite skills will fill many of the management and skilled technical jobs. The remaining jobs left for locals will be mostly unskilled ones.
• Landowners will receive millions of dollars directly in incentives and royalties, much of which will remain in the county.
• Indirect economic impacts occur when the aggregate wages earned by workers increase and stimulate spending for local goods and services. New businesses will be created and existing businesses expand. Construction will boom.

Drilling is inherently destructive - it has terrible environmental consequences.

• The drilling uses a process called "hydraulic fracturing." Because of the chemicals used in the process, water and environmental pollution has happened in other areas. It will happen in Yates County. Unintentional accidents are unavoidable - mishaps have occurred in all geographies where hydraulic fracturing is used to extract gas from shale formations. Spills can seep into the ground and poison the underlying water and eventually the lakes. The result will be undrinkable water - it has happened in other areas and will happen here.
• Large drilling rigs will deface much of the landscape. The scenery of countryside will be degraded.
• Traffic will be heavy due to large trucks carrying materials to well sites. Roads and bridges will be ruined.
• Emission of fumes from equipment will foul the air.
• The disposal of wastewater that contains noxious chemicals and radioactive brine is a serious but yet unsolved problem.

These problems are not imaginary - they have happened in other regions where hydraulic fracturing is used and will happen here. It will forever change the character of life in Yates County. It will cease to be a place of pretty farms and wineries. Its reputation as an idyllic retreat will be a thing of the past - tourism will dwindle. Wineries that depend on sales to visitors will be put out of business. Property values, especially along the lakes will go down. Mortgages on land that is leased to drillers will be difficult to obtain. The influx of oil and gas industry workers will result in housing shortages, overcrowding in schools, and will strain shopping, lodging and eating establishments. The county and towns will be called on to provide more services ranging from roads and bridges to policing to schools. As a result, taxes will increase.

DEC AND LOCAL GOVERNMENT AUTHORITY FOR OIL AND GAS REGULATION

Local governments have only limited jurisdiction. Article 23, Title 3 of the Environmental Conservation Law (ECL) delegates all authority to regulate oil and gas activity to DEC and specifies that local governments retain jurisdiction over local roads and their rights under the Real Property Tax Law.

This law may be challenged in New York courts as being unconstitutional but the outcome of any litigation would be years in the future. Until then, there is little that local governments can do.

The county and its towns need laws to control truck traffic in their jurisdictions because the activities associated with gas wells are transportation intensive. Large numbers of vehicles are needed to transport equipment and other supplies to and from the drilling site. Oil and gas specialists in the Geologic Resources Division of the National Park Service estimate that the "average" gas well requires as many as 1,365 truckloads of equipment to bring a well into production. Many roads will not meet standards necessary for large trucks that will be used to haul equipment, water, and other supplies to and from drill sites. These roads will need to be upgraded through widening and surfacing.

MANAGING THE FUTURE

Local county and town government must always remember the drilling companies are focused on extracting gas and making a profit, not on improving the quality of life in the county. The companies will leave when the gas is depleted - the people and land will remain. In general, coal, gas, and oil companies have an environmental history of leaving ravaged land behind them after they have finished their drilling and mining.