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Testimony to NYSDEC on SGEIS for potential development of natural gas in the Marcellus Shale

Kenneth Adams
Nov. 10, 2009

Good evening, my name is Kenneth Adams. I am president and CEO of the Business Council of New York State, Inc. I appreciate the opportunity to express The Business Council’s views in support of the development of natural gas in the Marcellus shale formation in the Southern Tier.

From the outset, let me state that the Business Council is still reviewing SGEIS and will be submitting a formal statement by the December 31 deadline.

Marcellus shale natural gas development will create jobs and economic growth for many financially strapped communities and provide extraordinary end use savings for customers who burn clean, abundant and domestically produced natural gas.

There have been some questions raised about the environmental risks and challenges in employing hydraulic fracturing to drill horizontal wells. Namely that subsurface groundwater will be contaminated. We will address this issue in more detail in our formal comments.

For tonight let me just state that thousands of horizontal wells have been successfully drilled across the US without contamination. Pennsylvania, our neighbor to the south is a testament to the success of this drilling.

Economic revitalization is underway across Pennsylvania’s northern border. Although Pennsylvania producers have little more than a year of Pennsylvania Marcellus production under their belt, a Pennsylvania State University study revealed that more than $240 million of state and local tax revenues have already been generated, and estimate that by year end, that number could rise to as high as $400 million. They estimate total economic output to exceed $3.8 billion by the end of 2009 and more than 48,000 total jobs created by this industry. By the year 2020, the Penn State analysis suggests some 179,000 direct and indirect jobs will have been created, more than $880 million in local and state tax revenues generated and more than $13.5 billion in total economic output for Pennsylvania.

New York needs this same type of economic development. But, that is not the only reason why the Marcellus Shale important for New York.

First, Marcellus shale has the potential to meet all or a substantial part of New York’s natural gas demand. Currently, New York consumers pay upwards of $2/MCF for transportation and storage costs. Most of the state’s supply comes from the Gulf of Mexico, Canada and the Midwest. There are significant charges to get that natural gas to market. If we can avoid those long-haul charges, we can save consumers millions.

During the peak winter months, natural gas on the open market in New York City has reached costs exceeding $25/MCF. Having gas right here in New York is a huge advantage for cheaper supplies of energy that can fuel our homes, our businesses, our manufacturing processes, our electric generation facilities and our automobile fleets—especially trucks and urban bus fleets.

Natural gas is the cleanest of the fossil fuels and will help the country in meeting the air reduction for carbon, CO2, sulfur dioxide, particulates, NOx and VOCs.

New York has a long history in natural gas production. Some of the first natural gas wells were drilled in the early 1800’s near Fredonia. New York drilling companies drill approximately 1000 wells each year in New York.

Marcellus production will yield extensive new job opportunities, provide increased state and local tax collections, and boost local economies and provide long-term growth particularly to the Southern Tier, an area in desperate need of economic growth.

We encourage the Department of Environmental Conservation to begin permitting these wells and policing New York’s production operations. Only then will New York achieve its long-term energy security goals, its environmental compliance objectives, and economic opportunities that are sure to follow Marcellus development.

We appreciate the opportunity to appear before you and we look forward to developing an energy resource that will yield long-term benefits to the people of New York.