A.5424A (Sweeney)

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The Business Council of New York State opposes A.5424-A as the legislation is unjustified, and misguided. The legislation contains a moratorium on natural gas extraction in low permeability natural gas pools until May 15, 2015, and requires the development of a skewed health impact study.

The Business Council supports the collection of comprehensive data and facts related to high volume hydraulic fracturing. Most importantly, any review of drilling should focus on risk assessment. Blanket studies about community health impact assessment traditionally have failed to provide solid answers.

The study proposed by this legislation will not provide a fair and balanced review of the positive and negative public health impacts of extraction of natural gas using horizontal drilling and high-volume hydraulic fracturing. As outlined by the legislation, no efforts will be made to review the positive health effects associated with domestic natural gas extraction.

Throughout the Country numerous studies have been either completed or are ongoing regarding shale gas extraction. Some studies are limited in scope; others have collected data with limited scientific value.

The studies can quickly become mired in controversy. That is what happened to one by the University of Colorado's School of Public Health for the 3,200-acre community of Battlement Mesa, Colorado.

County officials who commissioned the study halted it before it was final, saying it was hopelessly bogged down. The study included a provision stating the following:

(B)ecause the domestic natural gas resource is part of the national policy to increase domestic energy production and reduce greenhouse gas emissions, a high level discussion of the health implications of this policy needs to take place. While municipal, county and state governments have begun to respond to citizen concerns, a national discussion of the benefits and risks associated with this policy is due. As outlined in this HIA, in addition to potential local economic benefits of energy development, there are potential local negative impacts to the physical and social health of the community. It will be important to understand public health implications in the context of national priorities for domestic energy production.

The Business Council of New York State agrees that health studies, if they are needed, should occur at a National level. We support studies that will improve our scientific understanding of hydraulic fracturing, but do not support this legislation as it is unwarranted in New York. The rdSGEIS and proposed regulations thoroughly review potential adverse health impacts and put requirements in place to prevent them.

First, a suspension of the permitting process is unnecessary. Hydraulic fracturing has been safely employed in New York for over 60 years under the regulatory oversight of the Department of Environmental Conservation (DEC). The Department's ongoing and long-standing regulation of hydraulic fracturing has proven sufficiently protective of groundwater resources and will continue to be protective under the enhanced permitting requirements proposed in the SGEIS.

Hydraulic fracturing is a proven technology that has allowed natural gas producers to safely and economically recover natural gas from deep shale formations across the country. It is vital to today's shale gas revolution, which is reducing reliance on foreign oil, lowering air emissions generated by dirty coal, and vastly increasing America's supply of clean natural gas.

Thousands of horizontal wells have been drilled across the United States with hydraulic fracturing without contamination. Our neighbor to the south is a testament to the success of this drilling. Economic revitalization is underway across Pennsylvania's northern border.

Secondly, the proposed suspension would delay economic development opportunities, which will drive 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.

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 1,000 wells each year in New York.

Natural gas 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.

The effects of the recent global recession are still resonating in much of the state, and it would be unreasonable to disregard the substantial economic benefits that would come with utilizing this valuable natural resource. We need only to look south into Pennsylvania, where 48,000 private sector jobs in Marcellus Shale-related sectors were created in 2010, to see how development of this resource has positively affected their citizens and businesses.

Much of The Business Council's focus has been on the potential for job creation in New York. If New York fails to allow the development of this resource, the state stands to lose over $11 billion in economic output and thousands of private sector jobs between 2011 and 2020. By conservative estimates, the development of the Marcellus has the potential to create 37,572 new jobs per year in New York, jobs that may pay over $79,184 annually — over double the average private sector wage upstate.

We understand that there are competing numbers of how many jobs would be created in New York, and speculating job creation is not a hard science. To facilitate a greater understanding of employment trends in the Marcellus region the Pennsylvania Center for Workforce Information & Analysis (CWIA) uses the North American Industry Classification System (NAICS) to define the Marcellus related industries. The CWIA has identified a group of six industries identified as "core" and a group of 30 industries as identified as "ancillary."

Employment (2009Q2 to 2012Q2):

• Core industries were up 19,945 (+182.8%).
• Ancillary industries were up 16,037 (+8.2%).
• All industries increased 111,651 (+2.0%).
• 2012Q2 Marcellus Shale related industries total employment was 243,116.

Establishments (2009Q2 to 2012Q2):

• 1,220 establishments were added (399 core, 821 ancillary).
• This represented 60.1% growth in the core industries and 6.7% growth in the ancillary industries; over the same time period, PA experienced 4.5% growth for all industries.
• Marcellus Shale related industries totaled 14,152 establishments in 2012
  Q2.

Wages (2011Q3 through 2012Q2):

• The average wage across all industries was $48,087.
• The average wage in the core industries was $89,116, which was approximately $41,029 greater than the average for all industries.
• The average wage in the ancillary industries was $65,122, which was approximately $17,035 greater than the average for all industries.

New Hires (2009Q3 to 2012Q3):

• Statewide new hires in the core industries were 122.7% higher in 2012Q3 than in 2009Q3.
• Statewide new hires in the ancillary industries were 30.0% higher in 2012Q3 than in 2009Q3.
• Statewide new hires across all industries were 11.3% higher in 2012Q3 than in 2009Q3.
• In 2010Q2, 71% of new hires in the core industries were PA residents; in 2011Q2, this increased to 74%. 2012Q2 research is underway.

Online Job Postings (November 2012):

• There were 2,954 online job postings statewide in core and ancillary industries.

Unemployment

• PA's seasonally adjustment unemployment rate (7.9%) was 0.4% lower than national rate (8.3%) in July ‘12.
• Five of six Workforce Investment Areas (WIA) (accounting for 98% of wells drilled) have unemployment rates below statewide average.
• In these six WIAs, core employment increased by 123% and ancillary employment increased by 9% from 2Q'08 to2Q ‘11.
• Seven of top 10 counties for wells drilled in 2011 had unemployment rates lower than statewide average.
• Bradford County had 4th lowest unemployment rate (6.3%) in state (Centre 5.8%, Montour 6.1%) in June '12.

IHS's October 2012 report, America's New Energy Future: The Unconventional Oil and Gas Revolution and the US Economy, highlighted the significant economic contributions that unconventional oil and gas are making today and will continue to make well into the future. More than $5.1 trillion in capital expenditures made between 2012 and 2035 for unconventional oil and natural gas activity will drive state economies.
The study's findings demonstrate that:

• In 2012, capital expenditures will surpass $87 billion. These expenditures supporting the growth of unconventional oil and gas activity will reach $172.5 billion in 2020 and more than $353 billion in 2035.
• Over 1.7 million jobs are attributable to unconventional oil and gas development today. These employment contributions are expected to rise to 3 million by the end of the decade and to 3.5 million jobs by 2035. On average, direct employment will represent about 20% of all the jobs resulting from unconventional oil and natural gas activity, with the balance contributed by indirect and induced employment.
• In 2012, unconventional oil and natural gas activity will contribute over $63 billion in federal, state and local tax receipts. In 2020, total government revenues will grow to nearly $113 billion. On a cumulative basis, unconventional oil and natural gas activity between 2012 and 2035 will generate more than $2.5 trillion in tax revenues.
• In 2012, unconventional oil and gas will contribute almost $238 billion in value added to the US economy. This contribution to gross domestic product (GDP) will increase more than 75% by 2020 to over $416 billion. By the final year of the forecast period, 2035, this will increase to nearly $475 billion.

The following are highlights of the second study's findings. The findings detail the economic contributions to individual states in terms of jobs, their contributions to gross state product (GSP), also known as value-added, and the tax revenues paid to federal, state and local governments as a result of unconventional oil and gas activity:

• Among the producing states in 2012, the 10 states with the largest employment gains from unconventional oil and natural gas activity contributed a combined total of nearly 1.2 million jobs, a figure that is projected to exceed 2.3 million in 2035. Among the non-producing states, those with the top 10 employment gains contributed a total of over 290,000 jobs in 2012, and that is expected to increase to over 585,000 by 2035.
• Cumulative government revenues from unconventional oil and natural gas activity will exceed $2.5 trillion between 2012 and 2035. Approximately 82% of these revenues are generated from activities in producing states, with the remaining 18% coming from non-producing states. Within producing states, 75% of all tax revenues, or $1.9 trillion, is contributed by the 10 largest revenue-contributing states.
• Over $188 billion was added to the GSP of producing states from unconventional oil and gas activity in 2012, while non-producing states added more than $49 billion. By 2035, unconventional oil and gas will add almost $475 billion dollars to the economies of the lower 48 US states.

These findings demonstrate the extensive national effects of unconventional oil and gas development, which extend to nearly every lower 48 state economy. Many producing and non-producing states alike are organizing their economic development and infrastructure-investment strategies to further capitalize on the economic benefits they derive from the unconventional oil and gas revolution. The economic activity that begins in the upstream sector is also creating new opportunities downstream, such as in the petrochemical industry.

We encourage DEC 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 natural gas development. 

For these reasons The Business Council respectfully recommends against adoption of A.5424-A.