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Shale gas in Maryland impacts two counties enormously: study

https://www.chemnet.com   Mar 02,2012 Platts
An industry-funded study of the economic impact of drilling for shale gas in Maryland's westernmost two counties found that production would create 1,814 permanent jobs by 2025 and contribute $441 million in tax revenues to the state and Garrett and Allegany counties.

"The fiscal impact will be enormous, particularly at the county level," Sage Policy Group CEO Anirban Basu said in a conference call Thursday.

Garrett and Allegany counties collect 5.5% severance taxes on gas production. Basu estimated that the state of Maryland would enact a 2% severance tax.

Allegany and Garrett counties are estimated to contain about 1% of the total recoverable gas in the Marcellus Shale. Drilling in Maryland is on hiatus while the state studies environmental impacts and creates a regulatory structure to govern hydraulic fracturing. The state currently has no oil and gas law.

Basu emphasized that most of the jobs created by gas drilling would be blue collar. The study did not examine whether drilling would create any service industries inside the state, assuming services would come from neighboring West Virginia and Pennsylvania, where shale drilling has occurred for the past five years.

According to the Baltimore-based Sage Group's study, Garrett County would collect $5.4 million in revenue/year over 30 years starting in 2016, about 7% of the county's 2011 tax revenues. Allegany County could collect $2.2 million/year over the same time period, about 2% of its 2011 tax receipts.

The study found that gas production in Maryland would generate $300 million/year in economic activity by 2025 assuming current natural gas prices, about 0.1% of Maryland's 2011 state gross domestic product of $13.5 billion, with almost all of the activity occurring in the two western counties.

Basu and Drew Cobbs of the Maryland Petroleum Council, an American petroleum Institute state affiliate, said the study was intended to give Maryland policymakers some financial numbers to consider as they draft the state's regulations for shale gas extraction.

It is possible for Maryland to price itself out of the industry, Basu said, particularly with gas prices at a decade's low.

"It may be with permissions from Maryland industry will not drill," Basu said.



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