A Quick Marcellus Shale Note, With Resources

If you've been hearing a lot about Marcellus Shale lately and are wondering what it is and why there is such a fuss, you are not alone.

Marcellus Shale wasn't in the news much before 2005 because only geologists knew or cared about it. The US Geological Survey noted that there could be significant natural gas deposits under or in Marcellus Shale in some stats, but especially Pennsylvania. A 2003 well found natural gas. Since then there has been more drilling and a lot of talk about land rights, leases and rights of way, environmental aspects, and, of course, tax.

In April I sat in on a conference call with the Pennsylvania Budget and Policy Center, to discuss the topic. Unlike over 30 other states, Pennsylvania does not have a "severance tax" to require drilling companies to pay for the right to extract (or sever) natural gas. Gov. Rendell has proposed such a severance tax, which is estimated to bring in over $1.8 billion over five years.

One of my concerns is the amount of water needed in the drilling process and what happens to wastewater afterwards.

Economically, without a severance tax local communities will have to bear the costs of public infrastructure needed to support the increased transportation and education systems, especially in an industry with boom and bust cycles.

But you should read more for yourself. Check out:

Geology.com http://geology.com/articles/marcellus-shale.shtml This site provides a lot of background on what Marcellus shale is and how natural gas is extracted, and the economic significance

Marcellus Shale: Severance tax update in Pennsylvania brief outline

Marcellus Shale, a lot of good links and resources, including an faq and fact sheet

PA Budget and Policy Center http://pennbpc.org/severance-tax 40-some page report reviewed the impact of mineral resource production across the country and analyzed state severance tax policies. It also examined the claims about the benefits of the natural gas production and reviewed research around the effect of severance taxes on gas production

The Corporate View http://www.pamarcellus.com/