Beware 'frackophobia'

Pennsylvania could play a key role in the largest gas field ever

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Last year, America imported almost 4.4 billion barrels of oil, much of it from countries that don't particularly like us. The tab totaled $260 billion and accounted for roughly half of our trade deficit.

With the economy recovering and oil prices forecast to exceed $100 a barrel this year, imports will grow further and the cost in 2011 could easily exceed $300 billion. This growing dependence on imported oil is good neither for our economy nor our national security.

We could significantly reduce our oil imports by developing our indigenous energy resources, in particular natural gas that's locked in shale formations. Several weeks ago, the U.S. Department of Energy more than doubled its estimates of recoverable shale gas to 827 trillion cubic feet. These reserves are equivalent to 140 billion barrels of oil, more than the proven oil reserves of Iran.

Twenty years ago, the Barnett Shale in North Texas was unknown. Today it's the largest producing natural gas field in the United States with output exceeding 4 billion cubic feet a day. What's more, the Barnett Shale has added a new dimension to the North Texas economy, supporting thousands of jobs and generating millions in tax revenue for local governments and school districts.

In terms of potential output and economic impact, the Barnett is dwarfed by the Marcellus Shale formation that stretches across large swaths of Pennsylvania, West Virginia and New York. Pennsylvania is already benefiting mightily from shale gas production, and several studies have recently documented the huge economic boost to the state in term of jobs, income and tax revenue. Indeed, one can point to drilling and production in the Marcellus as the main reason Pennsylvania added more jobs last year than any state except Texas. By contrast, New York, with an effective moratorium on shale gas drilling, continued to lose jobs in 2010.

Unfortunately, the anti-drilling crowd in Pennsylvania is raising unfounded concerns about the safety of the hydraulic fracturing process that is used to release the trapped gas. In particular, some environmental groups are claiming that the chemicals used in "fracking" are contaminating local water supplies.

Yes, there have been a few cases where improper disposal of used fracking fluids has polluted surface water. But Pennsylvanians shouldn't succumb to "frackophobia" simply because of these isolated incidents. Careful studies by the Environmental Protection Agency and the Ground Water Protection Council haven't revealed a single case of drinking water contamination from shale gas drilling itself.

The decision by Philadelphia officials to avoid purchases of Marcellus gas and by Pittsburgh officials to ban hydraulic fracturing in the city will be good for us in North Texas as we sell more Barnett gas to the Northeast. But it will be harmful to the nascent drilling industry in the state of Pennsylvania.

Is producing, gathering, processing and delivering natural gas from shale formations completely risk free? Of course not. But these minimal risks must be weighed against the huge economic and national security benefits that can be realized by fully developing our domestic natural gas resources.

Pennsylvania has a unique opportunity to become the administrative center for all drilling operations in the Marcellus Shale, potentially the biggest gas play ever. At the same time, this growing industry can support tens of thousands of well-paid jobs for Pennsylvanians while generating millions of new tax revenue for the state and its local governments.


Bernard L. Weinstein is associate director of the Maguire Energy Institute and an adjunct professor of business economics at Southern Methodist University's Cox School of Business in Dallas ( bweinstein@cox.smu.edu ).


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