PA S HARDWOODS INDUSTRY: CURRENT ISSUES. Keith Craig, Executive Director Hardwoods Development Council Pennsylvania Department of Agriculture

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1 PA S HARDWOODS INDUSTRY: CURRENT ISSUES Keith Craig, Executive Director Hardwoods Development Council Pennsylvania Department of Agriculture

2 Big Issues in PA Marcellus Shale Impacts on Forest Products Industry Invasive Pest Update Emerald Ash Borer Thousand Cankers Black Walnut Disease

3 Marcellus Shale Overview 2nd largest gas field in the world Parts of 6 states in Appalachian region est. 500 trillion+ cubic feet Covers about 60% of PA Down to 9000 ft deep - fracking wells PA to become #2 producer of gas in US Currently 3,900 MShale wells drilled/8,300+ permits issued 700,000 acres state forest under Mshale lease Most economic activity will occur over next 15 years Could create 200,000 jobs in PA by 2020 Utica Shale Deposit is under Marcellus

4 MShale Benefits to FP Industry Revenue from Gas leases Increased Local Demand for Wood Products Industrial timbers; chips/dust; building products New Business Opportunities Land clearing; water transport; other services Potential new source for stumpage Participation in SFI training & other groups

5 Road Issues

6 Road Issues Impacts on FP Industry FP Industry has history of modest road damage costs MShale development causing proliferation of year round road postings (PennDOT has posted 3,000+ mi in past 2 yrs) Bond security of $12,500/mi. paved road Damages distributed by proportion of trips MShale traffic results in expensive repairs, resulting in significant exposure to loggers/mills for their share Traditional best practices ineffective at mitigating costs Inconsistency in treatment of FP industry across the state Announced increase in road inspection costs Direct threat to future of the FP industry in MShale region!

7 Labor Issues 72,000 new MShale hires since 2009 Employment opportunities - $50k+, plus benefits Demand Pressures on FP employees loggers, truck drivers, mechanics, technical Housing scarcity/costs impacts recruitment FP industry facing local scarcity/price inflation of materials and services Unemployment Rate (July 2011) US 9.1% PA 7.8% Mshale Counties: Bradford 6.2% Greene 7.2% Tioga 7.5% Washington 7.5% Susquehanna 7.7% Fayette 9.4%

8 Other MShale Impacts Timber Supply Private lands no hard data on impacts Public lands still accessible Pressure on DCNR staff/budget Impact on FSC certification? Stumpage from pad & ROW clearing Future impacts of pipelines Add l Regulatory Impacts Not much yet on state level Expanded local zoning Impact on local Chesapeake Bay TMDL s Forest Ecology Issues Fragmentation Invasives plants/aquatics Call for future forest acquisitions

9 PA Policy Debate Governor s Marcellus Shale Advisory Committee 96 policy area recommendations Severance Tax/Impact Fees (currently none) How much/when? Who gets this revenue? local govt., State, NGOs? Note: PA also has no timber severance tax Address the road issue Additional regulation/enforcement of drilling Development of Gas-related Economy NG fleet vehicles, mfg, etc.

10 MShale Information Sources Penn State Cooperative Extension: Governor s Marcellus Shale Commission PA DEP PA DCNR Marcellus Coalition

11 Emerald Ash Borer in PA Discovered in PA in 2007 PA dropped intra-state quarantine in 2011 USDA intrastate quarantine continues Regulated items ash logs, green lumber/wood products; all HW chips/mulch; all HW firewood Compliance agreements and mitigation options available Minimal disruption to FP market chain

12 Thousand Cankers Black Walnut A disease complex from the combined activity of the walnut twig beetle (Pityophthorus juglandis) and canker producing fungus Discovered in Bucks Co., PA in 2011 PA quarantine of Bucks Co.; exterior quarantine of walnut imports from TCD states Regulated items walnut logs, green lumber/wood products; all HW chips/mulch; all HW firewood Compliance agreements for barkfree KD lumber Currently no compliance agreements mitigation for chips, mulch Greater risk of disruption to FP market chain

13 Thank You! Pennsylvania Hardwoods Development Council (717)