Impacts of Shale Gas Development: Myths and Realities

Transcription

1 Impacts of Shale Gas Development: Myths and Realities Alan J. Krupnick, Senior Fellow and Co-Director, Center for Energy and Climate Economics JRC-PIT-UH Conference Alan Krupnick June 20-21, 2017

2 Economic Myths and Realities I. UOGD will create thousands of jobs and bring local prosperity vs. Most benefits to outsiders and the State: Positive national impacts in US Gas prices and electricity prices, generation shares Pollution Small GDP effect Energy independence Community impacts mixed

3 Change in Real GDP, High Shale Gas Case vs. Low Shale Gas Case Source: Author calculations based on EMF 26 Report Changing the Game?: Emissions Markets and Implications of New Natural Gas Supplies. 3

4 Change in Electricity Price, High Shale Gas Case vs. Low Shale Gas Case 2.0% 0.0% % -4.0% -6.0% -8.0% -10.0% -12.0% LIFT US-REGEN NEMS MRN-NEEM ADAGE CIMS-US ENERGY2020 EPA-IPM -14.0% -16.0% -18.0% -20.0% Source: Author calculations based on EMF 26 Report Changing the Game?: Emissions Markets and Implications of New Natural Gas Supplies.

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6 Employment Multipliers Study Scott & Associates (2009) Employment Multiplier Methodology Focus 76 Input-Output Estimates 2008 Haynesville shale impacts, Louisiana. IHS (2012) 5 Input-Output Predicts US employment from oil and gas, Munasib & Rickman (2014) 3.37 in ND; 1.77 in AR Statistical Estimates impact of shale in North Dakota, Arkansas, and Pennsylvania, Deck et al. (2008) Input-Output Predicts Arkansas shale employment, Considine et al Input-Output Estimates 2010 Marcellus impacts for (2011) Pennsylvania. Considine et al. (2010) 2.02 Input-Output Estimates 2009 Marcellus impacts for Pennsylvania. Brown (2014) 1.7 Statistical Analyzes county-level natural gas boom in 9 central US states, Weinstein et al. (2017) 1.5 Statistical Analyzes county-level income and employment in US, Weber (2014) 1.4 Statistical Analyzes non-metropolitan counties in AR, LA, OK, TX from Weinstein (2014) 1.3 Statistical County-level analysis of shale boom in lower 28 states from Tsvetkova & Partridge (2015) 1.26 Statistical Examines oil and gas specialization in 6 Western states,

7 Community Externalities II. Negative externalities are not systemic and isolated vs. Fracking is horribly damaging to health and the environment and must be stopped Risk-Benefit Matrix, Literature Reviews, original research(*) Health and Safety Health, Seismicity, Truck accidents* Social Property values* Education* Social License to Operate* Environmental Air Water (ground and surface) quantity* and quality* Land* Habitat Fragmentation*

8 Risk-Benefit Matrix: Health Birth Outcomes Cancer Birthweight ~ Studies of mixed quality find mixed effects on term low birthweight. One study finds a positive association, while a high quality study finds Low APGAR ~ no association. Several studies report no association with development, while one Preterm birth ~ higher quality study and another lower quality study find an increase in premature births with UOGD. Small for gestational age ~ Birth Defects Asthma Asthma Other health Two studies report an increase in babies who are small for their gestational age, while another higher quality study reports no association. One flawed study finds evidence of an increase in some birth defects, but no association with one defect. CNS Tumors One study finds evidence of positive association with UOGD. Childhood cancers Ø One lower quality study finds no association with UOGD. Leukemia and lymphoma ~ Hospitalization Migraines ~ Multiple symptoms Studies report evidence for an increase or no association. One risk assessment finds an elevated risk of leukemia and other cancers based on air measurements of benzene, though another study finds air measurements of pollutants to be below a threshold of concern. One study reports increases in asthma hospitalizations, ER visits, and prescriptions for asthma medications. One study finds an increase in hospital rates for some types of inpatient cases, but no associations for most cases Two medium quality studies report no association while one lower quality study reports an increase; all are self-reported symptoms One study finds positive and no associations for different types of self-reported symptoms

9 Low Birth Weight Incidence Near Shale Gas Wells Source: Elaine Hill. Shale Gas Development and Infant Health: Evidence from Pennsylvania. Charles H. Dyson School of Applied Economics and Management, Cornell University, Working Paper

10 Does Oil and Gas Development Raise Accident Rates in PA?

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13 Marcellu s Results in the Bakken and Marcellus: Quantitative Student #s Studentteacher ratio Total Revenue /pupil Education Local State Spendin Capital Spendin /pupil /pupil /pupil g/pupil 3 rd Grade Scores 8 th Grade Scores Math PA OH WV Math Math English Math English English Math Math English English + ND n/a n/a *Arrows imply statistical significance and direction. / signs imply a trend direction but no statistical significance. Heterogeneity in results between the Bakken and Marcellus was also observed in interviews.

14 Spatial and Temporal Patterns of Water Use for Natural Gas Development in the Susquehanna River Basin We collected and matched data on permitted surface water withdrawal limits, actual withdrawals, and USGS stream gage data Analyzing these detailed spatial and temporal data reveals that SRBC policies to regulate withdrawals by natural gas companies have been more binding than what has been suggested by previous literature.

15 Comparison RFF project of focuses General on Chemicals environmental risks in from Produced shale Water gas development and Fracking Fluid Waste * Number at the bottom of the boxplot is the sample size 15

16 RFF project focuses on environmental risks Comparison of Metals in from shale gas development Produced Water and Fracking Fluid Waste 16

17 Comparison RFF project of focuses Organics on environmental risks in from Produced shale Water gas development and Fracking Fluid Waste 17

18 Comparison RFF project of focuses Naturally on Occurring environmental Radioactive risks Materials from shale in Produced gas development Water and Fracking Fluid Waste 18

19 Social License and Engagement Low Level of Engagement High Education/PR Joint Planning/ADR Strategic Engagement Operational Engagement Transactional Transitional Transformational Harder to Obtain Social License to Operate Easier to Obtain

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21 Conclusions Economics: Benefit to the nation and state (during boom) Externalities: There are no smoking guns and a lot of uncertainty But perceptions affect housing markets strongly Definitely some reasons for real concern Best practice clearly not enough need comprehensive regulations and real (and costly) community engagement

22 Thank you For further questions:

23 RCRA Toxicity Determination TCLP Concentrations The regulatory levels for toxicity in RCRA ( ) are indicated with dashed lines. If the concentration of a contaminant is greater than the regulatory level, the solid waste is a hazardous waste. Sample size is indicated in parenthesis above the name of the contaminant.

24 Employment and Wages Estimates Study Feyrer et al. (2017) Weber (2012) Allcott and Keniston (2014) Bartik et al. (2016) DeLeire et al. (2014) Jacobsen (2015) Komarek (2016) Maniloff and Mastromonaco (2014) Paredes et al. (2015) Wrenn et al. (2015) Weinstein (2014) Location Time Period US CO, TX, WY 2007 US US PA US OH, WV, PA 2013 US PA and NY PA Lower States 2011 Treatment for spatial unit Wages/Earnings Employment Counties with $1 million of oil and gas $42,000- $80, jobs production $1 million of oil and gas production within 100 miles $130,000- $257, jobs Counties with $1 million of gas production $91, jobs Counties in the top 20% of production 2.6% 1.5% annually Counties with one standard deviation greater oil 1.79% 2.82% and gas endowments than other counties during a boom that increases national oil and gas employment by 100 log points Top Quartile Fracking Potential Counties 4.4% - 6.9% 3.6% - 5.4% New wells installed in PA counties Minimal effects 2% for average county, over 10% for some Non-Metropolitan Areas with increase of $ % 13.6% million or greater of oil and gas extraction Counties with at least 50 wells Temporary increase in ~7% temporary some sectors increase Top 25% of counties with increased shale well 10% 24% count Counties with shale development Minimal effects 0.16% to 0.4% for the average county Shale development impact for local residents N/A 1.53% Counties that experience 10% increase in oil and gas employment and 20 additional oil and 7.2% initially, returns to original growth rate 3.3% initially, returns to original growth rate

25 Shale Gas and Habitat Infrastructure development for shale gas extraction (well pads, roads, gas and water pipelines) can cause considerable environmental impacts including: Species loss through habitat loss and fragmentation, Water quality from sedimentation Tradeoff between negative externalities (e.g. habitat quality and fragmentation) and infrastructure construction costs is an empirical question Constructing spatial optimization models to estimate tradeoff curve using infrastructure data from Washington County, PA 25

26 Wastewater characteristics from Marcellus shale gas development in PA Researchers: J. Shih, S. Olmstead (UT Austin), J. Chu, L. Muehlenbachs (U. Calgary), J. Saiers (Yale), S. Anisfeld (Yale). Statistically analyzes characteristics of flowback, produced water, and drilling fluid waste sent to wastewater treatment facilities in PA, Data Source: Form 26R, submitted to PADEP by residual waste generators. 432 different analytes were identified in the data, in the following categories: 1. General chemicals 2. Organics 3. Pesticides 4. Metals 5. Radioactive Materials

27 Risk-Benefit Matrix: Key Findings Key Definitions Higher quality studies Medium quality studies Lower quality studies The majority of the studies for this endpoint (greater than half) are of higher quality. Where there is one study of higher quality, it is marked as such. The majority of the studies for this endpoint (greater than half) are of medium quality. Where there is one study of medium quality, it is marked as such. The majority of the studies for this endpoint (greater than half) are of lower quality. Where there is on study of lower quality, it is marked as such. Not reviewed Increase Decrease Heterogeneou Research on this endpoint was not reviewed. Studies show a positive, robust association with that endpoint (an increase in incidence or magnitude). Studies show a negative, robust association with that endpoint (a decrease in incidence or magnitude). Across regions or areas, studies report robust results that differ No association Ø Studies reported results that showed no association. Inconsistent ~ Across studies, differing (contradictory) results.

28 Schlumberger Stewardship Tool