Gas production plateauing in 'Frackalachia,' report warns

A new report argues that Appalachian natural gas recently entered a production plateau and economic growth in the area now depends on other industries.

“As measured by jobs, population, and income, Appalachia’s principal shale gas producing counties have done worse economically than the region and the nation since the dawn of the Appalachian boom,” the report from the Ohio River Valley Institute stated.

The 22 natural gas counties of Pennsylvania-Ohio-West Virginia, which it calls “Frackalachia,” have lost more than 10,000 jobs since natural gas’s boom in 2008 and more than 47,000 residents.

“Any hope that natural gas development can turn this trend around is undermined by the fact that Appalachian gas development either has or will soon plateau,” ORVI Senior Researcher Sean O’Leary wrote.

The report argued that the 22 counties had above-average GDP growth but jobs, income, and population declined.

ORVI was also skeptical of the economic potential of hydrogen hubs in the region, which have been criticized as a risk for taxpayers.

“Private markets may not support it, despite generous federal subsidies,” O’Leary wrote.

Instead, ORVI argued that policy should change “to simply capture for their constituents more of the wealth that they and their property are generating,” such as through severance and property taxes.

They also argued for copying other areas who have used a grant-based approach to build up local resources and improve the quality of life for residents. The report pointed to Centralia, Washington, which has offered funds to improve energy efficiency for businesses and homes, support locals with an economic and community development fund, and invest in solar and wind energy.

Experts from the natural gas industry, however, argued that the report falls short. They say that data from the International Energy Agency shows that the Permian and Appalachian basins still lead natural gas production and fewer rigs obscure that each rig produces more gas thanks to technology improvements.

Though revenues from Pennsylvania’s impact fee are expected to decline after a recent increase of almost 20%, the industry has blamed a production slowdown on its limitations in building new pipelines.

“Our region’s diverse and broad-based energy workforce, and the significant economic, environment, and climate benefits that clean natural gas continues to deliver for consumers, is without question and supported by on-the-ground experiences in the communities we work, as well as independent data ignored in this and previous reports,” Marcellus Shale Coalition President David Callahan said.

The “activist organizations” are “marginalizing and undercutting” the jobs and community benefits created by the natural gas industry, he argued.

“We’d strongly encourage the ‘researcher’ to visit Washington or Lycoming County and talk with the building trades members and small businesses who’ve benefited from reliable, energy-sector work,” Callahan said.