NCPA - National Center for Policy Analysis

Economic Benefits Outweigh Environmental Impacts of Shale Drilling

June 23, 2011

The development of unconventional natural gas and oil resources is well under way throughout the United States and the world on account of the arrival of two technologies: directional drilling and hydraulic fracturing.  The application of these technologies represents a paradigm shift in oil and gas development, sweeping out the model of intensive initial development followed by a long period of production, and ushering in natural gas manufacturing, which requires unremitting drilling activity to add new wells that can replace rapidly depleting older ones, says the Manhattan Institute.

  • The environmental impacts of unconventional oil and natural gas development have received a great deal of public scrutiny.
  • In developing the Marcellus shale in Pennsylvania, the industry has taken steps to avoid these events, and when a violation has taken place, it has remediated the pollution and made efforts to compensate those harmed by the incident.
  • The value of these environmental impacts is far smaller than the economic benefits of the activities that caused them.
  • For example, a typical Marcellus shale well generates about $4 million in economic benefits while generating only $14,000 in economic damages from environmental impacts.

New York State currently has in place a moratorium on shale gas development.  Analysis of Marcellus development in Pennsylvania suggests that environmentally safe development is possible in New York.  The net economic and environmental benefits from shale gas development is considerable, suggesting that the current moratorium is far costlier than its proponents, or even its opponents, realize, says the Manhattan Institute.

Source: Timothy J. Considine, Robert W. Watson and Nicholas B. Considine, "The Economic Opportunities of Shale Energy Development," Manhattan Institute, June 2011.

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