Penn State drills down to project natural gas royalties

June 23, 2008

Impact of Marcellus Shale payments could have ripple effect on Pennsylvania economy

University Park, Pa. — One of the top questions on the minds of Pennsylvania landowners these days is how much money might they see in royalties from drilling natural gas in the Marcellus Shale. While individual royalties will vary, Penn State's Workforce Education and Development Initiative, a collaboration of the Outreach Workforce Assessment Center and the College of Education Institute for Research in Training and Development, has released its forecast of the potential impact of increased royalty income. According to the report, natural gas royalty income will create a positive impact on Pennsylvania employment, economic output, personal income and population.

"There's no question, Pennsylvania landowners will benefit from royalty income earned," said Rose Baker, program manager for the Workforce Assessment Center. "The ripple effect on the rest of the state economy might be equally impressive."

For every $1 billion in royalty income by Pennsylvania residents each year from 2008 through 2011:

• Nearly 8,000 jobs will be created annually.

• Disposable personal income will hover around $1 billion annually.

• The population will increase by thousands each year through 2011.

Estimates of the shale's value, which primarily runs below Ohio, West Virginia, Pennsylvania and New York, have been put around $1 trillion — give or take a billion.

Statewide, Pennsylvania is expected to see a boon from landowner royalties. The personal income they may generate is expected to translate into more purchases of goods, increasing the output of Pennsylvania industries and improving the income of state workers, which in turn attracts more workers to the state.

"Royalties are likely to be substantially greater than upfront checks," said Tom Murphy, educator with Penn State Cooperative Extension. "Landowners are coming in looking for unbiased information to make sound decisions as they explore these new found opportunities."

In the last few months, statewide public meetings offered by Penn State Cooperative Extension educators on natural gas exploration and leasing have been standing-room-only events. Landowners have been interested in learning whether their properties sit above a treasure of natural gas and how they might be able to sell drilling rights to natural gas companies. Although gas leases have been around for years, the money offered per acre has risen dramatically, especially since a recent study by professors from Penn State and the State University of New York at Fredonia discovered much more gas than was originally thought.

For more information on Penn State's Natural Gas Exploration and Leasing Program and upcoming landowner information sessions, check out online. To get a copy of the Economic and Workforce Brief, go to online.

The Workforce Assessment Center in the Office of Economic and Workforce Development supports the development of the workforce in Pennsylvania through the utilization of Penn State resources to conduct various types of workforce assessments for employees, industry partnerships, not-for-profit organizations and government entities. For information, visit online. The Workforce Assessment Center is part of Penn State Outreach, the largest unified outreach organization in American higher education. Penn State Outreach serves more than 5 million people each year, delivering more than 2,000 programs to people in all 67 Pennsylvania counties, all 50 states and 80 countries worldwide.

(Media Contacts)

Last Updated March 19, 2009