The AP Calculates 2011 Shale Gas Revenue for PA & WV

The Associated Press (AP) did an analysis of how much natural gas was produced in Pennsylvania and West Virginia during 2011 and have run some basic calculations based on an assumed average price (last year) of $3.50 per thousand BTUs (or mBtus). The results of those calculations should put to bed any claims that shale gas drilling does not have a profound economic impact that touches every resident in a shale gas producing state.

According to the AP analysis:

Marcellus shale gas wells in Pennsylvania generated about $3.5 billion in gross revenues for drillers in 2011, along with about $1.2 billion in West Virginia.*

But wait! There’s more. In addition to the $3.5 billion in revenue for PA and $1.2 billion for WV are the investments made by the drilling companies:

Patrick Creighton, a spokesman for the Marcellus Shale Coalition, an industry group, estimated that it costs the industry about $5 million to bring a well into production. With about 2,200 active wells in the state, that comes to $11 billion in additional investments, mostly over the last four years. The industry is also building or planning billions of dollars of new pipeline construction.

Creighton said the minimum royalty in Pennsylvania is 12.5 percent of well revenues, meaning property owners here were paid more than $400 million last year.

Gheit said the real value of shale gas is that the lower energy cost is making American industry more competitive around the world. That opens doors for long-term investments, such as Shell Oil’s plan to build a huge petrochemical plant in western Pennsylvania.

"In my view this is much bigger than anything we’ve seen in our lives" as far as a new energy development, Gheit said of shale gas.*

*Williamsport (PA) Sun-Gazette (May 6, 2012) – Records: Gas drilling in state grosses $3.5B