A presentation by Professor Susan Christopherson, Department of City and Regional Planning, Cornell University - "A Distinctive US Approach to Shale Gas Development? Local Responses to Complex Risks" For further information on Prof. Christopherson's work, see www.greenchoices.cornell.edu

1. A Distinctive US Approach to Shale
Gas Development?
Local Responses to Complex Risks
Susan Christopherson
Department of City and Regional Planning
Cornell University
smc23@cornell.edu

2. Research on Social and Economic Effects of
Shale Gas Development
 What do we know about social and economic effects
based on historical experience in resource extraction
communities and early experience in Texas and
Pennsylvania shale extraction regions. What are the
research questions and sources of data? 8 projects
 Why are communities taking action in response to shale
gas development? What form does their response take?
Can opposition be characterized as NIMBYISM?
 What jobs are created in conjunction with shale gas and
oil development? How does actual job creation compare
with projections from I/O models? What is the spatial
distribution of job creation?

3. The Horizontal Hydraulic Fracturing Process

5. Production of Shale Gas in the United States
Production of natural
gas from shale in
the United States
has expanded
rapidly in the last ten
years, and is
projected to
continue through
2040 (EIA 2013a)

6. Local Community Responses
 A consequence of fragmented governance
 Learning over time about externalities and local
costs
 Awareness of losers as well as winners
 Concern about long-term social and economic as
well as environmental effects.

8. At a National Policy Level, There is Support
for Natural Gas Development
Why?
It lowers costs for some manufacturers (in petro-
chemicals) and improves the balance of payments through
exports.
Some evidence indicates that its use will lower
CO2emissions.
It creates jobs – in the petrochemical industry, financial
services, and transportation as well as in oil and gas
extraction.

9. Local and Regional Concerns

10. There are Winners and Losers
Winners
Non-resident owners of large acreage with mineral rights
Resident owners of large acreage with mineral rights
Some regional businesses – trucking, quarries, construction,
hotels, restaurants, bars (not necessarily located near
drilling sites)
Losers
Resident owners of small parcels or renters
Some regional businesses – tourism, specialized agriculture
(organic farming), businesses competing for labor,
retirement homes,“brand” based business.
Regional residents who absorb indirect and public costs
related to safety, roads, traffic, air pollution

11. The Risks from Shale Gas Development are
Significant
Environmental risks include water, air, and noise
pollution, effects on habitat, seismic risks from injection
wells, industrial accidents. These risks extend beyond the
well site.
Economic risks include the effects of a resource “boom-
bust” cycle on local and regional economies, the” crowding
out” of other industries -- tourism, organic farming, dairy
farming, manufacturing -- and loss of property value
because of proximity to industrial sites and activities.
Social risks include increasing crime, conflicts within
communities, and inability to provide housing or services to
boom period population.

12. Risks of Industrial Accidents

13. The Extent of Risks Depends on The Pace
and Scale of Development
 Pace: How rapidly well development occurs in a
geographic area
 Scale: The number of wells developed in a
geographic area
Pace and scale are determined by investment
strategies -- land speculation, offerings to
investors, relative prices for oil and gas etc.

14. The Boom-bust Cycle in Resource
Extraction
Adapted from Tim Kelsey (2011), "Annual Royalties in a Community".
Years
Dollars

15. Who is Affected By HVHF Development? How
Extensive are the Effects?

16. Gas Development is a
Regional Industrial
Process

17. What Do We See in HVHF Regions?
 “Man Camps”
 Water extraction sites
 Compressor plants
 Pipelines
 Staging sites
 Rail spurs
 Gas storage sites and facilities
 Processing facilities for
“produced” water or injection wells
 Trucks, trucks, trucks

18. Risks and Benefits May Occur Far From the
Well Pad
 Trucks carry drilling and fracturing inputs (sand, water,
chemicals) and equipment move into and out of the
region from distant points.
 Gas development infrastructure (pipelines, gas storage
facilities, produced water facilities may be located far
from the drilling locations
 Sand mining in Midwestern states and transport of
Bakken oil by rail to refineries in Canada and the US
creates risks for states and regions outside the shale
plays.
 Rural drilling locations may experience risks while
expenditures occur in cities away from the drilling sites.

19. Disruption May Be Extensive and Long-Term,
Depending on the Pace and Scale of
Development

20. Extensive Sand Mining in the
Midwestern US

21. Shale Oil Transport to Coastal Refineries

22. “Classic” Depictions of Well Sites

23. HVHF Occurs in Highly-Populated Areas

24. Hydraulic Fracturing in Suburbs and Cities

25. Case Studies Tell Us Public Costs of Shale
Gas Drilling During Boom include:
 Accelerated road maintenance
 Traffic congestion from trucks
(An estimated 890 to 1,340 truck trips per well site)
 Higher public safety costs
 Increased demand for health and education services
 Increased demand on public administrative services
(e.g. planning and zoning, permitting, assessments,
housing assistance)
 New service requirements, such as emergency
response capacity and environmental monitoring and
remediation.

26. How Will Local Costs Be Paid?
An illustration: SR 3020 in Towanda Township, Bradford County, Pennsylvania
after a high volume of overweight drilling trucks and a Northeast winter
(Photo: PennDOT Engineering District 4-0)
Local residents may have to absorb whatever costs are not covered through
state tax policy, local taxes and fees, or local agreements.

27. Unanticipated Costs
A study of Sublette
County Wyoming
found that public
safety costs rose
significantly with
increases in drilling.
The question is the
threshold at which
communities cannot
absorb new costs.

28. How Are Local Communities and Regions
Reacting to Risks?

29. A Study of How Marcellus Shale Play
Communities Are Responding
Our database of 298 communities that have taken
some governmental action and 53 interviews with a
stratified sample of communities, indicates:
 A “wait and see” attitude, moratoria rather than
outright bans.
 Distrust of the oil and gas industry and of state policy
makers to address risks and public costs.
 A commitment to local community sovereignty or
“home rule”

31. What Did Interviews Tell Us?
 Learning and time to plan have increased risk
perception.
 Community leaders are aware that risk of public
costs extends regionally, beyond the well site.
 Costs are clearer than benefits to regional residents.
 Local control is emphasized because of lack of
confidence in state level or industry ability to protect
resident interests. There are few options available.

32. Some Significant Research Issues
 What local and regional public costs and benefits are
associated with shale gas and oil development? How
are these costs and benefits distributed spatially and
among segments of the population?
 What do investment projections tell us about
expectations regarding the productivity and longevity
of wells and shale plays?
 What strategies are being adopted by local
government to regulate shale gas and oil
development and mitigate negative effects?
 What key governance policies differentiate national
approaches to shale gas and oil development?

33. A Distinctive US Approach to Shale
Gas Development?
Local Responses to Complex Risks
Susan Christopherson
Department of City and Regional Planning
Cornell University
smc23@cornell.edu