The Center for Coalfield Justice published a report questioning the economic future of natural gas in Greene County and the surrounding area and warns that the oil and gas industry is not as economically sound as it may seem.
According to pa.gov, the oil and gas industry was Greene County’s third largest source of employment and the second highest paying industry in the county. The industry provides between $5 million to $6 million in Act 13 funding to Greene County every year.
According to the CCJ’s report, this is a cause for concern. The oil and gas industry faced difficulty in 2019, particularly in the Appalachia region. Natural gas prices remain low as production outpaces demand, and extraction companies have struggled to produce positive cash flow for the past six quarters.
In a filing for the United States Securities and Exchange Commission, EQT, the country’s largest producer in natural gas according to statista.com, announced that it will likely write-down $1.4 billion and $1.8 billion in assets. Meanwhile, Chevron, which lost $6.6 billion in the fourth quarter and is selling its natural gas assets in Appalachia, said in a press release that it expects a write-down of $10 billion to $11 billion in assets.
Despite the dismal outlook for many of the big natural gas companies, Mike Belding, chairman of the Greene County Board of Commissioners, doesn’t think that Greene County’s economy will be harmed in the long term.
“I think that specific industry players like Chevron and Exxon have little impact on Greene County’s oil and gas, and I say that because it’s a commodity that will always be required to be taken out of the ground,” Belding said. “Regardless of the market price, there will always be a player in the natural gas industry in southwestern Pennsylvania.”
The natural gas industry has gotten aid in the form of government subsidies. According to PennFuture, the natural gas industry was given $3.2 billion in subsidies in 2012-2013 alone. Veronica Coptis, executive director of the Center for Coalfield Justice, thinks that this is cause for concern.
“The industry is not as financially stable as the companies’ own narrative says,” Coptis said. “From our analysis, if they’re able to lobby and get additional subsidies and corporate giveaways, then yes, they will still be able to operate. But the way that our analysis is looking, the industry cannot sustain itself in the long-term without assistance from the government.”
The CCJ’s report cites a census statistic showing the population growth in Greene County has decreased by 5.6% despite an overall increase in Pennsylvania. However, Belding doesn’t think the oil and gas industry is the primary cause of the decline.
“In the western side of the county, the coal industry has bought up a lot of surface property as they continue longwall mining underneath that. So, they have displaced a number of families, and it is a large number of families who have decided to move out of Greene County,” Belding said. “The other phenomenon that we see is that individuals that work in Greene County don’t work in Greene County. 62% of our workforce commute into the county.”
To Belding, the natural gas industry has affected the population decline in a small way. Belding said there are some people who receive natural gas royalties for their farmland and choose to leave Greene County and receive their check in the mail instead of staying and continuing to farm. He doesn’t think, however, these oil and gas subsidies are the primary reason for the decline in population growth.
“I would caution people that equate the population decline directly to the natural gas industry,” Belding said. “I think it’s a combination of several different reasons, and at least not significantly caused by the natural gas industry.”
According to a report from the Journal of Urban Affairs, the Pittsburgh area gained 7,000 extraction jobs, while manufacturing lost 10,000 jobs. Belding doesn’t think that this trend will extend to Greene County.
“Greene County doesn’t really hold a lot of industries other than the coal mines and the natural gas industry. It’s not like we are manufacturing vehicles or something like that,” Belding said. “We don’t have empty warehouses sitting around that used to have businesses in them and now no longer do.”
Coptis explained a viable alternative to the natural gas industry is the service industry.
“The biggest sector of jobs in the county is the service sector,”Coptis said. “I think there could be a lot done to advocate at the state level to raise the minimum wage, which would significantly increase the access to good-paying jobs for residents in the county.”
Coptis also mentioned Greene County’s location in a major transportation corridor as a potential avenue to improve Greene County’s economy. Unlike many other coalfield counties, Greene County has access to major interstates, and Coptis said improving infrastructure such as schools would encourage people to move to Greene County and commute to more urban areas to work.
Belding said Greene County’s location will be advantageous to Greene County’s economic future.
“When you look at Greene County, we are in a transportation corridor that is almost unmatched,” he said. “As far as the transportation corridor and the opportunity to move material and freight goes, we’re right in the best place you could be.”
Overall, Coptis said it might be risky for Greene County to focus on natural gas in the long-term.
“Is there going to be a role for oil and gas to play in the next ten year time frame? Potentially, but we can’t do what we did and put all of our tax infrastructure and economic job opportunities in a boom and bust industry,” she said. “We know that boom and bust cycles are not healthy for our economy.”
Although the natural gas industry as a whole has struggled as of late, Belding explained the industry will remain stable in Greene County.
“I think the natural gas industry here is level as far as activity goes and as far as the labor force that is going to be required. The boom is over, and now we are on to sustainment and increasing the infrastructure to get the assets out of the area so that it can be shipped overseas or moved to a facility that is going to use it,” he said. “I think the natural gas industry is level in Greene County and will remain that way for the next 20 or 40 years.”