Section 5 – Estimates for an economic influx

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Tuesday May 1 is the due date for the final draft of DENR’s environmental study to be turned in to the General Assembly. However, I’m only about halfway through reading the thing! Over the next few days, I’m going to bombard you with posts in an effort to get through this before I comb through the final draft and see what changes have been made.

So hold on, and hang in there; we’re almost through this thing.

This next section of the impact study addresses the potential economic impacts that hydraulic fracturing and the introduction of the natural gas industry would have in North Carolina. Scratch that. COULD have.

The economic analysis of this study only takes into account drilling activities, and does not take site prep, land leasing, hydraulic fracturing or the extraction production and transmission of gas into consideration. There was apparently a review conducted along these missing lines, but the data quality wasn’t up to par, mostly because real-world cost and supply relationship information is missing.

Therefore, The Department of Commerce (which conducted research for the first half of section five) didn’t use that review in their study, and recommends a follow-up analysis with better data.

It’s one more in a long series of “we just don’t knows.” But at least this uncertainty didn’t make its way into the study like some of the others did. And Commerce goes on to state, “Caution must be exercised in interpreting these results; the economic impact estimates in this analysis are based strictly upon assumptions” (191).

The economic impact model that Commerce created was done using IMPLAN software, and this table shows the info and assumptions used to develop it:

Basically, the gist of the beginning of this section is summed up in these two sentences early on: “Overall, these studies show that a large infusion of economic activity from shale gas drilling will increase the incomes of some individuals and communities and will add jobs. However, without reliable expenditure inputs based on primary research, it remains uncertain how much wealth, income or benefits from long-term employment would accrue to Lee, Chatham and surrounding counties” (192).

In other words, some people will make money off this, but we aren’t actually sure how many, or how much, or how long it will last.

The next few sections take this uncertainty and run with it. All sorts of fun words are used, such as “likely,” and “estimate,” and “could be.” And they turn all these “maybes” into real numbers!

According to the model, only 36 percent of drilling investments will be provided by NC vendors because North Carolina doesn’t have a developed fossil fuel industry. The report refers to this as “substantial economic leakages,” since that means a fairly large amount of money will be spent outside of the NC economy on these operations.

One example they give is that of the actual drilling and fracturing, which take specialized equipment and skills. That means calling in outside contractors.

Tune in Wednesday to see some of the “hard” numbers, and what drilling could maybe, potentially do for employment, local government and tourism in our fair state.

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