Production from the Marcellus play will continue to provide natural gas to the entire North Eastern United States. This bodes well for the Pennsylvania economy despite the low commodity price environment. Although the deliverability from Pennsylvania has decreased over the past year, this can be attributed to the decrease in rig counts rather than natural reservoir decline. The state has seen a severe drop in rig activity over the past year to accommodate for the abundance in oil and gas.
In 2015, the Pennsylvania Department of Labor and Industry estimated that there were up to 80,000 people with jobs related to natural gas projects in the Marcellus play. Since the decline in natural gas prices in the tail end of that year, that number has dropped to 31,000. Companies that have made these cuts include Eclipse Resource Corp and Consol Energy.
The lost revenue and job count will cost the state approximately $1 billion in income. But still, some are hopeful. Consol President and CEO Nicholas J. DeIuliis stated “we anticipate that continued cost improvements and strong well performance will further improve development economics when drilling activity is resumed.”
Despite the downturn, certain midstream projects are giving hope to the region’s energy industry. The Federal Energy Regulatory Commission approved The Utica Access Project pipeline with deliverability of up to 205 million cubic feet. FERC is also working to approve a second WB XPress Project pipeline.
Despite the bad news in the energy industry, the state has only seen an 8.4% drop in oil and gas wage and salary employments within the past year. And given Pennsylvania’s diverse economy, the total unemployment rate has actually decreased from 5.4% in June to 5.0% in November. The strength of the state’s industrial machinery and equipment, fabricated metal products, and food and kindred products industries has helped keep Pennsylvania out of budget problems as is the case in Oklahoma.