Drilling for Answers: Cleveland Fed Hosts Shale Symposium
The pros and cons of natural resource extraction in the United States are well documented. While mining activity brings jobs—and often, great economic hopes—to an area, it also brings downsides to communities. Short-term negative impacts include strains on municipal resources such as schools, roads, and emergency services, as well as increases in rental-housing prices. Perhaps less well-documented are lessons gleaned from prior experiences that might be used to help guide communities dealing with the decidedly mixed blessing of resource extraction. With this in mind, the Cleveland Fed organized a forum in March in partnership with the Multi-State Shale Research Collaborative. The one-day event, Shale Symposium: What Communities Need to Know, convened experts from around the country to examine how communities can make the most of extraction’s “boom” while mitigating the effects of the inevitable "bust."
This event was held in Wheeling, West Virginia, part of the Federal Reserve Bank of Cleveland’s footprint and a locus of extraction activity occurring in the nation’s Appalachian region. (The Cleveland Fed covers the Fourth Federal Reserve District, comprising Ohio, western Pennsylvania, eastern Kentucky, and the northern panhandle of West Virginia.) The symposium focused on three stages of extraction: the early stages of shale development; the growth-to-boom period; and the declining development-to-bust period.
“This is a complex and highly relevant set of issues in our District,” noted Cleveland Fed Vice President and Community Development Officer Paul Kaboth. “Communities across the country, including those in more rural parts of Ohio, Pennsylvania, and West Virginia, are increasingly facing a broad set of economic and development challenges as the industry finds new ways to extract previously unrecoverable deposits of oil and natural gas from shale rock.”
Event organizer Matt Klesta, a research analyst with the Community Development team at the Cleveland Fed, identified researchers, municipal leaders, energy policymakers, and legal experts to speak on topics related to these three stages of shale extraction. Presentations covered issues ranging from the volatility of energy markets and the employment impacts of shale drilling to identifying which global factors even the smallest communities must consider when devising strategies to ensure positive longer-term effects of extraction in their areas. Collectively, their regional and national perspectives provided useful insights to some 80 attendees present at Wheeling Jesuit University and another several dozen virtual participants who tuned in via Ustream. A number of attendees tweeted at #whattheshale to chronicle highlights and some of the speakers’ key points.
Speakers from all three panels used terms such as “volatile” and “wildly unpredictable” to describe shale drilling. The recent plunge in energy prices is one example of the industry’s volatility; changing global demands for new forms of energy is another. Mineral rights, too, wherein a landowner can be paid by oil and gas companies for the right to drill from wells erected on the landowner’s property and/or receive royalties from the volume extracted can vary greatly from state to state and even within a community.
Keynote speaker Mark Partridge, professor of urban-rural policy at The Ohio State University, discussed the impact of volatile energy prices on the local energy industry and on local governments. The volatility of the mining industry is not conducive to a steady economy, he stated, and while “energy development can be a short-term buffer,” establishing arrangements like Pennsylvania’s highly successful Road Use Agreements can help a community weather the longer-term impacts once extraction activity slows and, eventually, rolls out of town.
So, what can communities learn from past experience with extraction activity? The following are some key takeaways from the event:
A community’s response needs to be tailored to its region and needs
Context matters. Communities need to devise plans that incorporate the needs and requirements of their region and their residents. Speaker Jason Brown, an economist with the Kansas City Fed, made the point that “states’ responses to shale drilling vary,” to a polar-opposite degree in some instances. He noted that Oklahoma subsidizes drilling activity, while New York has legislated moratoriums in some areas. Speaker Dale Arnold, director of energy, utility, and government policy at the Ohio Farm Bureau Federation, works with residents, government leaders, service organizations, and energy service providers to create effective development strategies. “In many cases,” he stated, “these strategies are unique to a specific neighborhood or county.”
Community education and engagement is essential
Joe Campbell, a research associate and lecturer at The Ohio State University’s School of Environment and Natural Resources, has conducted research on the impacts of shale oil and gas development on communities. He stressed the critical role civic leaders play in communication and education about shale, pointing out that rural and urban residents of a community will likely anticipate and interpret arriving shale oil and gas development differently, as well as experience its long-term impacts differently. “Local governments’ ability to engage in community-wide communication and public education will be determined, in part, by how well they collaborate and share information prior to the arrival of shale oil and gas development,” Campbell said.
Opportunities for community and economic development exist beyond the well pad
Speaker Iryna Lendel from Cleveland State University’s Maxine Goodman Levin College of Urban Affairs pointed out in her analysis of current drilling in Utica that plenty of opportunity exists beyond the immediate vicinity of drilling wells. For now, she said, pipelines are a primary conduit for sending oil and gas to locations, often in or near port cities, where crackers break the liquids into discrete components for a variety of uses. “One of the regional factors controlling throughput over the next five years is development of midstream infrastructure,” she noted, adding that communities might develop some processing capacity in the region.
Natural resource extraction isn't new—it’s been an economic activity in this country for over a century—but what is new is the pace of development associated with that industry. Technological advances have opened up swaths of previously unrecoverable deposits of oil and natural gas. To maintain production levels, new wells are constantly drilled, which can overwhelm the infrastructure and planning capabilities of many small communities where this is occurring. To compound things, the finite amount of these resources means that at some point the resource will be exhausted and the industry will leave the area. When that will occur is anyone’s guess as projections and estimates vary wildly.
So what’s a community to do? How can it cope with the rapid development? How can the wealth be leveraged for future economic benefits to the community when the industry leaves? This one-day event hopes to provide some answers and strategies. It will give policymakers who are interested in the long-range success of their community a chance to interact with academics who have extensive knowledge of the industry’s impacts and to connect with colleagues facing similar issues.
The agenda features national and regional experts on three panels who will examine the issue across the timeline of natural resource development:
• Early shale development
• Growth-to-boom phase
• Declining development to bust phase
Who should attend? City and county leaders, elected officials, foundations, bankers, academics, community development corporations, and economic development professionals.
Thursday, March 19, 2015 final
Download the speakers info page.
|9:15 — 9:55 AM||
|9:55 — 10:00 AM||
WELCOME & OPENING REMARKS
Welcome and Panel 1 video
|10:00 — 11:15 AM||
PANEL 1: EARLY SHALE DEVELOPMENT
Watch the streamed Welcome and Panel 1 video
|11:15 — 12:30 PM||
PANEL 2: GROWTH-TO-BOOM PERIOD PHASE
Watch the streamed Panel 2 video
|12:30 — 1:45 PM||
LUNCH & KEYNOTE
Watch the streamed Lunch & Keynote video
|1:45 — 3:00 PM||
PANEL 3: DECLINING DEVELOPMENT-TO-BUST PERIOD PHASE
Watch the streamed Panel 3 video
|3:00 — 3:05 PM||
Dale Arnold is director of energy, utility, and local government policy at the Ohio Farm Bureau Federation (OFBF), a position he has held since 1995. Dale started his career with OFBF as an organization director in central Ohio in 1985. Dale is involved in regional and state working groups exploring how oil and gas exploration and related infrastructure expansion impact farmers and rural communities, and what they can do to get involved in the process, and works with OFBF leaders to create effective energy policy on local, state, and national levels. He has authored papers advocating a diversified energy portfolio using domestic oil and coal resources, nuclear energy, and renewable technologies. He is a native of Knox County, where his family can trace their involvement in Ohio agriculture since the 1820s. [ presentation ]
Ted Boettner, co-founding executive director of the West Virginia Center on Budget and Policy, is the author of numerous reports on state tax and budget issues, economic development, and family economic security, including the annual “State of Working West Virginia.” Ted frequently presents analyses of policy proposals to the West Virginia Legislature and testifies before committees. He also regularly addresses statewide civic groups on state tax, budget and economic policies. In 2013, Ted was appointed to a three year term as a primary member to the U.S. Extractive Industries Transparency Initiative (USEITI), an advisory committee within the Department of Interior. An adjunct instructor at West Virginia University Institute of Technology, Ted holds a B.S. degree in journalism from West Virginia University and a M.A. degree in political science from the University of New Hampshire. [ presentation ]
Jason Brown is a senior economist in the Regional Affairs Department of the Federal Reserve Bank of Kansas City. He conducts research on issues related to regional economic growth, emerging industries, and structural change in regional industry and labor markets. Prior to joining the Federal Reserve Bank of Kansas City, Jason was an economist at the USDA Economic Research Service in Washington, D.C. He holds a Ph.D. from Purdue University. [ presentation ]
Joe Campbell is a research associate and lecturer at Ohio State University's School of Environment and Natural Resources. His research focuses on the balance between community economic development and natural resource management in rural areas of the U.S. and abroad. Joe, who has worked on community development and research projects in mining and agricultural communities in the U.S. and in Ghana, oversees the university's social responsibility initiative and conducts applied research on the social impacts of energy development. His areas of expertise include intergovernmental collaboration for economic development, rural sociology, natural resource management, and watershed restoration. He holds a PhD in rural sociology from The Ohio State University. [ presentation ]
Michelle Decker is the chief executive officer of Rural Action, a regional sustainable development nonprofit in Appalachian Ohio working on waste, forestry, food systems, watershed restoration, and energy. For the past 20 years she has held leadership positions in community economic development and has specialized in rebuilding or constructing nonprofit development organizations in both urban and rural communities. Michelle is a member of the Rural Policy Research Institute's National Advisory Board and leads Rural Action's participation in the Central Appalachian Network, Central Appalachian Forestry Alliance, and Central Appalachian Regional Network. She holds a M.S. degree in urban and regional planning from the University of Wisconsin–Madison and a B.A. in Art History from the University of Cincinnati.
Harry Eadon Jr. is president and executive director of the Economic Development and Finance Alliance of Tuscarawas County, a position he has held for 12 years. He has experience in all aspects of accounting and financial management, including direct experience with real estate, financial consulting, and venture capital. In addition, he has developed an early-stage venture capital fund. Harry has successfully recruited major energy projects and co-leads a multi-county regional economic development group in Eastern Ohio focused on economic development opportunities around the Utica Shale development.
Steve Herzenberg is executive director of the Keystone Research Center, a position he has held since the organization's inception in 1996. Before joining Keystone, Steve taught at Rutgers University and worked at the U.S. Congressional Office of Technology Assessment and the U.S. Department of Labor, where he served as assistant to the chief negotiator of the labor side agreement to the North American Free Trade Agreement. Steve has been published widely; his work includes Losing Ground in Early Childhood Education, 2005; New Rules for a New Economy: Employment and Opportunity in Postindustrial America, 1998; U.S.–Mexico Trade: Pulling Together or Pulling Apart? 1992; and Labor Standards and Development in the Global Economy, 1990. Steve holds a PhD in Economics from MIT. [ presentation ]
Jeffrey Jacquet is assistant professor in the department of Sociology and Rural Studies at South Dakota State University. Since 2005 he has performed research and been published widely on the social and economic impacts of multiple types of energy development across the US. Jeffrey is among the first scientists to have examined the social and economic effects of hydraulic fracturing, including efforts to effectively model the distribution of energy industry workforces and impacts to local municipalities. More recently, his work has examined municipal level planning, regulation, and ownership of energy facilities, along with the social-psychological disruption in energy impacted communities. Jeffrey received his master's degree from the University of Wyoming and his PhD from Cornell University. [ presentation ]
Paul Kaboth is vice president and community development officer in the Community Development department at the Federal Reserve Bank of Cleveland. His responsibilities include strategic oversight of the team's work on a range of consumer credit, community reinvestment, and asset-building issues with the Bank's Research and Supervision and Regulation departments and with other Federal Reserve offices. He also directs research, outreach, and public programs that promote fair and equal access to credit in the Fourth Federal Reserve District, which comprises Ohio, western Pennsylvania, eastern Kentucky, and the panhandle of West Virginia. Paul began his career with the Cleveland Fed in 1986 as a field examiner; he was appointed to his current position in 2011. A commissioned bank examiner, Paul holds a bachelor's degree in business administration from Miami University in Oxford, Ohio.
Iryna Lendel is assistant director of the Center for Economic Development at the Maxine Goodman Levin College of Urban Affairs at Cleveland State University. An economist with extensive experience analyzing regional and industry economic development, Iryna has conducted research for projects on the high-tech, oil and gas, steel, and re-emerging optics industries. In her affiliated role with the Center for Energy Policy and Applications, she conducts research in energy policy and best management practices for water use sectors. Iryna is also a principal co-investigator on a project assessing the economic impact of the Utica Shale development on the state of Ohio. She earned her Ph.D. in economics at the Lviv Regional Institute of Ukrainian Academy of Science; she earned a second Ph.D. in urban studies from the Levin College of Urban Affairs. Iryna was named a Fulbright New Century Scholar for 2009–2010. [ presentation ]
Troy Mix is a policy scientist with the Institute for Public Administration at the University of Delaware and a PhD candidate in Regional Planning at the University of Illinois at Urbana– Champaign. A member of the American Institute of Certified Planners (AICP), Troy provides data-driven research and analysis, strategic planning, and training services to support the economic development efforts of governments, business groups, and community stakeholders across Delaware and the mid-Atlantic region. He managed an Appalachian Regional Commission funded research project focused on understanding the role of economic diversity in regional development efforts. Troy earned a Master of Public Administration from the University of Delaware and a B.A. in Political Science from the University of Pittsburgh. He is completing a dissertation on the development of university research parks. [ presentation ]
Mark Partridge is the C. William Swank Chair of Rural–Urban Policy at The Ohio State University and a Professor in the Agricultural, Environment, and Development Economics Department. He is managing editor of the Journal of Regional Science and co-editor of seven other journals. Mark has published more than 100 scholarly papers and coauthored The Geography of American Poverty: Is there a Role for Place-Based Policy? His research, funded by sources including the Appalachian Regional Commission, Brookings Institution, European Commission, Infrastructure Canada, Lincoln Institute of Land Policy, U.S. National Science Foundation, U.S. National Oceanic and Atmospheric Administration, and the U.S. Department of Agriculture, includes investigating rural-urban interdependence and regional growth and policy. Mark, who currently serves as chair of the North American Regional Science Council, has served the Southern Regional Science Association as president and fellow. [ presentation ]
Scott Rotruck, director of energy and transportation services at Spilman Thomas & Battle law firm, is a key leader of Spilman's government relations, energy and shale gas practice groups. In this role, Scott consults with exploration and production companies; mid-stream companies; trade associations; state, regional and local development authorities; and other businesses related to the energy and natural gas industry (e.g., suppliers, vendors, end-product users, etc.), among other responsibilities. Previously he served as vice president of corporate development and state government relations at Chesapeake Energy, leading corporate development and government relations in the Marcellus and Utica Shale regions. Scott also has 10 years of experience in the railroad industry with CSX Corporation and Norfolk Southern Corporation and 15 years of experience in the energy industry.
Amanda Woodrum is a researcher with Policy Matters Ohio who focuses primarily on energy issues. She has written reports examining the economic impact of Ohio's advanced energy fund and clean energy standards, outlined strategies to make our transportation and manufacturing sectors more energy efficient and Ohio's communities more sustainable, all while creating good jobs and building green pathways out of poverty in the process. Amanda also convenes the statewide network Ohioans for Transportation Choice. Previously, she clerked for the City of Cleveland law department and the Summit County Council, where she received a commendation for commitment to public service. Amanda has a master's in economics, a law degree from the University of Akron, and a bachelor's degree from Bowling Green State University. [ presentation ]