STATE COLLEGE -- With energy companies rushing to lock up rights to suddenly valuable deposits of natural gas, royalties earned by Pennsylvania landowners will ripple through the broader state economy, according to a Penn State University forecast.
Royalty payments will spur spending by landowners throughout the economy and lead to the creation of jobs that will attract workers, researchers said.
There has been something of a land rush in parts of Pennsylvania recently as energy companies negotiate leases to drill into untapped reserves of natural gas.
A rock formation in parts of four states, called the Marcellus Shale, is believed to hold a large reservoir of natural gas. Geologists and energy companies have known for decades about the gas, but only recently have figured out a way to extract it.
In their study, Penn State researchers used $1 billion in annual royalty income as a yardstick to measure potential gains in employment, disposable income, population and other economic indicators in Pennsylvania through 2011. The actual amount of royalty income could be higher or lower; the study did not provide a forecast.
"It's a real unknown at this point," David Passmore, director of the Penn State Institute for Research in Training and Development, said Tuesday. "Royalty income only occurs when the asset is lifted out of the ground. When the gas comes out, nobody knows. How much comes out, nobody knows."
According to the researchers, each $1 billion in royalty income would produce nearly 8,000 jobs and population gains ranging from 1,484 to 4,045, depending on the year being studied. Gross state product, a measure of the value of goods and services produced, would increase by more than $500 million per year.
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