Little Impact Felt Locally

NEW MARTINSVILLE – The impact of the natural gas boom in Wetzel County – both good and bad – pales in comparison to other Tri-State area counties also experiencing a surge in drilling activity, according to a report released Thursday by the Multi-State Shale Research Collaborative.

The report includes case studies from Wetzel County and three other active gas-producing counties – Carroll in Ohio and Greene and Tioga in Pennsylvania. Those four were selected based on being largely rural counties with lower-than-average income and higher-than-average unemployment when compared with the rest of their respective states, said Sharon Ward, director of the Pennsylvania Budget and Policy Center.

But beyond across-the-board reports of heavy truck traffic and damage to roads, the experience of Wetzel County appears to be much different from the three other counties studied – which all experienced significant economic and population growth accompanied by noticeable increases in crime, housing shortages and demands on social service agencies.

Although drilling activity has provided a revenue boon for local government, Wetzel County continues to experience population decline and lower rates of job growth than the other counties – but on the other hand, officials haven’t reported a marked increase in crime and social service costs.

“The story in West Virginia is that there is no story,” Ward said.

One possible reason why Wetzel County isn’t seeing the same economic transformation experienced elsewhere is that production royalty payments seem to be concentrated in the hands of a few major landowners. More than one-fourth of the county’s active wells are drilled on land owned by two lumber companies – Dallison and Coastal – Wheeling Jesuit University and a handful of state agencies, with Dallison Lumber accounting for almost 11 percent of the county’s overall total.

Despite a 6000-percent growth in gas production in Wetzel County since 2000 – vaulting the county to second in the state – the county’s unemployment rate remains above 10 percent, three points higher than the state average. Fewer than 2 percent of jobs there are related to the natural gas industry, according to West Virginia Center on Budget and Policy analyst Sean O’Leary, who authored the Wetzel County case study.

Total employment in Wetzel County has grown about 10 percent since 2005, outpacing job growth in the rest of the state, but those gains pale in comparison to a 40-percent increase in private sector employment in Greene County, Pa. Out-of-state workers are driving demand for hotels, trailer camps and restaurants, but are providing little in the way of permanent population growth, according to O’Leary.

“The gains that you are seeing in Wetzel County are the service industry jobs … that aren’t going to bring a whole lot of economic development with them,” he said.

Mark Price, a labor economist with the Keystone Research Center, said there are a number of factors that could explain why Wetzel County hasn’t seen the same level of growth as Greene County.

“Greene (County) also had very healthy growth in coal mining,” Price said. “So the combination of coal jobs, more wells drilled and pipeline construction explains the difference between the two counties in overall employment growth. The bottom line is that it takes a lot of drilling before you observe employment impacts from drilling.”

Annual property tax revenue in Wetzel County has nearly tripled since 2005 to about $30 million. But according to the report, the property tax surge is attributable mainly to a 600-percent growth in the value of “business personal property,” which includes drilling rigs, pipelines and equipment – taxable in West Virginia but not in Pennsylvania or Ohio – while gains in other areas have been comparatively flat.

Business real estate values in Wetzel County have increased 88 percent since 2005, while residential real estate has increased 11 percent over the same period – and actually has declined since 2012, according to the report. Statewide, about 43 percent of landowners where drilling is actually taking place reported a decline in property values since drilling began, with slightly more, almost 47 percent, reporting some type of surface damage.

The report also found that public perception of the industry is driven largely by who is receiving a direct financial benefit from the activity, based on a survey of West Virginia landowners with at least one completed well on their property. Almost 65 percent of those who owned both the surface and mineral rights reported overall satisfaction with drilling, compared with fewer than 29 percent of landowners with only surface rights.

“Those who don’t get royalty payments have a lot less satisfaction with the drilling process and have a much more negative perception of the drilling activity,” O’Leary said.

Wetzel County’s crime rate remains lower than the state as a whole, and the report notes authorities there have reported no substantial increases in criminal activity attributable to the drilling industry, though a slight increase in DUI arrests was noted. Heavy truck citations have dropped off significantly over the past two years, after a spike in 2009 and 2010 in the early stages of the drilling boom.

West Virginia Department of Transportation data indicates annual road maintenance costs in Wetzel County have increased 36 percent since 2005. But officials there seem to have coped with the challenges better than their counterparts in other areas, which researchers attribute to the formation of a community task force comprised of representatives from the gas industry, state agencies, schools, local governments and residents that allows those various entities to share information and discuss problems.

“We did see some successful models that we think can be employed in other counties,” Ward said.