natural gas development and local government finance daniel raimi, associate in research, duke...
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Natural gas development and local government finance
Daniel Raimi, Associate in Research, Duke University Energy Initiative
April 21, 2015
North Carolina Energy Conference
Implications for North Carolina
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Shale Public Finance project
• Funded by:– The Alfred P. Sloan Foundation
– The Duke University Energy Initiative
• Carried out by the Duke University Energy Initiative– Richard Newell, director and principal investigator
– Daniel Raimi, key researcher and analyst
Daniel Raimi, April 21 2015 NC Energy Conference
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Project significance
• Local public services matter for quality of life, property values, and more
• Public perception of industry matters for resource development
Daniel Raimi, April 21 2015 NC Energy Conference
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Bakken
Marcellus
Fayetteville
Haynesville
Eagle Ford
Permian
Barnett
Green River
Map source: HPDI/Drilling Info 2.0. Heat map data represents drilling permits issued in the 90 days leading up to Jan. 14, 2014. Data not available for Alaska
Our travels to active oil and gas regions
Denver-Julesburg
Daniel Raimi, April 21 2015 NC Energy Conference
San Juan
Piceance
Los Angeles
Kern Co.
Miss. Lime
Woodford
UticaHugoton
North Slope
Kenai Peninsula
Most permits Some permits Few permits No permits
Uintah
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Local public revenues and costs associated with oil and gas development
Daniel Raimi, April 21 2015 NC Energy Conference
Major revenue sources Major costs
State severance taxes Road damage
Local property taxes Water/wastewater infrastructure associated with population growthLocal sales taxes
Leasing revenue from public lands Staff costs: administrative, law enforcement, workforce retentionIn-kind contributions
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Bakken
Marcellus
Fayetteville
Haynesville
Eagle Ford
Permian
Barnett
Green River
Map source: HPDI/Drilling Info 2.0. Heat map data represents drilling permits issued in the 90 days leading up to Jan. 14, 2014.
Net fiscal impacts for local governments examined
Denver-Julesburg
Daniel Raimi, April 21 2015 NC Energy Conference
San Juan
Piceance
Los Angeles
Kern Co.
Miss. Lime
Woodford
Uniformly net positive Mostly net positive Mix of positive/negative Mostly net negative
UticaHugoton
Uintah
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Lessons on overall fiscal effects• Most local governments have experienced net positive fiscal
impacts to date
• Fiscal effects are not uniform– Some local governments in very rural areas have struggled financially during
large boom periods
• Collaboration with industry can help reduce costs– Especially for road maintenance/repair, as seen in AR, OH, PA and parts of CO
• State fiscal policies play an important role in providing revenue for local governments with large-scale development
Daniel Raimi, April 21 2015 NC Energy Conference
Daniel Raimi, April 21 2015 NC Energy Conference
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Triassic Basins resource potential in context
- 30,000 60,000 90,000
N.C. Triassic Basins
Bakken/Three Forks
Eagle Ford
Marcellus
- 2,000 4,000 6,000 8,000
N.C. Triassic Basins
Bakken/Three Forks
Eagle Ford
Marcellus
Source: U.S. Geological Survey. Marcellus and Eagle Ford assessments from 2011. Bakken/Three Forks assessment from 2013
technically recoverable resourcesbillion cubic feet
technically recoverable resourcesmillion bbl
Natural gas Oil and natural gas liquids
Daniel Raimi, April 21 2015 NC Energy Conference
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Public finance considerations in the absence of major oil and gas production• In communities with little or no drilling, some benefit, while
others face challenges
• State and local governments compete to attract large infrastructure projects
• Tax policies may provide incentives or exemptions for certain projects or activities, which may create local challenges
• State-level tax policy needs to take into account local fiscal issues
For more information
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Daniel RaimiAssociate in Research
Duke University Energy Initiative
energy.duke.edu
919-886-1952
Find our publications online at: energy.duke.edu/shalepublicfinance
Daniel Raimi, April 21 2015 NC Energy Conference