Posts Tagged ‘region’

Study: Marcellus Shale helping Pittsburgh region economy

Employment numbers expected to rebound to pre-slump levels by early 2012.

The following article is from the June 21 Pittsburgh Post-Gazette.

The Pittsburgh metropolitan area is weathering the recession better than many other parts of the country, partly because of Marcellus Shale production, researchers said Monday, projecting that the region’s employment numbers will rebound to pre-slump levels by early 2012.

The Pittsburgh area lost 37,500 jobs beginning in the third quarter of 2008 but will recover that number by the first quarter of 2012, according to a report released as the U.S. Conference of Mayors closed its 79th annual meeting in Baltimore. The report was prepared for the conference and the Council for the New American City by IHS Global Insight, a Colorado-based research firm.

The report didn’t say what kinds of jobs were lost, what types are likely to replace them or why Pittsburgh is faring better than other parts of the country. However, in an email, Tom Jackson, senior economist at IHS Global Insight, said:

“Many areas of Pennsylvania, including the Pittsburgh metro area, are benefitting from the Marcellus Shale drilling activity. That certainly is giving Pennsylvania a boost relative to the rest of the country in terms of employment and gross economic output.”

The University of Pittsburgh, Carnegie Mellon University and other institutions have “helped in a number of ways,” he added. “The universities themselves are big employers, especially when you include the medical centers … They are also producing a large number of graduates in areas of high employment demand, which can help to encourage employers to move to or expand existing operations in the region.”

Joanna Doven, spokeswoman for Pittsburgh Mayor Luke Ravenstahl, said the study reflected the region’s stable real estate market and government efforts to work with private industry on the city’s “Third Renaissance.”

Mr. Ravenstahl did not attend the Baltimore meeting. He is at a Pennsylvania League of Cities and Municipalities meeting instead, Ms. Doven said.

In all, the report looked at employment and other indicators of economic progress for 363 metropolitan areas.

About 30 areas — including Morgantown, W.Va., and State College, Centre County — are expected to return to pre-recession employment numbers before Pittsburgh. The Pittsburgh area is one of about 10 areas, also including Dallas and Fort Collins, Colo. — expected to recoup lost jobs by early 2012.

All of the other areas are expected to take longer to recover. About 35 regions, including the Youngstown, Ohio, area, are not expected to regain all of their jobs until after 2021.

It’s taken the nation longer to recover from this recession than it has other post-World War II slowdowns, the authors said, counting weather disasters and a slow housing market as complicating factors.

Among the 363 metropolitan areas, Pittsburgh ranked 107th in average annual growth of real gross metropolitan product from 2007 to 2009. Real GMP is the total value of goods and services produced in an area, adjusted for inflation; the examination of real GMP from 2007 to 2009 showed an area’s economic performance in the throes of the recession.

Instead of growing, Pittsburgh’s real GMP on average lost one-tenth of a percent annually during those years. Together, the 363 metropolitan areas averaged a 1.3 percent annual dip in real GMP from 2007 to 2009.


What They’re Saying: Marcellus Shale Helping Small Businesses Reach “The American Dream”

Clean-Burning Marcellus Natural Gas Helping Small Businesses Reach “The American Dream”: Fred Raco is living proof that hard work plays a big role in reaching the American dream. … Raco is negotiating to purchase and refurbish a new facility in Richland Township, giving him three times more space than the city site. “We’re really gearing up for this,” he said of the Marcellus Shale. Raco currently has 23 employees working at his Johnstown laboratory and in the field. He expects his employment to reach 50 within two years. … Raco thinks Marcellus may allow more young people to stay at home. “They are by no means minimum-wage jobs.” Raco rejects the notion that the Marcellus jobs are going to workers from Texas. “There is a real misconception that all the jobs are being filled by people from out of the state,” he said. “We’re doing work with companies that are Pennsylvania-based that are manufacturing metering stations, manifold piping, that type of thing.” (Tribune-Democrat, 12/15/10)

Marcellus Shale Creating Jobs for America’s Veterans: A Penn State economic impact study predicted the industry will be an $8 billion boon to the state, with about half of that money generated in southwestern Pennsylvania. The study, commissioned by the Marcellus Shale Coalition, also projected that 88,000 jobs would be created in Pennsylvania this year. Those jobs are great opportunities for veterans, said Kathryn Klaber, executive director of the Marcellus Shale Coalition. Range employs dozens of veterans, Mr. Pitzarella said. “They’re ideal candidates,” he said. “They’re hard workers, team-oriented, natural leaders and have no issues with long hours.” … When Carl Dokter served another tour of duty overseas, Range held his job for two years and hosted a welcoming ceremony for him when he returned, he said. … Chesapeake Energy Corp. is another driller that employs a large number of veterans and is expanding its local footprint. The company employs about 150 military officers and servicemen, spokesman Rory Sweeney said. (Post-Gazette, 12/16/10)

Small Business Owner: “I am a Marcellus Overnight Success”: Three years ago, Larry Mostoller had two employees and was trying to develop a business park outside Somerset. Today, Mostoller employs 100 people and provides work for more than 30 subcontractors. He has gotten involved in the Marcellus Shale industry. “I am a Marcellus overnight success,” Mostoller said. Mostoller is co-founder and CEO of Somerset Regional Water Resources, a two-year-old company that provides nearly all general labor needs on a gas drilling site. … Mostoller is proof of Marcellus Shale’s role in changing the economic landscape. … One thing is certain: Marcellus is having an impact. … “It’s absolutely phenomenal. All of us are going to live better.” He is convinced that Marcellus Shale gas will continue to help meet the nation’s energy needs for years to come, and its development will take decades. “The person that drills the last Marcellus well has not been born yet,” Mostoller said. (Tribune-Democrat, 12/15/10)

Mayor: ‘Marcellus Multiplier’ Jobs Good “For The Entire Region” : For one Mon Valley municipality, drilling for natural gas into the Marcellus Shale will create dozens of new jobs. Export-based Dura-Bond Industries will open a 55,000-square-foot pipe-coating facility along the Monongahela River in Duquesne. It will serve to complement the company’s existing coating facility in nearby McKeesport. … Once opened, the facility will create between 75 and 85 new jobs in the Mon Valley, a fact that is not lost on Duquesne Mayor Phil Krivacek. “Well, anytime you can bring in a company that will create new jobs in the region is a definite plus,” said the mayor. “I think this a good thing for not only Duquesne, but for the entire region.” … “We are good stewards of the environment and will continue to be. It is imperative that the needs for job and energy production can meet with the needs of the environment.” (Post-Gazette, 12/16/10)

Small Business Owner on Marcellus Supply Chain Related Work: “We Were So Lucky”: Chesapeake has spent more than $94 million this year to pave or repair 300 miles of roads in Bradford and three other counties. That has benefited Leo Drabinski, who co-owns Calvin C. Cole Inc., a hard-rock quarry and construction company in Bradford County. He said demand for rock used for roads and well sites used by gas companies grew 10 times in the past year. He increased his quarry staff to 15 from six, and even started a van service to shuttle rig workers to their jobs. “We were so lucky,” Mr. Drabinski said. “We’re right in the heart of this natural-gas boom.” Business is also booming for truck dealerships, restaurants and motels. Some farmers have sold lease rights for $5,000 an acre, using the money to pay off debt, invest in new farm equipment or retire. … Chesapeake, whose Towanda offices are in a renovated department store, says it is working with local colleges so it can train an all-local work force. In the past year, the company increased its staff in the state to 1,100 from 250 and said more than 400 employees are state residents. (Wall Street Journal, 12/14/10)

Responsible Marcellus Development “The Region’s Gold Rush”: The Marcellus Shale is said to be the biggest natural gas field in the United States — spanning nearly 61 million underground acres under Ohio, West Virginia, Pennsylvania and New York. Southwestern Pennsylvania is called the “fairway” of the shale by industry experts, and its economic impact reaches beyond the energy in demand. Local politicians have described it as the region’s gold rush and the second coming of the coal and steel industries. (Post-Gazette, 12/16/10)

Economic Leaders: “Marcellus-Related Opportunities Have Meant Jobs in Various Areas”: Economic leaders…have been watching the Marcellus action to the west of the region and in the state’s northeastern counties. “JARI has identified the Marcellus Shale opportunity as one of the top opportunities for our region in the coming years,” Thomson said. … “The Marcellus industry needs just about anything and everything. It’s just amazing the amount of things that are needed.” … “The spinoff is where we’re going to see the economic impact,” Silka said. … Bradford County Commissioner John Sullivan said Marcellus-related opportunities have meant jobs in various areas. “They’re building three motels in the county,” said Sullivan. Sullivan has a friend who sells tires, and the Marcellus drilling has had a significant impact on his business. Another friend has a quick-lube shop and is overrun with business… Williamsport has seen 75 new businesses open during the past 18 months – since the surge in Marcellus drilling began there. … Kathryn Klaber, president of the Marcellus Shale Coalition said much of the economic benefit will be outside the direct industry. “The jobs story is starting to have a much broader reach,” Klaber said. … State Sen. John Wozniak, D-Westmont, said the Johnstown region is on the cusp of an improved economy. “It’s just beginning and there is a tremendous opportunity out there.” (Tribune-Democrat, 12/15/10)

Wall Street Journal Underscores Marcellus Shale’s Positive Economic Impact: A recent Penn State study estimates that Marcellus is the second largest natural gas field in the world. The study notes that Pennsylvania had $4.5 billion in Marcellus-related investment in 2009, generating nearly $400 million in state and local tax revenue and 44,000 jobs. … The drilling industry could compensate with new jobs in construction, trucking, engineering and a variety of attendant services. The industry also pays royalties and leases land from landowners, who pay taxes and buy goods. … The EPA and the Ground Water Protection Council, a nonprofit made up of state regulatory agencies, have published studies concluding that fracking is safe. While energy exploration is never risk-free, the Ground Water Council hasn’t found a single documented case of fracking having polluted local ground water. (Editorial, 12/16/10)

New Fed. Govt. Analysis Projects Rapid Growth in Clean-Burning Natural Gas

“DOE sees rapid growth in natural gas”: The Energy Department foresees a rapid growth in natural gas production over the next 25 years, according to a report from its statistical arm Thursday. … Natural gas will represent 62 percent of new capacity by 2035, EIA said. The greatest chunk of that should come from shale gas, which has already increased production 14-fold over the last decade. (Politico, 12/16/10)

“Shale-Gas Output May Double by 2035, Reducing Energy Imports, U.S. Says”: Production forecasts for natural gas locked in shale have doubled, which will help the U.S. become less reliant on imported energy, according to a federal agency. The Energy Information Administration’s annual long-term forecast shows gas from shale will play a bigger role in meeting U.S. demand, Richard Newell, agency administrator, said today in Washington. Production in 2035 is “twice the level that we had in last year’s outlook,” he said. … This year’s outlook more than doubles the estimate of U.S. technically recoverable reserves of natural gas from shale, a type of sedimentary rock, to 827 trillion cubic feet from 347 trillion cubic feet. New technologies that let natural-gas producers drill horizontally and fracture the rock formations with injections of water, sand and chemicals account for the increase, Newell said. (Bloomberg, 12/16/10)

“US doubles estimates for gas reserves”: In the first release from its Annual Energy Outlook for 2011, the EIA more than doubled its central estimate of the country’s technically recoverable reserves of shale gas, from 353,000bn cubic feet to 827,000bn cubic feet. The estimate would be enough to cover the entire gas consumption of the US for 36 years. The rapid development of shale gas production has already had profound effects on the US energy system, driving down prices and inspiring companies to invest in plants to produce supercooled liquefied natural gas that can be exported in tankers to Europe or Asia. (Financial Times, 12/16/10)

New Lycoming College Poll: “Public opinion is largely supportive of the development of Marcellus Shale”

Canonsburg, Pa. – A new Lycoming College poll released today finds that “public opinion is largely supportive of the development of Marcellus Shale” in central and northeastern Pennsylvania, a region that is experiencing significant natural gas activity and production. Kathryn Klaber, president and executive director of the Marcellus Shale Coalition (MSC), issued this statement following the release of the poll:

“These results are welcomed news, and affirm the fact that as responsible Marcellus development continues throughout the region, more jobs and more supplies of affordable, clean-burning, homegrown energy will continue to be realized. Pennsylvanians – particularly in communities where Marcellus production is underway – understand this too and this research bears that out.

“But while a clear majority of Pennsylvanians understand the historic economic, energy security and clean energy benefits associated with responsible Marcellus development, it is incumbent our industry to equip citizens with the facts about our industry’s work.

“We’re not only committed to ensuring that communities are well-informed and educated about these critical issues and the environmental safeguards that we are applying to every aspect of our operations, but we’re also working each day to attract and retain a talented local workforce.”

Key poll findings:

  • When offered a list of possible benefits that might result from the development of Marcellus Shale in the region, respondents were most optimistic about its potential for the creation of many new jobs for the region; in total 78 percent felt the creation of many new jobs was very likely or somewhat likely to occur.
  • Similarly, 71 percent felt that the natural gas industry would create needed economic development in the region.
  • Sixty-one percent agreed that natural gas development would be very likely or somewhat likely to reduce our reliance on foreign sources of energy.

NOTE: The Lycoming College poll is available on-line HERE. Last week, the MSC formally unveiled a set of guiding principles — “Our Commitment to the Community” — by which Marcellus operators will conduct their work and ultimately be judged. Also, click HERE to view the MSC’s new web video, “The Marcellus: An American Renewal.”

Onorato wants drilling to go on, but with care

WILKES-BARRE – Democratic gubernatorial nominee Dan Onorato said Thursday he doesn’t support a moratorium on drilling in the Marcellus Shale region, but he does want to see the gas industry grow in “a responsible way.”

“I will grant permits,” Onorato said. “But I want these companies to hire Pennsylvanians. I don’t want to see a bunch of Oklahoma and Texas license plates here.”

Onorato visited the Scranton Chamber of Commerce to speak to members and young professionals of POWER Scranton to discuss the opportunities for economic growth in Scranton.

“Northeast Pennsylvania is in a unique situation to benefit from great economic growth,” he said. “The combination of location, resources and infrastructure could lead to an economic boon for the region’s economy.”

Onorato is opposed by Republican Tom Corbett, who has served two terms at the state’s attorney general.

Onorato knows Northeastern Pennsylvania – he is married to the former Shelly Ziegler of Mountain Top. Onorato said he has traveled to the region regularly for the past 20 years to visit his in-laws, Bill and Sue Ziegler.

“The northeast region is very important to me,” he said. “I will be campaigning here a lot over the next 17 weeks. I see a lot of similarities between here and my home area of Pittsburgh.”

Onorato, 49, has served as the Allegheny County executive for seven years. He boasts that when the next budget is passed in October, it will mark 10 straight years of no tax increase in the county.

“I’ve run the second largest county in the Commonwealth,” Onorato said. “We’ve downsized government – going from 10 row offices to four and we consolidated five 911 centers to one. Those two moves alone saved taxpayers $7 million per year.”

Onorato, the father of three teenagers, said he is optimistic about the governor’s race. He said he doesn’t believe a poll released last week that showed Corbett ahead by 10 percentage points.

“The same people that did that poll also had McCain ahead of Obama in 2008,” He said. “All the polls I’ve seen show this race to be neck-and-neck. I know it will be a battle, but I believe I can win.”

Onorato said the northeast region’s proximity to New York and New Jersey makes it the perfect location to become the warehouse distribution center for the eastern part of the country.

“I see a lot of potential here,” he said.

The Democrat said he would seek to enact a severance tax on the Marcellus Shale drillers and he would use the revenue to fully fund the state Department of Environmental Protection. Onorato said DEP took a 28 percent budget cut last year and he wants to return the department to full capacity.

“If we’re going to allow drilling, then we need a department to watch over it and protect the water and the environment,” Onorato said.

Bill O’Boyle, a Times Leader staff writer, may be reached at 829-7218.

Copyright: Times Leader

Interest in natural gas fades for now

Insiders say price declines and credit issues are limiting lease bids and bonus payment offers.

The natural-gas windfall seems to have dried up – at least for now.

Commodity price declines, disappearing credit worthiness and companies transitioning to produce gas from the lands they’ve leased have combined to limit lease bids and reduce bonus payment offers.

“Not only are we noticing it, there’s no argument that’s not happening,” said Jack Sordoni, who owns the Wilkes-Barre-based fossil-fuel drilling company Homeland Energy Ventures LLC and is negotiating leases for local landowners.

Though he’s recently inked leases in Fairmount Township with $2,850 per acre up-front bonuses, he said he’s also recently had similar offers in the same area fall to $2,000 per acre. Other sources are reporting offers dropping back to pre-summer levels of several hundred dollars.

Part of the cause for the change, he noted, is that some large companies have dropped out of the leasing competition because prices have fallen and the credit crisis has hampered their ability to take on short-term debt.

“I would suspect, not being an economist, that they would have pretty far reaching” effects, he said. “The ones who are signing aren’t competing with as many players, so the prices aren’t going to be as high.”

The companies say the clock is ticking on beginning work on existing leases, so they’re focusing on filling out the gaps in the territories they’ve already locked up.

“We have moved from the lease acquisition phase to the development phase,” Chesapeake Energy spokesman Matt Sheppard wrote in an e-mail. “We are leasing strategically to support our existing leasehold.”

Sheppard said that for Chief Oil & Gas and many companies “it is more of a shift to moving dollars into drilling and development” instead of continuing to build leasehold in unproven areas.

Chief Oil & Gas spokeswoman Kristi Gittins wrote in an e-mail: “A lot of acreage has been leased. As drilling begins and areas prove out, leasing should pick up.”

Sordoni said that in the business “a lot of times we call that ‘going operational,’ and think for many of them, that’s true.”

With drilling and production increasing, natural gas prices have dropped about 50 percent in the past half year, he noted.

“This was a gold rush at the beginning. It was a frantic pace. Companies were scrambling. The pullback of the commodity prices has certainly led to a slowdown,” he said.

But there are some positive indications for unsigned properties. For example, companies have already shown indications of ramping up production in the region.

Gittins said Chief will soon have four rigs in the region, including one made specially for maneuvering in the hilly Appalachian region, and two more by early 2009.

First, the gas isn’t going anywhere. Horizontal drilling only allows vertical fracturing of rock, and it’s illegal to drill beyond the leased boundaries. So the rule of capture – which allows gas or oil to be collected from a rock fracture that crosses a lease boundary – doesn’t apply.

Secondly, companies have already shown indications of ramping up production in the region.

Gittins said Chief will soon have four rigs in the region, including one made specially for maneuvering in the hilly Appalachian region, and two more by early 2009.

Chesapeake is predicting it will need much more water for its drilling operations before the 2012 expiration of its current permit with the Susquehanna River Basin Commission. While the company isn’t asking to change its permit to withdraw 5 million gallons daily from the river, it is asking to expand how much water it can use each day from 5 million gallons to roughly 20 million gallons.

Copyright: Times Leader