It's the Economy, Stupid!

This past summer, if any of us can still remember days that had sun and no snow, Penn State University offered a study of the Marcellus Shale indicating that by 2020, the oil and gas industry could be generating somewhere in the neighborhood of 175,000 jobs.
That's a lot of work for the Appalachian region, stretching from Kentucky through West Virginia, Pennsylvania, Eastern Ohio and Southern New York. Good, steady well paying jobs of all sorts. Science and engineering jobs that parents can believe their children may return home for after college. Work on rigs and developing and remediating well sites that could put many industrial folks back to work. And so many others. Jobs are the shining star of Marcellus development.
So I was pretty surprised when people at information sessions started telling me that Marcellus jobs were a myth. They were all imported from Texas. or Oklahoma. or Colorado. Crews came up worked on rigs, made a ruckus, and then went home. They weren't "sustainable" jobs, to use a word that keeps popping up in all the wrong places.
I'm not an economist. I can only counter those allegations with what I see. So I'll start with an observation.
Range Resources, the company that considers itself (rightly so) the father of the Marcellus, began its Appalachian presence a few short years ago with one man -- Ray Walker, its President. Today, it employs over 200 in the Marcellus region, and leases quite a bit of office space in Southwestern Pennsylvania. It also uses lots of fleet vehicles, office equipment, housing, and so on. That's one company.
In the last few years, companies that have established a presence in the basin, or grew a smaller operation include Chief Oil & Gas, XTO/Exxon, Fortuna/Talisman, MarkWest, Williams, Atlas, Chesapeake, EnCana, Haliburton, Schlumberger, Hess, EXCO Resources, Cabot, and Anadarko to name a few. Its an impressive list of names. There are others, and even more are on their way.
When I think about companies moving in, I think about the basics of setting up office. In addition to the managers and rig hands and geologists and engineers needed to run the operation, you also need secretaries, assistants, geotechs, safety people, accountants (I've been amazed at the number of accountants this industry employs to get everyone paid and royalties out the door), land personnel, lawyers, regulatory and permitting people, public relations folks, IT and tech people, interns, clerks, you name it. Drilling is a complicated endeavor - to borrow from the Clinton's again, it takes a village to produce a well, so to speak.
So I have a hard time when people tell me the only jobs in the Marcellus are rig hands imported from Texas. or Oklahoma. or Colorado. I will tell you there are managers that have been imported from those areas -- that's because the oil and gas industry has been a little more lively where they're from in recent years, and because these are some of the best people available at doing those jobs. Funny thing is this -- lots of them are from Appalachia originally. I once heard an Appalachian executive say a great thing about the Marcellus is getting people back home who were forced to leave for other areas in the 1980s when the local oil economy fell on hard times.
But regardless -- when an executive comes here to take a position in a play forecast to last as long as the Marcellus play is projected to go, he or she buys a house, enrolls kids in school, and starts patronizing local businesses. That can only be good in a place like PA that's been bleeding people to other states for years.
The jobs are there -- check local boards. EQT, more of a regional company, is hiring so many people right now they may have to import. There just can't be enough qualified people in the region to do what they need done at the current moment. Schools in eastern PA see this trend needs to remedied. Both Penn College and Lackawanna College have set up technical programs to train people in jobs like well tending, oil and gas equipment maintenance and rig work. Expect to see more programs like that emerge as the play grows.
I've also run across some things that are just fun about the flurry of activity surrounding well drilling that benefit an economy. For the southerners that have moved north, or are here to train new crews, the weather this winter was more than a surprise. I believe it could have jump started a business boost for those who install remote starters in cars and trucks. I've been in parking lots for oil and gas companies that at lunch and the end of the day are filled with idling white pick-ups with out of state plates.
Bakeries near producer offices also have to be thriving. The oil and gas industry is one in which vendors of equipment, services and innovation like to stop in and meet face to face with potential contacts and share their latest success and products. This almost always includes pastries. I spent over a year working as a consultant in a producer's office -- someone was always visiting, and there were always Krispy Kreme, Dunkin Donuts and Einsteins Bagel boxes. As offices grew and took on more employees, the number of goodies brought in by vendors grew as well. The oil and gas industry loves breakfast.
The bump in hotel and lodging use is one non-believers like to attempt to debunk. But at a time when people are spending less on vacations and travel, hotels in and around the Marcellus region often have something to cheer about. Last summer, I visited a small inn complex in Clark's Summit in northeastern Pennsylvania. The comfortable inn was booked solid by landmen, and oil and gas folks for the next year. Year -- not month, not season, year. I have a funny feeling the inn owners aren't among those who say there aren't economic boosts to drilling.
Then of course there are local heavy equipment operators hired to help prepare and remediate sites, local material companies who provide items like stone, gravel, liners, rental equipment and other items for well site work, and local truckers who handle various hauling needs. Regional and local engineering and project management outfits have seen much business come their way in terms of permitting, site design, surveying, and environmental assessments. My favorite job so far is rattlesnake handler: PA requires that in some areas, where specific types of snakes are known to live, a snake handler be available during all well construction activity. Who knew?
It seems it takes all kinds and many types of occupations to effectively produce a Marcellus well. 175,000 jobs doesn't seem like such a big number when put into perspective.