State Representative Mark Mustio Workforce and Community Impacts. Jon Laughner Marcellus Shale Team Penn State Cooperative Extension June 1, 2010

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1 State Representative Mark Mustio Workforce and Community Impacts Jon Laughner Marcellus Shale Team Penn State Cooperative Extension June 1,

2 A Few Background Concepts Scale of this may be BIG Resource-based economic development; when it s gone, it s gone. Local impact- multiplier effects if dollars are kept local. 2

3 Economic Development Challenge Help local businesses and workers compete for these new opportunities. Encourage businesses, workers, and royalty owners to spend dollars locally. 3

4 Value? $1.2 trillion dollars of recoverable natural gas in PA.* Pennsylvania Estimates; Could exceed 88,000 jobs created ,000 new employment. * At $4.00 mcf The Economic Impacts of the Pennsylvania Marcellus Natural Gas Play; May

5 Things to Remember: The play is in its infancy Marcellus Gas Infrastructure is being developed Businesses are still moving in Extreme amount of complexity with overall industry, ie; Supply Chain Other Unconventional Plays have provided a guide to occupations. Estimates on the number of wells to be drilled. 5

6 Three Phases of Natural Gas Development Development Phase (Short Lived/Labor Intensive) Well-pad and Access Road Construction Local collection pipeline Construction Drilling of the Well Fracturing of the Well Reclaiming some Disturbance Production Phase (Long lived/small & Steady Labor Force) Trucking Water and condensate from Well Site Monitoring Production Occasional Well Work-Overs (partially re-drill/re-frac) Reclamation Phase Dismantle and Reclaim well-sites Source: Jacquet 6

7 Jonah/Anticline Fields Direct Workforce Through The Three Phases: Graph: Ecosystem Research Group/Jacquet 7

8 What Specific Jobs are Required? Engineers 3% Supervisors 5% Inspectors 1% Landmen/Realty 8% Semi-Skilled Tech. 6% X-Ray Tech 0% X-Ray 0% General Office, 24% Welders-Helpers 1% Welders 1% Timber Logging 1% CDL 10% Cartog/GIS 1% Paralegal 1% Heavy Equipment 17% Gen. Labor 20% Lawyers 4% Geologists 3% 8

9 Barnett Shale (TX)-Which Industries Benefit? Share of Annual Impact on Business Activity Business Sector Crude Petroleum & Natural Gas Personal income Employment 21% 7% Retail Trade 16% 27% New Construction 10% 9% Maintenance & repair 7% 7% Business services 6% 4% Health services 6% 6% Eating & drinking places 5% 15% Transportation 4% 3% 9

10 Opportunities/challenges in Pennsylvania: Economic & Workforce Businesses Existing local businesses benefit? New local businesses? Attract outside businesses? Workers & Residents Local residents/workers HAVE the skills? Locals LEARN the skills? Youth LEARN the skills & stay? Newcomers to move into county? 10

11 What Do We Need? Biggest recruitment challenge is finding experience, work ethic, basic skills, and basic knowledge of industry. Local education and training represents a smaller, yet important, challenge to recruitment. 11

12 Educational Capacityl Local Education and training providers will need to address natural gas specific skills for blue collar jobs. Local Education and training providers have existing programming in place for white collar occupations found in the industry, but may need to expand current capacity. Career and Technical Education Programs are currently teaching some related skills Some now expanding to providing natural gas industry specific programming. 12

13 Major Economic Impacts from 1. Business activity Gas industry Supporting businesses Other local spending by employees & companies 2. Royalty income to landowners 13

14 1. Business Activity Impacts Drilling each Marcellus well requires: More than 410 individuals Almost 150 different occupations 11.5 full time direct jobs Once drilled, every 100 wells generates 17 longterm full-time jobs Estimates: 165, ,000 wells??? + Indirect employment impacts Source: MSETC/CPWDCWorkforce Needs Assessment

15 2. Pennsylvania Activity Royalty Income (per well) 3 to 4 mmcf per day in Marcellus Estimated 2.5 bcf lifetime per well Mineral right owner gets minimum 1/8 th share $2.25 million over lifetime ($4 mcf) $2.80 million ($5 mcf) (spacing is one well every 80 acres or so) Provide opportunities for the money to be spent locally Local business activities & spending? Charitable contributions? Range Resources

16 2. Pennsylvania Activity 52+ energy companies and increasing. Estimated collective $55B by Some selling other assets to reposition here. Large Majors investing in Marcellus and its technology. 16

17 2. PA Spending by Marcellus Industry 2009 Industry spending $2,751,854,000 Payment to Landowners 1,783,448,000 Payroll ,000,000 *The Economic Impacts of the Pennsylvania Marcellus Natural Gas Play May

18 l Taking Action Locally to Shape Impacts Opportunities and Challenges 18

19 Could transform our communities but for the better or worse? Requires careful decision-making about: 1. Thinking long term, not just short term gain Monitoring, understanding & mitigating environmental impacts How can this be used to improve Pennsylvania in long run? Other industries this could attract? 2. Encouraging dollars to stay local Workforce training Business development Housing 19

20 Could transform our communities but for the better or worse? 3. Manage the Boom without having a Bust? Short term housing & worker needs? Plan NOW for when the gas no longer flows 4. Need for monitoring, adapting regulations and recommended practices Social and cultural change Revenue sharing Environmental remediation and use of conservation practices 20

21 Could transform our communities but for the better or worse? 5. Balancing private gain and public good Local control & voice? Quality of life impacts? Effects on other businesses? Who pays for public service impacts (and how)? 21

22 Resources Written Materials Landowner Guide Local Government Primer Natural Resource Primer (spring) Financial Management Primer (spring) Fact Sheet series Includes Organizing a Community Task Force 22

23 Thank You. 23