Workforce Implications from Natural Gas Development New York Association of Towns Binghamton, NY June 24 th, 2011 Jeffrey Jacquet Cornell University Dept. of Natural Resources jbj47@cornell.edu 1
Jobs Local Businesses Landowner Royalties Local Government 2
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Name of Study Number of Jobs Considine et al 2009 98,000 Jobs in Pennsylvania!!! PA Labor and Industry 2011 Weinstien and Clower 2009 72,000 New Hires in one Year!!! 20,000 Jobs in Broome County!!! 4
JOB CREATION It is Complicated! Direct Workforce Indirect Workforce Induced Workforce Resident and Non-Resident Workforce Short Term and Long Term Workforce 5
Bottom Line on Job Creation: Where? When? and Who? 6
I/O Modeling (IMPLAN), very simply Input amount of money spent on drilling (and wages and royalties) Program uses regional economic profile to estimate how much money is absorbed and respent locally Creates indirect and induced job multipliers based on this local stimulus But: drilling costs change rapidly, local economic profiles change, spending patterns are not well known, workers may be non-local, and royalties may not be spent locally. 7
Direct Workforce Copyright 2005 Tim Matsui www.timmatsui.com 8
Indirect Workforce Copyright 2005 Tim Matsui www.timmatsui.com 9
Induced Workforce 10 Michael J. Mullen Scranton Times-Tribune
Name of Study Direct Jobs Indirect Jobs Induced Jobs Total Jobs Considine et al. 2010 Pennsylvania 700 Wells 21,778 8,732 13,587 44,098 Labor and Industry 2011 PA New Hires In 2010 8,273 63,453 71,726 Considine 2010 New York 314 Wells 8,196 2,992 4,540 15,727 Weinstein and Clower 2009 New York 400 Wells 1,627 438 2,065 11
L & I Report Fine Print (not only all new hires, but indirect industries include): Marcellus Shale Ancillary Industries (NAICS): Fossil Fuel Electric Power Generation (221112); Natural Gas Distribution (221210); Water Supply & Irrigation Systems (221310); Sewage Treatment Facilities (221320); Water & Sewer Line & Related Structures Construction (237110); Nonresidential Site Preparation Contractors (238912); Industrial Gas Manufacturing (325120); Iron & Steel Mills (331111); Iron & Steel Pipe & Tube Manufacturing from Purchased Steel (331210); Mining Machinery & Equipment Manufacturing (333131); Oil & Gas Field Machinery & Equipment Manufacturing (333132); Specialized Freight Trucking, Local (484220); Specialized Freight Trucking, Long-Distance (484230); Lessors of Other Real Property (531190); Construction, Mining & Forestry Machinery & Equipment Rental & Leasing (532412); Engineering Services (541330); Geophysical Surveying & Mapping Services (541360); Testing Laboratories (541380); Environmental Consulting Services (541620); Remediation Services (562910); Commercial & Industrial Machinery & Equipment Repair & Maintenance (811310). 12 While the vast majority of Marcellus Shale employment can be found in these industries, not all establishments in these industries are necessarily involved in Marcellus Shale.
Name of Study Direct Jobs Indirect Jobs Induced Jobs Total Jobs Considine et al. 2010 Pennsylvania 700 Wells 21,778 8,732 13,587 44,098 Labor and Industry 2011 PA New Hires In 2010 8,273 63,453 71,726 Considine 2010 New York 314 Wells 8,196 2,992 4,540 15,727 Weinstein and Clower 2009 New York 400 Wells 1,627 438 2,065 13
Broome County Study 16,272 Person-Years Over 10 years = 1,672 Jobs for 10 Years Why So Low? Assumes Economic and Worker Leakage Meanwhile, Considine Studies Assume All Royalty spending will be local and immediate 14
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Phases of Development Drilling/Development (months/well, years for entire region) Construct access roads, well pad, local collection pipeline Drill & fracture well Production (decades) Truck water from well site, monitor natural gas production Refracture well if necessary Reclaim some disturbance Reclamation Remove surface equipment, plug well Restore landscape 18 (Source: Jacquet)
Drilling & Development Phase Only needed when and where drilling is occurring Long hours, Tough Work Good Pay Copyright 2005 Tim Matsui www.timmatsui.com 19
Production Phase Needed for as long as gas is produced Safe Stable job, long term,smaller Workforce 20
Workforce will Change Over Time (ERG 2008/Jacquet). 21
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What Kind of Jobs? MSETC STUDIES FOUND: 420 Individuals Perform 150 Occupations to Drill one 1 Well. 11.53 Drilling Phase FTE s Per Well 0.18 Production Phase FTE s Per Well 23 98% of Jobs related to Drilling Phase Only.
24 MSETC.org 2011
25 MSETC.org 2011
26 (MSETC.org)
27 MSETC.org 2010
In General: Industry will hire local workers if they are available. Jobs are not for everyone! Require very long hours Require Specialized Training But do not require advanced degrees 28
Training Programs: Offer Orientation to the Industry Work Schedules Terminology Types of Equipment Safety Classes designed for industry Basic Skills classes such as heavy machinery, CDL, Instrumentation, Mechanics, Welding 29 Many focus on long term production jobs
30 Students perform gas well operator functions on training equipment located on the Western Wyoming Community College Campus in Rock Springs, Wyoming. (http://www.wwcc.wy.edu)
31 Workforce Training