Binghamton Natural Gas Summit: How Many Jobs Does Drilling (Really) Create?
Beyond random speculation, is there really any way to know, scientifically and accurately, just how many drilling-related jobs are being created in the Marcellus Shale? Yes there is! And two of the speakers at the Natural Gas Development Summit held in Binghamton on March 18th at the Regency Hotel, who have extensively studied the issue, laid out their findings for the assembled group.
The speakers were Larry Michael, Executive Director for Workforce & Economic Development with the Pennsylvania College of Technology (PCT), and James Ladlee, County Extension Director with Penn State Cooperative Extension. Both have put in a great deal of time studying the jobs issue. Larry Michael spent six months on the Marcellus Shale jobs issue as a contributing author of PCT’s Marcellus Shale Workforce Needs Assessment study.
What follows are MDN’s notes on this informative session. But we won’t make you read to the end for an answer. According to Messrs. Michael and Ladlee’s findings, every well drilled in the Marcellus Shale generates the equivalent of 12 full-time jobs, in perpetuity—for at least 20 years, as long as the well is active. The slightly longer explanation is, there are many people who work for varying periods of time on a well project, but if you add all of their time together, it would work out to 12 people full-time, ongoing, working directly or indirectly on the well project.
How important is that? Take Tioga County, PA as an example. One drilling company, East Resources, projects they will drill between 6,000-7,000 wells over the next few years. Let’s call it 6,500. That would be the equivalent of adding 78,000 full-time jobs to payrolls in Tioga County. What county would not jump at that opportunity? The economic impact will be huge—and that’s not an understatement. Landowners who lease their land will benefit of course, but entire communities will reap benefits from drilling in the Marcellus Shale as the money spent ripples throughout an area creating even more jobs beyond the 12 full-time jobs working on the well project. “Jobs are coming” was the message loud and clear during this portion of the Summit.
MDN Notes from the joint presentation
Larry Michael opened the talk, focusing on the workforce component. Larry lives in the Williamsport, PA area, smack in the middle of the Pennsylvania Marcellus Shale. He said that his area of PA is about 1 1/2 to 2 years ahead of New York in the drilling process. Two years ago, from January to June of 2008, there was a sudden leasing frenzy in his area. So Larry and others started asking, What kind of workers and training will be needed? What education infrastructure should be in place to meet the demand?
Oil and gas technology was a new area for PCT. Larry (and James Ladlee) were part of a team that spent six months analyzing the workforce requirements for drilling. The results of those efforts became the Marcellus Shale Education & Training Center (www.msetc.org). A copy of their published research, the Marcellus Shale Workforce Needs Assessment study, is available for download (see the end of this post). The charts and supporting material in the study are well worth the read.
The Needs Assessment study looks at the three phases of drilling: Pre-drilling, Drilling & Completion, and Post-Drilling/Production. Wells will usually produce for 15-20 years, on average. The study breaks down the jobs available at each stage. They used interviews and surveys in the Northern Tier and Central counties of Pennsylvania where live, ongoing drilling activity is happening. The model methodology they used for the study is unique and dynamic—allowing it to scale. The model is based on per well and per mile metrics. Plug in how many wells, and get an answer for how many jobs are produced.
James Ladlee then took the stage to discuss some of the key findings of the study. He said that jobs in the Marcellus Shale, due to drilling activity, will increase dramatically. He offered these statistics:
- Roughly 75 percent of the jobs will be blue collar jobs.
- It takes an average of 20-30 different companies participating to drill a well.
- It takes an average 410 people in 150 occupations to drill a single well. They don’t all work full-time! But at some point during the process, over 400 people will have worked at least some amount of time on the well project.
- Each well generates 11.53 (rounded to 12) full-time equivalent workers during the life of the well.
- Each well generates .17 full-time production workers, which are long-term “production” jobs. Put it this way, every six wells will yield one full-time job for many years into the future.
MDN observation: Bear in mind the statistics above do not account for the pass along benefits that an influx of jobs and money will have. An office worker, geologist, “rough neck” or other worker who gets a paycheck from a drilling operation will go into the local community and buy goods and services. The influx of jobs and money will lead to more jobs and money. A virtuous cycle!
The size of the workforce, according to Mr. Ladlee, will depend on the price of natural gas. The higher the price, the more incentive to drill.
Who composes the workforce? In the beginning stages there are a lot of transient workers from Texas, Oklahoma and other oil and gas states simply because there are not enough trained workers locally. Energy companies prefer to hire local, but many times cannot, and so outsiders must come in. That’s one of the challenges that Mr. Ladlee and Mr. Michael are working on—training people to work in the Marcellus Shale. A questioner from the audience asked for a breakdown of outsiders to local workers. Anecdotally, they have found at the beginning of the drilling process workers are about 80/20 or 70/30 out of state workers to local workers. Within 12-18 months that flips around and a majority are local.
On the point of training, Mr. Michael took the stage again and talked about PCT’s short-term training programs. All workers who are onsite at a drilling pad need safety training—the industry (and OSHA) is quite strict about safety training for those working onsite. Occupations like welders (for pipelines), geologists, truckers and even office workers are needed, all with different training requirements. The study does a complete breakdown of the different occupations needed to drill a well.
Mr. Ladlee closed by pointing out that the Marcellus Shale is one of four shale deposits in Pennsylvania and New York. Even though a horizontally drilled and fracked well will produce for 15-20 years, drilling activity in our region is likely to go on for the next 80-100 years. It will span the next several generations, generating a large number of jobs and contributing huge sums of money into our local economies.
Both the slide presentation and full copy of the study are available for download from the MSETC website: