Unions Embrace Shale Boom Creating Local Jobs and Environmentalist Disdain

A horizontal drilling rig goes up in western Pennsylvania. Photo courtesy of Wikimedia Commons.

A horizontal drilling rig goes up in western Pennsylvania. Photo courtesy of Wikimedia Commons.

On Earth Day 2014, it’s worth noting a fault line is beginning to emerge between long time allies

Foes of the drilling practice known as fracking are frustrated at Labor Union support of drilling in the Marcellus and Utica shale basins, according to the Associated Press. More than 6,000 wells have been drilled in the region that encompasses large parts of Pennsylvania, Ohio, and West Virginia to extract oil and natural gas, and fracking has created many jobs while turning once dirt-poor regions and its inhabitants prosperous. 

Environmentalists and green groups don’t like the perceived ecological damage. Penn Environment has called for much stronger regulations and a ban on drilling in some areas, such as state forests.

But blue-coillar workers particularly Laborers’ International Union, or LIUNA, have shown strong support because of the large influx of local jobs created over the last five years, the AP said. LIUNA represents workers in numerous construction trades. It’s mid-Atlantic regional manager Dennis Martire called the new industry a “lifesaver.”

Martire said that as huge quantities of natural gas were extracted from the vast shale reserves over the last five years, union work on large pipeline jobs in Pennsylvania and West Virginia has increased significantly. In 2008, LIUNA members worked about 400,000 hours on such jobs; by 2012, that had risen to 5.7 million hours.

Nationally, the Bureau of Labor Statistics says total employment in the nation’s oil and gas industry rose from about 120,000 in early 2004 to about 208,000 last month. Less than 10 percent of full-time oil and gas industry workers are represented by unions.

This has crated rift between the two reliably Democrat groups that threatens the coalition of voters the party needs to turn out the vote and win elections. But self interest is strong motivator and the prospect of long-term employment in a diverse and interesting energy sector is making converts of some workers who were once dubious.

And even now some powerful unions are withholding judgment. Anthony Montana, a spokesman for the United Steelworkers, declined to comment on how much drilling is helping that industry.

But others say the trend toward more local jobs is clear.

Mike Engbert of the Ohio Laborers District Council said that while some companies still use a lot of out-of-state labor, “Across the board, job gains have really shot up.”

For some, the drilling-related work is a big improvement over low-wage service jobs.

“I’ve probably worked 15 jobs, and none of them nearly as stable as this one, or nearly as interesting,” said Amy Dague, 38, of Wheeling, W.Va. She’s worked for a pipeline construction and maintenance company for a little more than a year.

“It’s definitely changed the way I see my future. I see this as long-term employment,” Dague said.

It’s hard to see how wind and solar can keep pace, even when heavily subsidized by the government. There’s just too much volume in oil and gas exploration from upstream companies paying for the rigs to midstream haulers and pipeline builders all the way to the downstream beneficiaries in the region like hotel providers, restaurant owners, and shop keepers providing services for field workers.

As Thomas Lifson said in an American Thinker piece, “Fracking is one of the greatest boons to America in my lifetime. In addition to all the domestic benefits, it disempowers the Muslim oil powers responsible for the spread of worldwide jihad, and Russia’s Putin.”

Indeed, but even when you take geopolitical considerations out of the equation, the sheer economic multipliers are strong enough reasons to continue oil and gas exploration in these rust-belt states. Interestingly, the political fault lines formed here because of Labors’ needs and Environmentalists’ disdain may prove more toxic than fracking itself.

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Eagle Ford Oil & Gas Corp. closes major acquisition

Current production from three surrounding formations have estimated ultimate recovery between 350,000 and 500,000 barrels per well

In a press release, Eagle Ford Oil & Gas (ECCE) announced it has acquired an 85 percent working interest in 3,684 acres in hydrocarbon rich Frio County, Texas located south of San Antonio, Texas. The purchase price for the acreage in the heart of the Eagle Ford Shale oil and gas play was $6.26 million and is funded by project finance from a private fund, the release said.

“The acreage lies within the historic Pearsall Field where more than 200 million barrels of oil equivalent (boe) have been produced from the prolific Austin Chalk, sourced by the Eagle Ford Shale. Current success of industry activity in the immediate area demonstrates a high degree of prospectivity in the Austin Chalk, Eagle Ford Shale and Buda Lime, all of which are primarily black oil reservoirs Substantial legacy well data within and adjacent to the acreage clearly indicate the presence of effective fracture systems in all three reservoirs. The Company has rights to all formations including the deeper Pearsall Shale, a condensate-rich gas reservoir which the industry has just begun to exploit in the area.”

 

Can shale gas meet China’s energy needs?

Foreign oil companies are licking their lips at the prospect of a Chinese gas rush

Simon Montlake the Beijing Bureau Chief for Forbes says despite China’s large potential to exploit proven shale gas reserves the country may have a difficult time doing so.

“The question is at what price would gas be sold, and who owns the downstream industry. The ongoing battle to control China Gas Holdings, a Hong Kong-listed gas distributor, is one clue to the high stakes. Any privately invested upstream producer of shale gas will require assurances that they can get a fair price. That isn’t the case with China’s natural gas imports; state-owned importers must bear the loss from subsidies. Two cities have begun experimenting with regulated gas prices pegged to global oil prices, but this would need to be adopted more widely. Investing in unconventional gas fields, with all the technology required to make it feasible, sounds like a loser’s game without market-based pricing. So China’s desire for cleaner energy runs up against its need to tamp down inflation and protect the turf of national oil companies. Don’t expect a wildcat boom in shale gas in China’s western heartland.”


Halliburton warns of lower profit margins

The high cost of guar gum has been felt across the oilfield services sector

The Halliburton Company said Wednesday that its North American profit margins this quarter would drop by twice as much as it had been expecting, knocking its stock price down to an eight-month low, according to a Reuters article in the New York Times.

“The giant oilfields services company attributed the bigger decline in its profit margins to a shortage of guar beans in India. Guar, which is also used to make sauces and ice cream, is a key part of the hydraulic fracturing fluids that have been in high demand because of a boom in American drilling and well development. Halliburton has said the guar system can now account for as much as 30 percent of the overall fracking price.”

We reported last week how the shale gas boom has resulted in a spike in the price of guar beans from India. (Link here.)

“U.S. companies drilling for oil and gas in shale formations have developed a voracious appetite for the powder-like gum made from the seeds of guar, or cluster bean, and the boom in their business has created a bonanza for thousands of small-scale farmers in India who produce 80 percent of the world’s beans. [...]

“It has also turned guar into a precious commodity farmers now call “black gold”. In the Rajasthani city of Jodhpur, under the shadow of an ancient fort, traders buy guar seed at 305 rupees ($5.5) a kg, a 10-fold increase from a year ago.”


Opinion: Fracking safety improves dramatically, says independent study

Opinion: Fracking safety improves dramatically, says independent study

In a commentary at Forbes contrarian columnist Jon Entine says recent study shows vast improvement in hydraulic fracturing and oversight. (Here’s a press release from the University of Buffalo touting the study.) 

“The safety profile of hydraulic fracturing has improved dramatically in Pennsylvania since 2008. Environmental violations as a percentage of wells drilled dropped by more than half over the course of the years examined. The study—the first based on comprehensive data rather than on anecdotal claims or selective reports—contradicts claims by anti-fracking groups that shale gas extraction is poorly regulated in Pennsylvania and that the environmental dangers are increasing,” Entine says.

Readers should note that one of the study’s authors Timothy J. Considine, a University of Wyoming economics professor, has come under fire as being in the pocket of the oil industry, according to a blog at the BuffaloNews.com, edited by Business Editor Grove Potter.

Indeed, according to the Washington TImes, opposition groups contend there is a cumulative impact, saying that as more wells are drilled, the number of environmental incidents increases. The study bears this out showing the overall number of incidents tripled from 2008 to 2011, even though the number per well went down.

Still, the story says industry leaders are mounting a pushback against a one-size-fits-all standard from Washington, D.C, arguing that states such as Pennsylvania and New York are better equipped to craft guidelines specific to their geographic and environmental situations.

The Pennsylvania Department of Environmental Protection has stepped up its environmental oversight since the shale boom kicked off in earnest in 2008, by revising permit applications and requirements, increasing air and water quality monitoring and heavily fining companies fouling the environment. It continues developing policy and programs for the regulation of oil and gas development and production pursuant to the Oil and Gas Act, the Coal and Gas Resource Coordination Act, and the Oil and Gas Conservation Law, among other things, according to its website.

Then-Gov. Edward G. Rendell signed Act 15 into law in 2010 to make the activities of drilling companies and their business partners more transparent. Pennsylvania’s DEP has regularly fined companies for their violations, and the state adopted new regulatory guidelines last year after Republican Gov. Tom Corbett took office, according to the Washington Times.

An NPR report in August 2011 by Scott Detrow, as part of its StateImpact series, says [d]ur­ing the early years of the country’s shale drilling boom, there was next to no trans­parency, when it came the details of chem­i­cals used dur­ing the hydraulic frac­tur­ing process. But over the past year, Penn­syl­va­nia and four other states have passed laws or reg­u­la­tions requir­ing much more dis­clo­sure from drilling companies.”

According to the Washington Times story: “The [University of Buffalo study]comes at a time when many industry leaders are growing increasingly concerned that federal rules, such as those proposed by the Environmental Protection Agency and the Interior Department, could hamper the development of domestic natural gas.”


Recoverable oil in west ‘about equal to entire world’s proven oil reserves’

Recoverable oil in west ‘about equal to entire world’s proven oil reserves’

According to Terence P. Jeffrey at CNSNews, “[t]he Green River Formation, a largely vacant area of mostly federal land that covers the territory where Colorado, Utah and Wyoming come together, contains about as much recoverable oil as all the rest the world’s proven reserves combined, an auditor from the Government Accountability Office told Congress on Thursday.”

Via Jazz Shaw at HotAir, who, in highlighting the article, says, “If we move forward on this aggressively, the industry can safely access these resources which would significantly strengthen our hand on the international stage. But with the wrong approach, Washington could hog tie energy developers with excessive, expensive regulations or shut the entire process down by failing to issue permits to develop resources on these federal lands.

“The public disclosure of these reserves is good news, but it’s only the beginning. And while I feel some trepidation in saying it, I’m afraid the ball is in Barack Obama’s court.”


Shale exploration gains support in Ohio: API

Shale exploration gains support in Ohio: API

Sabrina Fang, writing for the American Petroleum Institute, sights polling in Ohio supporting more drilling for oil and gas in the Utica and Marcellus shale formations.

“A March poll of likely Ohio voters, conducted by bipartisan groups Public Opinion Strategies and Frederick Polls on behalf of API, found that 73 percent of Ohio voters favor more development of U.S. oil and natural gas resources. The poll found that large majorities agree that more U.S. oil and natural gas development could lead to more American jobs (91 percent), increase the nation’s energy security (86 percent), help reduce consumer energy costs (84 percent), and deliver more revenue to the government (75 percent). Seventy-four percent believe that some in Washington are intentionally delaying domestic oil and natural gas development, potentially hurting the economy and leading to higher energy costs for consumers. “


Eagle Ford generated $25 billion in south Texas revenue

Eagle Ford generated $25 billion in south Texas revenue

PennEnergy reports, development of oil and natural gas in the Eagle Ford Shale contributed $25 billion in total economic output to the region in 2011, according to a study released today by the Center for Community and Business Research at The University of Texas at San Antonio Institute for Economic Development (UTSA).

The study also concluded that in 2011 shale development:

• Paid $3.1 billion in salaries and benefits to workers;

• Provided more than $12.6 billion in gross regional product;

• Added more than $358 million in state revenues, including $120.4 million in severance taxes;

• And spurred a triple-digit sales tax revenue increase in various local counties.

 

 


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