Pennsylvania sees positives coming from Marcellus and Utica shales as businesses move into area and add employees.
Williamsport, Pennsylvania, has always been filled with diverse industries. In the mid-2000s, Williamsport had businesses such as metal manufacturing, wire rope manufacturing and food industry, including a Kellogg’s plant.
Then just over five years ago, a new industry emerged: gas and oil businesses. The Marcellus and Utica shales were just becoming big, and Williamsport, located in the north-central part of the state, was going to receive a strong economic boost.
“We saw the industry come in here in 2009, 2010 — they were looking for buildings, properties,” says Jason Fink, who is the executive vice president of the Williamsport/Lycoming Chamber of Commerce. “It was real active.”
Williamsport was prepared for the gas and oil boom, already having a strong infrastructure in place. The largest city in Lycoming County had an existing rail yard so it could accommodate all the rail activity the industry was going to generate.
SPREADING THE WEALTH
Since the Marcellus and Utica shales encompass over 90,000 square miles, including about 60 percent of Pennsylvania, Williamsport isn’t the only city to feel the trickle down of good fortunes.
“It’s a life-saver for the state of Pennsylvania,” says Larry Allison Jr., owner of Allison Crane & Rigging, which has its main office in Williamsport. “If you didn’t have the Marcellus in Pennsylvania, Pennsylvania would not be able to support jobs and the incomes.”
According to a January 2014 survey done by the American Petroleum Institute, the oil and natural gas industry contributed $34.7 billion to Pennsylvania’s economy from October 2012 to September 2013. During that same time frame, 339,000 jobs in the state were supported by the oil and natural gas industry.
Allison says his company has done so well since the boom, it has been able to triple its employees’ salaries. “The benefit for the state of Pennsylvania is just giant,” he says.
In a report released by the U.S. Energy Information Administration, in 2012, Pennsylvania ranked as the third-highest state in dry natural gas production.
Pennsylvania (6.13 billion cubic feet per day) trails only Texas (18.84) and Louisiana (7.98). In fact, Pennsylvania came in No. 13 in the world in dry natural gas production.
PLENTY OF ACTIVITY
Growth really began to pick up in Williamsport by 2009 as hotel development, apartment complexes and new business construction were popping up around Williamsport. The city’s industrial park was pretty mature and built up prior to the boom, so any new construction had to take place outside the city limits.
The Marcellus Shale has brought plenty of new businesses to Pennsylvania. According to Pennsylvania’s Quarterly Census of Employment and Wages, between the third quarter in 2010 and the third quarter in 2014, 960 (331 core industry and 629 ancillary industry) Marcellus Shale-related establishments were added in the state. That represents a 39.7 percent growth in the core industries and 5.1 percent growth for ancillary industries.
Big businesses such as Halliburton entered the market in 2010. The Texas-based oilfield services giant set up shop in nearby Montgomery. “You had other companies like that that just stepped into the area, either doing new builds, new construction or adaptive reuse of existing buildings,” Fink says.
Companies like Allison Crane & Rigging already had a presence in Williamsport and took advantage of having an energy gold mine in their backyard.
“When the gas field came to the Williamsport market, we were the first company getting into the oilfield because they were calling for our cranes and they were calling for our trucks,” Allison says. “We expanded upon that and grew our crane fleet; we grew our trucking fleet; we grew our water fleet.”
Allison Crane & Rigging has expanded its operations in Pennsylvania to meet the needs of the boom. It also has locations in State College and Mansfield.
“Geographically, we’ve spread out to where the hot markets are,” Allison says. “We’ll keep expanding into the hotbeds.”
ADDING THE WORKFORCE
Since Williamsport had never experienced anything similar to a boom in natural gas, an influx of workers invaded the area at the outset of the Marcellus discovery.
“We had a lot more people come to the area from outside of Pennsylvania because we didn’t have local people that could do the jobs,” Fink says. “That was a big thing, because we didn’t have an available workforce that understood what the needs of the industry were. We had a competent, capable workforce, it just wasn’t skilled within the gas industry.”
However, those who came to teach the local workers about the industry were only in Williamsport for a short time and then left. The city didn’t experience a huge population increase because of the discovery of natural gas. “We haven’t really seen that population boom and bust like North Dakota has seen,” Fink says.
A SLIGHT SLOWDOWN
Williamsport and throughout Pennsylvania are still attracting businesses to the area, but the activity has slowed down due to the drop in the crude oil prices.
“Absolutely. Look at the rig counts,” Allison says. “You drop the rigs by three-quarters almost. It’s affected everybody.”
Halliburton announced in June it was closing its 430-worker facility in Homer City, which is in the western part of the state.
“When they’re going gangbusters, everybody’s coming in trying to take advantage of whatever opportunities there are,” Fink says. “Once you start to see a little bit of a slowdown, that’s when you see companies either consolidate or go out of business. We’ve got both Baker Hughes and Halliburton here in the market.
Well, Halliburton’s buying Baker Hughes, so you’re only going to have one of them surviving that way. You’ll have two facilities, but that’s the type of stuff that takes place in this industry.”
The peak of the Marcellus and Utica shales was only about five years ago, but things can change quickly in the industry. Williams, a global energy and communications company that moved into the state in the 1960s, relies heavily on the Marcellus Shale for its production.
“It definitely has an impact on our customers, therefore it has an impact on us,” says Jeremy Zeman, manager, commercial development for Williams’ northeast region. “We’ve been working hard to try and connect the record levels of natural gas that have been out there.”
Williams has three locations in Pennsylvania: northeast, northwest and southwest. It also runs compression stations near Williamsport. “We’ve had really good success in northeastern Pennsylvania with some pretty large quantities of natural gas that have been produced out of that area,”
Zeman says.
Despite the slower time, the future looks bright for the Marcellus and Utica shales. Fink believes the plays will be great producers of natural gas for a long time because they are positioned well.
“We don’t see it dying off. This gas isn’t going anywhere,” Fink says. “They’ve invested significantly in terms of their resources. And while they are large companies that could take and deal with the closing of a facility here in the market, they’re not going to because they look at this as a long-term play, a long-term investment. They’re not going to put that type of resource into some place it’s not worth it, especially given the fact that Pennsylvania is open for business for natural gas development.”
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