New York Association of TownsBinghamton, NY June 24th, 2011

Jeffrey Jacquet Cornell University Dept. of Natural Resources

jbj47@cornell.edu

Workforce Implications from Natural Gas Development

1

JobsLocal BusinessesLandowner RoyaltiesLocal Government

2

3

Name of Study Number of Jobs

Considine et al 2009 98,000 Jobs inPennsylvania!!!

PA Labor and Industry 2011

72,000 New Hires in one Year!!!

Weinstien and Clower 2009

20,000 Jobs in Broome County!!!

4

JOB CREATION

It is Complicated!Direct Workforce

Indirect WorkforceInduced 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

7

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.

Direct Workforce

8

© Copyright 2005 Tim Matsui www.timmatsui.com

Indirect Workforce

9

© Copyright 2005 Tim Matsui www.timmatsui.com

Induced Workforce

Michael J. Mullen Scranton Times-Tribune10

Name of Study

Direct Jobs

IndirectJobs

Induced Jobs

Total Jobs

Considine et al.2010Pennsylvania 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 2010New York 314 Wells 8,196 2,992 4,540 15,727Weinstein and Clower 2009New 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).”

“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. “12

Name of Study

Direct Jobs

IndirectJobs

Induced Jobs

Total Jobs

Considine et al.2010Pennsylvania 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 2010New York 314 Wells 8,196 2,992 4,540 15,727Weinstein and Clower 2009New 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

15

16

17

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

(Source: Jacquet)18

19

Drilling &Development Phase

Only needed when and where drilling is occurring

Long hours,Tough WorkGood Pay

© Copyright 2005 Tim Matsui www.timmatsui.com

20

Production Phase

Needed for as long as gas is produced

Safe Stable job, long term,SmallerWorkforce

(ERG 2008/Jacquet).

Workforce will Change Over Time

21

22

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

98% of Jobs related to Drilling Phase Only.

23

MSETC.org 201124

MSETC.org 201125

(MSETC.org)26

MSETC.org 201027

•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

In General:

28

29

•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

•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)

Workforce Training

31