Drilling & fracking operations site of EQT in Washington County in southwestern Penna.

From an Article by Peter Eavis, New York Times, March 31, 2020

CARMICHAELS, Pa. — The last time the global economy was in free fall, an economic savior showed up in southwestern Pennsylvania. Energy companies, which had discovered a way to get at the state’s vast natural-gas reserves, invested billions of dollars in the region, cushioning the blow of the Great Recession.

“There were just so many jobs,” Debbie Gideon, a retired community banker, recalls. “It was crazy.”

But 12 years later, as the region braces for the coronavirus recession, natural-gas companies are much more likely to weigh on the local economy than to rescue it. These natural-gas companies operating in Pennsylvania were looking shaky before the coronavirus hit. Local economies are now at risk.

Even before the latest shock, gas operators were reeling from self-inflicted wounds. They had taken on too much debt and drilled so many wells that they had flooded the market with gas, sending its price into a tailspin.

To conserve cash, the firms have been frantically slashing investments, cuts that will pummel local suppliers and contractors. “Every time one of these slowdowns occurs, they beat down every vendor they can,” said Steve Stuck, president of Jacobs Petroleum in Waynesburg, which supplies diesel to the natural-gas operators.

Pennsylvania, home to the United States’ first major oil wells and a large coal producer for decades, has a long history with the fossil fuel industry. That was a reason the state, unlike New York, allowed gas companies to use hydraulic fracturing — or fracking — to extract gas from the Marcellus Shale formation, estimated to be the largest gas field in the United States.

To many businesspeople and residents, the bet has paid off, not least by creating many well-paying jobs in struggling parts of the state. And though the industry, which Pennsylvania has allowed to operate through the coronavirus emergency, goes through ups and downs, they expect it to remain an important part of their economy for years to come.

“I don’t think we’ll ever get to the bust, because we have 40 to 60 years of gas,” says Mike Belding, a former Marine helicopter pilot and now a commissioner for Greene County. “That’s past our lifetimes.”

But there are strong signs that this natural-gas shakeout could grind on longer than others. And if it does turn into a rout that leads to large layoffs and business closures, Pennsylvania may have to reassess its great shale experiment.

“There is not a lot of knowledge of how fragile these companies are,” said Veronica Coptis, executive director of the Center for Coalfield Justice, which has often been critical of the coal and shale industries. “And when the companies start to struggle financially, the people who get hurt the most are the employees.”

Some energy giants have already lost faith in the region. Chevron in December took a multibillion-dollar write-down on its Appalachian shale assets, dominated by gas reserves in Pennsylvania, and said it might sell them. The stocks of two once mighty Marcellus Shale pioneers, Range Resources and EQT, have plummeted, and their bonds are trading at steep discounts, a sign that investors believe they could default on their debts.

The debts of those two companies and Southwestern Energy, another shale business focused on Pennsylvania, have increased by a combined $7 billion since 2008. Their operations generated far too little cash to pay for their investments. In fact, the three companies’ capital spending exceeded operating cash flows by $14 billion in that period.

The frackers now have fewer friends on Wall Street. “All they’ve done is destroy shareholder value,” said Ben Dell, managing partner at Kimmeridge, a private-equity firm that specializes in energy. “For the Marcellus guys, it will all stop with bankruptcy.”

Shale operators, pipeline companies and service companies together employed nearly 32,000 people in Pennsylvania as of June, according to an analysis of data from the Bureau of Labor Statistics, roughly the same as during a previous peak, and about as many as Pennsylvania State University. In the first half of last year, workers in the shale industry and related sectors on average earned $2,128 a week, almost twice the average for private-sector workers in the state.

Larry Allison Jr., a co-owner of a crane company in Williamsport, a town in the center of the state, said his natural-gas-related business was down 30 percent from its peak, but added that the industry still created high-paying jobs: Crane operators earn $35 to $40 an hour. “Everyone’s making $10 per hour more than they were before,” he said. Activity in the natural-gas industry slowed slightly after the coronavirus outbreak began, Mr. Allison added later.

And Mr. Stuck’s fuel business has ballooned in size over the past decade, an expansion that was in part financed by loans from Community Bank in Carmichaels. “We would never have been able to employ local people from local universities for good competitive-wage jobs,” he said, “It’s been unbelievable to see the impact. And we’ve been through three downturns.” He says natural-gas companies’ demand for his services has not yet dropped because of the coronavirus outbreak.

Residents in gas-producing counties have received royalties for allowing shale operators to extract gas from and run pipelines across their land. “A lot of people made money,” said Ms. Gideon, the former banker. “I was happy for them; they had scraped by for years.” And the copiously flowing gas has lowered utility bills.

But now the shale-gas operators are trying to adapt to a harsher environment. They have cut the cost of drilling and fracking, which involves forcing liquids into the ground at extreme pressures to release gas by fracturing rock formations. Moving vast quantities of sand, used to prop open the fractures, has become more efficient, and operators are saving money by sharing water.

There is one big hope for some of the Pennsylvania gas companies. It’s the giant plastics plant that Shell, with the help of large tax breaks, is building in Beaver County in the southwestern part of the state. The plant takes ethane, a natural-gas byproduct, and breaks apart its molecules, which are then used to make plastic. The plant is expected to consume large amounts of gas from local wells, but Shell has not said exactly when it will come on line.

The Pennsylvania gas operators were also hoping that new pipelines would open up big markets. Some capacity has been added, but last month the companies behind the Constitution Pipeline, which would have transported gas to New York and New England, canceled the project, saying it was no longer economical.

One option the operators can try is cutting production to support prices. Pennsylvania’s rig count, a yardstick for new well drilling, is 24, half what it was a year ago, according to Baker Hughes. And natural-gas prices could benefit from the sharp drop in oil prices. That’s because the scaling back of drilling by American shale-oil operators will also reduce the amount of “associated” natural gas that those wells produce along with oil. But the economic downturn is expected to depress demand for the gas overall.

If the gas companies go into a long downturn, many in the community worry that it might become harder to get them to pay for legal settlements, cleanup costs, and wear and tear on local infrastructure.

In clearing ground for a road down to drilling site in 2018, EQT cut down some old Osage orange trees on land owned by Rose Friend. The company was building a road on her land because it had acquired a lease from another energy company.

Ms. Friend, 82, a former teacher who sings in a church group, said she didn’t want the road access to be directly opposite her farmhouse in Marianna, Pa., which has been in her family for 101 years, and tried to stop the company. The access was eventually moved 50 yards down the hill, and Ms. Friend’s daughter, Karen LeBlanc, is still negotiating with EQT over a payment to replace the trees.

“They just came in and took over,” Ms. Friend said. “I don’t do things that way.” The company did not respond to requests for comment.

Some of the oldest roads in the United States are in Washington County, where the gas industry is particularly active. Some residents say that the heavy trucks that cart water and sand cause them to crack and crumble and that the gas companies take too long to fix them. The industry defended its record of paying for road repairs and construction.

One way the companies help cover the costs of infrastructure improvements is through a state impact fee that is distributed to local governments. The fee peaked at $252 million in 2018, but the revenue for 2019, not yet paid out, is expected to decline by 21 percent to $198 million.

Counties and municipalities that have come to rely on the revenue are getting ready to cut or forgo projects. “It is not a crisis,” said Mr. Belding, the Greene County commissioner, “but it is concerning.”

Percent Change in Jobs with & without Fracking

The false promise of fracking and local jobs

From an Article by Susan Christopherson, Professor, Department of City and Regional Planning at Cornell University, January 27, 2015

In a surprise decision that led to consternation in the oil and gas industry and elation among fracking opponents, New York Governor Andrew Cuomo in December banned fracking in the state. He attributed his decision to unresolved health risks associated with this drilling technique, but the governor surely also weighed the economics and the politics.

During the past five years, I’ve researched and written about the economic impacts of fracking and, as a long-time resident of New York, I have observed its fractious politics. What I’ve found is that most people, including politicians and people in the media, assume that fracking creates thousands of good jobs.

But opening the door to fracking doesn’t lead to the across-the-board economic boon most people assume. We need to consider where oil and gas industry jobs are created and who benefits from the considerable investments that make shale development possible. A look at the job numbers gives us a much better idea of what kind of economic boost comes with fracking, how its economic benefits are distributed and why both can be easily misunderstood.

Not a recession buster

Pennsylvania is one of the centers of dispute over fracking job numbers. In Pennsylvania, the job numbers initially used by the media to describe the economic impact of fracking were predictions from models developed by oil and gas industry affiliates. For example, a Marcellus Shale Coalition press release in 2010 claimed:

“The safe and steady development of clean-burning natural gas in Pennsylvania’s portion of the Marcellus Shale has the potential to create an additional 212,000 new jobs over the next 10 years on top of the thousands already being generated all across the Commonwealth.”

These job projections spurred enthusiasm for fracking in Pennsylvania and gave many people the impression that oil and gas industry employment would lead Pennsylvania quickly out of the recession. That didn’t happen.

Pennsylvania’s unemployment roughly tracked the national average throughout the state’s gas boom. While some counties benefited from the fracking build-up, which occurred during the “great recession,” the state economy didn’t perform appreciably better than the national economy.

Nationally, the oil and gas industry employs relatively few people compared to a sector like health care and social assistance, which employed over 16 million Americans in 2010. The drilling, extraction and support industries employed 569,000 people nationwide in 2012, according to the Energy Information Administration (EIA).

Although it grew faster than other sectors of the economy, the core of oil and gas employment constitutes only one half of one percent of total US private sector employment. This total includes jobs unrelated to shale development and jobs that preceded the shale boom. As for job growth, the EIA indicates that 161,600 of these jobs were added between 2007 and 2012. Drilling jobs specifically increased by only 6,600.

Impressive growth percentages notwithstanding, that is not a lot of jobs. In 2010, more than 143 million people were employed in the US, according to the Bureau of Labor Statistics (BLS).

In Pennsylvania, the Multi-State Shale Research Collaborative (MSSRC) report on shale employment in the Marcellus states found that shale development accounts for 1 out of every 249 jobs, while the education and health sectors account for 1 out of every 6 jobs.

FedEx drivers?

The central issue with job projections is how many additional jobs are credited to oil and gas development beyond the relatively small number of people directly employed in oil and gas extraction.

In December 2014, Pennsylvania’s Department of Labor and Industry reported that just over 31,000 people were employed in the state’s oil and gas industry. That figure was higher than the federal data indicates, but appears to be reasonable. However, what’s striking is that the Department attributed another 212,000 jobs to shale development by adding employment in 30 “ancillary” industries.

All employment in these related industries – including such major employers as construction and trucking – was included in this attributed jobs figure. Thus, a driver delivering for FedEx or a housing construction worker were “claimed” as jobs produced by the shale industry.

This is eye-rolling territory for economists. They know that attributing two additional jobs to every one directly created in an industry is very generous. The Commonwealth of Pennsylvania attributed seven additional jobs to each one created in the oil and gas industry.

Depending on how broadly you define the state’s oil and gas industry, between 5,400 and 31,000 people were employed in Pennsylvania before many of the rigs started pulling out in 2012 to head west. Certainly, jobs in other sectors were also created, but a generous estimate would be 30,000 to 60,000 rather than the hundreds of thousands claimed by industry promoters.

QCEW is the Quarterly Census of Employment and Wages, a federal-state cooperative program that is based largely on the quarterly Unemployment Insurance reports filed by employers. Multi-State Shale Research Collaborative, Pennsylvania Budget and Policy Center, Author provided.

The MSSRC report demonstrates that only a tiny portion (under 1%) of jobs in many of these 30 industries could be related to shale development activities, and further, that Pennsylvania employment in these industries overall changed little before, during, and after the shale boom.

The real winner: Texas

Beyond the exaggerated numbers, a geographic blindness obscures our view of fracking jobs. Where do the workers extracting gas in Pennsylvania or Ohio live and spend their money? Where are the best jobs located? While the fracking industry may support the national economy as a whole, some places are winners and others are losers.

In Ohio, where extraction continues because its shale holds both natural gas and other valuable “wet gas” hydrocarbons, a series of investigative reports by The Columbus Dispatch showed that at least a third of the workforce in drilling areas are transient workers. In the four Ohio counties with the most shale permits, the number of local people employed actually decreased between 2007 and 2013.

This tells us that the production sites aren’t necessarily the places that get the economic boost. The most skilled workers on drilling crews are from Texas and Oklahoma and they return home to spend their earnings. Northern Pennsylvania drilling crews spent much of their money in the Southern Tier of New York.

My own research on the geography of shale jobs shows that Texas has derived the lion’s share of the benefits from US fracking. Texas has consistently had around half the jobs in the oil and gas industry (currently 47%). During the 2007-2012 shale boom, Pennsylvania gained 15,114 jobs in the drilling, extraction and support industries, but Texas gained 64,515 – over four times as many jobs. Texas not only has much of the skilled drilling workforce, but the majority of the industry’s managers, scientists and experts, who staff the global firms headquartered in Houston. Still, even in Texas, energy-related jobs constitute only 2.5% of the state’s now more diversified employment.

What does this tell us about New York’s decision on fracking? Andrew Cuomo may have decided that the state would do better providing finance capital to the oil and gas industry from Wall Street rather than taking on high-risk, low-reward fracking production. _________________________________

See also: www.FrackCheckWV.net

Greater Wheeling Homeless Coalition

WV Cost of Living, Child Poverty, Homeless

Article by Joselyn King, Wheeling Intelligencer, June 20, 2013 

WHEELING – When children don’t have a stable home they don’t achieve, and there’s currently a lack of affordable housing in Wheeling, state lawmakers learned Wednesday. 

The West Virginia Legislature’s Select Committee on Children and Other Issues met at Catholic Charities of Wheeling for a public hearing on poverty’s effect on children. The topic for discussion Wednesday was housing, said committee chairman Sen. John Unger, D-Berkeley.

A large percentage of West Virginia’s children younger than age 8 have no stable home in which to live, he said. “This causes toxic stress, and inhibits development,” Unger said. “It creates uncertainty and anxiety, and affects child achievement.”

There are even instances in West Virginia where children are living in cars and abandoned trailers, he said. “The question now is what can we do to address the issue?” Unger asked.

Representatives of local social service agencies present told the panel it is often impossible for lower-income families to afford housing. The local monthly cost for a two-bedroom apartment with utilities can exceed $1,200, said Lisa Badia, executive director for the Greater Wheeling Coalition for the Homeless.

While she praised the presence of economic development in the area, Badia noted those working in the natural gas industry have an advantage over low-income residents in renting housing as their employers often cover the higher cost for rent. “Our folks working tables aren’t able to afford what the housing market is dictating,” she said.

Marlene Midget, executive director for Northern Panhandle Head Start, said affordable housing “has all but disappeared in the area.” “Now people are on the street because they don’t have affordable housing for their families,” she said.

Jodie Gardill, associate director of behavioral health advocacy at Legal Aid of West Virginia, suggested the area needs more public transportation. Not having transportation to a job leads to financial and housing insecurity, she said.

Committee members said they would continue to hold meetings on the issue during future interim legislative sessions.

NOTE: The federal Housing & Urban Development program will assist housing up to $615 per month for a two bedroom facility for a parent with children.  Housing is now more expensive. The influx of gas industry workers in Wetzel, Marshall, Ohio and Brooke counties has resulted in a shortage of available housing, increased housing costs, and an increase in the cost of living more generally.  There are now more West Virginians homeless in need of shelters and those coming in are requiring a longer stay. Needless to say, there is not space enough to care for the current needs.  (Lisa Badia explained these issues on “MetroNews Talkline” on June 27^th). DGN