Natural gas production in the Marcellus Region reached a new milestone by surpassing 15 billion cubic feet per day in July, according to new production estimates released today by the Energy Information Administration (EIA). Over the last three years, natural gas production in the Marcellus Region has increased by more than three times, from 4.7 billion cubic feet per day in July 2011 to 15.23 billion cubic feet in July of this year (see chart above). Since 2007 when the shale boom first started in the Marcellus gas fields, natural gas production there has increased about 14 times, from just over one billion cubic feet per day in early 2007. The EIA estimates that Marcellus natural gas production will increase further to almost 15.5 billion cubic feet in August, making this one of the most remarkable energy success stories in US history.
What economic impact has the increase in natural gas production had on the Marcellus Region? Here’s how it’s affected employment and wages in Pennsylvania according to a recent BLS report “The Marcellus Shale gas boom in Pennsylvania: employment and wage trends“:
This article uses data for the period 2007–2012 to examine employment and wage trends in Pennsylvania’s oil and natural gas industry and to compare those trends with corresponding developments in the state’s coal mining industry.
Despite recent declines in Pennsylvania’s overall economy, the state’s oil and natural gas industry has seen substantial growth in terms of both employment and wages. From 2007 to 2012, total annual average employment in Pennsylvania declined by 74,133 (–1.3 percent), to 5,578,414; by contrast, employment in the oil and natural gas industry increased by 15,114 (259.3 percent) over the same period. In addition, while the state’s average annual pay increased by $5,158 (11.9 percent), to $48,397 in 2012, wages in Pennsylvania’s oil and natural gas industry rose by $22,104 (36.3 percent), to $82,974 in 2012.
The Marcellus Region is centered on Pennsylvania but extends into eastern Ohio and covers almost all of West Virginia, and here are some first-hand observations of economist W.E. Heasley based on his recent trip to the Marcellus shale gas fields near St. Clairsville, Ohio (14 miles west of Wheeling, West Virginia):
1. You have a hard time finding a parking space in St. Clairsville on weekdays. Why? St. Clairsville is the Belmont County seat and there is a line of people waiting daily to enter the county courthouse to check deeds and property records, etc. Parking spaces near the courthouse are filled every day, all day.
2. All rental properties are occupied, all of the hotels and motels are full, and all of the RV parks are occupied with gas field workers. About a dozen new hotels have been built during the last three years to accommodate the high housing demand for gas field workers. As soon as they cut the grand opening ribbon, each of the new hotels is already booked.
3. When you drive by the hotels there are few private passenger vehicles because the vast majority of vehicles are light trucks of many varieties used by the gas field workers.
4. The restaurants, bowling alleys, bars and golf courses are always packed.
5. Need some gasoline? You’ll frequently need to wait in line. There are simply too many vehicles for the current supply of gas stations in St. Clairsville.
6. There appears to be no wildcatting (speculative or exploration drilling). The gas companies know exactly where to drill…first time, every time.
7. Transmission lines from the new drill sites to main transmission lines are being installed, and the activity looks like busy ants scurrying over many ant hills.
One thing that came to mind on my recent visit was: History books. That is, one reads in history books about America’s “boom towns.” But to see it first hand, live, in action is an amazing sight.
MP: Just like with shale oil in North Dakota and Texas, the shale gas bonanza in Pennsylvania, Ohio and West Virginia is bringing shale-based prosperity to those states in the form of thousands of new, well-paying jobs, millions of dollars in royalty payments to local landowners and farmers, construction booms for housing and hotels, and a huge boost in local retail spending for food, restaurants, cars and trucks, recreational vehicles, home furnishings, appliances, etc.