Several companies cashing in on Marcellus Shale-related business across Pennsylvania told their stories last week to an audience of politicians and fellow businessmen, one of several community outreach efforts by the Marcellus Shale Coalition, an organization of more than 80 producer and supplier members.
The coalition joined with United States Steel to host the meeting, which was held at the steelmaker’s Mon Valley Works training center in Duquesne, PA. It was designed to put a local face on what the Marcellus activity means to companies based in Southwestern Pennsylvania.
“We felt we needed to do this for a long time,” said Kathryn Klaber, executive director of the Marcellus Shale Coalition, addressing an audience of about 75. “We hear the macroeconomic view about the thousands of jobs created by Marcellus Shale drilling, but these examples show that someone locally has a job due to the Marcellus impact.”
A similar meeting among rail carriers that are capitalizing on the tons of sand, pipe and aggregates moved by rail for each well was slated for later in the week in the Harrisburg area in central Pennsylvania, Klaber said. Experts estimate just under $4 billion was spent in Pennsylvania last year on Marcellus-related activities.
Jason Norris, vice president of tubular products with Dura-Bond Industries Inc., an Export, PA-based pipe manufacturer and coatings company, described to the audience how his company is expanding to meet Marcellus-related business. Dura-Bond has converted all its seasonal, part-time employees at its three in-state plants to full-time positions, while adding more personnel to its 415-employee roster.
The 50-year-old company also has spent $1 million on new equipment and is looking to construct an $8 million coatings facility on a 55-acre site at the site of the former United States Steel Duquesne Works. The plant will employ between 55 and 65 people, and should be in operation within a year.
“We just received a $30 million contract from Dominion Transmission for 45 miles of 30-inch pipe, and 65 miles of 24-inch pipe,” Norris said. “We’ll manufacture the pipe at our Steelton (Pennsylvania) facility, then ship it here and store it on the new property until it’s needed. We never would have gotten that contract had we not had the new site.”
Experts said it’s no surprise that Marcellus Shale activity is having an impact on local companies. “We found there was a great deal of indirect, business-to-business spending related to the Marcellus,” said Timothy Considine, a professor of energy at the University of Wyoming in Laramie.
Considine is the co-author of a Penn State University study published last August that measured the economic impact of Marcellus shale development. The study found that the natural gas industry generated $2.3 billion in economic impact in Pennsylvania in 2008, and forecast that figure would jump to $3.8 billion for 2009.
Considine said it’s very possible that once Marcellus gas begins flowing, the availability and projected low prices of the fuel-feedstock could actually mean a return of manufacturing jobs long missing in Southwestern Pennsylvania.
U.S. Steel can capitalize on its location close to the shale, said Vice President Doug Matthews. “Drilling for shale gas and shale oil around the country is having a significant impact on our Mon Valley operations,” Matthews told the audience. “We recently received an order from longtime customer Chief Oil & Gas for 50 miles of pipe. The steel will be made at the Edgar Thomson Works in Braddock, PA, and made into pipe at the Camp Hill tubular products facility in McKeesport, PA.”
Dallas-based Chief Oil & Gas is one of the largest Marcellus Shale players in Pennsylvania. Jim Scott, a senior vice president, said the all-inclusive cost of pipe that his operation is laying in the northeastern portion of the state is about $1.2 million per mile.
“That 50 miles will probably last me for about six months. I’ll probably place an order for another 50 miles of pipe for delivery around the end of the year,” Scott said. “I have a $135 million capital budget just for Northeastern Pennsylvania this year and I hope I can keep spending to that figure.”
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