The Times West Virginian

Business

February 24, 2013

Marcellus impact

Influence significant, especially in North Central West Virginia

FAIRMONT — Over the past four years, Marcellus shale activity has had a significant impact on employment and wages in the state — especially in North Central West Virginia.

The Research, Information and Analysis Division of WorkForce West Virginia released a special report, titled “The Influence of the Marcellus Shale on Employment and Wages in West Virginia,” in November 2012.

Jeff Green, director of the Research, Information and Analysis Division, explained that his office conducts all of WorkForce West Virginia’s economic research, including the monthly employment and unemployment data for the state.

The division also collects a variety of occupational information and industry data, such as statistics on wages, projections, employment dynamics, and occupational safety and health.

All of these programs are done cooperatively with the U.S. Bureau of Labor Statistics, he said.

WorkForce West Virginia led the recent study in order to determine what is happening as a result of the development of the Marcellus shale.

“We started to look into it because there is a lot of questions about what are the effects, what are the benefits in terms of employment,” Green said. “So we tried to take a comprehensive look at this by looking at all of the industries.”

The report is primarily an employment and wage analysis for workers in the six core oil and gas industries, he said. According to the study, those industries include crude petroleum and natural gas extraction, natural gas liquid extraction, drilling oil and gas wells, support activities for oil and gas operations, oil and gas pipeline and related structures, and pipeline transportation of natural gas.

WorkForce West Virginia cites information from the U.S. Energy Information Administration that shows the increased use of natural gas for power generation in the country over the past decade compared to coal, which has decreased.

While coal is still the biggest source of electricity generation, it’s taking a smaller role, and natural gas is taking a bigger role because of technology that has allowed companies to access shale plays like the Marcellus, Green said.

He said one of WorkForce West Virginia’s programs is to collect quarterly statistics on employment and wages from employers in the state.

For the Marcellus shale report, the agency examined data starting in 2008, which was roughly the beginning of the Marcellus shale development in the state, and compared it to 2011, which was the last full year of data available at the time the report was developed.

Because numbers can fluctuate over the course of the year, WorkForce West Virginia used annual averages, Green said. In this way, the agency was able to see a solid trend.

Over the course of four years, employment in the core oil and gas industries in the state went up by 916, or 9.5 percent, he said. On average, annual wages increased by $8,100 over that period, going from $61,898 to $70,082.

“Most of the growth that we’ve seen has been in two particular industries,” Green said.

He said the construction of oil and natural gas pipelines showed the strongest growth of any of the six industries. The support activities for oil and gas, which include excavation and well surveying, also saw a significant increase.

“Though both industry sectors include oil and gas in their definition of activities, there can be no doubt the recent upswing in activity within the two can only be attributed to measurable activity in the Marcellus shale gas field,” the report states.

WorkForce West Virginia observed that 40 percent of all the employment in oil and gas is in Workforce Investment Area (WIA) 6, which is basically North Central West Virginia. There are 10,580 workers in the state in all of the core oil and gas industries combined, and 4,275 of those were located in WIA 6, Green said.

According to the report, total oil and gas employment grew by more than 1,000 workers, or 31 percent, in this area from 2008 to 2011. The support activities for oil and gas operations in WIA 6 saw an increase of 1,106 employees, or 112 percent, during that time. In addition, the average wage went from $44,968 to $63,889, showing growth of 42 percent.

Green commented that WorkForce West Virginia expected to see some growth somewhere in the state, but the question was where it was happening at the moment.

He said other areas of West Virginia saw declines and leveling off in employment and wage activity in the oil and gas industries. The Northern Panhandle and the southwestern region of the state showed some growth.

“Clearly, the early influence of the Marcellus shale activity is centered in Workforce Investment Area 6,” the study says. “This is expected to continue in the months ahead with more measured growth anticipated in other regions of the state.”

That development could expand to other parts of the state. Looking at WorkForce West Virginia’s quarterly data for 2012, pipeline construction is still increasing. So at the moment, employment and wages are growing strong in terms of infrastructure work, Green said.

“I think a lot of it just depends on what happens in the energy markets,” he said of the future impacts of the Marcellus shale.

The price of coal and natural gas can be a determining factor for how quickly any development happens, Green explained.

In May or early June, WorkForce West Virginia plans to update its information on employment and wages and the Marcellus shale with the full year of 2012 statistics, and also start adding demographic data.

The study from November also includes a listing of some key occupations in the oil and gas industries in order to provide a perspective on the earnings, education, work experience and job training that is needed for these jobs.

To access the full report, visit www.workforcewv.org/lmi.

Email Jessica Borders at jborders@timeswv.com or follow her on Twitter @JBordersTWV.

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