Gas Pipelines: Part Of An Economic Boom
(Editor’s Note: Part two of a two-part series.) As the natural gas industry in the Ohio Valley experiences a revival enabled by new drilling technologies accessing the deep Marcellus Shale play, so too will the pipeline industry and related services feel the resurgence. Midstream companies whose primary business is collecting, preparing, and transporting the gas, such as Caiman Energy, Dominion Transmission, Colombia Gas Transmission, Equitrans, MarkWest, and Eureka Hunter, are all visible in the Ohio Valley. Some are building compression stations to help move the gas through the new high pressure lines. They are also constructing or expanding fractionation facilities to extract butane, ethane, propane, and other products and sending them to market via pipeline, truck, rail, and barge.
For more than a century residents of the Ohio Valley have witnessed the drilling of natural gas and oil wells and the accompanying construction of pipelines. Much of the labor of the early pipeline installation was hard, backbreaking, physical work, over steep rocky terrain. In spite of the hardship though, the lines were laid. Today bulldozers, backhoes, and winches replace some of the physical work, but the terrain is the same and the labor is still challenging. Current requirements for some pipeline jobs include: “Ability to pass a physical capabilities test–which includes, but is not limited to lifting and carrying 70 pounds, walking one-half mile at various inclines, etc. — necessary to demonstrate the physical ability to perform the essential functions of this job.” For those who have the skills and stamina, pipeline jobs and midstream employment are on the rise. As Robert Orndorff, managing director of Dominion Resources, put it, “Some of the best pipeline people in the country come from West Virginia. . . If you can do it here, you can do it anywhere.”
What kind of local pipeline jobs are being advertised? Gas pipeline jobs in West Virginia range from laborer positions such as roustabout or pipeline construction crew; through welder, corrosion control specialist, pipeline operator, lead pipeline operator; to supervisor positions such as technical specialist III or midstream operations foreman. Landmen, surveyors, timber cutters, heavy equipment operators and mechanics, and right-of-way specialists are also needed to acquire the easements and clear the land for the pipelines.
If increased visibility on the road is any indication, then business is active for local indirect service providers such as Litman Excavating of New Martinsville, Norman Jackson Trucking of Pennsboro, Select Energy Services of St. Marys, Martin Marietta Aggregates of New Martinsville, and Laurel Aggregate of Morgantown. Heavy truck traffic means one thing: increased need for the transporting of materials and jobs for drivers. Recent estimates in several studies report over 10,000 people are employed in West Virginia in the Marcellus Shale industry. Add to that figure increased revenue from motels and hotels operating at full capacity, more restaurant and retail business, and busy gas stations. The total picture indicates an economy on the rebound.
How do pipelines contribute to the local economy and jobs? The number of midstream companies building facilities in West Virginia continues to expand. MarkWest Energy Partners, headquartered in Denver, Colo., is the largest natural gas processor in the Appalachian region.
With two field office locations in West Virginia, MarkWest Liberty Midstream & Resources announced in January it will develop a midstream gas processing complex in Logansport, W.Va., just across the Marion County border from Smithfield in Wetzel County.
MarkWest Liberty is completing a second cryogenic plant at Majorsville, W.Va., and is considering a third. MarkWest has reached agreements with Chesapeake Energy, Equitrans, Range Resources, and Columbia Gas Transmission Corp. to expand their gathering and processing services in West Virginia. Altogether the new construction will cost hundreds of millions of dollars and employ pipeline and facility construction crews as well as those to maintenance the infrastructure.
Midstream services companies say they hire local workers to build their facilities whenever possible. Jobs are bid out to West Virginia construction firms such as Select Energy Services who have offices in St. Marys; Appalachian Pipeline Contractors of Amma; and S.T. Pipeline of Clendenin, to mention a few.
Caiman Energy uses Chapman Corporation, a Pennsylvania company located just across the West Virginia border, for its processing plant construction, as well as a range of West Virginia contractors for pipeline construction.
Caiman’s corporate vision includes local emphasis. Jack Lafield, Caiman’s chief executive officer, explains, “Citizenship is a core value at Caiman Energy. We are committed to investing in the communities where we work and that includes a commitment to hiring locally. We are pleased that Caiman’s expanding footprint across the Marcellus will generate hundreds of local jobs over the next few years.”
A growing natural gas industry is also indicated by the number of different companies competing for leases and pipeline rights-of-way. Equitrans (EQT) and MarkWest Liberty are building new lines in eastern Wetzel County. In May 2010 Select Energy Services, a Texas corporation, acquired local Arvilla Oilfield Services and Buck Stone companies based in St. Marys. With regional headquarters in Canonsburg, Pa., Select Energy has nearly doubled the number of employees it gained during the acquisition and now employs 270 local workers in its West Virginia locations. Select’s West Virginia team provides pipeline construction services, maintenance, road and location construction, aggregates sales, roustabout services, fluid hauling and disposal, and well testing.
Some of the improved economy to the area comes in the form of state and federal income taxes paid by the industry and landowners on royalties and lease agreements.
In a study released in March 2010, “Projecting the Economic Impact of Marcellus Shale Gas Development in West Virginia” sponsored by the U.S. Department of Energy, data revealed in 2009 $213.95 million was paid by the gas industry in royalties in West Virginia, with a projected increase to over one billion dollars by 2020; right-of-way monies paid to landowners for pipelines are included in this figure, with offers to landowners as high as $20 per linear foot for a 50-foot wide right of way.
State and local taxes paid by the industry were $138.53 million in 2009, increasing to almost $700 million by 2020. These taxes become part of the general state revenue to be utilized in state and county budgets for roads, schools, and other public projects.
The future of pipeline construction in the Ohio Valley depends heavily on the development of Marcellus Shale, which by all predictions looks to be viable for another 30 years or more.