New market for gases and welding supplies looks promising.
Shale is changing the energy landscape around the globe, particularly in the United States. The recovery, production and delivery of shale gas have a positive economic impact not only on the core oil and gas industry, but also on the indirect suppliers (supply chain) and the induced suppliers (consumers). The trickledown effect is occurring across the United States, creating jobs and reducing our dependence on foreign sources of oil. For gases and welding distributors, this means a new and expanding market.
Natural gas is used in many different applications, including heating and cooling, electricity generation, transportation fuel, as well as the wet gas byproducts that are used to supply some key industries with feedstock to produce their products. This abundant and affordable fuel is cleaner, lowers heating and cooling costs, creates well-paying jobs and decreases the amount of oil that the United States has to import from countries that we do not call friends.
The Barnett Shale started the change back in the early 1980s with limited success. It was not until 2001 that Texas businessman George Mitchell learned how to unlock the gas from the shale in economic quantities. In 2004, the first Marcellus well was drilled in Washington County, Pennsylvania. Development of the Utica Shale has recently begun in Ohio and Pennsylvania. North Dakota has the Bakken Shale; Texas has the Barnett and Eagle Ford Shales; Oklahoma has the Woodford Shale; Arkansas has the Fayetteville Shale; and shared between Texas and Louisiana is the Haynesville Shale. We are still discovering different shale plays across America and around the world.
In the United States, we are fortunate to have the core competencies and infrastructure already in place to effectively develop the different shale plays. Horizontal drilling and hydraulic fracturing are not new techniques, but have been used and refined by experienced oil and gas industry workers for many years.
New Markets for Welding and Gases Suppliers
Many resources are required to directly sustain the forward motion of shale exploration and production. These resources include manpower, drilling rigs, drill pipe, well casing, hydraulic fracturing equipment and trucks, pipe for pipelines, pipeline construction, welding supplies, personal protective equipment, tanks to store water, rail and railcars, material storage, trucks to transport material and additional items too numerous to mention. Fabrication and maintenance of drilling rigs and trucks are needed across the country, as well as fabrication of compressor stations that pressurize gas so it can travel through pipelines.
The production of on-site water tanks for the shale market requires a significant amount of welding. According to Chesapeake Energy, drilling a typical shale natural gas well requires between 65,000 and 600,000 gallons of water, while a horizontal deep shale natural gas well requires 5 million gallons of water. In under-pressurized zones and depleted or water-sensitive formations, gases such as nitrogen and carbon dioxide are being used in place of water. These gases require special tanks and valving equipment, along with the supply of the gases themselves.
The Marcellus Multiplier, which defines the average money invested in different phases of the drilling and delivery of natural gas to the consumer, states that the cost to drill a single well is $5 million; at 3,000 produced wells, that equals $15 billion in well site operations alone. Additionally, pipelines are being constructed wherever gas is being produced. Each mile of pipeline represents another $1 million in investment. In areas such as the Bakken Shale, where drilling has increased significantly over the last few years, pipeline infrastructure is being built from the ground up. Even in areas such as Northeastern Pennsylvania where large transmission lines already exist, gathering lines are needed from the well sites to the transmission lines.
Job creation has increased as a result of work being done at the shales. In Pennsylvania alone, there are 218,200 employees in the Marcellus and related industries, with 72,000 new hires since Fourth Quarter 2009. In the first three months of 2011, there were 12,700 new hires in shale-related jobs.
The goods and services necessary to support the influx of workers to these areas stimulate the economy in virtually all markets. Since beginning development of the Marcellus shale in the Williamsport, Pennsylvania, area, 115 new businesses have opened, existing businesses have expanded, and an estimated 3,400 new jobs have been created. Williamsport ranked seventh in the country in GDP growth in gross domestic product between 2009 and 2010, according to the U.S. Department of Commerce. According to the U.S. Labor Department’s Bureau of Labor Statistics, Washington County, Pennsylvania, had the third largest percentage increase in employment in the nation between March 2010 and March 2011. There is no question that these increases can be tied directly to development of the Marcellus Shale in that region.
Other industries are beginning to recognize the merits of natural gas as a fuel source. For instance, natural gas-powered vehicles (NGV) are becoming increasingly popular. The infrastructure is being built so that the user of an NGV can confidently drive across the United States without ever being too far from a fueling station. Plans have been made to construct fueling sites to comprise the Pennsylvania Clean Transportation Corridor with 23 planned or proposed fueling stations. Natural gas fueling stations require the fabrication of high-pressure storage vessels.
The oil and gas industry has been not only responsive to the stakeholders of the natural gas boon, but proactive in finding new and better ways to protect people and natural resources. New technology in hydraulic fracturing has spurred innovation in operating standards to continue to meet environmental responsibilities and has led to enhanced safety programs to sustain a safe work environment.
The industry’s commitment to working with environmental agencies to protect our resources is evidenced by the inception of the chemical disclosure registry, www.FracFocus.org. This joint effort between the Interstate Oil and Gas Compact Commission and the Ground Water Protection Council was designed to make drilling and well services operations more transparent, providing information to the public about the chemicals used in hydraulic fracturing. It also provides informational materials to help laypeople put the information into perspective and help them recognize the industry’s commitment to preserving the environment.
Oil and gas companies are “raising the bar” regarding safety standards and implementing stronger preventive programs and training. Furthermore, they demand the same safety standards from the companies with which they contract. Behavior-based safety and safety-initiative programs are just a couple of examples of the ideas many companies are embracing. Every shale site has its own safety protocols, and many require contractors to be safety qualified. Vendors and contractors who are going to be on location should ascertain the protocol for that specific site from the organization contracting them.
The effects of recovering and producing the natural gas hidden beneath our feet in the various shale plays have been positive and far-reaching. We have every reason to expect that those effects will continue to impact our lives in a positive way as new plays are discovered and developed.
|Bob Garland is senior technical advisor at Universal Well Services Inc., located in Meadville, Pennsylvania, and on the Web at www.univwell.com.|