Quote:
Originally Posted by Private Dick
Hopefully, the "discovery" that there isn't nearly as much natural gas (141tcf vs 410tcf according to the EIA and USGS) in the Marcellus shale formation than was previously trumpeted doesn't negatively affect the employment numbers above too much... considering the most significant increases (nat resources/mining/construction and wholesale trade) are directly attributable to the Marcellus boom. And considering planned production at companies like local firm Consol will decrease in 2012 and 2013...
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The slowdown in Marcellus hiring is happening... due to record low natural gas prices.
http://www.post-gazette.com/pg/12027/1206355-503-0.stm
Quote:
Shale drillers see slowdown as natural gas prices decline
Friday, January 27, 2012
By Erich Schwartzel, Pittsburgh Post-Gazette
Two of the region's most prominent energy firms Thursday reported their profits and revenues rose last year, but the record-low price of natural gas is forcing both to cut back on rapid-fire drilling.
Consol Energy became the latest company involved in tapping the Marcellus Shale to scale back that development, with the Cecil-based business announcing it had cut $130 million of its 2012 spending outlook from the Marcellus division and would hold off drilling 23 wells.
The reason: natural gas prices that can make it tough to turn any profit at all on a well that cost $7 million to build.
Downtown-based EQT Corp., Calgary-based Talisman Energy Corp. and Oklahoma City-based Chesapeake Energy have announced similar reductions in recent weeks as the industry takes a breath and moves its rigs to shale regions loaded with more lucrative resources.
The strategy shifts are influenced as much by cold economic rules as they are by the unseasonably warm winter felt across the region.
In recent years, hydraulic fracturing technology has opened gas reserves that were once inaccessible, causing gas supplies to balloon. And warmer weather patterns this year have kept demand for natural gas low.
Prices have hovered below $3 per thousand cubic feet for weeks -- the kind of bargain basement prices that can force multinational conglomerates to revise an entire year's plans.
In Consol's case, the company's per-well net income dips into the red once natural gas starts trading at $2.74 per thousand cubic feet, said Brandon Elliot, vice president of investor relations. Gas prices closed at $2.60 per thousand cubic feet Thursday.
Consol is shifting focus to extracting from liquids-rich regions of shale where "wet" gas comes out of the ground loaded with valuable elements such as ethane. Those liquids trade at higher prices than regular natural gas, and more closely follow oil prices that are currently hovering around $100 per barrel.
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I wouldn't freak out too much about this. An unseasonably warm winter shouldn't have long-term impacts on the industry here.
But more importantly... Pittsburgh's "economic miracle" was underway before Marcellus activity ramped up in the region... and it's a diversified economic growth that cuts across most sectors. Of the 27k jobs Pittsburgh added over the year... 3k were in "natural resources, mining".
The biggest contributor to regional economic growth is still...
That's an increase of over 10k jobs from 2010 to 2011 and now at 250k... represents almost 5 times as many employees as the "natural resources, mining" sector
Pittsburgh also had the top growth rate among "benchmark regions" in..
Financial Services
Trade, Transportation and Utilities