Uptick in 'downstream' energy job openings provides hope that Western Pennsylvania's employment is improving
Editor's note: This is the first in a two-day series looking at work in the oil and gas industry in Western Pennsylvania. Coming Monday: Demand for truck drivers outstrips supply.
Despite a two-year downturn in the oil and gas industry, “downstream” opportunities such as power plants and pipelines are feeding a growing sense that the employment outlook in Western Pennsylvania is improving.
Available energy-related jobs run the gamut from truck drivers, who can earn a commercial driver's license in five weeks, to highly trained technicians, who may have to go back to school for a two-year degree, industry observers say.
“What this slowdown in the upstream part has allowed to happen is for the midstream to catch up,” said David Pistner, director of workforce development for Westmoreland County Community College's Advanced Technology Center. “It's allowed the industry to put those gathering lines in because each well needs a line to take it from the gathering to the collection area.”
The downturn, spurred by a drop in natural gas prices and an overabundance of supply, led to the loss of tens of thousands of energy-related jobs nationally. According to the U.S. Bureau of Labor Statistics, the energy sector contracted by 18 percent in just over a year — from a peak of 852,500 jobs in September 2014 to 698,500 jobs in January 2016.
Some of that also had to do with the cyclical nature of the oil and gas industry and a wave of retirements, according to a 2016 Allegheny Conference study. The report noted that energy-related employers need to fill more than 5,000 openings annually but are struggling to find qualified applicants.
Midstream activities include the collection, storage and transport of natural gas, while downstream projects cover the refining and processing of fuels for manufacturing and other uses.
“It costs $7 million to $8 million to put that hole in the ground, but if you don't have a pipe to take the oil or gas to market, it's just an expensive hole in the ground,” Pistner said.
The Advanced Technology Center is fielding more calls from local companies seeking workers with the skills and training needed to meet the demands of more technical downstream jobs, said Byron Kohut, director of energy programs.
“Things are turning around,” Pistner said. “We've talked with manufacturers both small and large, and they're saying 2017 is going to be a good year for them — upstream and midstream.”
Among the projects on the center's radar:
• Export-based Dura-Bond Industries announced in January that it will hire at least 100 people and retool the U.S. Steel site in McKeesport for the manufacture of pipe for the oil and gas industry.
• The Tenaska Westmoreland Generating Station, which broke ground near Smithton in August, expects to employ 600 during peak construction this year and have 25 full-time employees.
• Shell Chemical Appalachia LLC is building an ethane “cracker” plant in Beaver County that will employ an estimated 6,000 during peak construction and 600 to operate the plant.
• Sunoco Logistics has begun construction on the western portion of the Mariner East 2 pipeline, which will pass through Westmoreland County on its way to the Marcus Hook processing facility in Philadelphia once it obtains the necessary state permits.
In addition to energy-related companies, manufacturers that rely on fuel and fuel byproducts will add to a more promising employment outlook for Western Pennsylvania, Pistner said. “I just picture it as an economic ripple.”
“You've got all these industries moving in to take advantage of the gas,” Kohut said.
As recently as Jan. 25, Domtar Corp., a paper manufacturer with facilities in DuBois in Clearfield County and Johnsonburg in Elk County, announced that it is retaining 438 jobs because it is converting from coal to Marcellus shale natural gas as a source of energy.
David Spigelmyer, president of the Marcellus Shale Coalition, said Domtar's workforce typifies the kinds of jobs that will develop from the oil and gas industry.
“The downstream manufacturing jobs, not direct production jobs, are the ones that show the greatest potential for growth in Pennsylvania,” he said.
The pharmaceutical, fertilizer, steel, plastics, adhesive, tire, cosmetics and power generation industries all rely on natural gas and petrochemicals such as butane, ethylene and propane, he said.
As the United States becomes more energy independent, the lower cost of energy will lead to further job growth, Spigelmyer said.
“A lot of folks think we've seen the high point and now it's over. We're far from it,” he said. “There's a lot of shale to be produced, a lot of gas in the ground, a lot of development yet to be had — not only in Pennsylvania but (specifically) in Westmoreland County.”
Such production, if it does increase, would require more pipeline and other infrastructure to get the gas to the marketplace. Spigelmyer believes energy companies have a greater pool of available skilled labor in Western Pennsylvania than they used to, so that they're not as dependent on workers from Louisiana, Oklahoma and Texas.
“Early in this play, the concern was that we didn't have enough trained workers. Today, seven out of 10 are from Pennsylvania; nine out of 10 are from the Appalachian Basin,” he said. “Our folks are now training folks in other shale plays.”
James Kunz Jr., business manager of the International Union of Operating Engineers Local 66, said contractors that are union signatories are required to hire at least 50 percent of their workforce from the local union. As a result, more than 1,000 members of Local 66 have been hired to work in the oil and gas industry since 2010, he said.
“There's a high demand for skilled operating engineers in the industry. There's a lot of job opportunities,” Kunz said. “We're expecting the next two years to be decent.”
Although welding jobs are plentiful, pipeline welding jobs are still drawing from out of state because of the specialized nature of the work, observers say. The Advanced Technology Center recently added a semester-long course in pipeline welding in the hope that more Pennsylvanians will fill those jobs, Kohut said.
Stephen Huba is a Tribune-Review staff writer. Reach him at 724-850-1280 or email@example.com.