PennSylvania marcelluS S Workforce needS aSSeSSment

www.msetc.org

MSETC NEEDS ASSESSMENT SERIES - SUMMER 2011

Summer 2011

PennSylvania

marcelluS Shale

Workforce needS aSSeSSment

PennsylvaniaStatewideMarcellusShaleWorkforceNeedsAssessment

©2011MarcellusShaleEducation&TrainingCenter1 www.msetc.org


June2011

Needsassessmentconductedby:

MarcellusShaleEducation&TrainingCenter(MSETC)AcollaborationofPennsylvaniaCollegeofTechnology

andPennStateExtension

MSETCTeam

TracyL.BrundageManagingDirector,WorkforceDevelopment&ContinuingEducationPennsylvaniaCollegeofTechnology

JeffreyJacquetJacquetResearchandConsulting

TimothyW.Kelsey,Ph.D.StateProgramLeader,EconomicandCommunityDevelopmentPennStateExtensionThePennsylvaniaStateUniversity

JamesR.LadleeCountyExtensionDirector,PennStateExtensionDirectorofSpecialInitiatives,MarcellusShaleEducation&TrainingCenterThePennsylvaniaStateUniversity

JaniceLobdellConsultantLjLConsulting,LLC

JeffreyF.LorsonDirectorofWorkforceTraining,MarcellusShaleEducation&TrainingCenterPennsylvaniaCollegeofTechnology

LarryL.MichaelExecutiveDirector,Workforce&EconomicDevelopmentPennsylvaniaCollegeofTechnology

ThomasB.MurphyCo‐Director,MarcellusCenterforOutreachandResearchPennStateExtensionThePennsylvaniaStateUniversity

MarcellusShaleEducation&TrainingCenter®andPennCollege®areregisteredintheU.S.PatentandTrademarkOffice.



TableofContentsTableofFigures ............................................................................................................................................4

ExecutiveSummary ......................................................................................................................................5

Introduction..................................................................................................................................................9

MarcellusShaleNaturalGasPlay .............................................................................................................9

StatewideDevelopmentProjections ......................................................................................................14

SingleWellPadsvs.Multi‐WellPads......................................................................................................15

High‐BTUGas..........................................................................................................................................18

IntroductiontotheNaturalGasIndustryWorkforce .................................................................................19

LocationsandResidency ............................................................................................................................20

DrillingPhaseJobsvs.ProductionPhaseJobs............................................................................................21

Pre‐drillingandDrillingPhaseJobs.........................................................................................................21

ProductionPhaseJobs............................................................................................................................21

TheMSETCWorkforceModel ....................................................................................................................22

Methodology ..........................................................................................................................................22

HistoryofThisWorkforceModel ...........................................................................................................23

Advantages,Limitations,andKeyAssumptionsoftheMSETCModelMethodology.............................24

Advantages: ........................................................................................................................................24

Limitations: .........................................................................................................................................25

KeyAssumptions: ...............................................................................................................................25

KeyAssumptionsofHigh‐BTUGasWorkforceEstimates.......................................................................25

KeyAssumptionsforFTEsforMultipleWellPads ..................................................................................26

NaturalGasWorkforceRequirementsInterviews,FocusGroups,andOnlineWorkforceAssessment.....26

WorkforceModelResults ...........................................................................................................................29

Full‐TimeWorkEquivalent(FTE)toDrillOneMarcellusShaleWell.......................................................29

ProductionPhaseFTEs ...........................................................................................................................30

“Direct”JobCreation..................................................................................................................................30

StatewideDirectWorkforceRequirements ...............................................................................................31

PreviousandCurrentWorkforceRequirements ....................................................................................31

EstimatedFutureWorkforceRequirements...........................................................................................31

NortheastRegion........................................................................................................................................33





SouthwestRegion.......................................................................................................................................34



NorthwestRegion.......................................................................................................................................35



OccupationalCategorieswithintheNaturalGasIndustry .........................................................................36

Summary ....................................................................................................................................................37

References..................................................................................................................................................38

Appendices .................................................................................................................................................39

HighNortheastRegionScenarioMarcellusShaleWorkforceRequirementsbyPhase..........................40

HighSouthwestRegionScenarioMarcellusShaleWorkforceRequirementsbyPhase ........................41

HighNorthwestRegionScenarioMarcellusShaleWorkforceRequirementsbyPhase.........................42

LowPennsylvaniaScenarioMarcellusShaleWorkforceRequirementsbyPhase..................................43

LowNortheastRegionScenarioMarcellusShaleWorkforceRequirementsbyPhase ..........................44

LowSouthwestRegionScenarioMarcellusShaleWorkforceRequirementsbyPhase..........................45

LowNorthwestRegionScenarioMarcellusShaleWorkforceRequirementsbyPhase..........................46

HistoryoftheMarcellusShaleEducation&TrainingCenter .................................................................51

Pre‐DrillingMatrix ..................................................................................................................................53

Drilling&CompletionMatrix..................................................................................................................55

ProductionPhaseMatrix ........................................................................................................................59



TableofFigures

Figure1:MapofMarcellusShaleFootprint&Depth..................................................................................................10

Figure2:MapofMarcellusShaleWellsasofMarch31,2011 ...................................................................................10

Figure3:HistoricalandProjectedActivity&MedianEstimatedWorkforceRequirements,2008‐2014.....................12

Figure4:MarcellusWellsDrilledbyRegion(andCounty)inPennsylvania.................................................................13

Figure5:MarcellusShaleDirectWorkforceAssessmentStudyArea ..........................................................................14

Figure6:WellsonMulti‐WellPads,2007‐2011 ..........................................................................................................16

Figure7:WellPadDevelopmentScenarios .................................................................................................................17

Figure8:WellsDrilledonNewWellPads....................................................................................................................18

Figure9:PhasesandTimelineofDevelopmentofMarcellusShaleNaturalGasWells ..............................................19

Figure10:GeneralEquationBehindWorkforceModel...............................................................................................23

Figure11:BiggestChallengestoFindingNewWorkers ..............................................................................................28

Figure12:EducationandTrainingProgramsMostNeeded........................................................................................28

Figure13:FTEbyPhaseandTypeofWell ...................................................................................................................29

Figure14:MedianPennsylvaniaScenarioMarcellusShaleWorkforceRequirementsbyPhase.................................31

Figure15:MedianNortheastRegionScenarioMarcellusShaleWorkforceRequirementsbyPhase..........................33

Figure16:MedianSouthwestRegionScenarioMarcellusShaleWorkforceRequirementsbyPhase.........................34

Figure17:MedianNorthwestRegionScenarioMarcellusShaleWorkforceRequirementsbyPhase.........................35

Figure18:OccupationalCompositionofNaturalGasWorkforces..............................................................................36

Figure19:HighPennsylvaniaScenarioMarcellusShaleWorkforceRequirementsbyPhase .....................................39

Figure20:HighNortheastRegionScenarioMarcellusShaleWorkforceRequirementsbyPhase ..............................40

Figure21:HighSouthwestRegionScenarioMarcellusShaleWorkforceRequirementsbyPhase..............................41

Figure22:HighNorthwestRegionScenarioMarcellusShaleWorkforceRequirementsbyPhase..............................42

Figure23:LowPennsylvaniaScenarioMarcellusShaleWorkforceRequirementsbyPhase ......................................43

Figure24:LowNortheastRegionScenarioMarcellusShaleWorkforceRequirementsbyPhase ...............................44

Figure25:LowSouthwestRegionScenarioMarcellusShaleWorkforceRequirementsbyPhase...............................45

Figure26:LowNorthwestRegionScenarioMarcellusShaleWorkforceRequirementsbyPhase...............................46

Figure27:EstimatedStatewideOccupationalRequirements2011‐2014MedianDevelopmentScenario .................47

Figure28:EstimatedNorthwestOccupationalRequirements2011‐2014MedianDevelopmentScenario ................48

Figure29:EstimatedSouthwestOccupationalRequirements2011‐2014MedianDevelopmentScenario ................49

Figure30:EstimatedNorthwestOccupationalRequirements2011‐2014MedianDevelopmentScenario ................50



ExecutiveSummaryThePennsylvaniaMarcellusShaleWorkforceNeedsAssessment is intendedtosupplybaselinedatato

provide individuals, job seekers, communities, businesses, workforce and economic developmentprofessionals, and government officials at all levels with the ability to estimate the direct workforcerequirements forMarcellus Shale development. Specifically, the assessment can help outline the key

occupations associated with unconventional natural gas development and the number of direct jobsrequiredtobringaMarcelluswellintoproductioninPennsylvaniabetween2011and2014.

Over the course of nearly three years, theMarcellus Shale Education& Training Center (MSETC) hasdevelopedandrefinedthemethodusedinthisstudytoestimatethe“direct”workforcerequirements

of the natural gas industry. Given the different development patterns across Pennsylvania, it isimportanttohaveaworkforcemodelthat iseasilyadaptabletochangingdevelopmentscenarios.ThemethodologyfocusesonanalyzingthetypesandnumbersofworkersneededtodrillasingleMarcellus

Shalegaswellandthenusesthedirectworkforcedatatoachieveatotalworkforcerequirementbasedon estimates of futurewell drilling activity. At the core of theMSETCmodel is a full‐time equivalent(FTE)calculationforeachworkerassociatedwithdrillingasingleMarcellusShalewell.Themodelalso

incorporateschangesindevelopmentpractices(singlevs.multi‐wellpads),infrastructuredevelopment(pipeline), and differing natural gas properties (dry gas vs. high‐BTU gas). The flexibility of a perwellmodel significantly increases the predictive power of themodel and the usefulness for business and

workforceplanning.Theworkforceestimateswithinthereportwerecreatedusinginterviews,anonlineassessment, publicly available investor reports, and the Pennsylvania Department of EnvironmentalProtection’spermitandwellspudreports.

MarcellusShaleisaverylargenaturalgasformationextendingacross95,000squaremilesandrunning

throughroughlytwo‐thirdsofPennsylvaniaandportionsofNewYork,WestVirginia,Virginia,Maryland,andOhio.InPennsylvania,developmentofMarcellusShalebeganinWashingtonCountyin2004.Over

the next few years, the Marcellus development footprint quickly expanded to include significantportionsofnortheastPennsylvania. Today, southwestPennsylvania is increasinglybeing selectedas apreferredlocationtoestablishAppalachianBasinheadquartersforexplorationandproduction,service,

andsupplycompanies.ThehubofdrillingactivityinPennsylvaniahasbeenmoreheavilyconcentratedinthenortheastfor2010andthusfarin2011.

The northeast region of Pennsylvania saw moderate growth during initial stages of Marcellusdevelopmentwithonly 76wells drilled in 2008. In the secondhalf of 2009, development in the area

begantorampupquicklywith332wellsdrilled.Thecorecountiesofthenortheastregionhavequicklybecome amajorMarcellus Shale development hotspot for the state of Pennsylvania, with 909wellsdrilledin2010,andmorethan1,000expectedin2011.

TheMarcellusShaleresourcealsoincludesthenorthwestregionofPennsylvania;however,duetothe

shallower depth and thinner shale formation,most of the areas are currently consideredoutside thegeologic“MarcellusFairway”.Anumberofenergycompanieshavebeendrillingexploratorywellsinthearea,andseveralcompanieshaveannouncedplanstodedicatedrillingrigsonthesouthernandeastern



frontsofthenorthwestregion.Permittingactivityhasincreasedintheregionoverthepastfewyears,anddrillingactivityinthefirstfourmonthsof2011showcontinuedgrowthandsignificantpotentialfor

commercialquantitiesofnaturalgasfromthenorthwestregion.

With the recentdramatic increase in interest inhigh‐BTUgasand thepremiumpricecommanded forliquids‐richnaturalgas,thesouthwestregionappearspoisedforaresurgenceinshalegasdevelopmentrelatedtotheMarcellus,Utica,andotherUpperDevonianShaleformations.Acombinationof limited

naturalgas infrastructurecapacityandaneedtodevelop leaseholdings innon‐traditionalnaturalgasareas of Pennsylvania appear to have resulted in amoderation of development growth in the regionoverthelastfewyears.Naturalgasinfrastructurecapacitywouldincludeaneedforadditionalpipeline

and processing facilities required to bring “wet” or high‐BTU gas to market. Although the pace ofMarcellusdevelopmentwasslowerinthesouthwestfrom2008‐2010,companiesactiveintheareahavemadepublicstatementsthattheyintendtodramaticallyincreaseactivitywithinthesouthwestregionin

2011andbeyond. Infact,rigcountsandpermittingwithinthefirstfourmonthsof2011showactivitylevelsshouldeclipse2010development.

The 19 southeast counties of Pennsylvania are currently outside the Marcellus Shale footprint, butrepresent28%ofallPennsylvaniacountiesand58%ofthetotalPennsylvaniapopulation(Census,2010).

EventhoughoutsidethecoreMarcellusdevelopmentarea,thesoutheastportionofthestatewillstilllikely benefit significantly from Marcellus business and workforce opportunities. Without directMarcellusdrillingandcompletionactivitiesinthesoutheastregion,manyoftheworkforceandbusiness

opportunities will likely provide services, support, and supply‐chain resources in support of energyexplorationandproductionoperations.Mostofthesesupportbusinesseswillbeabletomaintaintheirprimary locations inthesoutheastregion,butcompanyfieldandoperationsstaffwillprovideservices

withintheMarcellusfootprint.BeingoutsidetheMarcellusfootprintdoeschangetheoverallimmediatevisibilityoftheworkforceimpact,buttheregionwillfacemanyofthesamechallengesasotherregions

inPennsylvaniainattemptingtotakefulladvantageofMarcellusworkforceandbusinessopportunities.A few of the key workforce challenges across Pennsylvania include understanding the geographicdistribution of theMarcellus industry, developing a basic understanding of natural gas development,

developingadiversenetworkofenergysectorcontacts,andtakingadvantageofnaturalgassafetyandtrainingopportunities.

MarcellusShaledevelopmentinPennsylvaniaisexpectedtoincreaseincomingyears,butthestrengthof Marcellus growth will continue to depend on the commodity price of natural gas, natural gas

inventories,naturalgasinfrastructuredevelopment,naturalgasutilization,andtheoverallhealthoftheeconomy. Additionally, many areas will likely see increased natural gas activity, but development isexpectedtocontinuetobeuneven.ThecurrentMSETCdirectworkforceassessmentresearchsuggests

Pennsylvaniadrillingactivityshouldincreasesignificantlystatewide.Onaregionalbasis,thesouthwestandnorthwest portionsof the statewill see the largest increaseswithdevelopment in thenortheastregion moderating slightly. Current estimates for 2011‐2014 statewide drilling activity include 1,599

Marcelluswellsin2011;1,888wellsin2012;2,009wellsin2013;and2,159wellsin2014.Thecompanydrillingprojections indicatearoughannualgrowthrate indrillingactivityof6‐18%,withanearly60%increaseinoverallactivityby2014.



TobringasingleMarcelluswellonlinerequiresabout420individualsacross150differentoccupations.Eachphaseofnaturalgasdevelopmentincludesdifferentworkforcedemandsandvariesbasedonthe

utilizationofmulti‐wellpadsandtheneedforadditionalnaturalgasinfrastructure.Utilizing260eight‐hourdaysor2,080workhoursperyear,thefirstMarcelluswelldrilledonawellpadwillrequire13.1‐13.3full‐timeequivalent(FTE)workersand9.65‐9.85FTEworkersforeachwelldrilledinsuccessionon

thesamewellpad.FordevelopmentofasingleMarcelluswell, the initialpre‐drillingphaseofnaturalgas development represents about 18% of the entire workforce needed or 2.41 FTEs. The phase ofnaturalgasdevelopmentwhenthenaturalgaswellsaredrilledandthepipelineinfrastructureisputinto

place is anextremely labor‐intensiveprocess and represents about80%of theworkforce for a singlewell or 10.50 FTEs. Finally, natural gas compression and processing requires about 2% of the overallworkforceor0.2‐0.4FTEsdependingondry,wet,orhigh‐BTUnaturalgasprocessingneeds.

BasedontheMarcellusdevelopmentin2010,theMSETCmodelwouldprojectroughly14,777direct

jobswererequiredtocomplete1,368wells,anincreaseofnearly12,248newjobsover2008joblevels.AcrossthestateofPennsylvania,thetotalnumberofdirectnaturalgasdevelopmentjobs(notindirectorinducedjobs)createdbywellsdrilledbetween2011and2014iscurrentlyestimatedtorange

between18,596and30,684FTEjobs,creating9,800to15,900newjobsover2010levels,dependingonthetotalnumberofwellsdrilled.

Thisassessment isbasedsolelyon theemployeesdirectly involved indevelopingawellandplacing itintoproductionanddoesnot consider indirector inducedemployment impacts. Theprojectionsare

not intended to serve as ameasure of the total employment created byMarcellus Shale natural gasdevelopment or to estimate the economic impact of such development. The findings of this report,therefore,shouldnotbecomparedtoemploymentestimatesofotherstudies,whichmostareintended

to project theoverall employment and economic impact of natural gas drilling in Pennsylvania using“multipliers”toestimatejobcreationinsectorsotherthanthosedirectlyassociatedwiththebringingof

aMarcelluswell intoproduction.ThisreportprovidesthebestestimatecurrentlyavailableofworkersneededtobringaMarcelluswell intoproductionandprojectedgrowthin labordemandsaroundhighpriorityoccupationsfortheoilandgasindustry.

Theutilizationofmulti‐wellpadsnotonlyreducesthesurfaceenvironmentalfootprintofawellpad,but

also increases theefficiencyof thenatural gasexplorationprocessand reduces theoverallworkforceneeds by roughly 25%. The greatest multi‐well pad workforce impacts result from a roughly 73%decrease in the need for pre‐drilling occupations and a 16% decrease in drilling and completion jobs

whentwoormorewellsaredrilledonthesamewellpad.IfallMarcelluswellsdevelopedweresinglewellpads,theworkforceneedswouldincreaselabordemandsbythousandsofadditionalworkers,butconversely thewell pad surface footprintwould also increase by six to ten times (depending onwell

spacing).

Inactualityover98%ofnaturalgasexplorationanddevelopmentjobsarefoundinthepre‐drillinganddrillingphaseofbringingawell intoproduction, and this segmentof theworkforcewill no longerbeneededoncetheprocessofdrillinggaswellsandaffiliatedinfrastructureinanareaiscompleted.Inthe

oil and natural gas industries, this drilling phase period is often referred to as “the boom” as vast



workforces are often suddenly required to perform tasks associated with natural gas development.Conversely,thedrillingphasecansuddenlydecline,whichisoftenreferredtoasthe“thebust”.

Themajorityofthepre‐drilling,drilling,andproductionphasejobswillbelocatedinthevicinityofthe

well being drilled. Office workers and some geologic scientists, engineers, and supervisors will belocated at energy, service, and support company offices,whichmay ormay not be located near thevicinityofthewellsiteorevenwithintheregion.InthedevelopmentofMarcellusitisimportanttonote

thatmanyofthedrillingphasejobswillbegeographicallytemporary,meaningadrillingrigmovesfromlocation to location, but the drilling phase jobs will continue to be stable jobs across much of theAppalachianBasinforanestimated30to50years.

In contrast to drilling phase jobs, jobs associatedwith the production phase are well defined as the

managementofanoperatingwell,generallyserveafixedgeographicarea,andwilllastthelifetimeofaproducingMarcelluswell.Evenifdrillingweretoceasecompletely,theproductionphasejobsnecessarytomanageandmaintainMarcelluswellswould still be required fordecades. In fact,manygeologists

believe thewells created as part of theMarcellus Shale developmentwill likely produce commercialquantitiesofnaturalgasfor30yearsormore.

As the Marcellus Play continues to mature, the industry has definitely moved towards hiring morePennsylvania residents. Early in the development of the Marcellus, the natural gas industry relied

heavilyonout‐of‐stateemployeeswithexperienceandknowledgedevelopinghigh‐pressurenaturalgas.Although Pennsylvania drilled its first oilwell in 1859, fluctuations in the commoditymarket and theprospectsof stronger commercial gas fields inother areasdrewmuchof the industry talent toother

states.WhenMarcellusexplorationandproductionbegantoramp‐up,therewastremendouspressuretofindemployeeswithsomelegacynaturalgasknowledge.Theearlystagesofdevelopmentfoundas

many as 70‐80% of the employees from outside Pennsylvania. Although there is still tremendousvariability across energy, service, and support companies, this study’s interview and survey dataindicatesanaverageof65‐75%ofallnewMarcellusworkersarePennsylvaniaresidents.



IntroductionThePennsylvaniaMarcellusShaleWorkforceNeedsAssessment is intendedtosupplybaselinedatatoprovide individuals, job seekers, communities, businesses, workforce and economic developmentprofessionals, and government officials at all levels with the ability to estimate the direct workforce

requirements forMarcellus Shale development. Specifically, the assessment can help outline the keyoccupations associated with unconventional natural gas development and the number of direct jobsrequiredtobringaMarcelluswellintoproductioninPennsylvaniabetween2011and2014.

MarcellusShaleNaturalGasPlayMarcellus Shale is a very large natural gas formation extending across 95,000 square miles, running

throughroughlytwo‐thirdsofPennsylvaniaandportionsofNewYork,WestVirginia,Virginia,Maryland,andOhio (Figure1). InPennsylvania,developmentofMarcellusShalebegan inWashingtonCounty in2004. Over the next few years, the Marcellus development footprint quickly expanded to include

significantportionsofnortheastPennsylvania.SouthwestPennsylvaniaisincreasinglybeingselectedasa preferred location to establish Appalachian Basin headquarters for exploration and production,service, and supply companies. The hub of drilling activity in Pennsylvania has been more heavily

concentrated in thenortheast for2010and thus far in2011.Today,more than2,800MarcelluswellshavebeendrilledinPennsylvania(Figure2).

Energy companies continue to invest billions of dollars in exploration and production programsthroughout Pennsylvania. Investments by industry include securing mineral rights and land, drilling,

productionstimulation,pipeline,compressorstations,processing,andavarietyofother infrastructureinvestmentsnecessary to realize thepotential ofMarcellus Shale. In 2010, twoof theworld’s largestenergy firmspurchased largestakes inMarcellusShale,andnearlyallof themajor firmsactive in the

areacontinuetoplanexpansionsoftheirdevelopmentoperationsbeyond2011.

ThereasonsfortheplannedMarcellusexpansionbyexplorationandproductioncompaniesareduetoanumberof factors including,butnot limitedto, therelative infancyof theplay, thecloseproximityoflargeconsumermarkets,proximitytomajortransmissionlines,andtheextremeamountofnaturalgas

thoughttoberecoverable.Theamountoftotalrecoverablenaturalgaslocatedwithintheformationiscurrentlyunknown,althoughrecoverablegasestimatesforMarcellusShalehaverecentlyrangedfrom262to489trillioncubicfeet(EIA,2011;Englander,2009).Regardlessoftheestimates,mostgeologists

placetherecoverablegasreservepotentialamongthelargestinthenationandpossiblytheworld.



Source:MarcellusCenterforOutreachandResearch,PennState

Figure1:MapofMarcellusShaleFootprint&Depth

Source:MarcellusCenterforOutreachandResearch,PennState

Figure2:MapofMarcellusShaleWellsasofMarch31,2011



Marcellus Shale development within Pennsylvania first occurred with significant intensity in thesouthwestregion,withthefirstwelldrilledbyRangeResourcesLLCin2004inWashingtonCountyand

corresponding gas production in 2005 (Harper, 2008). Shortly afterMarcellus development began insouthwest Pennsylvania, the hub of drilling activity quickly shifted to the northeast region ofPennsylvania (Figures3and4).With the recentdramatic increase in interest inhigh‐BTUgasand the

premium price commanded for liquids‐rich natural gas, the southwest region appears poised for aresurgence inshalegasdevelopmentrelatedtotheMarcellus,Utica,andotherUpperDevonianShaleformations. A combination of limited natural gas infrastructure capacity and a need to develop lease

holdingsinnon‐traditionalnaturalgasareasofPennsylvaniaappearstohaveresultedinamoderationofdevelopmentgrowthintheregionoverthelastfewyears.Naturalgasinfrastructurecapacitywouldincludeaneedforadditionalpipelineandprocessingfacilitiesrequiredtobring“wet”orhigh‐BTUgasto

market. Although the pace ofMarcellus development was slower in the southwest from 2008‐2010,companies active in the area havemade public statements that they intend to dramatically increaseactivitywithin thesouthwest region in2011andbeyond. In fact, rigcountsandpermittingwithin the

firstfourmonthsof2011showactivitylevelsshouldeclipse2010development.Additionally,AlleghenyandWashingtonCountiesalsoappeartobeemergingasafutureenergyhubontheEastCoastwithaveryhighconcentrationofoilandgasrelatedbusinesseslocatingAppalachianBasinoperationsthere.

The northeast region of Pennsylvania saw moderate growth during initial stages of Marcellus

development,withonly 76wells drilled in 2008, but expandeddramatically in 2009and2010. In thesecondhalfof2009,developmentintheareabegantorampupquicklywith332wellsdrilled.ThecorecountiesofthenortheastregionhavequicklybecomeamajorMarcellusShaledevelopmenthotspotfor

thestate,with909wellsdrilledin2010andmorethan1,000expectedin2011.

ThesoutheastregionofPennsylvania isoutsidethecurrentlydefinedMarcellusShalefootprint.Giventhe geographic proximity to the play, location of the Appalachian Basin and regional company

headquarters, and a large workforce base, southeast Pennsylvania will experience some workforcedemand in key core and ancillary occupations related to shale gas growth. Although, not as easy toquantify,thesoutheastregionwilllikelyseeanincreasedneedforconstructionworkers,retailworkers,

mechanics,engineers,welders,commercialtruckdrivers,geologists,andmore.

MuchofthenorthwestregionofPennsylvaniacontainsMarcellusShale,butduetotheshallowerdepthand thinner shale formationmost of the areas are currently considered outside theprimary geologic“MarcellusFairway”. However,anumberofenergycompanieshavebeendrillingexploratorywells in

the area, and several companies have announced plans to dedicate drilling rigs on the southern andeasternfrontsofthenorthwestregion.Permittingactivityhasincreasedintheregionoverthepastfewyears, and drilling activity in the first four months of 2011 show continued growth and significant

potentialforcommercialquantitiesofnaturalgasfromthenorthwestregion.



Figures 3 and 4 provide a breakdown of the number ofwells drilled by region and by county acrossPennsylvania.

HistoricalandProjectedDrillingActivity&

MedianEstimatedWorkforceRequirements,2008‐2014

Southwest Northeast Northwest Pennsylvania Wells Rigs FTEs Wells Rigs FTEs Wells Rigs FTEs Wells Rigs FTEs

2008 103 10 1,333 76 8 956 19 2 239 198 20 2,528

2009 370 37 4,319 332 33 3,745 61 6 689 763 76 8,7532010 358 36 4,032 909 91 9,664 101 10 1,080 1,368 137 14,777

2011 449 37 5,095 1,020 85 10,971 130 11 1,401 1,599 133 17,4672012 620 52 7,062 1,089 91 11,889 179 15 1,940 1,888 157 20,891

2013 760 63 8,734 1,069 89 11,884 180 15 1,985 2,009 167 22,6032014 892 74 10,350 1,088 91 12,285 179 15 2,008 2,159 180 24,644

Figure3:HistoricalandProjectedActivity&MedianEstimatedWorkforceRequirements,2008‐2014



MarcellusWellsDrilledbyRegionNortheastRegion SouthwestRegion

County 2011* 2010 2009 2008 County 2011* 2010 2009 2008Bradford 131 355 113 14 Allegheny 0 1 2 1Carbon 0 0 0 0 Armstrong 6 29 17 2Centre 6 38 7 5 Beaver 0 1 0 0Clinton 6 33 12 3 Bedford 0 1 0 0Columbia 1 1 0 0 Blair 1 5 0 0Juniata 0 0 0 0 Butler 17 38 8 10Lackawanna 0 0 1 0 Cambria 0 0 2 0Luzerne 0 2 0 0 Fayette 0 19 55 18Lycoming 68 102 24 13 Fulton 0 0 0 0Mifflin 0 0 0 0 Greene 16 70 91 18Monroe 0 0 0 0 Huntingdon 0 0 0 0Montour 0 0 0 0 Indiana 7 9 8 3Northumberland 0 0 0 0 Somerset 2 4 3 0Pike 0 0 0 0 Washington 61 135 138 32Schuylkill 0 0 0 0 Westmoreland 18 46 46 19Snyder 0 0 0 0 TotalSW: 128 358 370 103Sullivan 8 18 0 0 NorthwestRegionSusquehanna 37 82 60 32 County 2011* 2010 2009 2008Tioga 80 261 114 8 Cameron 0 4 1 0Union 0 0 0 0 Clarion 0 1 4 0Wayne 0 3 0 1 Clearfield 22 35 27 4Wyoming 8 14 1 0 Crawford 0 0 0 0

TotalNE: 345 909 332 76 Elk 2 8 4 8 Erie 0 0 0 0

StatewideTotals: 515 1138 763 198 Forest 0 2 5 0Jefferson 6 4 2 1Source:PennsylvaniaDepartmentofEnvironmental

Protection.*2011DatathroughMay1,2011 Lawrence 2 0 0 0 McKean 4 14 10 3 Mercer 0 0 0 0 Potter 5 33 8 3 Venango 1 0 0 0 Warren 0 0 0 0 TotalNW: 42 101 61 19

Figure4:MarcellusWellsDrilledbyRegion(andCounty)inPennsylvania

Finally, itshouldbenotedthatwhiletheworkforcenumbers intheassessmentreflectthegeographicborders of Pennsylvania divided into four regions (northeast, northwest, southeast, and southwest)withinthestate(Figure5),Marcellusdevelopmentdoesnotstopatthestateborderandencompasses

most of the Appalachian Basin. It also should be noted there are no job estimates for the southeastregionofPennsylvaniabecausenowellsarebeingdrilledinthatregion.Marcellusworkforceactivityinthesoutheastwillbeprimarily limitedtoservice,support,andsupply‐chainindustries.Themajorityof

thepre‐drilling,drilling,andproductionphasejobswillbelocatedinthevicinityofthewellbeingdrilled.Someexamplesofjobsthatmayormaynotbelocatednearthevicinityofthewellsiteorevenwithintheregioncouldincludeofficeworkers,geologists,engineers,andsupervisors.



Figure5:MarcellusShaleDirectWorkforceAssessmentStudyArea

StatewideDevelopmentProjectionsWhile region‐specific sections are discussed, overall Marcellus Shale development in Pennsylvania isexpected to increase in comingyearsasdevelopmentgrowthoccurs in the southwestandnorthwest

regionsanddevelopmentinthenortheastregionremainssteady.Basedoninterviewsandsurveydatafrom energy companies, as well as from information gleaned from investor statements and publicdisclosures,currentestimatesfor2011‐2014statewidedrillingactivityinclude1,599Marcelluswellsin

2011;1,888wellsin2012;2,009wellsin2013;and2,159wellsin2014.



Table1:Actual/ProjectedMarcellusShaleWellsDrilledPerYearbyRegion

SingleWellPadsvs.MultiWellPadsThedirectworkforceassessmentmodelusedtodetermineworkforceneedsisbasedonthenumberof

occupations and full‐time equivalent (FTE) workers needed to bring a single Marcellus well intoproduction. Over the last 18months, the industry has shown amarked increase in the utilization ofmulti‐well pads. Multi‐well pads actually reduce the potential surface footprint of natural gas

developmentandincreasetheefficiencyoftheexplorationprocess.Whileincreasingefficiency,theuseof multi‐well pads does decrease the overall required workforce. The amount of FTE savings reallydepends on howmanywells are drilled consecutively on a singlewell pad.Wells that are drilled on

existing pads require a smaller workforce for land clearing, pipeline construction, and equipmentoperationonaperwellbasis.

AccordingtotheDepartmentofEnvironmentalProtection’s2007‐2011spudreports,thetotalnumberofwellsspudded(started)asofMay15,2011,included2,966wells.Aftercorrectingforduplicatewell

records and eliminatingwells where a usable coordinate system could not be identified, 2,824wellswereidentifiedforinclusioningeo‐spatialanalysisofwellpaddevelopmentintheMarcellusPlay.Wellpadswereidentifiedusinga250‐footbufferaroundeachwellhead,meaningifanotherMarcelluswell

waswithin250feetthereisaveryhighlikelihoodthatthewellsareonthesamewellpad(Figure6).

0

250

500

750

1000

1250

1500

1750

2000

225020

08

(Actual)

2009

(Actual)

2010

(Actual)

2011

2012

2013

2014

103

370 358 449620

760892

76

332

909

1020

10891069

1088

19

61

101

130

179180

179

WellsDrilledPe

rYear

Year

Actual/ProjectedMarcellusShaleWellsDrilledPerYearbyRegion

Northwest

Northeast

Southwest



Basedonageo‐spatial analysisofdrilling locationsperformedby theMSETC team for this study, it isestimatednowellsdrilledin2007werewithin250feetofanotherMarcelluswelloronamulti‐wellpad,

butby2011upwardsof78%ofthewellsdrilledwereonawellpadwithat leastoneotherMarcelluswell(Figure6).Sixty‐fivepercent(65%)ofwellsdrilledin2011weredrilledonnewmulti‐wellpads,13%weredrilledonpadscreatedinpreviousyears,and22%arecurrentlysinglewells.

Figure6:WellsonMulti‐WellPads,2007‐2011*

*2011datacurrentthroughMay3.

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If we look at multi‐well pad development over time, our research revealed that about 17% of theMarcellussinglewellpadsconstructedin2007ultimatelyendedupasmulti‐wellsites.Jumpingaheadto

2010,1,380totalwellsweredrilled,126wells(9%)weredrilledonpreviouslyconstructedwellpads,325wells(24%)wereonnewsinglewellpads,and929wells(67%)weredrilledonnewlyconstructedmulti‐wellpads(Figure7).Ifwefocusonthe1,254wellsdrilledonnewwellpadsconstructedin2010,wefind

74%ofnewwellsweredrilledonmulti‐wellpads,and26%ofnewwellsweredrilledonasinglewellpad.In2010,atotalof580newwellpadswereconstructedwith56%ofnewwellpadsholdingonlyonewell (325 wells) and 44% holding two or more wells drilled on the same pad (929 wells) within a

calendar year. Several variables can affect the development of multi‐well pads; however, under thecurrentdevelopmentscenariosmulti‐wellpadscertainlydominatecurrentproductionplans.

Figure7:WellPadDevelopmentScenarios

One other important question to consider when analyzing workforce estimates and the process fordevelopingmulti‐well pads is howmanywells are actually being drilled perwell pad in a given year.Riggingupforonewell,drillingawell, riggingdown,andcomingbacktothesamewellpadata later

dateisfarmorelaborintensivethandrillingandcompletingmultiplewellsallatthesametime.

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TotalWellsDrilled



Ofthe580wellpadsconstructedin2010,255(44%)weredevelopedasmulti‐wellpadswhile325(56%)hadonlyonewellwhentheywereoriginallyconstructed.Today,ofthosesame580wellpads,271are

multi‐well pads, and 309 are still single well pads. Although there were more single well padsconstructed in2010,about76%ofthedrillingactivitytookplaceonamulti‐wellpad.Roughly18%ofwellsweredrilledonatwo‐wellpad,12%onathree‐wellpad,9%onafour‐wellpad,7%onafive‐well

pad,and31%weredrilledonasix‐wellormorepad(Figure8).

Figure8:WellsDrilledByWellPadType

HighBTUGasAbigfactorintheprojectedincreaseofdrillingactivityinthesouthwestregionisduetotheeconomic

attractivenessofliquids‐rich,high‐BTUgasfoundinpartsoftheMarcellusShalelocatedinsouthwesternPennsylvania.High‐BTUgas requires largeprocessing facilities toextract liquids suchasoil andheavygasoline and to fractionate other gas compounds foundwithin the producedmethane. The result of

high‐BTU gas processing is amultitude of saleable products that can significantly raise the return oninvestment and produce potentially higher profits under lower natural gas commodity prices. Somemedia reports have labeled the attractiveness of high‐BTU gas as a “Race to Liquids” as companies

devote significant resources to liquid‐rich areas (Braziel, 2010). Like many aspects of natural gas

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development,thecontinuedattractivenessofhigh‐BTUgaswilllikelyremainvariableanddependentonanumberofdifferentfactors,includingcommodityprice.

Theexactboundaryofwetvs.drygasisunclearatthistime,althoughwet/high‐BTUgasisunderstood

to be principally found in western Pennsylvania (Figure 1). Projecting development activity that willoccur specificallywithin the high‐BTU gas region ismore difficult. Permitting activity reported by thePennsylvaniaDepartmentofEnvironmentalProtection,aswellasdiscussionswithoperatorsinthearea,

suggestthatbetween60‐75%ofthewellsdrilledinthesouthwestregionwithinthenextseveralyearsmaybeliquids‐rich,high‐BTUgasthatrequiresadditionalprocessing.

IntroductiontotheNaturalGasIndustryWorkforceTheMarcellusShaledevelopmentprocessdifferssignificantlyfromthatofPennsylvania’slongtraditionof extracting shallow gas and oil. Due to differences in geology, technology, and energy company

practicestheextractionofMarcellusShalerequiresmoreemployeesandsignificantlygreaterinputandutilization of supplies, materials, and equipment (Figure 9). Marcellus Shale gas is considered“unconventional”becausetheformationrequiresdirectionaldrilling,productionstimulation,andother

methodstoproducecommercialquantitiesofnaturalgas.Theseprocessesaremuchmoreindustrialinnature, labor intensive, and technologically advanced than conventional shallow gas development.Unconventionalnaturalgasshalesarealsoknownasacontinuousgeologicalformation.Asacontinuous

formation, unconventional shale does require higher technology inputs but also reduces thedevelopment risk found in conventional formations, which rely on finding pockets of natural gas.Additionally, the energy companies and contractors that initially developed and utilized the

unconventional shale drilling and extraction technology were mostly national or internationalcompanies and primarily utilized contractors and personnel with legacy shale gas knowledge fromaroundthecountryandfromotherpartsoftheworldtobegindevelopingMarcellusShale.

ExtractionTimelineLifespantotalingapproximately3050years

PipelineConstruction Constructiontimedependsonpipelinelength Permitting Drilling NaturalGasProduction

Upto2mos. 30‐45days

Wellscanbeproductiveovera30‐50yearperiod

Pre‐Drilling Drilling&Completion Production/Reclamation

GeologyStudies StakingWell ProductionStimulation

Reclaiming

Uptosixmonths 30‐60days 1‐2wks. 1month+

MineralRights©2011MarcellusShaleEducation&TrainingCenter

Figure9:PhasesandTimelineofDevelopmentofMarcellusShaleNaturalGasWells

History has shown that predicting future trends of the natural gas industry can be challenging andestimatingtheworkforcerequirementsofthisparticularindustryrepresentsanevengreaterchallenge.Naturalgasdevelopmenttrendscanbedifficulttopredictascommodityprices,technologicalchanges,



newplaysdevelop,andotherfactorscanchangetheintensityandscopeofexplorationratherquickly.Additionally,awidearrayofenergycompaniesandanevenwiderarrayofsubcontractorscomprisethe

industry, and the resulting complex web of occupational needs and workforce requirements can bedifficult to estimateevenunder ideal circumstances.Additionally, the industry challenges the generaldefinition of an industry sector and local worker, as employees supporting natural gas development

workacrossavarietyofindustrysectorsandoftenworkinmultiplelocationswithinaregiontodevelophundreds of different wells and infrastructure projects. Furthermore, industry employees willsometimeswork12‐hourshiftsforweeksatatimeandthenbeaffordedseveralcontinuousweeksof

leavewhileanentirelynewcrewtakestheirplace.

LocationsandResidencyDue to the inherent uncertainty of development intensity, as well as the need to work at multiplelocations,manyoftheinitialMarcellusShale‐relatedworkersremainedtransientresidentsoftheregionand kept their permanent residency at a location hundreds or even thousands ofmiles away. As the

Marcellus Play continues tomature, the industry ismoving towards aworkforce that contains fewertransientworkersandmorepermanentPennsylvaniaresidents.

Since many contractors and subcontractors are accustomed to working at multiple and changinglocationsthroughoutNorthAmericaandtheworld,itiscommonplacewithinthenaturalgasindustryto

initially utilize non‐localworkers and supply‐chain services.However, as developmentmoves forwardover the courseofmonths and years, contractors and subcontractorswill either relocate to the localarea, or local businesses will be created to meet industry needs. National and international drilling

companies,gasfieldservicecompanies,andgasfieldconstructionfirmshavealreadyopenedregionalofficesinsouthwestandnortheastPennsylvania.Manyofthesecompaniesinitiallybroughtanexternalworkforcewiththemtothearea,butareintheprocessofreplacingthisworkforcewithlocalworkersas

opportunitiesarise.Inaddition,manycompaniesthathavehistoricallycateredtoconventionalshallownaturalgasandoilfielddevelopmenthavesignificantlyaugmentedtheirbusinessestoincludeworkin

MarcellusShale.

As the Marcellus Play continues to mature, the industry has definitely moved towards hiring morePennsylvania residents. Early in the development of the Marcellus, the natural gas industry reliedheavilyonout‐of‐stateemployeeswithexperienceandknowledgedevelopinghigh‐pressurenaturalgas.

Although Pennsylvania drilled its first oilwell in 1859, fluctuations in the commoditymarket and theprospectsof stronger commercial gas fields inother areasdrewmuchof the industry talent tootherstates.WhenMarcellusexplorationandproductionbegantoramp‐up,therewastremendouspressure

tofindemployeeswithsomelegacynaturalgasknowledge,andtheearlystagesofdevelopmentfoundas many as 70‐80% of the employees were from outside Pennsylvania. Although there is stilltremendousvariabilityacrossenergy,service,andsupportcompanies,basedonrecent interviewsand

surveydatathepercentageofnewindustryhireswhoarePennsylvaniaresidentstodayrangesfrom50‐100%withanapproximateaverageof65‐75%ofnewMarcellusworkersbeingPennsylvaniaresidents.APennsylvaniaresidentwasdefinedasanemployeewhohas livedinPennsylvaniaforat leastoneyear

andholdsavalidPennsylvaniadriver’slicense.Inaseparateanalysisofresidencydatausingwageand



employment records for workers in the gas and oil industry in Pennsylvania, the PennsylvaniaDepartmentofLaborandIndustryfoundthat71%ofnewhiresin2010innaturalgascoreandancillary

industriesoperatingintheMarcellusShaleregionwerefromPennsylvania(Mukherjee,2010).

DrillingPhaseJobsvs.ProductionPhaseJobsThenaturalgasdevelopmentprocessissuchthatalargeproportionofthetotalindustryworkforcewillberequiredduringthewelldrillingphase,whileasmallminorityoftheworkforcewillberequiredforthelong‐termproductionphase.Pre‐drillinganddrillingphasejobsaregroupedtogetherforpurposes

ofthissectionoftheassessment.

PredrillingandDrillingPhaseJobsThephaseofnaturalgasdevelopmentduringwhichthenaturalgaswellsaredrilledandtheassociatedpipelineinfrastructureisputintoplaceisanextremelylabor‐intensiveprocess.Inactualityover98%ofnaturalgasexplorationanddevelopmentjobsarefoundinthepre‐drillinganddrillingphaseofbringing

awellintoproduction,andthissegmentoftheworkforcewillnolongerbeneededoncetheprocessofdrilling gas wells and affiliated infrastructure in an area is completed. In the oil and natural gasindustries, this drilling phase period is often referred to as “the boom” as vastworkforces are often

suddenly required to perform tasks associatedwith natural gas development. Conversely, the drillingphase can suddenly decline,which is often referred to as the “the bust”. Given the level ofmobilityrequired,manyemployeesinthedrillingphaseofgasdevelopmentmaintaintemporaryresidencyina

givenarea–suchasinmotels/hotels,RVs,“mancamps”,monthlyapartment/houseleases,etc.

Noone can accurately estimatehow long thedrillingphasewill lastwithinMarcellus Shaleorwithinspecificareasoftheshaleformation.Drillingphaseestimateshaverangedfrom10to70years,whichinpartreflectsuncertaintycreatedbyfuturefluctuations incommodityprices,economicconditions,and

technological changes, among other variables. A number of drilling scenarios are possible for futureMarcellusdevelopment,andtheyincludearelativelyquickflurryofactivitythatsubsideswhendrilling

movestoanotherlocation,highintensitydrillingthatjumpsfromhotspottohotspot,andmoderateandsustaineddrillingacrosstheAppalachianBasinlastingfordecades.Eachdevelopmentscenariochangesthedirectworkforceneeds,localworkforcerequirements,andopportunitiesforbusinessdevelopment

andentrepreneurship.

ProductionPhaseJobsIn contrast to drilling phase jobs, jobs associatedwith the production phase are well defined as themanagementofanoperatingwell,generallyserveafixedgeographicarea,andwilllastthelifetimeofaproducingMarcelluswell.Evenifdrillingweretoceasecompletely,theproductionphasejobsnecessary

tomanageandmaintainMarcelluswellswould still be required fordecades. In fact,manygeologistsbelieve thewells created as part of theMarcellus Shale developmentwill likely produce commercialquantitiesofnaturalgasfor30yearsormore.

Withintheindustry,careersassociatedwiththeproductionphaseareoftenreferredtoaslong‐termor

even“permanent”.Occupationsduringtheproductionphasetendtobelesslaborintensive,withfewer



hazards involved, and more specialization than development phase occupations, while still retainingexcellent salary and benefits. Jobs associated with production activities almost always result in local

residencyandoftenutilizelocalworkforces.

Thedurationoftheproductionphasewillvaryfromregiontoregion.Inthewesternpartofthestate,for example, the high‐BTU gas that is present in the majority of the natural gas offers additionalopportunitiesforlocalproductionphasejobs.Theseadditionalnaturalgasprocessingopportunitiesare

notpresentinotherareasofthestate.Localhigh‐BTUnaturalgasprocessingisneededtofractionateorremovenon‐methanecompounds (non‐natural gas suchasbutane,ethane,propane,etc.) and liquids(oil, water, heavy gasoline, etc.) that naturally occur in the natural gas. Similar to other natural gas

production, high‐BTU processing facilities and jobs will remain stable for the life of the well andsignificantly longer thandrillingoperations.Occupations associatedwithhigh‐BTUgasproduction aresomewhatsimilar tootherproductionphaseoccupationsand includecompressoroperations,pipeline

maintenanceandtechnicians,informationtechnology,gaugemonitoring,supervisorypositions,processengineers,loaders/testers,etc.

TheMSETCWorkforceModelGiven the complexwebof occupations that constitute thenatural gas industryworkforce, traditionalmethodsofmeasuring future jobcreationused inother industriesareoften inadequate.Manyof the

industriesthatparticipateinthedevelopmentofanaturalgasfieldareusuallynotpresentintheareabefore thenatural gasdevelopmentprocessbegins; thus capturing theirworkforceneedsusingmostworkforceprojectionmodels is ineffectiveatbestgiventhereisnolocalbaselinedata.Similarly,given

theuncertaintyinnaturalgasdevelopment,jobestimatespredicatedsolelyonpostedjobopeningsorindustry questionnaires – while providing an accurate snapshot of current demand – are largelyinflexibletotheconstantlychangingintensityofdevelopmentactivity.Finally,giventheintenseuseof

subcontractorsbymostexplorationandproductioncompanies,usingastrictdefinitionof“local”asamunicipal boundary or “industry” as only a natural gas industry economic code does not accurately

reflect the complexity, interconnectedness, and the true scope of natural gas related jobs andopportunities.

MethodologyOverthecourseofnearlythreeyears, theMarcellusShaleEducation&TrainingCenter(MSETC)teamhasdevelopedandrefinedthemethodusedinthisstudytoestimatetheworkforcerequirementsofthe

naturalgasindustry.Themethodologyfocusesonanalyzingthetypesandnumbersofworkersneededtodrill a singleMarcellusShalegaswell and thenextrapolates thatdata toachievea totalworkforcerequirementbasedonestimatesof futurewelldrilling.At the coreof theMSETCmodel is a full‐time

equivalent(FTE)calculationforeachworkerassociatedwithdrillingasingleMarcellusShalewell.AnFTEforeachworker is260eight‐hourdaysor2,080hoursperyear.Manytasksthatoccurduringthewelldevelopment processmay only require a fewworkdays to complete. Therefore, the “perwell”work

requirementformostoftheoccupationalcategoriesrangedfrom1/10to1/100ofanFTE.Somevery



labor‐intensiveoccupations suchasheavyequipmentoperation,office staff, anddrilling rigoperation(roughnecks)constitutedanequivalentthatrangedbetween1/10toasmanyastwo(2)FTEsperwell.

DeterminingfractionalFTEnumbersforeachworkerdirectlyassociatedwithdrillinganaturalgaswellis

acomplexandtimeconsumingprocess.FTEnumbersforthemajorityofoccupationsinvolveidentifyingthenumberofworkers in aparticularoccupationorwork crewand thendetermining thenumberofdaystheworkerstypicallyspendonawellsiteorinsupportofwellsitedevelopment.FTEnumbersfora

portionoftheoccupations‐ includingpipelineconstruction,landclearing,officestaff,etc.–arehighlyvariablefromcompanytocompanybasedonspecificconditions;therefore,roughaverageswereusedtoreducethedifferencesincompanydevelopmentpractices.

AcriticalelementintotalworkforceprojectionformulausedintheMSETCmodelisthenumberofwells

drilled by a single drilling rig in a given year. In research across both Pennsylvania and Texas, it wasdetermined a large rotary rig drills about 12 wells per year. The efficiency of drilling operations inPennsylvaniahasdefinitelyincreasedbyroughly20%overthelastthreeyears.Theutilizationofmulti‐

wellpads,anincreaseinthenumberofbuilt‐for‐purposeMarcellusrigs,andtheincreaseinlocaldrillingknowledgehaveallcontributedtothisincreasedefficiency.

TheaveragenumberofworkdaysforoneFTEworkerisequalto260.AMarcellusShaledrillingrigwilldrill12wells

peryearonaverage,whichhasincreasedfrom10wellsperyearinpreviousmodels.

Figure10:GeneralEquationBehindWorkforceModel

HistoryofThisWorkforceModelIn2009, theMSETCteamworkedcloselywithrepresentatives fromanumberofenergy firms,drilling

companies, and subcontractorsoperating in theNorthernTier andCentral regionsofPennsylvania toproduce a workforce needs assessment for the Central Pennsylvania Workforce DevelopmentCorporation, Northern Tier Regional Planning and Development Commission, through Pennsylvania

DepartmentofLaborandIndustryPartnershipfunding.Duringtheinitialassessmentprocess,nearly150occupationalcategoriesand/orskillgroupswereidentified.

Inthespringof2010,theMSETCteamperformedin‐depthinterviewswithmanyofthemajorMarcellusShale energy companies, drilling companies, and serviceprovidersoperating in the southwest region.

The exploration and production companies interviewed represent slightly more than 88% of allpermitting activity in 2009‐2010. These discussions were designed to revise or reconfirm the dataobtained in the2009studyandto identifydifferences in industrypracticesand jobs in thesouthwest

region.Tosolidifytheinterviewdata,theMSETCteamcreatedanonlineworkforceneedsassessmentinthe summer of 2010 for gas industry representatives. Thirty (30) respondents completed the onlineworkforceassessment.

For this report, the MSETC team performed interviews in early 2011 with Marcellus Shale energy

companies, drilling companies, and service providers throughout Pennsylvania to update previouslyobtainedworkforceinformationandexpandthedatatoincludeastatewidefocus.In‐depthinterviews



wereperformedwitheightcompanies.Additionally,anonlinesurveyinstrumentwasdistributedto346individuals across 175 different companies, of which 62 individual responses/46 company responses

were returned.Of the 46 industry responses, 13 exploration andproduction companies returned thesurvey representing over 76% of all drilling activity in 2010. Other company respondents included 3servicecompanies,4drillingcompanies,3constructioncompanies,and23supportcompanies.

Ineachofthestudies,amajorstepincreatingaviableworkforceprojectionmodelistoestimatefuture

drillingrigactivity.Forthisreport,inadditiontoworkingwithenergyoperatorsandsubcontractors,theMSETC team reviewed investor statements, press releases, and public statements made by energycompany officials regarding their plans for future drilling activity in the region. The results from

companyinterviewsandtheonlineworkforceassessmenthelpedtoconfirmtherig/drillingestimates.

Advantages, Limitations, and Key Assumptions of the MSETC ModelMethodologyTheMSETCmodelallowstheusertoidentifyaprojectedlevelofdevelopmentintensityasmeasuredbywellsdrilledperyear(the input)andprojectthenumberofworkersbasedonoccupationalcategories(theoutput)requiredfortheexpectedlevelofdevelopment.

For thepurposesofassessingpotentialworkforceneedsandworkforcedevelopmentcapabilities, this

typeofmodelissuperiortoanumberofdifferentmethods;however,thismodelstillhasanumberofdifferentlimitations.Theassessmentisbasedsolelyontheemployeesdirectlyinvolvedindevelopinga

wellandplacingitintoproductionanddoesnotconsiderindirectorinducedemploymentimpacts.TheprojectionsarenotintendedtoserveasameasureofthetotalemploymentcreatedbyMarcellusShalenaturalgasdevelopmentortoestimatetheeconomicimpactofsuchdevelopment.Thefindingsofthis

report,therefore,shouldnotbecomparedtoemploymentestimatesofotherstudies,whichmostareintendedtoprojecttheoverallemploymentandeconomicimpactofnaturalgasdrillinginPennsylvaniausing “multipliers” to estimate job creation in sectors other than those directly associated with the

bringingofaMarcelluswellintoproduction.Thisreportprovidesthebestestimatecurrentlyavailableofworkers needed to bring a Marcellus well into production and projected growth in labor demandsaroundhighpriorityoccupationsfortheoilandgasindustry.

Theadvantages,limitations,andkeyassumptionsofthemodelandmethodologyfollow.

Advantages:• Offersmuchmorespecificoccupationaldescriptionsthangeneric“industrialclassifications”

• Doesnotinclude/excludebasedonindustrialclassifications

• Usesdirectworkerrequirements,notcompleximputationsofrequirements

• Doesnotinclude/excludebasedonthegeographiclocationsofbusinessoffices

• Doesnotrelyprimarilyonsamplingorresponserates(suchassurveys)

• Caneasilybechangedasdevelopmentscenariosfluctuate



• Allowsfortriangulationofmultipledatasources

• Accountsfordifferencesinsinglewellandmulti‐wellpadworkforceneeds

• Includesdifferencesinhigh‐BTUanddrygasworkforcerequirements

Limitations:• Does not (currently) calculate the specific workplace locations of all the occupations; most

occupationswilloccuratthedevelopmentsite,butotheroccupationsmayoccurelsewhereinthestateorcountry

• Doesnot (currently)specificallycalculateordefine indirector inducedeconomicorworkforceimpacts of these jobs (e.g. additional jobs created by businesses providing this indirect orsupply‐chain support, such as for parts and materials, maintenance and repair, equipment,

janitorial services, office supplies, etc., and additional jobs created by the workers spendingtheirincome)

• Does not differentiate the type of labor force (i.e. corporate, individual business owner,organizedlaborshops,openshops,etc.)

• Doesnotincludemanyindirectorsupply‐chainindustriesorworkforces

• Doesnotprovidebusiness‐specificinformationsuchasname,size,location,etc.

• Doesnotincludeallworkers/contractors(suchasallcontractedlegalservices)

KeyAssumptions:• Full‐timeequivalent(FTE)isdefinedat260eight‐hourworkdaysor2,080hoursperyear

• Averagedrillingrigdrillsapproximately12wellsperyear

• Each single well or first well will require, on average, one mile of pipeline construction(Additionalwellsonamulti‐wellpadwillnotrequirepipelineconstructionbeyondconnection)

• Onecompressorstationwillbeconstructed,onaverage,forevery20wells

• Companies’currentdrillingrigprojectionsarerelativelyaccurate(forthe‘median’development

scenarios)

KeyAssumptionsofHighBTUGasWorkforceEstimatesThe workforce associated with high‐BTU gas processing facilities located in portions of westernPennsylvaniaandWestVirginiadonoteasilyconformtoaper‐wellestimate,asthesejobsaredirectlytiedtothevolumeofnaturalgasproductionandnotnumbersofwellsdeveloped.Asdrillingoperations

expandinanarea,thevolumeofnaturalgasproducedshouldalsoincrease.Increasedvolumemeansanincreased need for natural gas processing and associated jobs in high‐BTU areas. However, if drilling

levels off or declines, the volumeof natural gas needing to beprocessedwill also declinepotentially



reducing the number of processing jobs. Additionally,Marcelluswells have a relatively steep declinecurve,meaningthenumberofnaturalgasjobsisnotonlytiedtoincreasesinnaturalgasvolumebased

onnewdrilling,butdeceasesinvolumeasawellages.Understandingthesesomewhatcomplexvolumecalculationsandusingdetailedinterviewswithgasprocessingcompanies,theMSETCmodelbasedthehigh‐BTUprocessingworkforceestimatesonthefollowingassumptions:

• Roughly60%ofwellsdrilledinsouthwestPennsylvaniawillbelocatedinhigh‐BTUgasareas

• TheproductionfacilitycapacityandstaffingisapproximatelyoneFTEforevery7.5millioncubic

feetofgasprocessedperday

• Eachwellwill follow an average production curve of Year 1: 4.5MMcf/d; Year 2: 1.1MMcf/d;Year3:700Mcf/d;Year4:560Mcf/d;Year5:470Mcf/d

• Theexpectedultimaterecovery(EUR)foranaverageMarcelluswellwillbe3.5billioncubicfeet(BCF)ofnaturalgas

KeyAssumptionsforFTEsforMultipleWellPadsOver the last twoyears, thekeyexplorationandproductioncompanieshaveclearly started to realize

theefficiencyofconstructinganddrillingmulti‐wellpads.Whilethedevelopmentstrategyofmulti‐wellpads does vary significantly from company to company the overall emerging trend is clearly towardmulti‐welldevelopment. Infact,76%ofallwellsdrilled in2010wereonapadwithat leastoneother

well (929wellsweredrilledonnewwellpadsconstructed in2010,and126wellsweredrilledonwellpadsconstructed in2008or2009).Basedontheefficiencyofmulti‐wellpads, theMSETCmodeluses

thefollowingworkforceassumptions:

• Pre‐drillingjobsdecreaseby73%forsubsequentdrillingoperationsonthesamewellpad

• Drillingandcompletionjobsdecreasebyroughly16%forsubsequentdrillingoperationsonthesamewellpad

• Productionoperationsworkforceremainroughlythesame

• Partiallydevelopedpadswillnothavethesameworkforceefficiency;however,fewerthan8%(224wells)ofallMarcelluswellsdevelopedto‐dateweredrilledonpreviouslyconstructedwell

pads

Natural Gas Workforce Requirements Interviews, Focus Groups, andOnlineWorkforceAssessmentA comprehensive understanding of the natural gas development exploration and production, service,

and support companies is necessary to build an accurate workforce model. Across all three directworkforcestudiescompletedtodate,22companiesweredirectlyinterviewed,morethan40companiesparticipatedinthreefocusgroupsessionsrelatedtotheconstructionandevaluationoftheoccupational

matrix,andmore than100onlineassessment responseswere returned tohelpbuildandconfirmthe



occupational skills and FTE workers. Again, the purpose of the interviews and online workforceassessmentwastoobtainprojectionsofdrillingactivity,re‐affirmkeyoccupationandFTEassumptions

oftheworkforcemodel,andprovideabasistotriangulatedifferentdatasources.

In general, the results of the online workforce assessment confirmed much of the interview dataregarding well development projections, workforce development, and assumptions about workforceneeds.While the respondents to theonlineworkforce assessment remained anonymous, respondent

estimatesofwelldevelopmentactivitywithinthenextfiveyearswereverysimilartopublishedreportsandin‐personinterviewswithoperators.

Online workforce assessment results regarding questions about workforce development and hiringpracticesrevealedsimilarresults tothe2009MSETCreportandhistoricaldata fromothernaturalgas

plays.Companiesindicatedfindingindividualswiththeproperworkethic,generalmechanicalaptitude,andgeneralexperiencewithintheindustryremainedthelargestbarrierstofindinglocalworkers(Figure11). Most respondents indicated they used some type of training programs, with the vast majority

indicatinganeedforindustrialcertifications,vocationaltraining,ortechnicalcollege(Figure12).Thesefindingsare consistentwith theoccupationalmatrix that showsover75%of theMarcellusworkforcewillneedahighschooldiplomaoraspecializedcertificationsuchasAPI1104downhandweldingora

commercialdriver’slicense.



BiggestChallengestoFindingNewWorkers

Figure11:BiggestChallengestoFindingNewWorkers

EducationandTrainingProgramsMostNeeded

Figure12:EducationandTrainingProgramsMostNeeded



Specificoccupationalareasthathaveshownthegreatestdemandincludegeneralandsemi‐skilledofficestaff, engineering and geology‐related occupations, and supervisory roles throughout a range of

differenttypesofcompanies.

WorkforceModelResults

FullTimeWorkEquivalent(FTE)toDrillOneMarcellusShaleWellTheMSETCmodelrevealsthatover420individualsworkingacrossnearly150differentoccupationsare

needed to perform all the operations required to complete and produce gas from a singleMarcellusShalewell.Thetotalhoursworkedbytheseindividualsaretheequivalentof13.10FTEdirectjobsoverthecourseofayearfordrygaswells.OftheseFTEs,12.9arerequiredduringthepre‐drillinganddrilling

phase,while0.19arerequiredduringtheproductionphase.Foradditionalwellsdrilledonapreviouslyconstructedwellpad,thetotalFTEsrequireddropsto9.64.Ofthe9.64FTEs,0.65arerequiredduringpre‐drilling, 8.81 during drilling, and 0.19 during production phase. As is discussed in the following

section,theFTEforhigh‐BTUgaswellswillchangeovertime.

Figure13:FTEbyPhaseandTypeofWell

Itisimportanttonotethatpre‐drillinganddrillingphasejobsforeachwelldonotcompoundyearafteryear.Theseworkersarerequiredonlywhilewellsarebeingdrilledandareafunctionofthenumberofwellsbeingdrilledeachyear.Forexample,if100singlewellsaredrilledperyear,thenthetotaldrilling

phaseworkforcewill be 1,290. If 100 singlewells are drilled per year for 10 straight years, the totaldrilling phase workforce will still remain very close to 1,290. Although these jobs follow the drillingdevelopmentandthetruelengthofactivityremainsuncertain,drillingjobs,whilegeographicallyshort‐

term, may still be long‐term Pennsylvania jobs depending on the development scenario (sustained,hotspot,orflurrydevelopmentoutlinedpreviously).



Thevastmajorityofjobsdirectlyassociatedwiththestaking,scoping,permitting,engineering,logging,clearing, drilling, moving, finishing, cementing, completing, and producing a well are included in the

estimate, as well as the majority of jobs required to clear, dig, and construct collector pipeline andcompressor station infrastructure for the well. The workforce estimate includes the vast majority ofoccupationsdirectlyassociatedwiththedrillingandcompletionprocess,butdoesnotincludemanyof

the indirect jobs that will be created in a variety of occupations ranging from legal advice to gravelquarryingtosteelpipefabrication.

ProductionPhaseFTEsWhilethevastmajorityofjobsassociatedwiththenaturalgasindustryoccurduringthepre‐drillinganddrilling phase, a number of jobs are associatedwithmonitoring the long‐termhealth and production

capabilityofanaturalgaswell.Theseproductionjobswillberequiredforaslongaswellsareproducingcommercial quantities of natural gas, which is currently estimated by university scientists and theexploration and production companies in Marcellus Shale to be over a 30 to 40 year period. The

workforcemodelestimatesthat0.19oftheselong‐term,full‐timejobsarecreatedforeachdrygaswelldrilledinagivenfield(orapproximatelyoneworkerforeveryfivewellsdrilled),and0.39jobsforeveryhigh‐BTUwelldrilledoverthenextfiveyears.Productionjobsdocompoundeachyearasmorewellsare

drilled,whileprocessingjobswillbeinfluencedbythevolumeofnaturalgasproduced.Forexample,if100drygaswellsweredrilledperyearfor10years,19oftheselong‐termjobswouldbecreatedeachyear,foratotalof190long‐termjobscreatedafter10years.Inadditiontobeinglong‐terminnature,

these jobs typically retain theexcellent salaryandbenefits found innatural gasdevelopmentbutaregenerallylesshazardousandlesslaborintensivethanjobsassociatedwiththedrillingphase.

Jobs associated with high‐BTU gas processing also increase as the volume of natural gas increases;

however,theamountofrequiredworkersperwellwilldecreaseovertimeasthevolumeofgasthatisproducedfromawellalsodecreases.Approximately0.20processingjobsarecreatedperhigh‐BTUgaswellforthefirstfiveyearsofproductionfromawell,whileoverthe30‐year lifeofawelltheaverage

FTEcalculationforgasprocessingonaperwellbasismaybecloserto0.02.However,sincethisreportislimited to a 2014 time horizon, 0.2 FTEs perwell are used to extrapolate total workforce estimates.Duringthedrillingphaseofdevelopment,newwellswillcontinuetobedrilled;therefore,eventhough

the amount of production for each well is decreasing, the total gas production within a regionmaycontinuetoincreaseandthusrequirealargerworkforceuntildrillingactivityslows.

“Direct”JobCreationAspreviouslynoted,thejobsprojectedinthisassessmentareonlythosedirectlyassociatedwithdrillingandcompletingaMarcellusShalenaturalgaswellandrelatedpipelineconstruction.Jobsthatarenot

directlyassociatedwiththeindustrialprocessarenotincludedinthismodelandareoutsidethescopeofthisreport.Sincetheanalysisfocusesonthespecificjobsrequiredfordrillingandproductionwithoutregardtoformalindustrysectors,itwouldbeillogicaltoapplyworkforceoreconomicmultiplierstoit,

whichtypicallyarebaseduponspecificindustrysectors.



StatewideDirectWorkforceRequirements

Figure14:MedianPennsylvaniaScenarioMarcellusShaleWorkforceRequirementsbyPhase

PreviousandCurrentWorkforceRequirementsApplyingtheMSETCworkforceprojectionmodeltothepreviousandcurrent levelsofdevelopment in

Pennsylvania shows an estimated equivalent of 2,528 direct jobs (or FTEs) created throughoutPennsylvania in 2008, increasing to 14,777 FTEs in 2010. Using the well development projectionsdiscussed in previous sections, it is estimated that between 13,224 and 21,710 FTE jobs would be

required in 2011, with approximately 17,467 FTE jobs being the median workforce developmentestimate based on development projections given by energy companies. The number of productionphasejobscreatedbetween2008and2011isestimatedfrom843to1,075,with959beingthemedian

estimate,dependingondrillingactivityduringtheremainderof2011.

EstimatedFutureWorkforceRequirementsThemodelindicatesthatthenumberofjobswill increasebetween2011to2014alongwithincreasedlevelsofdrillingactivity.BasedontheMarcellusdevelopmentin2010,theMSETCmodelwouldprojectroughly14,777directjobswererequiredtocomplete1,368wells,anincreaseofnearly12,248newjobs

over2008joblevels.TheFTEdirectworkforceisexpectedtoincreaseby1,000to11,000newjobsover2010levelsbytheendof2012,andusingthemedianandhighestimatesthemodelprojectsbetween9,800and15,900newjobsbytheendof2014.Thetotaldirectworkforceneededtomeetcurrent2012

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Actualvs.ProjectedDevelopment



drilling predictionswill likely fall between15,788and25,994 totalworkers. By 2014, the total directworkforcenumberisexpectedtorangefrom18,596to30,684dependingonthedevelopmentactivity,

with24,644representingamediandirectworkforceestimate.

Thetotalnumberofproductionphasejobs(includinggasprocessing)createdbywellsdrilledbetween2011and2014will total between1,879 and2,822 FTE jobs, dependingon the total numberofwellsdrilled.



NortheastRegion

Figure15:MedianNortheastRegionScenarioMarcellusShaleWorkforceRequirementsbyPhase

PreviousandCurrentWorkforceRequirementsApplyingtheMSETCworkforceprojectionmodeltothepreviousandcurrent2011welldrillingactivityinBradford,Carbon,Centre,Clinton,Columbia,Juniata,Lackawanna,Luzerne,Lycoming,Mifflin,Monroe,Montour, Northumberland, Pike, Schuylkill, Snyder, Sullivan, Susquehanna, Tioga, Union,Wayne, and

Wyoming Counties indicated that approximately 956 FTE direct jobs were created in 2008 and thatnumberincreasedto9,664by2010.In2011,itisestimatedthatbetween8,290and13,652FTEdirectjobswouldberequired,with10,971FTEjobsbeingthemedianworkforceestimate.Itisestimatedthat

thenumberof long‐termproductionphasejobscreatedbetween2008andtheendof2010waslikelyaround248jobs.

EstimatedFutureWorkforceRequirementsThemodelindicatesthenumberofjobswillincreaseoverthefour‐yearperiodfrom2011to2014.TheFTEdirectworkforceisexpectedtoincreaseslightlyasdrillingintheregionstabilizesoverthenextfew

yearsandwillrequirebetween8,979and14,799workersby2012,with11,899requiredworkersbeingthemedianestimate.By2014,thetotaldirectworkforcerequirementsmayrangefrom9,276to15,294dependingonthedevelopmentactivity,with12,285workersbeingthelikelyworkforceestimate.

Thetotalnumberofproductionphasejobs(includinggasprocessing)createdbywellsdrilledbetween

2011and2014willtotalbetween603and928FTEjobs,dependingonthetotalnumberofwellsdrilled.

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SouthwestRegion

Figure16:MedianSouthwestRegionScenarioMarcellusShaleWorkforceRequirementsbyPhase

PreviousandCurrentWorkforceRequirementsApplyingtheMSETCworkforceprojectionmodeltothepreviousandcurrent2011welldrillingactivityin

Allegheny, Armstrong, Beaver, Bedford, Blair, Butler, Cambria, Fayette, Fulton, Greene, Huntingdon,Indiana, Somerset,Washington, andWestmoreland Counties indicated that approximately 1,333 FTEdirect jobswere created in2008, and thatnumber increased to roughly4,032 in2010. In2011, it is

estimatedthatbetween3,875and6,316FTEdirect jobswouldberequired,with5,095FTEjobsbeingthemedianworkforceestimatebasedondevelopmentprojections.Ofthesejobs,thenumberoflong‐termproductionphase jobs createdbetween2008and2011will bebetween398 and521,with460

beingthemedianestimatebasedon2011developmentinformationandanassumptionof60%ofthewellsdrilledwillrequiregasprocessing.

EstimatedFutureWorkforceRequirementsThemodelindicatesthenumberofjobswillincreaseoverthethree‐yearperiodfrom2011to2014.TheFTEdirectworkforceisexpectedtoincreaseasdrillingintheregionincreaseswithinthenextfewyears

tobetween5,346and8,779workersrequiredby2012,with7,062requiredworkersbeingthemedianestimate.By2014,thenumbermayrangefrom7,806to12,888dependingonthedevelopmentactivity,with10,350workersbeingthelikelyworkforceneeded.

Thetotalnumberofproductionphasejobs(includinggasprocessing)createdbywellsdrilledbetween

2011 and 2014 will total between 575 and 1,053 FTE jobs, depending on the total number of wellsdrilled.

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NorthwestRegion

Figure17:MedianNorthwestRegionScenarioMarcellusShaleWorkforceRequirementsbyPhase

PreviousandCurrentWorkforceRequirementsApplyingtheMSETCworkforceprojectionmodeltothepreviousandcurrent2011welldrillingactivityin

Cameron,Clarion,Clearfield,Crawford,Elk,Erie,Forest, Jefferson,Lawrence,McKean,Mercer,Potter,Venango,andWarrenCountiesindicatedthatapproximately249FTEdirectjobswerecreatedin2008,and that number increased to 1,080 by 2010. In 2011, it is estimated between 1,059 and 1,338 FTE

direct jobs would be required, with 1,080 FTE jobs being the median workforce estimate based oncurrent development projections. Of the direct jobs, the number of production phase jobs createdbetween2008and2011willlikelyfallbetween53and65basedondrillingin2011thusfar.

EstimatedFutureWorkforceRequirementsThemodelindicatesthatthenumberofjobswillincreaseoverthefour‐yearperiodfrom2011to2014.

As drilling in the region continues to increase, the FTE direct workforce is expected to increase tobetween1,464and2,417workersrequiredby2012andremainsrelativelystablethrough2014,basedon current drilling projections. These projectionsmay change or increase significantly if drilling shifts

stronglytothenorthwest.

Thetotalnumberofproductionphasejobs(includinggasprocessing)createdbywellsdrilledbetween2011and2014willtotalbetween94and157FTEjobs,dependingonthetotalnumberofwellsdrilled.

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OccupationalCategorieswithintheNaturalGasIndustryThe model and related research found the majority of the occupations in the direct workforceassociatedwithMarcellusShalenaturalgasdevelopmentarecomprisedofrelativelylow‐skilledorsemi‐skilled occupations. These occupations account for roughly 70‐80% of the workforce (Figure 18).

Industry representatives,onlineworkforceassessment respondents,andadditional research indicatedthatmostoftheseoccupationsrequirenoformalpost‐secondaryeducationandonlyafew(suchasCDL,welding, X‐ray, etc.) require a specialized license or trade certification; however, nearly all of them

requiretheskillsandknowledgeuniquetothenaturalgasindustry;skillsandknowledgethatareusuallylearnedthroughon‐the‐jobexperience.Workerswithinalloccupationsof thenaturalgas industryareadditionally praised for their hardwork ethic andwillingness towork very long hours in unfavorable

conditions.Manyof the remaining25%ofworkersare inoccupations thatarewhite collar innature,including supervisors, lawyers, realtors, engineers, and geologists that usually require post‐secondaryeducation.

Figure18:OccupationalCompositionofNaturalGasWorkforces

GeneralOffice20% CDL

10%

GeneralLabor20%

HeavyEquipment17%

Geologists3%

Lawyers4%

Paralegal1%

Cartog/GIS1%

TimberLogging1%

Welders3%

X‐Ray1%

Engineers3%

Inspectors1%

Supervisors5%

Landmen/Realty5%

Semi‐SkilledTech.6%

Natural Gas Workforce Occupations by Category



SummaryThePennsylvaniaMarcellusShaleWorkforceNeedsAssessment is intendedtosupplybaselinedatatoprovide individuals, job seekers, communities, businesses, workforce and economic development

professionals, and government officials at all levels with the ability to estimate the direct workforcerequirements forMarcellus Shale development. Specifically, the assessment can help outline the keyoccupations associated with unconventional natural gas development and the number of direct jobs

requiredtobringaMarcelluswellintoproductioninPennsylvaniabetween2011and2014.

ThecurrentMSETCdirectworkforceassessmentresearchsuggestsPennsylvaniadrillingactivityshouldincreasesignificantlystatewide;however,therewill likelybevariation indevelopmentpatternsacrossthe state. Additionally, the strength ofMarcellus growthwill continue to depend on the commodity

price of natural gas, natural gas inventories, natural gas infrastructure development, natural gasutilization,andtheoverallhealthoftheeconomy.Onaregionalbasis,thenortheastregioniscurrentlyadrillinghotspotwithnearly75%ofalldrillingactivity,butgrowthisexpectedtoslowsomewhatinthe

comingyears.Thenorthwestregionhasbeenslowtodevelop,butoverthecomingyearsalikelyuptickinactivityisprojectedforthesouthernandeasternportionsoftheregion.Inthesouthwestregion,themostdramaticdrillingincreasesareprojectedtotakeadvantageofhigh‐BTUgasandnaturalgasliquids

options.Finally, thesoutheast region is currentlyoutside theMarcellus footprint,butexplorationandproductionactivitieswilllikelydrawontheworkforceexpertiseofthesoutheastacrossawiderangeof

occupations.Currentestimatesfor2011‐2014statewidedrillingactivityinclude1,599Marcelluswellsin2011;1,888wellsin2012;2,009wellsin2013;and2,159wellsin2014.Thecompanydrillingprojectionsindicatea roughannualgrowthrate indrillingactivityof6‐18%,withanearly60% increase inoverall

activityby2014.

TheMSETCmodelrevealsthatover420individualsworkingwithinnearly150differentoccupationsareneededtoperformalltheoperationsrequiredtocompleteandproducegasfromasingleMarcellusShalewell.Thetotalhoursworkedbytheseindividualsistheequivalentof13.10FTEdirectjobsover

thecourseofayearfordrygasareasand13.3FTEinhigh‐BTUgasareas.OftheseFTEs,inbothdrygasandhigh‐BTUgasareas,12.9FTEsarerequiredduringthepre‐drillinganddrillingphasewhile0.19arerequiredduringtheproductionphase.Anadditional0.20FTEsarerequiredtoprocesshigh‐BTUnatural

gas.AcrossthestateofPennsylvania,thetotalnumberofdirectnaturalgasdevelopmentjobs(notindirectorinducedjobs)createdbywellsdrilledbetween2011and2014iscurrentlyestimatedtorangebetween18,596and30,684FTEjobs,creating9,800to15,900newjobsover2010levels,dependingon

thetotalnumberofwellsdrilled.

As the Marcellus Play continues to mature, the industry has definitely moved toward hiring morePennsylvania residents. Early in the development of the Marcellus, the natural gas industry reliedheavilyonout‐of‐stateemployeeswithexperienceandknowledgedevelopinghigh‐pressurenaturalgas.

Althoughthereisstilltremendousvariabilityacrossenergy,service,andsupportcompanies,thisstudy’s

interviewandsurveydataindicatesanaverageof65‐75%ofallnewMarcellusworkersarePennsylvaniaresidents.



ReferencesBraziel,Rusty.2010.“Drillingbudgets shift tohigh‐BTUgas,oil”OilandGasFinancial Journal.

July16,2010.

Engelder,Terry.2009.“Marcellus2008:ReportcardonthebreakoutyearforgasproductionintheAppalachianBasin,”FortWorthBasinOilandGas.August2009edition,Abilene,TX;pp.18‐22.

Harper, John A. 2008. “The Marcellus Shale ‐ An Old ‘New’ Gas Reservoir in Pennsylvania.”

PennsylvaniaGeology,38(1).

Murkerjee, Sue. 2010. Presentation to the Economic&Workforce DevelopmentWorkgroup,

PreparedfortheGovernor’sMarcellusShaleAdvisoryCommission,April14,2010.

The Pennsylvania Economy League of Southwestern Pennsylvania, LLC (PELSP) 2008. The Economic

Impact of the Oil and Gas Industry in Pennsylvania, Prepared for the Marcellus Shale of

Committee. Available Online:http://www.alleghenyconference.org/PEL/PDFs/EconomicImpactOilGasInPA1108.pdf.

United States Census Bureau, (2011). “American FactFinder.” Retrieved June 19, 2011,http://factfinder2.census.gov/faces/nav/jsf/pages/index.xhtml.



AppendicesHighPennsylvaniaScenario

MarcellusShaleWorkforceRequirementsbyPhase

Figure19:HighPennsylvaniaScenarioMarcellusShaleWorkforceRequirementsbyPhase

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HighNortheastRegionScenarioMarcellusShaleWorkforceRequirementsbyPhase

Figure20:HighNortheastRegionScenarioMarcellusShaleWorkforceRequirementsbyPhase

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HighSouthwestRegionScenarioMarcellusShaleWorkforceRequirementsbyPhase

Figure21:HighSouthwestRegionScenarioMarcellusShaleWorkforceRequirementsbyPhase

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HighNorthwestRegionScenarioMarcellusShaleWorkforceRequirementsbyPhase

Figure22:HighNorthwestRegionScenarioMarcellusShaleWorkforceRequirementsbyPhase

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LowPennsylvaniaScenarioMarcellusShaleWorkforceRequirementsbyPhase

Figure23:LowPennsylvaniaScenarioMarcellusShaleWorkforceRequirementsbyPhase

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Figure24:LowNortheastRegionScenarioMarcellusShaleWorkforceRequirementsbyPhase

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Figure25:LowSouthwestRegionScenarioMarcellusShaleWorkforceRequirementsbyPhase

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Figure26:LowNorthwestRegionScenarioMarcellusShaleWorkforceRequirementsbyPhase

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Figure27:EstimatedStatewideOccupationalRequirements2011‐2014MedianDevelopmentScenario

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EsdmatedPennsylvaniaOccupadonalRequirements2011‐2014MedianDevelopmentScenario



Figure28:EstimatedNorthwestOccupationalRequirements2011‐2014MedianDevelopmentScenario

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Figure29:EstimatedSouthwestOccupationalRequirements2011‐2014MedianDevelopmentScenario

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Figure30:EstimatedNorthwestOccupationalRequirements2011‐2014MedianDevelopmentScenario

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EsdmatedNortheastOccupadonalRequirements2011‐2014MedianDevelopmentScenario



HistoryoftheMarcellusShaleEducation&TrainingCenterAs a primary provider of education and technology resources in the region, the Marcellus ShaleEducation&TrainingCenter(MSETC)wasanearlypioneerineffortstodeterminethepotentialimpact

ofanemergingoilandnaturalgasindustryastheMarcellusShalePlayhasdevelopedinPennsylvania.

InNovember2008,PennCollege(throughitsWorkforceDevelopment&ContinuingEducationunit)andPenn State Extension partnered to form the Marcellus Shale Education & Training Center (nowheadquartered on the Penn College campus in the Center for Business&WorkforceDevelopment in

Williamsport,PA).

Among the first initiatives undertaken by theMSETC teamwas to research and publish a documentassessing workforce needs for the developing Marcellus‐related oil and natural gas industry. TheworkforceassessmentdocumentandmoreinformationaboutMSETCinitiativesareavailableonlineat

www.msetc.org. Sincetheinitialassessment,MSETChasbeencontractedtoperformthreeadditionalassessmentsutilizingtheirsuccessfulworkforceprojectionmodel.

These workforce assessments made it clear that significant new employment opportunities areemerging and that there is a need for more training and education related to the industry needs

throughouttheAppalachianBasin.

In addition to the multiple research projects, the MSETC team has developed several short‐term,noncredit,workforcetrainingprogramsthatmeetspecificindustryneedsandprovideopportunitiesforlocal residents to train for positions in the industry. To date, more than 2,500 individuals have

participated innoncredit trainingprogramsdevelopedby theMSETC teamandofferedat locations inWilliamsport,Wellsboro,andareasacrosstheAppalachianBasin.Classesofferedinclude:

• DefensiveDriving

• Fit4NaturalGasPre‐employmentTraining(Roustabout)

• CommercialDriverTraining

• API1104DownhandWelding

• SafeLandUSA

• CertifiedOperationsTechnician

• OSHARoughTerrainForkliftTraining

• NaturalGasDevelopmentandProductionOverview

• OSHA10‐HourConstruction

MSETChasdeliveredtrainingforcurrentemployeesofcompaniesworkingintheMarcellusindustryand

forcompaniespositioningforworkintheregion.Specializedclienttraininghasbeenofferedinwelding,



commercialdriving,andsafetytohelpareacompaniesgainacompetitiveadvantage insecuringworkrelatedtoMarcellusShale.Todate,MSETChastrainedworkersfrommorethan180companies.

Programsalsohavebeenofferedtothearea’sdislocatedandunemployedworkerswhomaybelooking

to enter careers associated with the industry. MSETC, in partnership with regional One‐Stop offices(CareerLinks)and regionalworkforce investmentboards (WIBs),offersa three‐week,pre‐employmentprogramtohelpthese individualsgainentry‐levelpositions inthe industry.Theprogram–calledFit4

NaturalGas–providesentry‐leveltechnicalandjob‐readinessskills.

Fit 4 Natural Gas has been offered in communities across the Marcellus Shale region in central,northcentral, and northeastern Pennsylvania (including Tioga, Bradford, Lycoming, Clinton, andSusquehannaCounties). Themodel of integrating CareerLink serviceswith technical training is being

replicated,expanded,anddisseminatedacrossamulti‐stateregionthroughacollaborationofeducationandtrainingprovidersknownasShaleNET.Additionalpre‐employmentnoncredittrainingwillsoonbeavailableforfloorhands,productiontechnicians,andwelderhelpersthroughcertifiedShaleNETtraining

providersacrosstheregion.

Anadditional20companieshavepledgedcashandequipmenttosupportthefuturedevelopmentofaMSETC Natural Gas Applied Technology and Safety Training facility at Penn College. This facility isscheduled to open in October 2011 and will provide hands‐on training for Pennsylvania’s first

responders and emergency responders as well as other training programs that require the installedequipment.

MSETChasparticipatedinoriginatingFederalandStategrantstotaling$17.6millionandmorethan$6million has already been awarded to support the natural gas industry’s training and workforce

developmentneeds. Othermajor initiativestosupport the industry includesponsoringasemi‐annualMarcellusCareerExpo(over2,500attendedthefirstevent)andanannualShaleNETWorkforceForum

that brings together industry, education, and public sector organizations involved in workforcedevelopmentinitiativesacrosstheMarcellusPlay.



PreDrillingMatrix

NaturalGasExtractionJobMatrixPre‐DrillingPhase(continuedonnextpage)



NaturalGasExtractionJobMatrixPre‐DrillingPhase(continued)



Drilling&CompletionMatrixNaturalGasExtractionJobMatrixDrillingPhase(continuedonnextpage)



NaturalGasExtractionJobMatrixDrillingPhase(continuedonnextpage)



NaturalGasExtractionJobMatrixDrillingPhase(continuedonnextpage)



NaturalGasExtractionJobMatrixDrillingPhase(continued)



ProductionPhaseMatrixNaturalGasExtractionJobMatrix

ProductionPhase(continuedonnextpage)



NaturalGasExtractionJobMatrixProductionPhase(continued)

Documents

PennSylvania marcelluS S Workforce needS aSSeSSment