EnergyFactor By ExxonMobil | Pespectives has a new home

Steel plants in Ohio and ships in Pennsylvania: the deep – and surprising – reach of oil and gas industry jobs growth

During these challenging economic times, there are plenty of facts and figures to show how the U.S. oil and natural gas industry is creating jobs and economic opportunity across the United States.

But just as powerful, I think, are the real-life stories from where the job growth is actually taking place. And it’s happening in places you might not expect.

Consider the news in a recent Wall Street Journal story about Youngstown, Ohio, where a new $650 million steel plant is being built – to supply steel tubes for production of natural gas from the Marcellus and Utica shale formations.

Once an economic powerhouse, Youngstown has experienced persistent unemployment for decades as the steel industry declined. Now, about 400 workers are constructing the new plant, which will create about 350 new jobs, in addition to providing much-needed tax revenue. The city’s outgoing mayor said, “I never envisioned a new steel mill in Youngstown.”

Youngstown isn’t alone. Other Ohio steel plants are being expanded in Canton and Lorain due to the shale gas industry, according to the Journal.

And the benefits aren’t all in the steel industry. Land owners, leasing companies and even county government offices are seeing benefits from increased shale gas business. A news story from Belmont County, Ohio, reports that a land leasing company planned to pay out $50 million to $60 million in lease revenue to property owners in just one week alone.

“Car dealerships are going to be doing well. Tractor supply companies will be doing well. It will be a big boost to the economy,” one of the leasing company partners told the reporter.

I know when people think of energy jobs, they don’t usually think “Ohio.” But Ohio is just one of a long list of states that are benefiting from technological advancements in the oil and gas industry. For example, advances in hydraulic fracturing have enabled production of enormous natural gas supplies that were thought to be impossible just a decade ago. Such production requires a lot of goods and services – from construction workers and contractors to trucks and raw materials.

West Virginia – a state historically known for its coal mining – is another example. West Virginia is one of several states (including Pennsylvania and New York) that sit atop the Marcellus shale formation. Rising shale-gas production in West Virginia has already created thousands of jobs in the state. But soon it might also lead to the construction of a new processing plant to serve the U.S. petrochemical industry.

According to a recent news story, a state task force in South Charleston is working to attract companies that convert ethane – a byproduct of natural gas production – into ethylene, a chemical compound used in a variety of manufacturing and consumer products. (I recently wrote about how natural gas is boosting the U.S. petrochemical industry). Early estimates indicate that West Virginia could expect more than 2,300 direct jobs from building a plant to process ethane, according to the story.

Marcellus shale gas development could create up to 19,000 more jobs in the state by 2015, according to a recent study. The West Virginia oil and gas industry directly employed 9,900 people in 2009.

Oil production also lifts state economies

Growth in U.S. energy jobs is coming not just from natural gas, but also oil. As I mentioned a few weeks ago, shale oil production in North Dakota has helped it achieve one of the nation’s lowest unemployment rates.

But just across the border in Canada, growing oil sands production is increasing demand for heavy machinery from American companies.

For example, Caterpillar, the Illinois-based machinery company, produces large trucks used for Canadian oil sands production. The trucks are manufactured by Illinois workers in the company’s plants throughout the state, and sales of the vehicles were part of $11 billion in Illinois exports to Canada in 2009. With Canadian oil sands production projected to more than double over the next two decades, U.S. companies like Caterpillar likely will see continued demand of heavy equipment. In fact, U.S. employment supported by oil sands development could grow to a peak of 600,000 jobs in 2035, according to one scenario in a new report from the Canadian Energy Research Institute.

It’s also interesting to note that oil production in Alaska is the source of new manufacturing in Pennsylvania. SeaRiver Maritime, ExxonMobil’s U.S. marine affiliate, just announced its intent for two new tankers to be built by a leading shipyard in Philadelphia.

“These new vessels will provide jobs for American shipyard workers and help support energy needs along the U.S. West Coast for decades to come,” said Will Jenkins, president of SeaRiver.

Continuing the trend

From steel manufacturing in Ohio to shipbuilding in Pennsylvania, the evidence of the U.S. oil and natural gas industry’s contributions to American job growth and the American economy can be seen around the country.

The good news is our industry could be doing even more. Several studies from universities, think tanks, and industry organizations have calculated the increases in jobs, tax revenues, energy production, and economic growth that result from greater oil and gas production.

The challenge is enacting the policies that allow it to happen. Greater access to energy supplies is the key that unlocks the economic benefits of oil and gas production. With that, our industry can continue to create the jobs and the energy that are essential to our economic recovery.

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