While the leaders of Pennsylvania’s oil and gas industry are
satisfied with the overall business climate statewide, mainly due
to a hike in wellhead prices, officials cautioned a skilled
workforce is still needed to allow the trade to grow in the
future.
That’s the word from a survey released Monday by the
Pennsylvania Oil and Gas Association (POGAM) of producers on the
boards of the three trade associations representing the
industry.
The survey is part of a larger study being conducted through a
grant by the North Central Pennsylvania Regional Planning and
Development Commission in Ridgway and its Workforce Investment
Board into the industry’s growing workforce needs; the final
results will be released next month.
“While producers are currently OK with the state’s business
climate, the survey highlights the underlying uncertainty they feel
going forward,” POGAM Executive Director Stephen Rhoads said,
adding those taking the survey cited concern for, not only price
risks, but the potential for increased state and local government
regulation of their operations.
“Our industry is already very tightly regulated, and producers
generally feel that any stronger government oversight could
seriously erode their ability to do business in this state.”
According to the survey results, the leadership of the oil and
gas industry – POGAM, Independent Oil and Gas Association of
Pennsylvania and Pennsylvania Independent Petroleum Producers – are
generally satisfied with the business climate across the state for
oil and gas exploration and development, with 78 percent of the
respondents ranking the climate as either good or neutral.
Meanwhile, the week-long survey – which had a 40 percent
response rate overall – showed producers largely expect wellhead
oil and gas prices to remain high and they hope to maintain or
slightly expand their capital investment in new well drilling.
However, the producers are also concerned about the volatility
of the wellhead price, tougher environmental rules and increased
local government controls.
“The results aren’t surprising,” Robert Esch, vice president of
blending and packaging at the American Refining Group in Bradford,
said. “This country is heavily dependent on petroleum products.
While we aren’t going to change that in a few years, we can do a
lot of things to ease it.”
Esch, who is involved with the study, said industry officials
are looking “well beyond 20 years down the road” when thinking
about how to increase its workforce.
Figures released by the state Department of Environmental
Protection earlier this year seem to bear that need out.
According to the DEP, the state realized a record increase in
the number of oil and gas drilling permits issued by the agency – a
hike of 32.4 percent between 2004-05. The number of wells drilled
in McKean County – the highest in the state – rose by 235 wells,
from 699 in 2004 to 934 last year.
Nearby Warren and Forest counties also saw increases in the
number of wells drilled.
Officials said the strain on the workforce is a direct result of
the wellhead (wholesale) prices reaching the historic highs while
the trained labor pool remains stagnant.
“The prices across the board have risen to a level that I think
will sustain the industry for some time into the future,” Rhoads
said. “It underscores the need for new employees. Our industry has
been cannibalized because of the number of lost employees we’ve had
over the years because we had been in such a depressed state.”
Across this region, officials said the crude oil and natural gas
exploration industry is centered around small to medium-sized
independent businesses, many of which are family-owned operations
handed down through the generations. The independents produce oil
and gas in 31 of the state’s 67 counties – most of the crude is
produced in McKean, Warren, Forest and Venango counties.
The Pennsylvania Department of Labor and Industry Center on
Workforce Information and Analysis indicates the average wage of
employees in the Energy Industry Cluster increased by 20 percent
between 1995 and 2004. The figures also indicate the energy
industry is experiencing an aging workforce that will require
significant replacement over the next 10 years.
The survey revealed Monday notes the most significant factor
affecting producer investment decisions directly relate to the
availability of skilled workers, drilling contractors and service
companies.
“The worries producers have about the need for skilled personnel
and the availability of drilling rigs and crews and well service
companies is perhaps the most significant finding in this survey,”
Rhoads said.
Meanwhile, Rhoads said the fear those in the industry see
regarding the increased regulatory control relates to a couple of
things: increased involvement by local governments which want to
impose additional regulatory controls over what DEP and other
regulatory agencies in the state already have in place and the
potential for a change in DEP’s regulations, particularly in the
amount the agency may require to raise surety bond rates, as well
as requirements regarding stormwater permits near the sites of new
wells being drilled.
“If that (additional regulations) were to happen, the business
climate could be eroded,” Rhoads said, adding the Environmental
Protection Agency on Monday exempted oil and gas officials from
needing to obtain stormwater permits. “We don’t know if DEP will
honor that or not.”
On a larger scale, Esch said refineries are most concerned with
the amount of time it takes to get permits approved in relation to
expanding refining capacity.
Last week, the U.S. House passed legislation establishing
updated regulatory guidelines for refineries in the hopes of
expanding those already in existence and creating the country’s
first new ones since 1976.
In regards to the larger workforce needs assessment, Rhoads said
surveys were distributed by mail on Saturday to about 140 companies
in the six county region North Central serves – McKean, Potter,
Elk, Cameron, Clearfield and Jefferson counties – to get input for
the final report.
“We strongly urge anybody that got a copy of the survey to fill
it out and send it back,” Rhoads said.
Officials hope to eventually be able to revitalize the
industry’s workforce through educational offerings as secondary and
post-secondary schools.
