WILLIAMSPORT, Pa. - The Marcellus Shale industry, which
arrived in this northern Pennsylvania city five years ago and turned
Williamsport into the seventh-fastest-growing area in the nation, appears to
have lost some momentum.
Economic activity in this city affectionately known as
"Billtown" has subsided noticeably in the last year as the pace of
drilling natural gas wells slowed in response to low gas prices.
Statewide, exploration companies drilled 30 percent fewer
wells in 2012 and are on course to drill even fewer this year. About half as
many drilling rigs are operating in Pennsylvania now as in early 2012, when the
rigs began moving to more lucrative oil-producing regions.
In Lycoming County, motels and restaurants are not so
crowded these days - hotel-tax revenue was off last year by 13 percent after
doubling the previous three years. Fewer out-of-state pickup trucks swarm the
fuel pumps at the Sheetz stations.
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But local civic and business leaders insist the shale-gas
industry has not gone bust. They say that it has merely taken a breather, and
that all signs point to a long-term boost for this region.
"We've said all along there's going to be ebbs and
flows to this," said Williamsport Mayor Gabriel J. Campana, an unabashed
gas-industry booster. "There's a real optimism here."
"I think the hype is what changed," said Davie
Jane Gilmour, president of the Pennsylvania College of Technology. The school
has trained 3,400 students as welders, rig hands, commercial truck drivers, and
office workers to serve the industry. She said demand for trained workers was
still growing.
Indeed, in the Marcellus Energy Park in nearby Muncy, at the
intersection of Marcellus and Energy Drives, bulldozers recently prepared the
foundation for an expansion of the field office of FMC Technologies Inc., one
of many national oil-field service companies that have located operations here
to support drilling across Pennsylvania's northern tier.
"The slowdown's over," said Daniel A. Klingerman,
the developer whose 350-acre industrial park includes several service companies
that maintain fleets of the huge engines and pumps used in the hydraulic
fracturing process. "We're twice as busy now as we were a year ago."
Klingerman's company, the Liberty Group, is a construction
juggernaut. It is building a new motel along I-180, a $35 million expansion of
the regional medical center, and a new $10 million YMCA center.
Klingerman also plans a civic arena downtown and a
160-foot-tall office building overlooking the West Branch Susquehanna River.
All he needs is an energy company as anchor tenant.
Companies such as Anadarko Petroleum Corp., which has about
100 employees in a 30,000-square-foot downtown office, and Halliburton Co.,
which employs 500 people at its Williamsport field office, say most of their
workforces now are local hires. Both companies say they have not shed staff
during the downturn.
The new companies have become integrated into the community,
contributing money and time to nonprofits. "At this point, everybody's
fitting in, like all our other legacy industries," said Lycoming County
Commissioner Jeff Wheeland.
There are skeptics
Not everyone is a believer. The pullback has reignited a
debate about whether the Marcellus development is all it's cracked up to be.
Critics point to the rapid decline of production from individual gas wells as
evidence that the resource is finite.
"We were promised a 40-year industry," said Ralph
Kisberg, a founder of the Responsible Drilling Alliance, a Williamsport
activist group. "It's going to become a 10-year industry because of the
decline of the wells."
The Keystone Research Center and Pennsylvania Budget and
Policy Center released a report last week that contends the Marcellus
development has had little economic impact outside the drilling region.
The report also said the slowdown "raises questions
about the stability and permanence of even the small number of jobs that have
been created."
Despite the slowdown in drilling, production across the
Marcellus continues to grow impressively as a backlog of previously drilled
wells comes on line. At current production levels of 13 billion cubic feet per
day, the Marcellus produces enough natural gas in 70 days to supply
Pennsylvania's annual demand. Two years ago, Pennsylvania needed to import gas
from the Gulf Coast to meet its needs.
Shale's economic impact is likely to be debated fiercely in
next year's election. Gov. Corbett says the Marcellus development now supports
more than 200,000 jobs in Pennsylvania, and can fuel new energy-intensive
manufacturing and chemical production for generations to come.
"The opponents of drilling have really become what I
would call economic-change deniers," Corbett said Nov. 14 at an industry
conference in Pittsburgh.
Williamsport is no stranger to economic boom and bust. The
city grew tremendously during a 19th-century timber bonanza, whose barons
bestowed the city with a legacy of Victorian mansions. Williamsport was said to
have more millionaires per capita in the late 1800s than any other place in
America, a claim still asserted in tourist literature.
But lumber also brought devastating environmental
consequences - floods in 1889 and 1894 were attributed to runoff from the
unregulated deforestation. Timber cutting, along with pollution from later coal
mining, left many people here with a bad taste for the risks that come with
extraction industries.
"Pennsylvania's gotten screwed twice, so you'd think we
would learn," said Robert H. Larson, a Lycoming College professor and
coauthor of a 1984 history of Williamsport.
Shale surge
When the shale industry arrived, Lycoming County leaders
greeted it with open arms.
Williamsport was struggling to cope with a decline in
manufacturing. As with many rust-belt cities, Williamsport's population
declined - it has lost a third of its residents since 1950, when 45,000 people
lived here.
In 1980, Billtown landed on the front page of the Wall Street Journal for all the wrong
reasons: "Feeling the Sting: Recession Bears Down on Williamsport, Pa.,
Despite Its Diversity."
Local officials say the arrival of the shale industry
accelerated a revival of Williamsport's tired downtown. The city had already
acquired and demolished crumbling waterfront blocks. A suburban-style Wegmans
grocery opened downtown in the late '90s. Several modern chain motels were
already in place.
The shale boom brought an onslaught of landmen, engineers,
seismic surveyors, and fracking crews. Developers quickly built restaurants,
lofts, executive apartments. Three new downtown motels have gone up since 2008.
A Kohl's department store, already in the works before the shale boom, opened
next to the Wegmans in 2011.
"Before the shale, we had residents downtown, but
mostly rundown apartments with low-income residents," said Jonathan
Williamson, the director of Lycoming College's Center for the Study of
Community and the Economy.
"If you're visiting here from a larger place, you're
not going to notice it as big-city vibrancy," he said. "But the level
of activity you see on the streets is significantly more than it was five to 10
years ago."
Williamson, also a member of the city council, said a
shortage of rental housing also appears to be easing. He was a coauthor of a
2012 report on how the shale boom had driven up rents, forcing some low-income
tenants out of their homes. A combination of a new supply of rental units,
along with the slowdown, has relaxed rents, but they are still higher than they
were pre-shale.
Officials broke ground this month on a 72-unit Memorial
Homes Development, a $19.3 million project that includes 40 low-income
apartments and 32 market-rate townhouses. That project, as well as a second
housing development aimed at seniors, is subsidized by money from the county's
share of the state impact fee imposed on Marcellus Shale drillers.
New business
Some local companies that have experienced the euphoric
growth of the gas industry are now looking to diversify.
NuWeld Inc., a family-owned business founded in 1996 to
repair steel dumpsters, expanded from 60 mostly unionized pipefitters to 290
employees in response to the gas industry's demand for wellhead components. On
one day in 2011, the company hired 35 new employees.
The gas industry accounted for 90 percent of the company's
$36 million in revenue last year, said Michael Caseman, the company's chief
financial officer.
With the downturn, NuWeld has cut its workforce to fewer
than 180. Two years ago, it moved into a reclaimed quarter-mile-long factory
when unsolicited orders flooded in. Now it has hired salespeople to drum up new
business.
"We'd like to expand in other areas and not have all
our eggs in one basket," Caseman said.
Source: Philly.com
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