Marcellus Shale: Economic Impact of this Industry Sector Updated Sue Mukherjee Director, Center for Workforce Information & Analysis Pennsylvania Department of Labor & Industry March 15, 2012

Sector Analysis of a ‘Growth Industry’ Six WIAs significantly impacted by a ‘growth sector’: Marcellus Shale 2

3 Marcellus Shale Research (PADLI) DLI defined Marcellus Shale sector; identified 6 industries as core, 30 ancillary Examples of jobs in core: Roustabouts, Rotary Drill Operators, Service Unit Operators, Derrick Operators, Welders Examples of jobs in ancillary or supply chain are: Truck Drivers – Heavy and Tractor, Civil Engineers, Industrial Machinery Mechanics, Maintenance & Repair Workers, Construction & Building Inspectors Produced first report in Dec. 2010; began production of Shale Fast Facts April 2011 Italicized jobs have been identified as high priority by ShaleNET

4 Impact of Marcellus Shale: Employment, Establishments Employment (2008Q2 to 2011Q2): Core, PA up 13,548 (131.2%); six WIAs up 7,097 (123.0%). All industries declined by -2.4% in PA in general. Ancillary, PA down 194 (-0.1%); six WIAs up 4,186 (9.0%) Establishments (2008Q2 to 2011Q2): Added more than 830 establishments (370 core, 460ancillary) 945 establishments in core industries as of 2011 Q2; increase of 64.3% from 3 years Wages (2010Q3 to 2010Q2): The average wage in core industries ($76,918) is $30,359 higher than statewide average ($46,559); average wage in ancillary industries ($63,155) is $16,596 higher New Hires (2008Q4 to 2011Q4): Statewide new hires in core increased by 193.9%; in ancillary increased by 40.4%; total statewide new hires decreased by 0.1%. For six WIAs, New Hires increased by 218.2% in the core and ancillary (745.1% core; 112.1% ancillary)

5 Marcellus Shale Employment Growth for PA Graph shows consistent employment growth starting 2008 In just over three years, employment in Marcellus Shale core related industries has increased from about 9,500 to nearly 24,000

Q2 Initial PA Employment Data Highest volume increase in employment occurred in Support Activities for Oil & Gas Operations, increasing by nearly 5,700; largest percentage growth in Natural Gas Liquid Extraction - PA employment in this industry is now 5 times what it was in 2008 Q2 Oil & Gas Pipeline & Related Structures Construction experienced a gain of more than 3,000 additional employees since 2008 Q2; this is noteworthy, as the Great Recession severely impacted construction industry 2008 Q22011 Q2 Vol. Change 2008 Q2 to 2011 Q2 Pct. Change 2008 Q2 to 2011 Q2 Estab.Emp.Estab.Emp Crude Petroleum and Natural Gas Extraction1842, ,8751, % Natural Gas Liquid Extraction % Drilling Oil and Gas Wells691, ,6013, % Support Activities for Oil and Gas Operations1152, ,0695, % Oil and Gas Pipeline and Related Structures Construction 662, ,4803, % Pipeline Transportation of Natural Gas1271, , % Totals57510, ,87213, % Pennsylvania Marcellus Shale Core Related Industries

Q2 Initial Employment Growth: NT, Central, SW Corner

Q2 Initial Local Employment Data Northern Tier experienced largest employment growth over past 3 years in terms of both volume and percent; Central had second largest Southwest Corner experienced employment growth of nearly 1, Q22011 Q2 Emp. Vol. Change 2008 Q2 to 2011 Q2 Emp. Pct. Change 2008 Q2 to 2011 Q2 WIAEstab.Emp.Estab.Emp. Northern Tier793542,0211, % Southwest Corner ,3611, % Central ,8641, % North Central1082, , % Tri-County1002, , % Westmoreland & Fayette , % Totals2935, ,8657, % Marcellus Shale Core Related Industries for Six WIA

Q2 Initial Local Employment Data Northern Tier experienced largest employment growth over past 3 years in terms of both volume and percent; Central had second largest Tri-County was the only WIA with significant drilling activity that had a negative employment change 2008 Q22011 Q2 Emp. Vol. Change 2008 Q2 to 2011 Q2 Emp. Pct. Change 2008 Q2 to 2011 Q2 WIAEstab.Emp.Estab.Emp. Northern Tier 2331, ,4331, % Southwest Corner 50010, , % Central 6119, ,1311, % North Central 4034, , % Tri-County 4819, , % Westmoreland & Fayette 54810, , % Totals 2,77646,2693,08550,4554,1869.0% Marcellus Shale Ancillary Related Industries for Six WIA

10 Impact of Marcellus Shale: New Hires 12,625 new hires statewide in core and ancillary industries (2011 Q4), 14% higher than 2010 Q4 and 54% higher than 2008 Q4 New hires in core industries as a percentage of total new hires has been increasing steadily, from 0.09% in 2007 Q1 to 0.47% in 2011 Q4

11 Impact of Marcellus Shale: Online Job Postings Local WIADec-2010Dec-2011Change Northern Tier % Southwest Corner % Central % North Central % Tri-County % Westmoreland & Fayette % Total % In six WIAs where majority of Marcellus Shale drilling is occurring, online job posting activity has increased by 171 job postings; highest volume of job posting is in Central currently Tri-County has experienced largest percentage increase in job posting from a year ago, with over twice as many online job postings in December 2011 compared to December job postings in core in Dec (56.3% increase), 2,672 in ancillary (30.9% increase); 2,897 job postings statewide Dec in core and ancillary; 532 in six WIAs. Statewide job postings up by 47.4%

12 Impact of Marcellus Shale: High Priority Occupations SOC Code SOC Title Average Annual Wage Cost Estimators$60, Industrial Engineers$77, Sales Representatives, Scientific & Technical$87, Billing & Posting Clerks & Machine Operators$32, Bookkeeping, Accounting & Auditing Clerks$35, Customer Service Representatives$36, Production, Planning & Expediting Clerks$38, Secretaries$30, Office Clerks$28, Supervisors - Construction Trades & Extraction Workers $64, Construction Laborers$33, Operating Engineers$43, Plumbers, Pipefitters & Steamfitters$52, Supervisors - Mechanics, Installers & Repairers$63, Industrial Machinery Mechanics$44, Maintenance & Repair Workers$36, Electrical Power-Line Installers & Repairers$58, Telecommunications Line Installers & Repairers$54, Supervisors - Production & Operating Workers$55, Welders, Cutters, Solderers & Brazers$36, Inspectors, Testers, Sorters, Samplers & Weighers $36, Supervisors - Transportation & Vehicle Operators $58, Truck Drivers, Heavy & Tractor-Trailer$41, Laborers & Freight, Stock & Material Movers$27,650 SOC Code SOC Title Average Annual Wage Mining & Geological Engineers$64, Electrical & Electronic Engineering Technicians$54, Environmental Engineering Technicians$46, Geoscientists$67, Geological & Petroleum Technicians$49, Logging Equipment Operators$24, Derrick Operators, Oil & Gas$41, Rotary Drill Operators, Oil & Gas$41, Service Unit Operators, Oil, Gas & Mining$38, Roustabouts, Oil & Gas$30, Mobile Heavy Equipment Mechanics$44, Welding, Soldering & Brazing Machine Setters$37, Gas Compressor & Gas Pumping Station Operators $51, Pump Operators$42, Wellhead Pumpers$37,010 Approved StatewideApproved Regionally Source: The Center for Workforce Information & Analysis

13 Impact of Marcellus Shale: Occupational Projections Occupational Title Employment Average Annual Wage 2010 Estimated 2010 Projected 2012 Percent Change Rotary Drill Operators, Oil & Gas 1,446 2, %$41,550 Derrick Operators, Oil & Gas %$41,920 Service Unit Operators, Oil, Gas, & Mining 1,213 2, %$38,530 Roustabouts, Oil & Gas 1,519 2, %$30,490 Pump Operators 706 1, %$42,200 Wellhead Pumpers 865 1, %$37,010 Petroleum Engineers %$129,510 Helpers--Extraction Workers 1,047 1, %$31,210 Explosives Workers & Blasters %$45,130 Geological & Petroleum Technicians %$49,700 Earth Drillers 1,115 1, %$43,610 Riggers %$43,380 The 12 occupations projected to grow fastest from 2010 to 2012 based on percent change in employment are all occupations that can be found in the Marcellus Shale related industries

14 Impact of Marcellus Shale: Recap For Six WIAs with Significant Marcellus Shale Activity Employment, Core Increase of percent (2008Q2 to 2011Q2) Employment, Ancillary Increase of 9.0 percent (2008Q2 to 2011Q2) New HiresIncrease of 218 percent (2008Q4 to 2011Q4) Job PostingsIncrease of 47.4 percent (Dec ‘10 to Dec ‘11)

15 Impact of Marcellus Shale: Recap For PA in Marcellus Shale Employment, CoreIncrease of percent (2008Q2 to 2011Q2) Employment, Ancillary Decrease of 0.1 percent (2008Q2 to 2011Q2) New HiresIncrease of 54 percent (2008Q4 to 2011Q4) Job PostingsIncrease of 32.6 percent (Dec ‘10 to Dec ‘11)

16 Impact of Marcellus Shale: Recap For PA in All Industries EmploymentDecrease of 2.4 percent (2008Q2 to 2011Q2) Employment, GreenDecrease of 9.1 percent (2008Q2 to 2011Q2) New HiresDecrease of 0.1 percent (2008Q4 to 2011Q4) Job PostingsIncrease of 14.3 percent (Dec ‘10 to Dec ‘11) Number of Individuals Unemployed Decrease of 12.8 percent (Mar ’10 to Jan ‘12)

17 Thank You! Sue Mukherjee Center for Workforce Information & Analysis (717) Customer Response Team (717) (877) Website