Jobs in pipeline construction are up and heading further up - Clarksburg, Morgantown: News, Sports, Weather

Jobs in pipeline construction are up and heading further up

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Production of gas from the Marcellus Shale hasn't yet brought the enormous jobs boon many once predicted, but a new bright spot is emerging.

"Pipeline has exploded," said Jeffrey Green, director of the Research Information and Analysis section of WorkForce West Virginia. "Construction of pipelines is the big thing right now."

Last November, WorkForce West Virginia put out a report showing that, in contrast to all the hype, activity in the Marcellus shale had created a lackluster 916 jobs in the state from 2008 through 2011. That's based on six specific industry categories in the comprehensive quarterly counts conducted by the federal Bureau of Labor Statistics and does not by any means represent all of the jobs created by the Marcellus activity.

The annual data in the WorkForce West Virginia report obscured the fact that pipeline construction employment had already begun to rise. The trend really began to show up in the first two quarters of 2012, the most data recent available from the BLS.

Marcellus jobs in the pipeline

But let's start with 9,300 jobs, on average, in 2011. That's the number of jobs in the "core oil and gas industries" identified by WorkForce West Virginia, where BLS consistently show data from one quarter to the next.

Federal privacy rules prohibit BLS from disclosing data on an industry that would reveal details about a specific company. So those core industries include BLS categories for oil and gas extraction as well as for oil and gas support activities, pipeline construction and pipeline transportation of gas, but not for drilling wells or extracting natural gas liquids — those data are withheld to protect employers' privacy. BLS and WorkForce West Virginia can see that data, but the rest of us can't.

Quarterly numbers in 2011 were lower than that 9,300 average at the beginning of 2011 and grew through the year and into 2012. In the second and third quarters of 2011, jobs in those categories totaled about 10,000. In the first quarter of 2012, they grew to 10,400. And in the second quarter, they jumped to 12,000.

Almost all of that growth is in pipeline construction. From the second quarter of 2011 to the second quarter of 2012, the state added 2,752 jobs in pipeline construction — one-fourth of the 11,040 jobs added in all industries statewide over the same period.

Third quarter 2012 data are due to be published any day, and Green said those data will show again an increase in pipeline construction.

Where are the jobs?

Where are all these pipeline jobs?

They're all over — that is, they're not enumerated in the county-level data but only show up at the state level.

"The subregions of the state never add up to the total in the data," Green explained. "For things like construction, or gas well drilling also, as another example, these data are collected quarterly and by that time those employers have set up, finished and moved on. So the jobs are counted, but they're assigned to a statewide category."

More to come

Pipeline jobs are going to keep increasing, according to Dennis Xander, president of the Independent Oil and Gas Association of West Virginia.

"These new shale wells, the volumes that they produce are so much greater than anything we've done in the past that the infrastructure just is insufficient to do it," Xander said.

He described an old 10-inch pipeline that runs from Taylor County through Barbour and Randolph to tie into a larger line. The total capacity of that line is probably 30 million cubic feet of gas a day, or mmcfd, he said. A new horizontal well can produce 8 to 10 mmcfd, so that old line would only support a small number of the new wells.

"And we have whole counties that have great Marcellus potential and no pipelines: Randolph, Taylor, Tucker, Preston, a lot of these areas," he added.

As is often noted, the new Marcellus jobs are high-paying jobs.

Compared with the statewide average wage of $780 per week, support for oil and gas extraction and pipeline construction, the two BLS industry categories where most of the Marcellus jobs are, carry wages of $1,200 per week and $1,690 per week.

A little context

Any discussion of Marcellus jobs has to acknowledge several points.

These several categories in the BLS data understate the number of jobs the Marcellus activity has brought the state by an unknown quantity. Not only are jobs in well drilling and extraction of natural gas liquids not included, but many others: direct jobs such as construction workers at the natural gas liquids fractionation plant Dominion is building at Natrium; indirect jobs like the additional oil and gas inspectors the state Department of Environmental Protection is hiring; and the broad range of jobs induced at shops and restaurants across the state by the spending of all of these workers.

"It's very misleading. It does not tell the whole story at all," Xander said.

At the same time, it's still hard to see a jobs boom. Employment in the state has fallen since the first Marcellus well began producing in 2007, according to monthly numbers through December 2012 published by the Federal Reserve: from a high of around 820,000 jobs at that time to under 800,000 in December 2012.