Energy News Today

Gas industry slowdown hurting western Pa. economy, taxpayers

For the past decade, the natural gas industry has boomed in Western Pennsylvania.But the industry is facing tough times now, and that is having a major impact in communities where the industry has a large presence.Waynesburg was the center of the natural gas boom but you wouldn’t know it these days.A downtown building hosting a Welcome to Greene County sign is for sale.Other buildings are seeking renters as stores shut down.Area leaders said it’s not just the pandemic causing the slowdown.”It used to be if you sat on the sidewalk in Waynesburg you’d see water trucks and sand hauling trucks just lined up going through there and that is no longer the case,” said County Commission Chairman Mike Belding.In late 2014, records show the natural gas industry employed 33,181 people in Pennsylvania.But by late 2020, that number had dropped by 30 percent to 23,360.From 2017 to 2020, the number of new wells statewide dropped by nearly half from 810 to 476.That’s had an impact on other businesses that relied on the gas industry.At Lavern’s Restaurant outside Waynesburg, Action News Investigates caught up with former Greene County Sheriff Richard Ketchem.After leaving office he oversaw security for a trucking company that serviced the gas industry.”For a while when I was running the agency they wanted guys all the time to check the wells, go around well sites. There’s none of that anymore,” said Ketchem, who lost his job before the pandemic.”We had five companies there, almost 1,100 people, and they all got laid off,” he said.The downturn has also hurt people who own gas leases, like Bill Schamp of Greene County. His lease paid up to $5,000 per year but no more.Five years later we’re supposed to renew it and it’s 17-18 acres of property and they just never called me back, let the lease expire,” Schamp said. “A few people I know were getting $40,000 to $50,000 a month, and they built new houses, bought new cars and trucks, then it dried up and now they’re going into foreclosure.”The county also spent freely during the boom, according to Belding who took over last year. He said his predecessors used millions of dollars in gas impact fees to plug budget holes.”We inherited a 2020 budget that was passed in 2019 with a $5 million budget deficit out of a $40 million budget. Because of that, we ended up raising taxes,” Belding said.It was a different story seven years ago when Pittsburgh’s Action News 4 came to Waynesburg during the peak of the boom.”Our hotels were full, our restaurants were full. You had these little RV parks where transient workers came and paid rent. All that’s gone,” Belding said.Marcellus Shale Coalition president David Callahan said the pandemic is part of the reason, but a much bigger factor is the sharp drop in the price of natural gas.”All commodity industries are cyclical. We’re very very reactive to prices. Low price means more supply on the market and the industry responds to those market signals,” Callahan said.Asked whether people living in gas-dependent regions should worry, Callahan said, “We all want the same thing. We want to see recovery in prices. We want to see an uptick in activity.”He said the cracker plant will help the gas industry when it is completed next year. But plans for other crackers in the Ohio River valley have been put on hold.James Burlingame is a wellhead technician who’s been off work since an injury three years ago. He hopes to return to the gas industry but he’s not optimistic about job prospects in Western Pennsylvania.”All the good guys left because there’s no work. It feels like it’s getting tapped out,” he said.Experts said it is hard to predict if or when the gas industry will rebound. The state Independent Fiscal Office estimated a 25 percent decline in new gas wells during early 2021.

For the past decade, the natural gas industry has boomed in Western Pennsylvania.

But the industry is facing tough times now, and that is having a major impact in communities where the industry has a large presence.

Waynesburg was the center of the natural gas boom but you wouldn’t know it these days.

A downtown building hosting a Welcome to Greene County sign is for sale.

Other buildings are seeking renters as stores shut down.

Area leaders said it’s not just the pandemic causing the slowdown.

“It used to be if you sat on the sidewalk in Waynesburg you’d see water trucks and sand hauling trucks just lined up going through there and that is no longer the case,” said County Commission Chairman Mike Belding.

In late 2014, records show the natural gas industry employed 33,181 people in Pennsylvania.

But by late 2020, that number had dropped by 30 percent to 23,360.

From 2017 to 2020, the number of new wells statewide dropped by nearly half from 810 to 476.

That’s had an impact on other businesses that relied on the gas industry.

At Lavern’s Restaurant outside Waynesburg, Action News Investigates caught up with former Greene County Sheriff Richard Ketchem.

After leaving office he oversaw security for a trucking company that serviced the gas industry.

“For a while when I was running the agency they wanted guys all the time to check the wells, go around well sites. There’s none of that anymore,” said Ketchem, who lost his job before the pandemic.

“We had five companies there, almost 1,100 people, and they all got laid off,” he said.

The downturn has also hurt people who own gas leases, like Bill Schamp of Greene County. His lease paid up to $5,000 per year but no more.

Five years later we’re supposed to renew it and it’s 17-18 acres of property and they just never called me back, let the lease expire,” Schamp said. “A few people I know were getting $40,000 to $50,000 a month, and they built new houses, bought new cars and trucks, then it dried up and now they’re going into foreclosure.”

The county also spent freely during the boom, according to Belding who took over last year.

He said his predecessors used millions of dollars in gas impact fees to plug budget holes.

“We inherited a 2020 budget that was passed in 2019 with a $5 million budget deficit out of a $40 million budget. Because of that, we ended up raising taxes,” Belding said.

It was a different story seven years ago when Pittsburgh’s Action News 4 came to Waynesburg during the peak of the boom.

“Our hotels were full, our restaurants were full. You had these little RV parks where transient workers came and paid rent. All that’s gone,” Belding said.

Marcellus Shale Coalition president David Callahan said the pandemic is part of the reason, but a much bigger factor is the sharp drop in the price of natural gas.

“All commodity industries are cyclical. We’re very very reactive to prices. Low price means more supply on the market and the industry responds to those market signals,” Callahan said.

Asked whether people living in gas-dependent regions should worry, Callahan said, “We all want the same thing. We want to see recovery in prices. We want to see an uptick in activity.”

He said the cracker plant will help the gas industry when it is completed next year. But plans for other crackers in the Ohio River valley have been put on hold.

James Burlingame is a wellhead technician who’s been off work since an injury three years ago. He hopes to return to the gas industry but he’s not optimistic about job prospects in Western Pennsylvania.

“All the good guys left because there’s no work. It feels like it’s getting tapped out,” he said.

Experts said it is hard to predict if or when the gas industry will rebound. The state Independent Fiscal Office estimated a 25 percent decline in new gas wells during early 2021.

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2021-05-03 17:24:00

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