Unions Want Their Piece of Shale Business

By On August 30, 2010 6:29 pm

Unions want their piece of shale business
Sunday, August 29, 2010
By Bill Toland, Pittsburgh Post-Gazette

It’s been a productive decade for union contracting and construction crews in Pittsburgh. But with many of the region’s big projects — two stadiums, a new arena, a casino, SouthSide Works, the new PNC skyscraper — completed or winding down, trade unions are contemplating the Next Big Thing: the Marcellus Shale industry and its many prospective jobs.

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Can organized labor get a toehold in the Southern-based energy industry?

The energy companies say they can — and in fact, union laborers already are being employed in great numbers here, mainly through subcontractors.

Range Resources, one of the biggest Marcellus Shale players in Pennsylvania, is not unionized but that’s because most of its employees are in professional and technical fields, working in geology, telecommunications, engineering and land leasing, said Matt Pitzarella, director of public affairs for Range Resources-Appalachia.

When it comes to field workers, it’s different, he said.

“The easiest way for me to explain companies like Range is we are similar to home builders. We have the capital and design the plans, acquire the leases, sell the gas, but we’re heavily dependent on service companies and subcontractors,” he said.

“From the time we select a location to drill and complete the well and then reclaim the property and move the gas to market, there are probably 100 other companies involved in that process, many of which employ unionized workers.”

Mr. Pitzarella estimated “about half” of work being done on behalf of Range is being performed by companies with organized labor, including big subcontractors like MarkWest and NiSource.

With a dearth of big projects on the horizon, labor wants a more surefire guarantee than “about half.”

Labor leaders want Marcellus Shale to be a reliable job provider, to the point that one union leader thinks the state should give tax rebates to companies willing to hire local workers so the energy industry will be more likely to choose local unionized contractors for drilling wells, laying pipe, welding steel and building access roads.

“We’ve all been involved, talking to our legislators,” said Kenneth Broadbent, business manager of the Steamfitters Local 449. “We’re competing, many times, with contractors from out of state who are bringing in workers from out of state.”

Utility contractor NiSource, for example, is based in the state of Indiana, and MarkWest Energy is based in Colorado. Both have corporate presences in Pennsylvania.

“There’s got to be incentive for somebody to use Pennsylvanians,” he said. “We’ve had to fight like hell” to get work at the compression stations, where gas is compressed to increase its pressure and flow rate.

State Rep. David Levdansky, D-Forward, is one of the legislators whose ears have been bent by local trade unions. In his proposed Marcellus Shale extraction tax legislation, he’s also included a provision that would offer a tax credit for each Pennsylvania job created (it doesn’t have to be a union job).

“The rest of the country is going to benefit from our natural gas. It’s going to power the entire Northeast. We need to make sure we get the maximum employment and financial benefit from the industry,” Mr. Levdansky said.

There is recognition among various energy stakeholders that “we do need to do a better job of matching the labor needs of the drillers with the labor market,” through training programs and specialized college courses. But Mr. Levdansky doesn’t buy the argument that southwestern Pennsylvania tradesmen are universally undertrained.

“That’s the excuse — Pennsylvania doesn’t have qualified workers,” he said. “Skilled pipe fitters and electrical workers and steamfitters can easily be trained” to do all sorts of energy sector field work, he said.

“I would feel that way any time, but especially in the midst of this recession.”

Mr. Pitzarella said Range Resources is already making efforts to hire Pennsylvanians.

“Range is just under 100 percent local workers, FracTech is almost all local, Red Oak Water Transfer is all local, even Patterson Drilling, which takes the longest to develop and train workers, is around half local workers,” he said via e-mail.

Overall, though, about half of Pennsylvania’s Marcellus Shale field and production workers still come from out of state. Mr. Broadbent said there’s nothing wrong with new workers migrating to Pennsylvania — but not “while we’ve got laid-off workers” across the region.

The energy industry, in various reports, says the Marcellus Shale play will create hundreds of thousands of jobs over the next decade, though most of those are not actually within the energy field. Most are “indirect” jobs, created because of the energy sector’s overall contribution to the economy.

Energy companies say that they need to minimize bid-out costs and put a lot of upfront capital into equipment and infrastructure because the Marcellus Shale industry is a fledgling one. That is why they’ve been resistant to an extraction tax and anything else that would create extra expense, especially at a time that gas prices are so low. But some labor leaders don’t like the hat-in-hand act from the same energy companies predicting the Marcellus field will be a multitrillion-dollar bonanza.

“As much money is involved here, [they] have sold themselves as these cash-strapped, poor, underdog industries,” and thus are unwilling to pay prevailing wages in some cases, said Rich Stanizzo, business manager of the Pittsburgh Building and Construction Trades Council. “That’s just not true — these are big national, multinational companies,” he said.

He disagreed with the notion that the state should subsidize energy companies through tax breaks so that they can pay union wages.

“The state shouldn’t have to subsidize anything. In fact, the state should be getting a lot of money” from the energy companies drilling in the Marcellus Shale, Mr. Stanizzo said.

As part of their summer budget deal, state lawmakers and outgoing Gov. Ed Rendell have agreed to impose an extraction tax on Marcellus Shale natural gas drillers in October, but have yet to settle on an amount.

Bill Toland: btoland@post-gazette.com or 412-263-2625.

Read more: http://www.post-gazette.com/pg/10241/1083522-455.stm#ixzz0y8HxERZH