How New York State Exaggerated Potential Job Creation from Shale ...

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Table 1. Annual Job Creation from Shale Gas Development Under New York’s “Average” Development Scenario Year # of new wells drilled and fracked # of producing wells (cumulative) New preproduction phase jobs New production phase jobs 1 165 165 1759 28 2 330 496 1771 56 3 496 991 1757 84 4 661 1652 1771 113 5 826 2478 1759 140 6 991 3469 1759 169 7 1156 4626 1771 196 8 1322 5947 1756 225 9 1487 7434 1771 253 10 1652 9086 1760 281 11 1652 10738 0 280 12 1652 12390 0 281 13 1652 14042 0 281 14 1652 15694 0 281 15 1652 17346 0 281 16 1652 18998 0 281 17 1652 20650 0 281 18 1652 22302 0 280 19 1652 23954 0 281 20 1652 25606 0 281 21 1652 27258 0 281 22 1652 28910 0 281 23 1652 30562 0 281 24 1652 32214 0 280 25 1652 33866 0 281 26 1652 35518 0 281 27 1652 37170 0 281 28 1652 38822 0 281 29 1652 40474 0 281 30 1652 42126 0 280 31 0 41961 -17634 -28 Note: The reason for the variability in the number of new pre-production jobs during the first 10 years is unexplained in the E&E Inc. report. Source: Ecology and Environment Inc. 2011, Table 4-7 for new jobs projected, pages 4-2 and 4-3 for wells drilled and fracked per year 4 Food & Water Watch • www.foodandwaterwatch.org
The New York job projection assumes that for the first 10 years there is constant growth in the number of new wells developed each year, from 165 new wells in the first year to 1,652 new wells in the tenth year. 22 (See Table 1.) Development is then assumed to level off for years 11 through 30 at 1,652 new wells a year. 23 This means there would not be any new pre-production phase jobs after year 10. Production jobs, in contrast, would accumulate as more wells are brought into production. The New York job projection assumes that a shale gas well will produce for 30 years, so in year 31 the first shale gas wells would be retired under the development scenario. However, while production jobs would accumulate, the pre-production phase of shale gas development requires many times more workers per well than the production phase. 24 The New York analysis, relying on the 2009 MSETC study, estimated that the pre-production phase requires the equivalent B of about 10.7 full-time workers per well. C25 In contrast, again based on the MSETC study, the New York analysis assumed that the production phase requires the equivalent of 0.17 fulltime workers per well, or about one full-time worker to manage the production of six active wells. 26 These estimates of the full-time equivalent (FTE) workforce needed per well, combined with the number of new wells developed and the number of producing wells, allowed New York to project the number of preproduction and production jobs each year under each development scenario. (See Table 1 for annual job creation under the “average” development scenario.) Indirect job impacts New York considers pre-production and production phase jobs as “direct jobs,” from which there is an economic spillover effect that creates “indirect jobs.” 27 The New York analysis used the Bureau of Economic Analysis (BEA) Regional Input-Output Modeling System (RIMS II) Type I employment multiplier to project indirect job impacts under the different development scenarios. 28 Specifically, the analysis used the oil and gas industry RIMS II Type I multiplier of 2.1766, estimated for the state of New York. 29 This assumption means that for each direct job created from shale gas development, an additional 1.1766 “indirect” jobs would be created (i.e., 2.1766 - 1). Thus, New York projected 29,174 “indirect” jobs by multiplying 1.1766 times the sum of the projected 17,634 “construction” jobs and 7,161 “production” jobs. 30 For reasons detailed below, however, New York’s projections of direct and indirect job creation from shale gas development are deeply flawed. B The MSETC study measures jobs in terms of full-time equivalent (FTE) workers working 2,080 hours per year. Hundreds of different workers may work on a given well at a given time, but in many cases only for a few days. C The New York analysis assumes that 10 percent of shale gas wells in New York would be vertical, and 90 percent horizontal. New York adopted a Marcellus Shale Education & Training Center (MSETC) estimate of 11.53 full-time workers per horizontal well in Pennsylvania, then assumed that the 10 percent of wells that would be vertical were about 70 percent less intensive to drill. To arrive at an adjusted estimate of full-time workers per well, the calculation is 0.90*11.53 + 0.10*(11.53*0.2777) = 10.7. How New York State Exaggerated Potential Job Creation from Shale Gas Development • November 2011 5
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