July 31--The signs are everywhere.
Consol Energy recently announced it won't drill any new gas wells for the next year and a half amidst a net loss of more than $600 million in the second quarter. Range Resources has announced it plans to reduce its workforce by 11 percent.
The cuts seem to be spreading industrywide. Energy company Chevron plans to slash more than 1,500 jobs, while Halliburton recently announced it was shutting down an office in Indiana County amidst a push to eliminate 6,000 jobs companywide.
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A recent report in the Wall Street Journal didn't paint a better picture; the publication said more than 50,000 energy jobs have been lost in the past three months.
Western Pennsylvania has for several years been at the heart of the Marcellus shale boom, and the downturn in the market is being felt here, too.
Jack Manning, chairman of the economic development taskforce for the Beaver County Chamber of Commerce, said the downturn is related to plunging oil prices and supply not meeting demand.
"This is an outcome of low crude prices globally, and that's really created a glut," Manning said. "It comes down to supply and demand. There is a lot of supply of shale gas globally and domestically, so now companies are cutting back on production."
The downturn comes at an unfortunate time locally, Manning said, because places like the Community College of Beaver County are still churning out new workers in the oil and gas industry for jobs that might not exist anymore.
"I've heard locally there's a lot of concern over the hiring slowing down," he said. "And what concerns me is there are a lot of people still trying to get into that field and starting to do training and workforce development. This isn't coming at a good time, especially because we continue training qualified workers for those jobs."
The only positive aspect is that Manning, who spent most of his career in the chemicals business, is convinced the downturn is only temporary.
"I've always found the energy field, and particularly shale oil and gas, is very cyclical," he said. "At some point, this is going to change, prices will go back up and there will be a ramping up of drilling sites coming back."
David Spigelmyer, president of the Marcellus Shale Coalition, said the record-low oil prices are half of what they were a year ago, which creates a "squeeze in investment to the tune of more than $10 billion in retreating capital" for 2015.
"And as a result, we're seeing lesser rig counts and job reductions," he said. "All of that is real and happening today."
The oversupply of oil and gas also plays a role in the downturn, being that the industry in Pennsylvania has quickly gone from producing a quarter of Pennsylvania's supply to 20 percent of America's supply in a span of six years.
"Did everybody see the depth of where we are today?" he said. "Probably not. But I think it's fair to say no one saw the volumes rising that quickly, either."
Spigelmyer also railed against a proposed severance tax put forth by Gov. Tom Wolf, a tax that Spigelmyer said will only make a bad situation worse.
"The severance tax is a false choice," he said. "People in Pennsylvania are realizing they've been sold a bill of goods here."
Erica Loftus, president of the chamber of commerce, said the industry decline is being felt here at home.
"It's definitely affecting members of ours," she said. "It's bittersweet because gas prices are low for consumers, but for companies like Range Resources, investing in the community and economic development is very limited right now."
Loftus added that the downturn has many other ancillary affects locally because companies are "so limited on what they can spend. That means everything from employees to donations to how they get involved in the community."
Despite the downturn, Manning and Spigelmyer are not convinced the current business climate is the new normal.
For Manning, it's only a matter of time.
"This will definitely change," he said. "History tells us this will definitely change. It's just that some cycles last longer than others."
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