Ohio CEO: “Phones Are Ringing Off the Hooks” With Business Opportunities, Thanks to Fracking
State Sen. Sean O’Brien (D) reported to EID at the beginning of the year that “oil and gas development is off to a great start.” And sure enough, there has been an uptick in drilling permits, announcements from producers that they will be adding more rigs to their drilling programs, and a flurry of pipeline approvals by the Federal Energy Regulatory Commissioner (FERC) so far this year. Combined with executive orders from President Trump, these developments have created an environment that Rex Ferry, CEO of Girard-based Valley Electrical Consolidated, INC (VEC), says have led to his phone “ringing off the hook” with opportunities for his local, third-generation family owned business, according to Western Wire and his recent testimony to Congress,
“Energy production within the oil and gas industry has proven to be one of the most promising job creator and revenue generator. Oil and gas markets has both directly and indirectly made up over 65 percent of our revenue over the last three years at VEC.”(Emphasis added)
While this is great news, the real story here is that VEC — an Ohio-based electrical contracting company that initially serviced Youngstown’s steel mills, factories and automotive production lines — had no real connection to oil and gas work prior to the shale revolution. But the business recognized and embraced the opportunities coming from the advent of shale development across the country and as a result, diversified their service offerings to include serving the oil and gas industry. They invested tens of millions, revamped and tooled their business to embrace the opportunities they believed would in fact come, and indeed they have. VEC’s vision – “To serve others with integrity for the sake of our future generations” – has resulted in significant growth. Today, they employee over 400 and have grown their geographical footprint outside of Ohio to Pennsylvania, Kentucky, Virginia, North Carolina, South Carolina, North Dakota and Wyoming. What started as an electrical contracting business has blossomed to include a $4 million expansion of a fabrication shop to produce equipment for oil and gas customers. As Mr. Ferry told Congress this week,
“Prior to the oil and gas energy boom, this scope of work experience was not prevalent in our part of Ohio. In fact, it did not exist in most of the Midwest. The development of fracking and horizontal drilling expands beyond the Ohio borders. The new energy economy provided by the oil and gas boom is creating new job opportunities for the construction industry, particularly for the electrical construction industry. Growth in this arena is helping address the loss of jobs in the electrical construction industry and we certainly hope the turnaround will continue.” (Emphasis added)
Indeed, an example of that turnaround is occurring just this week. Vallourec Star, a northeast Ohio steel manufacturer of oil and gas pipe, announced they are hiring workers. This is noteworthy, as Vallourec Star (formerly V & M Star) is a client of VEC’s. This example is a story that is playing out across the Appalachian Basin and the throughout areas of shale development nationwide.
There is indeed a direct correlation with fracking, manufacturing of U.S. steel — such as at Vallourec Star — and then the ripple effects, such as VEC. But at the end of the day it’s important to remember that all of this starts with exploration and production of shale. Without fracking, U.S. manufacturing of steel pipe for oil and gas use is not possible, electrical contract work for projects like compressor stations is not possible, the construction of billions in pipeline development is not possible, and finally, end users of natural gas such as billions in natural gas-fired power plants is again not possible without fracking. That’s why Rex Ferry, CEO of VEC testified to Congress that,
“There is a great amount of excitement in the oil and gas industry and many tradesmen are ready to get to work immediately.” (Emphasis added)
With permits ticking up, FERC approvals of pipelines under construction, and billions in natural gas-fired power plants underway, there’s no question that Ohio is certainly “off to a great start” in 2017.