U.S. Steel’s Shale Gas Comeback

We spend a good bit of time at EID documenting how some folks are willing to do, say and write just about anything – however misleading or flat-out wrong – to try to scare the public about responsible oil and natural gas development. So it’s always fun to turn the tables by discussing a subject that makes professional energy activists nervous: paychecks. The paychecks, jobs, revenues and new opportunities made possible by oil and natural gas production from shale are fueling an economic revival in America, and as people see the benefits of this abundant energy source, they are demanding those critics back up their rhetoric with facts. And the critics know, as we do, the facts are against them.

For this reason, today’s Wall Street Journal report on natural gas and Pennsylvania’s steelmaking industry, “Steel Finds Sweet Spot in the Shale,” caught our eye:

The rising fortunes of a massive U.S. Steel Corp. plant here has much to do with what sits below: massive deposits of cheap natural gas.

Shiny coils roll off the line destined for energy companies drilling in the Marcellus Shale natural-gas formations that rest below much of southwestern Pennsylvania. Production for so-called tubular goods used for pipes, tubes and joints in gas drilling has doubled in two years, says Scott Bucksio, the general manager of the plant in the sprawling Mon Valley Works, as drillers have raced to extract ever-larger amounts of gas from the shale deposits.

As significant, or more so for energy-intensive steelmakers, is that newly plentiful natural gas “is also keeping costs down” said Mr. Bucksio of U.S. Steel.

The Journal notes that increased production of shale gas came “just in time” for America’s biggest steelmaker, after posting losses in recent years, and now the company’s fortunes are rebounding. CEO John Surma expects shale oil and gas development “to make significant, positive contributions to U.S. Steel” in the years ahead. In other words, more paychecks:

That is good news for the U.S. Steel plant in the Mon Valley Works south of Pittsburgh, where 800 unionized workers take steel slabs made at the company’s Edgar Thomson Mill in Braddock, founded by Andrew Carnegie in 1875, and roll them into thin coils that are turned into pipes at another nearby company location.

PGT Trucking, a Pennsylvania trucking company, said revenue related to transporting steel tubular goods like those made at the Mon Valley Works plant soared to $10 million in 2011 from $1 million in 2010.

CEO Patrick Gallagher has 500 employees and wants to add another 50 to 100 over the year. “And we’re investigating a new fleet of trucks that run on liquid natural gas for 2013 and beyond,” he said. “We’re on a paradigm shift with natural gas becoming our main energy source.”

U.S. Steel is just one example of existing jobs becoming more secure and new jobs being created because of the oil and gas industry. Another is Shell Oil Co.’s planned ethane cracker in southwestern Pennsylvania, which would use locally produced ethane from gas production in the Marcellus Shale. According to Pennsylvania Governor Tom Corbett, the project could create 10,000 construction jobs and 10,000 permanent jobs and has the potential to be “the single largest industrial investment in the region in at least a generation.”

As EID has noted before, the economic benefits of oil and gas development are being felt across the country, and are winning international acclaim. According to the Switzerland-based World Economic Forum, nearly 1 in 10 new jobs in the U.S. last year were created by the oil and gas sector. Looking ahead, the WEF says the U.S. economy will create 1 million more jobs in 2014 than would otherwise be the case thanks to increases in natural gas production alone. That’s unquestionably good news, unless you’re in the business of fabricating bad news to try to bring American oil and gas development to a screeching halt.


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