Fracking, Steel, and 650 Million Dollars
While reading Bloomberg website Tuesday morning January 10, 2012 an interesting article caught my attention. http://www.bloomberg.com/news/2012-01-10/youngstown-opens-mills-again-as-states-jockey-for-fracking-jobs.html It mentioned an unusual geographic location for economic resurgence resulting from the renewed oil and gas production occurring in the lower 48 states. Can you guess where it is? Youngstown Ohio! That’s right, the former USA steel capital, Youngstown, Ohio. A new steel mill, Vallourec Mills is nearing completion and will manufacture and help supply the demand for seamless pipes used in hydraulic fracturing (fracking).
According to Aubrey K McClendon, CEO of Chesapeake Energy Corp (CHK) “this will be the biggest thing to hit the state of Ohio economically since maybe the plow”.
Look out Youngstown!
The Vallourec mill cost $650 million and employed hundreds to construct. When it is in full operational mode Vallourec Mills expects to employ 350 full time employees. These employees are a small portion of the estimated 200,000 oil and gas generated jobs expected to contribute towards the estimated $22 billion economic growth in Ohio alone within or over the next three years. This is great news for Youngstown who saw a black cloud come over it thirty-four years ago when steel manufacturing came to a screeching halt!
Additional spine offs for Ohio
Royal Dutch Shell Plc (RDSA) sees the great need for “world-scale” natural gas processing plants and is looking at Ohio as a place to build one of several. Also Shell is looking to construct a cracker plant somewhere in Ohio, Pennsylvania, or West Virginia. Cracker plants process ethane from natural gas to produce ethylene. This product is used in the chemical and plastics industries. Shell could invest close to $4 billion dollars which is an amount equal to what Andrew Carnegie contributed to U.S. Steel early in the 1900s.
Constructing a plant of this nature could require close to 10,000 persons and several hundred to operate, once completed. Collecting business taxes from oil and gas entities will be substantial. Neighboring state Pennsylvania saw an increase of $385.2 million dollars last year along between January and November of 2011. Not bad for a day’s wage!
About the author
I joined the staff of CFAA in late 2008. As the VP of Operations, it is my responsibility to ensure daily activities and processes are coordinated and stay on track to provide excellent service to our membership. My forty years of administrative/management experience is a combination of private and public healthcare, commissioned officer, and small business. I graduated from Suffolk University, Boston, MA, a BSBA with honors in 1977. I completed my masters from Washington Univerisity, St. Louis, MO with an MHA. I married my wife, Kay, in May of 1976, and we have a daughter, son and daughter-in-law.