From New York to Nkandla shale gas is a ‘game-changer’

This article first published July 15 in Daily Maverick – South Africa’s leading online publication


15 JULY 2014 07:58 (SOUTH AFRICA)

From New York to Nkandla, shale gas is indeed a game-changer

Shale gas has been hailed as a game changer worldwide, but many of the numbers being crunched are outdated – and the reality is a little more sobering. It’s worth picking up on US shale gas hype and bringing it down to earth in the Karoo.
Since 2011, there have been some incredible statements from oil and gas executives, but the uncontested winner must come from Chris Faulkner: “There is enough oil and gas underground (in America) to supply America for an almost endless amount of time.”

While SA’s leaders spread ‘feel good’ job figures from FRACKING

State inflates fracking-related jobs numbers

Report shows decline in gas-drilling jobs and overstates the number of workers supporting natural gas industry.

New York State Mulls Limited Fracking In Southern TierHydraulic fracturing, or fracking, of shale for natural gas has boosted local economies in South Montrose, Susquehanna County, (pictured here) and across the state. (SPENCER PLATT, GETTY IMAGES / June 19, 2012)
By Steve Esack, Call Harrisburg Bureau9:24 p.m. EST, February 23, 2014

HARRISBURG — As executive director of the Wellsboro Area Chamber of Commerce, Julie VanNess was front and center when energy companies descended on Tioga County to secure drilling leases on pristine land around Routes 6 and 660 through Pennsylvania’s Grand Canyon.

“I don’t have a negative feeling for the industry,” VanNess said.

The industry was accommodating and respectful of the community’s needs and understood the importance of its tourism industry, VanNess said. It fixed long-neglected back roads to handle rigs, rerouted drivers away from Wellsboro’s tony downtown and kept trucks away from schools during class time, she said.

“You can’t tell they were even here,” VanNess said. “If you drive through the countryside you will not know something happened. Once the wells are drilled, capped and the pipelines in, you don’t notice them.”


That was about two years ago.

With leases signed and wells operating, the companies have pulled back resources amid what had been until recently a downturn in natural gas prices. Many of the out-of-town workers who filled hotels and restaurants in and around Wellsboro have left, too.

“Right now it’s on kind of a hiatus,” VanNess said. “It’s slowed down significantly here. I expect that will pick back up again. Right now you see very little activity.”

It’s the same story in many of the 32 other counties where drilling began in 2004 to extract natural gas trapped in the underground Marcellus and Utica Shale formations: Fewer jobs and less overall economic activity, despite a record amount of gas — 3.1 trillion cubic feet — produced in 2013.

The industry has declined, Williamsport Mayor Gabe Campana said, but it’s still alive. Without it, the unemployment rate in his third-class city of 35,000 would be 10 percent and he wouldn’t have four new hotels downtown.

“It’s made a difference in the overall economy,” Campana said. “But it has receded. Talk to the guys in the field and they’ll tell you there’s ebbs and flows. It has picked up in the past two, three months and we are encouraged by that.”

Gov. Tom Corbett praises the natural gas industry as a key cornerstone of the state’s economy.

“It’s lifting up entire communities, creating and supporting many thousands of jobs well beyond gas production,” Corbett said in his Feb. 4 budget address.

But state records show the gas industry has not created as many jobs as state officials have claimed. In addition, the state’s estimates of ancillary job growth have been inflated to include employment in places drilling isn’t even taking place, further skewing the impact the natural gas industry has had on employment.

The number of jobs directly associated with Marcellus Shale’s six “core industries,” including drilling, extraction and pipeline construction, declined by 29 percent to 29,926 between the fourth quarters of 2010 and 2013, according to the state Department of Labor and Industry’s January labor report. The report is based on employer surveys collected for federal unemployment data and has been produced using the same analysis since Gov. Ed Rendell‘s administration.

The number of core gas jobs accounts for less than 1 percent of the state’s nearly 5.8 million jobs.

Corbett spokesman Jay Pagni defended the administration’s record on jobs in the shale industry and its training efforts. He said the state and governor support all forms of industry equally, and has numerous programs to help train workers in the event of a downturn in the local economy or job sector.

“The commonwealth and the governor support local communities in not only the Marcellus industry but in all industry,” Pagni said in an email. “Activities abound in attracting new business to the state, ensuring that services are available to companies while they manufacture, produce, create, etc. and support the workforce through job training and retraining efforts should a company choose to leave.”

All industries go through a natural cycle, Pagni said. The workforce and activities associated change and adapt, he said.

“If a well is not being drilled, jobs continue to flourish in the trucking and transport because it is still producing,” Pagni said. “These activities will continue to provide economic benefit to communities as the industry moves from flow to ebb.”

While the core Marcellus Shale jobs are declining, the Labor Department claims the number of ancillary jobs indirectly tied to the natural gas industry has increased 8 percent to 212,000.

But that increase is not based solely on employment trends in the counties where more than 7,000 wells are permitted to be drilled.

The report includes statewide employment trends in trucking, engineering, highway construction and about two dozen other career sectors. So jobs in the Lehigh Valley, Philadelphia and other areas where there are no wells have been counted as ancillary gas jobs.

Labor Department spokeswoman Sara Goulet defended the report, saying the data on core jobs show a concentration of drilling, extraction and construction jobs has increased in the state’s northern tier and southwest corner, where drilling is being done.

But trying to quantify the ancillary jobs data is hard, Goulet said, because the number of ancillary jobs has increased in the drilling regions, too. But since there is no way to determine if the jobs are tied to the gas industry, she said, it makes sense to list statewide employment numbers.

“Employers don’t state, ‘That’s a Marcellus Shale construction job’ in the employer survey that counts jobs,” Goulet said. “It is not a perfect science, but it does give a fair picture of those ancillary industries’ growth as it pertains to [Marcellus Shale] and the time period when those industries started to experience significant growth.”

The shale industry is creating support jobs statewide even if they are in Delaware County, said Kravis Windle, a spokesman for the Marcellus Shale Coalition, a trade group in Pittsburgh.

“As President Obama‘s energy secretary stated last week, responsible shale development is creating ‘economic prosperity’ across Pennsylvania and beyond,” Windle said in an email. “Not only are tens of thousands of good-paying jobs being created at well sites and pipeline construction projects across the commonwealth, but with Pennsylvania now the nation’s second largest shale-producing state — accounting for nearly 20 percent of all U.S. natural gas production — many other support industries are realizing these benefits.”

There is no question the drilling industry has had a positive impact in communities, said Mark Price, a labor economist with Keystone Research Center, an economic policy group with ties to several labor unions. The Labor Department report on core drilling jobs does a good job of capturing that impact through its employment report of the gas industry, he said.

But the ancillary report is bloated and useless, Price said. The shale industry has led to more engineering and trucking jobs, he said. But it’s hard to believe every engineer or trucker in the state is working in the gas industry as the Labor Department reports, he said.

“The ancillary is gobbledygoop,” he said.

The Labor Department cannot publish a county-level jobs report because of privacy issues, Price said. The report would be so narrow it would be easy to identify companies by name, which would violate private unemployment rights, he said. With that legal difficulty, Price said, the state should not publish a statewide ancillary report because it cannot accurately track which jobs support the shale industry.


Copyright © 2014, The Morning Call

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Fracking benefits the poor? Don’t think so.

Deborah Rogers tackles the inaccuracies printed by the Wall Street Journal on the so-called benefits of shale gas. South Africa better do the math.


Fracking Benefits the Poor?

By Deborah Lawrence Rogers

A recent opinion piece in the Wall Street Journal touted the financial benefits “to the poor” from fracking for natural gas. The piece based its entire premise on the ridiculous assumption that natural gas prices will stay low indefinitely. Such logic is seriously flawed. But for one of the world’s most prominent business papers to propound such an assumption is tragic.

Natural gas prices have indeed declined 61% from their highs which has translated into near term cost savings for manufacturing and electricity generation. No one would dispute that fact. But to infer that such a decline was intentionally designed by industry to continue long into the future requires a leap far beyond credibility. These same purportedly “altruistic” companies are struggling with massive impairment charges, negative free cash flow, fire sales of assets and ever weakening balance sheets, some even tottering on the brink of bankruptcy, because of the decline in natural gas prices. It is far beyond the realm of credibility to infer that such a decline was intended and even wished for by industry in order to “help the poor”. This borders on delusional.

The opinion states:

“…fracking is a much more effective antipoverty program than is Liheap.”

That statement can only be argued true from one angle: prices declined precipitously which in turn benefited consumer costs in the short run. This price decline, however, was the direct result of oil and gas operators over-producing natural gas on such a massive scale that they significantly disrupted the market and tanked prices. Further, and equally, one could reasonably argue that such disruption was irresponsible and poor management of natural resources. Leaving that aside, however, there have been not one but two rounds of massive impairment charges that have occurred in shale companies since 2009. The latest round began about a year ago with billions in write downs and culminated in the last quarter with corporations the size of Exxon Mobil and Royal Dutch Shell announcing intended shale asset sales as they reeled from a considerable drop in earnings.

Moreover, free cash flow in shale companies has been consistently deteriorating since 2008 with greater and greater losses incurred each passing quarter. Taking a universe of only five shale companies with onshore operations – Continental, Range, Devon, Kodiak and Chesapeake – one finds that free cash flow is alarmingly negative in every case. Further, CAPEX exploded during the same time in spite of the fact that no free cash was generated.

According to the WSJ opinion:

“Thanks to the lower price for natural gas, families saved roughly $32.5 billion in 2012.”

No one would argue that a cost savings of $32.5 billion to consumers is a bad thing but it must be juxtaposed against the fact that these 5 companies alone spent approximately $56 billion in capital expenditure since 2010, well in excess of the $32.5 billion in consumer savings. Nevertheless the free cash generated from their $56 billion spending spree is non-existent and losses are mounting. That equates to significant shareholder destruction and is not sustainable in the least. In order to keep producing natural gas, companies must begin to generate profits from shales and the only way that will happen is if prices increase in which case all “benefits to the poor” will evaporate like proverbial hot air.

It is more than strange, therefore, to witness cognitive dissonance at one of the premier business journals as the authors apparently dismiss the possibility of companies spinning headlong toward bankruptcy or destruction of shareholder worth as long as they provide economic benefits…to the poor?!!! Perhaps this should be our clue that something is truly amiss.

After all, entities such as the WSJ used to promote companies engaging in business to make money. Philanthropy belonged to another realm. Surely, they are not seriously advocating a paradigm shift.

Don’t bank on those fracking jobs South Africa

Shale gas jobs in PA?

Much has been made by Shell, Econometrix and the ANC Ministers about the hundreds of thousands of ‘permanent’ jobs that will be created by FRACKING.

Here is a report (3 days old – on September 1st 2013) that the jobs in Pennsylvannia (the darling of the shale gas industry in the US) are looking worse than since 2010. This despite all the INDUSTRY HYPE about how many JOBS have been created by FRACKING.

According to the report, the only people who didn’t suffer were the top 1% of salary earners who absorbed the income growth. As I have alleged in presentations and debates in South Africa  – the rewards of mining do not reach the people who do the work and who are affected by the process where they live.

Report: Pa. outlook on jobs worst in three years

Report: Pa. outlookAccording to a grimmer-than-expected report from the Keystone Research Group, the workforce outlook for Pennsylvanians is the bleakest it has been since 2010.

The report, “State of Working Pennsylvania,” shows a heightened level of worker discontent, coupled with slowed job growth, depressed wages and a surprising increase — a whopping 11 percent — in the number of poverty-wage jobs in the state.

The report shows that Pennsylvania’s economy has performed poorly from the perspective of typical working families since the end of 2010. It also shows that wages have been flat for a longer period. In the 32 months since 2010, ending July 2013, the state has experienced a gradual slowdown in job growth: from January 2010 to January 2011, the number of Pennsylvania jobs increased by 87,300, and over the ensuing 12 months, job growth fell to 46,200, with a further decline to 35,000 in 2012.

The report also shows that for this year through the month of July, Pennsylvania has created only 5,400 jobs.

“Many states have not witnessed a slowdown in job growth since 2010. Pennsylvania ranked 46th among the 50 states for job growth since December 2010. This poor job growth performance is in line with, but slightly worse than, Pennsylvania’s performance compared to the nation and other states during the equivalent 32-month period in the last two economic recoveries,” read a portion of the report’s executive summary. “Slowing job growth has resulted in persistently high unemployment in Pennsylvania. While the state’s unemployment rate was a percentage point or more below the national rate in 2009 and 2010, this Pennsylvania advantage has since disappeared.”

A closer inspection of the numbers provided in the report uncovers many unfortunate realities along with disconcerting trend indicators. For example, for the bottom four-tenths of the wage distribution index, Pennsylvania wages have declined by 4 percent since 2010, and since 2000, Pennsylvania workers “have seen more than a decade of flat wages. Indeed, since 1979, a full third of a century, wages for median-wage Pennsylvania workers have increased [by about 10 percent] in only one half-decade — the second half of the 1990s.”

The report terms that period as “the lost decade.”

“From 2010 to 2012, low-wage workers at the 10th percentile saw their earnings fall by 3.8 percent to $8.37 an hour, while a worker earning the state’s median wage saw earnings fall by 2.6 percent to $16.77 an hour. High-wage earners at the 90th percentile saw their pay fall by 1.6 percent to $37.45 an hour, while those at the 95th percentile saw earnings fall by 4.3 percent to $48.06 an hour,” read a statement from the center. “Recent job and wage trends undermine the economic recovery, researchers noted, as more low- and middle-income families are unable to buy the goods and services that will propel the economy forward. These same trends shrink the middle class, which, as the Harvard and Berkeley economists noted, jeopardizes upward mobility.”

The report did find that the state’s super-rich stayed that way, as the top 1 percent of wage earners in the state absorbed the majority of Pennsylvania’s income growth in 2012.

While solutions may be hard to come by — and even harder to enact and see through to the end — Keystone Research Center Executive Director Dr. Stephen Herzenberg said the solution may very well come from workers themselves who grow tired of accepting poverty-wage positions.

“The silver lining here,” said Herzenberg, an economist by trade, “is that a growing chorus of American workers have a dream of a different economy that pays workers at least $15 per hour. That economy is within reach and, our new report shows, badly needed.

“The fewer good jobs, or jobs of any kind, in lower-income communities, the less chance poor children have of escaping the economic station of their birth.”


Contact staff writer Damon C. Williams at (215) 893-5745 or

Pants on Fire?

You’re a devious man Ivo Vegter.
‘I mentioned your montage of interviews with Capetonians about fracking
in a column recently, and said that TKAG was associated with its
production.’ – Is what you [Ivo] wrote to Michael Raimondo today.
In fact, the TRUTH of the matter is that your ‘mention’ of the video and associated issues based on the content of the video runs to 515 words. And in those 515 words you refer to TKAG or the video 16 times. Ascribing the video to TKAG and going so far as to say that TKAG is misleading the public,  feeding people false information [and propagating] flat out lies – [of course within the context that TKAG scripted and produced the video]. In any event, you now have the unrehearsed truth from Michael Raimondo.
Here, for the benefit of your supporters, is what Michael Raimondo wrote back to you today. [And I am telling you that there was no discussion between Raimondo and I today – I don’t think we’ve spoken or communicated in a year]:
Hi Ivo,
We have made many videos on fracking. The Cape Town short film was done by a Rhodes intern who spent two weeks with us – this was his project completely. Jonathan is correct TKAG was not part of this film clip – I apologise on the interns behalf if he wrongly stated this – I will remove the video off the Internet.
One  [sic] again TKAG had nothing to do with this filming. I should have picked up on it but was away filming on other projects at the time.
None of the films ever produced by Green Reniassance have eve been funded by TKAG.
Let me know if you have other questions.
Based on your own text in red, above, compared with what you actually did with your ‘recent’ column and TKAG, I am telling you that in my opinion, you are a liar Ivo Vegter. Ivo, As I said, your bolt is shot, and what a flimsy last shot it was.
Jonathan Deal
Here, for ease of reference is what you regard as ‘a mention’ of the video.

The TKAG, and its partner against shale gas exploration, the Afrikaner rights group Afriforum (speaking of curious bedfellows), make much of a series of interviews conducted with anonymous strangers about shale gas drilling. But anecdotes do not a court case make. If their interviews have any evidentiary value, I’d like to use them as evidence that the public is being misled by the TKAG.

The video montage they made of these interviews shows several people either claiming ignorance, or parroting the misinformation fed to them by the activists. Take the (unnamed) fellow who talks about an “aerial shot” of fracking. Undoubtedly, he refers to the laminated photo with which Jonathan Deal, CEO of the TKAG, was once spotted on television, and which used to appear on a website called KarooSpace (but has since been removed). A similar image still appears on the Water Rhapsody website, run by Jeremy Westgarth-Taylor, a committee member of the TKAG.

The trouble with the supposed aerial photograph of “fracking” is that it isn’t of a shale gas play at all. It is an image taken by the activist group SkyTruth of the Jonah Field in Wyoming, a tight sands operation. It is one of the most productive fields in the world, with uncommonly dense well spacing even forvertical drilling. It covers about 85 square kilometres, which is the size of a small town, and soon gets lost on a satellite view that shows it in relation to the town of Pinedale, 50km to its north. The Karoo won’t look anything like that photograph.

If images are to sway the undecided, however, allow me to offer for your consideration another gas field that was fracked, in Germany. There are eleven gas wells in this image. See how they destroy the bucolic farm landscape?

Elsewhere in the TKAG video, the claim is made that shale gas drilling involves “over 500 poisonous chemicals”. It doesn’t, not any more than your pool uses all the chemicals in your pool shop, or your kitchen is cleaned with all the chemicals at the supermarket. It uses perhaps a dozen. And only a few are poisonous. Many of them no more than the pool or household chemicals used by the sort of people who happily use grey water to irrigate their garden, with blithe disregard for its impact on the local groundwater aquifers.

The question with chemicals is not whether they’re poisonous. Almost everything is poisonous in some degree. It is how they are handled, what potential routes of exposure exist, and if exposed, what doseyou’re likely to get.

The video states as fact that shale gas drilling “[leaves] the water table contaminated and poisoned”, and “rendered completely useless”. These are flat-out lies. They are not true in the general case, and have never even been proven in anecdotal cases.

“I don’t think it’s a good idea, if there are such negative implications,” one unnamed woman says. This shows that she was prompted before the clip that was shown, and given the false information mentioned above.

These sorts of videos are nothing but misleading agit-prop.