Friday, May 21, 2010

Burgh Energy Report: Regional Economics

If the Marcellus Play is fueling a regional jobs boom, it's most evident in the steel industry. You might have heard that President Obama was in Youngstown celebrating the $650 million investment in the V&M Star expansion. This month, Site Selection Magazine has an informative feature on the steel pipe manufacturer and its proximity to the Marcellus Shale. The Pittsburgh Tribune-Review recently investigated the surging demand for workers in Pennsylvania:

Dura-Bond has spent $1 million on new equipment. The 50-year-old company is looking to build an $8 million plant on a 55-acre site at City Center of Duquesne industrial office park, the site of the former Duquesne Works of U.S. Steel Corp. The plant, which will coat pipe to resist corrosion, will employ 55 to 65 people and should be in operation within a year.

"We just received a $30 million contract from Dominion Transmission for 45 miles of 30-inch pipe, and 65 miles of 24-inch pipe," Norris said. "We'll manufacture the pipe at our Steelton (Pa.) facility, then ship it here and store it on the new property until it's needed. We never would have gotten that contract had we not had the new site."

While I'm still skeptical that there will be a rush of migrants to Greater Pittsburgh, I can't ignore all the money being thrown around natural gas drilling. Apparently, this is a boon for banks:

Investors seeking long-term growth should consider community banks in southeastern and northeastern Pennsylvania poised to benefit from the development of the Marcellus Shale, a massive unconventional play discovered by Range Resources (NYSE: RRC).

Elliott discussed the region’s appealing economics in the April 28 installment of The Energy Letter, Why Some Natural Gas is Worth $7.28, and in numerous issues of The Energy Strategist This excerpt provides a quick recap ...

No one knows where the natural gas market is going and there are plenty of reasons why the Marcellus Play could be more bust than boom. But following the money, I reach a different conclusion. The investment is still pouring in despite the glut of natural gas and very low prices. Furthermore, Pittsburgh is much more than drilling. Energy is merely a part of the regional economic picture, which looks increasingly rosy.

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