Industry Overview

The cumulative impact of the shale gas revolution can most widely be seen through the growth of the downstream sector. The downstream sector is the utilization of natural gas and includes the development of electric generation facilities, ethane crackers, plastics and petrochemical facilities throughout the basin. The ethane cracker facility in Beaver County has created an immediate need to educate the community on new and expanded opportunities. Additional ethane crackers are expected to be built in the Appalachian Basin and this will not only create downstream opportunities, but direct opportunities to help construct those facilities. These world-class facilities cost in excess of $6 billion to construct. 

During the early phases of infrastructure build out, operators within the Appalachian Basin were scrambling to find local businesses to provide products and services. Numerous programs, expos, and events were developed to connect the industry with the local market. These gaps were quickly filled with local businesses diversifying their operations and new businesses setting up operations within the Appalachian Basin. The dynamics of the markets have shifted dramatically over the past decade. Currently, there is an oversupply of products and services for the oil and gas industry.

As shale wells proved to be more productive than even some operators anticipated, there quickly became a bottleneck to transporting the gas to market. Because of this, the industry saw a quick retraction in business and workforce development opportunities around mid-2015. This caused numerous local businesses to exit the industry, and created the perception in some quarters that the shale industry was exiting the Appalachian Basin. Due to several key developments, including new pipelines coming online to move gas to market, increased utilization across the Commonwealth, and the natural decline of the shale wells, industry activity ramped up again during 2017 until another retraction in 2020… While trade expos and networking events were the key drivers to entering the oil and gas industry early on, now operators are much more reserved in how and where they identify new opportunities. Businesses must be better prepared to articulate and demonstrate the value they provide the industry in order to get in the door. Understanding where the bottlenecks are also helps local businesses provide an entry into the industry. The last several years have seen a shift in global energy markets that are providing emerging export opportunities across the United States and Appalachia. Operators are also adopting new and emerging technologies related to emissions, completions, and unmanned aerial vehicles (UAV).

The Marcellus Shale was studied for decades and recognized as a source rock containing large reserves of natural gas. Nonetheless, it was never viewed to be economically viable. Operators did not have the technology to commercially develop the resource in a profitable manner. Through the advent of advanced technologies, hydraulic fracturing, and horizontal drilling, the first shale to be developed was the Barnett Shale in Texas. Development in the Barnett Shale took several decades and thanks to the persistence of several key players, technological improvements were implemented to make development economically viable. Mitchell Energy is credited with ultimately “cracking the code” and starting the Shale Revolution.

The Barnett Shale started seeing major investments in the early 2000’s and production increased in tandem. However, as technological advances, exploration, and employee migration occurred in the mid 2000s, the great land grab began in Pennsylvania as operators sought to secure a spot in shale development. The Barnett Shale continued to see major development investment as the Marcellus Shale was in its infancy during the late 2000’s. However, that quickly changed as the Marcellus became the top-producing shale play in the country in 2012 as the Barnett peaked at 5.7 BCF/day. Today, there is very little investment in the Barnett Shale except for the more liquids or oil regions.

By comparison, the Barnett Shale covers approximately 5,000 square miles and the Marcellus Shale is over 95,000 square miles. In addition to the Marcellus Shale, operators have begun development in earnest on the Utica Shale and several Upper Devonian Shales. There are additional shale plays within the region that operators are confidentially exploring. These additional shales have effectively doubled the acreage available for development in the Appalachian Basin.