Shale POWER Panel Discussion at PIOGA’s M2M Conference
On November 12th, the Shale POWER team conducted a roundtable discussion about the project at the Third Annual Marcellus to Manufacturing Conference hosted by the Pennsylvania Independent Oil & Gas Association (PIOGA). The daylong conference was held at the Oglebay Resort & Conference Center in Wheeling, WV.
Petra Mitchell, President & CEO of Catalyst Connection, facilitated a discussion with project leads Matt Henderson of Henderson Consulting and Katie Klaber of The Klaber Group. The following is an excerpt from the conversation:
Petra: Katie, Can you help us get oriented. When we say the words, Shale Gas Supply Chain – what do we mean by that? What does that entail?
Katie: The upstream sector of the industry is possible because of drilling and hydraulic fracturing equipment, the associated fluids, proppants, pipe and parts that come together to coax gas and liquids from the earth. The midstream sector also deploys equipment, to prepare and install infrastructure and the hardware to build and maintain gas processing and fractionation equipment. The downstream sector ranges from multi-billion dollar plants, such as Shell Polymer’s to small plastics companies to natural gas-fired power generation facilities, all of which require equipment to build and maintain. Even the use of the petrochemical plant products are part of this supply chain.
Unfortunately, many in the general public and among our local businesses still do not understand that they are benefitting from the supply chain or have opportunities in it that have not yet been realized. In part, that is because it is not an easy industry to navigate – so many players and a supply chain that has been long-established in other parts of the country. But this industry will be here for a long time, and the more that our local manufacturers benefit from its presence, the better for us all.
Petra: Matt, please address the issue – why now? Why is it a good time for manufacturers to consider entering a shale related supply chain and for energy companies to want to work with them?
Matt: In 2019, our petroleum trade deficit was the lowest on record at $13.7 billion. Just 11 years prior in 2008, the US trade deficit in petroleum products was an all time at $412 billion. This means in about a decade, the shale revolution has had a net positive impact of nearly $400 billion annually on our trade deficit. We are now in a position of abundant, affordable and accessible natural gas. This production has made the United States more competitive on the global market. While the last decade the focus has been on production of the resource, this next decade will be focused on the utilization of the resource.
For this utilization to become a reality, the upstream and midstream markets are going to have to continue to innovate, adapt and react to market conditions. There is a strong desire to purchase locally whenever possible, but economics and accessibility still play a key role in those decision-making processes. As the downstream markets continue to grow, this is where I see more opportunities for the manufacturing community. According to the American Chemistry Council there is investment opportunity of over $36 billion in the Appalachian Basin. I am confident this number will continue to grow, the makeup of the projects will change over time, but the opportunities will continue to be here.
Petra: Matt, how can the Shale Power initiative help a manufacturer? Who are the partners in the initiative and what is their role?
Matt: The Shale POWER initiative presents three main ways to assisting manufacturers; providing information, hosting events and technical assistance.
Through our newsletter and website, we are providing manufacturers with valuable information about the industry, opportunities, trends and other resources. We are still building out the resources to include interviews with partners, manufacturers, supply chain professionals and other industry experts.
Another key component of the initiative is hosting and participating in events. We currently have three more workshops planned for 2020 in early December. We will continue to plan more of these programs and hopefully in 2021 we will start to be able to host in-person programs or at least a hybrid with limited in-person participation. We are also going to host tours to various sites across the tri-state area to visit such infrastructure as producing well pads, midstream facilities and manufacturing operations. We have several energy and manufacturing partners lined up to host these starting next spring.
The final outreach effort is through technical assistance. This could be in the form of a grant, 1-1 consulting, employee training or developing a market strategy. Our project partners are helping us to reach a larger group of manufacturers beyond southwestern Pennsylvania.
We have several project partners and they are JARI (based in Johnstown, PA), the Manufacturing Extension Partnerships at West Virginia University and Ohio State University, and MAGNET (the Manufacturing Advocacy and Growth Network in eastern Ohio). Each of these partners helps to host and market the programs, provide technical assistance and recruit additional manufacturers to the program.
Petra: Katie, what’s in it for the industry? How can this program benefit energy companies, that are at all levels of the supply chain?
Katie: The Shale POWER program will provide opportunities for the energy industry to identify new suppliers in the region, leading to lower transportation costs and higher reliability and supply chain redundancy. Energy companies and their suppliers continuously innovate, and this region can contribute a disproportionate share of that innovation given our long history of manufacturing excellence. Additional collaboration with local businesses and economic development organizations will lead to unique long-term partnerships for the industry and a greater understanding of the industry in this part of the country.
Petra: Twenty-one manufacturing companies have received Shale POWER mini-grant awards to support up to 50% of the cost for technical assistance projects. The total investment for these 21 projects is $275,000 with $100,000 approved for grant funds. Companies with less than 500 employees are eligible. The awardees to date have between 5 and 115 employees. The types of manufacturers include: fabricated metals, computer & electronic products, machinery, chemicals, mineral products, and transportation equipment. The companies have invested in technical assistance projects to help them with one or more improvement areas, such as product development, process improvements, new business and capacity building.
Petra: Matt, how can or will the Shale Power program continue to support manufacturers? What are the next steps? How can an audience member get more engaged – either a manufacturer or an energy company?
Matt: With the overarching goal of our program to connect manufacturers with the shale supply chain, we will continue to provide the outreach, education and tools for manufacturers to be successful.
We have and will continue to work closely with the energy companies, and the various trade groups like PIOGA, across the tri-state area. These partners have provided us valuable insight to the industry, fact checked our information and they provide access to their supply chain experts. As we roll out our programs next spring, we have multiple commitments to host tours at their facilities.
For manufacturers, beyond helping the new entrants into the shale supply chain, we are also working with those who have successfully navigated the process and are currently working in the industry. We are working with those manufacturers to not only expand into other markets, but also learn from their experiences, share their expertise and help fellow manufacturers to expand into shale. There are also potential partnerships these manufacturing companies can help forge. Please be sure to visit our website: www.shalepower.org to learn more about what we are doing. Contact us and we would be glad to discuss how Shale POWER can help you specifically.
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