State of the Industry

January – February 2022

Over the last several years, manufacturers looking to enter or expand into the shale value chain have questioned whether the market opportunity is sufficiently robust.  Afterall, volatility in natural gas prices has been high, shale companies have faced headwinds from financial institutions, and the media and some politicians continue to deride the fossil fuel industry without merit. The Shale POWER team has assembled information that should help local manufacturers understand that the shale industry is alive and well in Appalachia, representing a great opportunity for market growth and diversification.

An important bellwether for future industry activity is permit activity.  Fortunately for industry observers, this information is largely accessible to the public as state regulatory agencies publish it online.  States differ in the nature of their permits and their posting methods, but all provide insight into which companies are planning to develop assets in which geographic locations.

Let’s look at what recent permit activity tells us about anticipated future activity.

First, in Pennsylvania, both upstream and midstream companies require permits before they undertake major earth moving activity.  These are referred to as erosion and sedimentation permits.  In the last six months of 2021, 40 different companies applied for a total of 150 of these permits in Pennsylvania.  Forty companies require a tremendous amount of assistance to execute on these projects – equipment must be procured and maintained, construction materials must be purchased and transported, workers must be accommodated and outfitted.

Well permits are another type of permit that portends future activity. Data across Pennsylvania, Ohio and West Virginia show that 38 different companies submitted more than 600 well permits in the second half of 2021. Consider that each well represents $5-10 million of spending, shale companies have signaled their collective intentions to continue spending billions of dollars in this region in the near future.  The more that local companies participate in those markets, the better for our regional economy.

If your manufacturing company is interested in learning about the industry and opportunities to enter this robust supply chain, visit today.

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