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NORTHEAST STATES
From Site Selection magazine, March 2010
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Could Gas Play
Ignite a Region?

EQT executives call the Marcellus Shale the most important
economic development for Southwest Pennsylvania ‘since
the invention of the blast furnace.’

NORTHEAST STATES
An Anadarko rig at work in the Marcellus Shale of north-central Pennsylvania. “We continue to ramp up our activities in the Marcellus and anticipate drilling more than 4,500 wells over the coming years,” said Anadarko Chairman and CEO Jim Hackett in announcing a JV with Mitsui in February.
Photo courtesy of Anadarko

by RON STARNER
C
EQT Corporation focuses on drilling in the Marcellus (pictured), Huron/Berea and coalbed methane plays. In 2009, the company experienced record annual sales of produced natural gas of 100.1 billion cubic feet equivalent (Bcfe), 19.5 percent higher than in 2008.<br />Photo courtesy of EQT
EQT Corporation focuses on drilling in the Marcellus (pictured), Huron/Berea and coalbed methane plays. In 2009, the company experienced record annual sales of produced natural gas of 100.1 billion cubic feet equivalent (Bcfe), 19.5 percent higher than in 2008.
Photo courtesy of EQT

an natural gas energize the economic development of an entire region?

That is the proposition of EQT Corp., a Pittsburgh-based company investing heavily in natural gas wells and new drilling techniques in the Marcellus Shale. The company forecasts that 167,000 new jobs related to the industry could be created by 2020.

"This represents a tremendous economic opportunity for Southwest Pennsylvania," says Kevin West, director of external affairs for EQT. "As many as 500,000 new jobs could be created in the region if all goes well."

The company is putting its money where its mouth is, expanding both its headquarters and its operations in the field. Last March, EQT expanded its corporate headquarters in Pittsburgh to 275,000 sq. ft. (25,548 sq. m.) at EQT Plaza on Liberty Avenue.

Now, it's approaching the world's largest source of recoverable natural gas with the same vigor. Plans include continued drilling in Washington County, expanding the capacity of the Equitrans interstate transmission pipeline, and forming a partnership that would supply infrastructure needed to service compressed natural gas-fueled vehicles.

EQT plans to hire at least 1,000 new employees to work in the growing drilling operations in Pennsylvania. The firm has rights to 3.4 million acres (1.38 million hectares) in the region and 3 trillion cubic feet of natural gas reserves.

"Despite the economy, last year our company experienced a 20 percent increase in people employed," says West. "We made a decision to continue to be headquartered in Pennsylvania. We have been here since the first natural gas well was drilled here in 1878. We operate in three other states too."

West calls the Marcellus Shale play "the most important economic development for the region since the invention of the blast furnace. We are trying to attract industry to Southwest Pennsylvania because of what we have."

The Marcellus Shale Formation extends beyond Western and Northern Pennsylvania to include portions of West Virginia, Ohio and Southern New York. Recent studies estimate that the formation could contain up to 500 trillion cubic feet of gas in place — enough to meet total U.S. demand for the next 20 years.

Will Chemical Plants Follow?

EQT, the oldest U.S. natural gas producer and holder of the 14th-largest reserve in the country, drilled 49 wells in the Marcellus Shale in 2009. "We have 400,000 acres [162,000 hectares] in the Marcellus play alone," West says. "Outside companies are required to acquire new acreage. You have to drill a well during the period of the lease. Some companies are drilling wells just to keep leases. We have the luxury of being able to be more prudent about our development, because we don't have that time pressure."

In 2011, West adds, the company will expand its Equitrans gas line to transport more gas to Northeastern and Mid-Atlantic markets. The company already generates an estimated $4 billion-a-year economic impact on the four-state region of Pennsylvania, West Virginia, Kentucky and Virginia.

West says the growth in underground exploration will fuel the expansion of not just the natural gas industry, but also manufacturing of chemicals and plastics.

"That is the whole idea behind the campaign to bring more companies to Southwest Pennsylvania — the abundance of natural gas," he notes. "The abundance of relatively low-cost gas makes this region a natural choice for companies involved in the manufacturing of plastics and chemicals. Also, Pittsburgh offers a lot of technology-based places that can support those industries. The intersection of all of these factors makes for a very attractive venue for a manufacturer."

In recent years, volatility in the price of natural gas prompted many chemicals and plastics manufacturers to flee the U.S. in search of lower-cost locations around the globe.

"Hopefully, we are going to see a change in that trend," says West. "The ability to access the Marcellus Shale — a deep shale, just like the Barnett Shale — plus the advent of horizontal drilling makes these valuable resources that much more accessible."

West notes that a study by an independent research group found that natural gas reserves in the U.S. increased by 39 percent from 2006 to 2008, "largely because these shale reserves are now accessible by new technology. Those reserves will increase even more because of the new drilling techniques, and a result of that will be a more stable price."

Remote Workers Connect to Scranton

EQT is not alone in igniting sparks of economic growth throughout the tri-state region of Pennsylvania, New York and New Jersey.

A survey of the Conway New Plant Database shows that, in 2009, corporate facility expansions were especially abundant in these sectors: energy, logistics, financial services and regional headquarters.

In Northeast Pennsylvania around Scranton-Wilkes-Barre, major facility investments came from companies such as Home Depot, U.S. Cold Storage, Diapers.com and TMG Health.

Atlanta-based Home Depot began construction on a 465,000-sq.-ft. (43,199-sq.-m.) distribution center in Luzerne County. The retail chain's "Rapid Deployment Center" is set to open this year and employ 350 workers on the 51-acre (21-hectare) site.

U.S. Cold Storage officially opened its 5.7-million-cu.-ft. refrigerated warehouse in the Humboldt Industrial Park in August. The 32-acre (13-hectare) plant employs 30 people and benefits from being located in a Keystone Opportunity Zone.

Diapers.com moved into 411,000 sq. ft. (38,182 sq. m.) of space in the Covington Industrial Park in Lackawanna County. The online retailer of baby-care items will eventually expand to 811,000 sq. ft. (75,342 sq. m.) and grow from 100 jobs to 300.

Less industrial, but no less important to the region, is TMG Health, a Scranton-based company that has been growing rapidly since its founding in the region in 1998.

Jack Tighe, president and founder of TMG Health, tells Site Selection that his firm grew from 35 employees in 1998 to 1,100 workers at two sites today.

"We do outsourcing work for insurance companies in the Medicare and Medicaid health-care business," he says. "In Scranton, we operate our national operations center, a data center, our call center and all billing and customer relations out of two facilities."

The firm occupies about 130,000 sq. ft. (12,077 sq. m.) in Scranton and Dunmore, but it also manages to get a lot of work done at another location: employees' homes.

"We employ a big at-home work force," notes Tighe. "In our claims processing division, 90 percent of our employees work from home. Company-wide, about 60 to 65 percent of our employees work from home. And all of them live within about 100 miles [161 km.] of Scranton.

"We have a very stable work force, and we have little difficulty attracting individuals to work for us," says Tighe. "Because of our telecommuting model, we can recruit people and then tie them in here remotely."

Solid Support

Tighe credits state and local economic developers with helping TMG achieve such quick success in Pennsylvania.

"The support we have received over the years from the economic development community, from both state and local agencies, has served us very well," he adds. "The technology and infrastructure in Northeast Pennsylvania have helped too. With a remote work force, we have a lot of people that need to be connected to us through high-speed modems. The broadband in the region is excellent."

Tighe says TMG has taken advantage of incentive programs such as the Ben Franklin Technology Fund for job training and the Keystone Opportunity Zone for tax abatements. "We have pretty much tried to use them all as we have grown to over a $100-million company today," he notes.

"I would say that Scranton works very hard at attracting and retaining businesses. The community really comes together to support companies. They are very approachable, and they truly want firms to be successful."


Story in Pictures


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