Marcellus Lesson 5: Marcellus Will Be a Boom, and a Bust, and Already a Cultural Collision!
If you are more confused than ever as to if, when, and how the gas boom will impact your business, you are absolutely lucid and sober. Every month brings new confusing signals and contradicting advances and setbacks. While the fundamentals aren’t changing, it is can be hard to reconcile the following:
- Shell Corporation announces it will invest a $1 billion to build a cracker plant which will convert natural gas into plastics
- 7 coal-fired plants will be retired in WPA in anticipation of diminished reliance on coal
- Critical midstream pipelines to transport Marcellus gas across the US are being announced and funded.
- Governor Corbett signed the severance tax enabling PA municipalities to start benefitting from local gas well revenue.
- Shortages of housing, employees and skills continue to prove that the Marcellus footprint presents a short-term economic bonanza for those who can supply these scarce resources.
- Seismic concerns in the form of tremors in Eastern Ohio have spurred deep concerns and unclear scientific responses from both pro- and anti-drilling parties.
- There is a huge glut of natural gas in WPA creating the world’s natural largest gas storage field with 13,000 dormant wells.
- Low domestic prices of natural gas (around $2.00) continue to be less than half the breakeven cost of production given current market conditions.
- Weak state and local governments in most Marcellus shale states and counties mean gas drillers must lead in setting standards and assuming risks, liability and public distrust. In other words, they can be damned if they do and damned if they don’t.
- Portions of eastern Ohio have instituted moratoriums on new drilling, but have not taken steps to resolve issues or questions to settle differences.
I am more bullish than ever on the potential for companies who don’t work in or even understand the energy business. Every company in the Marcellus footprint can and must decide how they can benefit from the billions of dollars and thousands of jobs entering our region on a yearly basis. My focus will continue to be on helping growing businesses that are twice removed from gas drillers, landowners and energy giants.
And my growing client base aside, many small businesses are catching on and figuring out how to benefit from the Marcellus Shale. At the Hart Energy Marcellus Midstream Conference, I saw:
- Urgi-centers, selling health care and testing, are actually loading their services onto “health RV’s capable of delivering care to visiting remote gas drilling sites and fracking ponds
- Rental home services. With housing in tight supply and non-existent in Greene County, realtors and other parties are getting creative. Fractional rentals and room-rental brokers are setting up shop.
- Websites like www.themarcellushale.com are springing up offering visibility and educational opportunities for any and all who want to grow and learn.
- Luxury Port-O-Johns for upscale energy customer/client events at gas well sites is also a booming business.
So there is no silver bullet or straight line to opportunity in Marcellus but in anticipation of a future “Marcellus Lesson,” I am beginning to believe that the single biggest obstacle to growing a small business in the Marcellus Shale is the enormous clash between local and “outside business” culture. Specifically, how can a deeply proud and parochial region accept the inevitability of a profound, unstoppable economic change that brings both good and bad? In my workshops, interviews and client work, deep into rural areas in WV and PA, I have seen a level of distrust of outsiders as high as in any of the 68 countries I have visited. Incoming businesses and interlopers who want to start, grow and run businesses must learn to understand and respect the local values and culture of these rural areas. This will continue to be a challenge and underestimated by many newcomers to the region. But just as importantly, local business owners, citizens and governmental leaders will find themselves needing to compromise and open their hearts as well. There is work to be done and I will write more about this in coming months. Keep focused on Marcellus and how you can grow your non-energy business because of the shale opportunity.