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Energy’s Latest Target: Women

By Alan Neuhauser

After two decades changing diapers, nanny Shelly Alexander was ready for a change herself.

“I wanted a job I could use my brain for,” says Alexander, who lives in Spring Valley in northeast Pennsylvania. “I had a great job, but I had no retirement, I had no benefits. It was just time.”

She tried working for a local gym. She made meal plans for friends, flirting with the idea of becoming a dietitian. But at age 40, four years of college to get the degree she’d need for that job held little appeal. Plus, in the past decade, a far more lucrative opportunity had moved into the area: hydraulic fracturing.

Fracking and horizontal drilling have unleashed an energy extravaganza in the Midwest and mid-Atlantic. American and international energy companies are churning out billions of barrels of oil and gas and attracting thousands of workers eager for entry-level paychecks of $50,000 to $60,000. In fact, in boom states like North Dakota, demand for workers is outstripping supply, as jobs remain unfilled for lack of qualified workers.

“We need more women, more workers,” says Randy Pacheco, dean of the San Juan College School of Energy in New Mexico. “The energy companies want to hire them. Whether it’s Chevron or BP or Conoco, they’re looking for them. They’re just looking for responsible, hardworking people.”

Regional colleges in boom towns from Pennsylvania to New Mexico have launched one-year certificate and two-year associate programs to train workers – with students’ educations often underwritten by the very energy companies that hope to hire them.

“A lot of the companies are struggling to field a workforce,” says Rick Marquardt, executive director of Lackawanna College’s School of Petroleum and Natural Gas, which opened in Dimock, Pennsylvania, the heart of the country’s fracking boom. “We get calls for interviews from [energy] companies in Pittsburgh, Houston.”

The reason, he says: “When our students come out, they’re ready to work.”

That sounded just fine to Alexander, who heard about the program through a friend last year. Within months, she’d bought herself steel-toed boots, a pink hard hat, and begun driving 90 minutes, each way, to Lackawanna’s campus three times a week to earn an associate’s degree in Petroleum and Natural Gas Measurement, one of four programs offered by the School of Petroleum and Natural Gas.

“I’m going to do something men do, and I’m going to do it better,” she says. “That’s what I’ve done my whole life.”

Alexander is one of 18 women enrolled at the School of Petroleum and Natural Gas, and the only woman enrolled in her particular program. All told, women make up 14 percent of the 129 students at the school. About 12 percent of the student body are minorities, mostly Latinos and Southeast Asians.

For $12,800 in tuition a year, they’ll spend two years immersed in the theories and science of oil and gas drilling, gaining the skills they need to work at fracking and drilling sites as well tenders, compression engineers, mud trackers and more. The goal is to produce workers, not analysts: Just about every student lands a summer internship at a fracking or drill site, and the job placement rate upon graduation is about 90 percent.

“It’s all science: physics, math computers,” Marquedt says. “We fill that gap between all the vo-tech schools and the four-year programs. We’re not interested in teaching them how to derive an equation.”

What they are interested in, though, is attracting more women to the program.

Geared toward an industry where the dorms are known as man-camps, and where the signing bonuses or other perks can include new pickup trucks – where most of the jobs, in other words, are overwhelmingly held by men – it’s a daunting challenge. A March 2014 study commissioned by the American Petroleum Institute, a trade group representing the oil and natural gas industry, found that women make up 19 percent of the workers in the oil and gas and petrochemical sectors. Women account for nearly half the country’s workforce overall.

On drilling rigs, production wells and fracking sites, that share sinks to about 15 percent, and the number is actually expected to keep falling.

Yet, says Lackawanna College president Mark Volk says, “This is a field that is open to women. We need to ensure they know there are opportunities for men and women.”

While the number of white-collar jobs for women in the industry is expected to rise through 2013, the study found, “The already-low shares of women in the semi-skilled and unskilled blue-collar occupational groups are projected to decline further,” according to the study, conducted by the consulting firm IHS Global.

For one, the chemicals used at fracking sites are hazardous to pregnant women, a 2013 report found, with the potential to cause congenital heart defects in their infants. The overwhelming number of men at the work sites and in the towns surrounding them raises the risk of on-the-job harassment and sexual assault. Police in the fracking boomtown of Willison, North Dakota, for example, have reported a marked rise in sexual assaults.

As far as the work itself, major oil and gas companies typically require their workers to have some amount of experience before they’re hired, industry insiders and school administrators say. That means most workers start at smaller, independent contractors, where back-breaking grunt work is often the order of the day, 12 hours at a time.

“With a contract company, there’s a lot of physical labor that’s required,” explains San Juan College’s Pacheco. “So it’s difficult for women to obtain that experience with the contractors and move on.”

As Irene Lewis Motts, communications director of Stark State’s Oil and Gas School in Ohio, explains, “They’re difficult jobs. Not that women can’t do it, but there’s certainly a lot of men that can’t do it, too.”

That has not deterred Sultana Holcomb, who, as a college senior studying petroleum engineering at Montana Tech, spent last summer both in offices and out in the field in an internship with Anadarko Petroleum Corporation in Houston.

“Being a woman in the oil and gas industry, you definitely stand out,” Holcomb says. “It’s not like you’re out there in the field in a dress and high heels, but you do get attention.”

But, she adds, “I enjoy it, because I know I’m doing something right. I’m part of this new generation force that’s tearing down the stereotypes.”

Women like Holcomb are, as she describes, “making way for more women to come into the industry.” And as the IHS study points out, there remains “significant potential for female blue collar employment.” The key to fulfilling it, it says, is training.

That’s where the schools come in. Like military service academies, oil and gas programs like the ones at Lackawanna and San Juan give students enough knowledge to jump a rank, skipping low-status grunt work or intensive training to go straight to better paying and less-labor-intensive jobs with Chevron, Cabot, Halliburton and other major companies at fracking and drill sites.

It’s one of the reasons why helping launch a school to exclusively train an industry workforce can be a savvy financial investment for oil and gas companies. Not only does Cabot’s $2.5 million endowment of Lackawanna, for example, make for good PR, but the job training is funded in part by student-paid tuition.

Schools can also function as de facto recruitment agencies, too, helping attract the female and minority workers that the companies say they’re seeking. Lackawanna, for example, launched a support, advisory and networking group for its female students and alumni.

“We’re bringing together women in the industry at different levels,” says school project coordinator Betty Seelendbrandt, who launched and advises the group.

The discussion, she says, focuses less on issues one might expect from male-dominated drill sites and company towns, like sexual harassment or the danger of assault, than on other concerns: “The trepidation I think for most women is very commonplace, and that of fear of math and science,” Seelendbrandt says.

Latha Ramchand, dean of the C. T. Bauer College of Business at the University of Houston, offers a similar view.

“There are biases built in from an early age: ‘I can’t do math, I can’t do engineering.’ We just need to get over that mindset,” she says. Oil and gas programs, particularly ones that recruit women, help accomplish that.

During a recent visit to a fracking site, “we did’t see too many women where they were fracking,” Ramchand says. But, she adds, “If we have these dialogues – why don’t we have more women in these professions – if we have women at the table, men at the table, female role models we might change that.”

Holcomb, the Montana Tech student, agrees. Both men and women, she says, need to “realize the world is changing, and realize more and more women are working in the engineering workforce.”

Women entering the industry, she adds, should “have fun with it, too. It’s exciting when you’re breaking ground, when you’re doing something new not too many females have experienced.”

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Article Source: Neuhauser, A. (2014). Energy’s latest target: women. US News & World Report. Retrieved from http://www.usnews.com/news/special-reports/energy-of-tomorrow/articles/2014/12/01/oil-and-gas-industrys-latest-target-women

 

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Gas Prices Will Soon Drop Below $2 Per Gallon

By Brad Tuttle

Gas prices have been falling for months, and thanks to plummeting oil prices, they’re expected to keep on dropping through the end of the year—dipping below $2 per gallon in some parts of the country.

Wholesale prices for U.S. crude oil are down 38% compared with June, and analysts expect prices to keep dropping in the weeks ahead. The trickle-down effect is that American drivers will be receiving a holiday gift in the form of cheaper and cheaper gas.

How cheap? The national average may hit $2.50, and gas stations in states where pump prices are already low are all but guaranteed to dip into sub-$2 territory.

“We’ll see at least one station in the nation at $2 by Christmas,” Patrick DeHaan, an analyst with the gas price-tracking site GasBuddy told Bloomberg recently. “And that’s not really a prediction at all. That’s more like a certainty.”

“Drivers in southeastern states may see a select few stations selling gas at or below $2 in the coming weeks,” AAA spokesman Josh Carrasco said in a news release.

Drivers in all states can expect increasingly cheaper prices at the pump through the end of the year. And drivers in states where prices are already below average—including Alabama, Arkansas, Mississippi, Missouri, Oklahoma, South Carolina, Tennessee, and Texas—are most likely to see prices drop below the $2 mark.

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Article Source: Tuttle, B. (2014). Gas prices will soon drop below $2 per gallon. Time. Retrieved from http://time.com/money/3611655/cheap-gas-prices-2-per-gallon/?xid=twitter

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Oil refinery

OPEC Finding U.S. Shale Harder to Crack as Rout Deepens

By Grant Smith and Dan Murtaugh

OPEC is resisting pressure to cut oil production while demand slumps as it tests how low prices must go to make U.S. shale oil unprofitable. As producers become more efficient, that floor is sinking.

The Organization of Petroleum Exporting Countries boosted output by the most in 13 months in September, even as crude plunged into a bear market and demand growth weakens to a five-year low, according to the International Energy Agency. Saudi Arabia and Kuwait, the largest and third-largest members of OPEC, indicated the price slump doesn’t warrant immediate production cuts, the IEA said.

While OPEC acted as a “swing producer” over the past decade, responding to surpluses by cutting output, it’s now letting oil slide to see if North American production can withstand lower prices, said Antoine Halff, head of the IEA’s oil industry and markets division. So far drillers are showing no signs of cracking, with the U.S. government forecasting record shale output in November, helping boost the nation’s crude supply to the highest level since 1986.

“This is a new situation and will likely elicit a new response from OPEC,” Halff said by phone from Paris yesterday. “We’re more likely to see OPEC let market forces play out and let the higher-cost production be the first one to cut.”

Brent crude, a benchmark for more than half the world’s oil, slumped as much as 2 percent today to a four-year low of $83.37 a barrel on the ICE Futures Europe exchange in London. Brent has dropped more than 20 percent from its June peak, meeting a common definition of a bear market. West Texas Intermediate crude on the New York Mercantile Exchange sank as much as 2.2 percent to $80.01, a two-year low.

Saudi Determination

Saudi Arabia has “appeared determined to defend its market share” in Asia, even at the expense of lower prices, the IEA said in a report yesterday. Kuwait’s oil minister said there may be “no room” to restore prices by trimming supply. Saudi Arabia, Iraq and Iran are offering the biggest discounts to crude buyers in Asia since at least 2009, amid speculation they are seeking to maintain market share.

“It makes perfect sense for Saudi Arabia to let the price drift down,” said Jamie Webster, an analyst in Washington at IHS Inc. “There’s a lot of discussion on what is the break-even price for shale, and whatever you believe, the reality is there’s no clear consensus. It gives the Saudis the opportunity to test” that level, he said.

Iran, OPEC’s fifth-biggest supplier, isn’t concerned about the drop in prices, which will pass, Roknoddin Javadi, deputy oil minister and managing director of National Iranian Oil Co., was quoted as saying by Mehr, the state-run news agency.

Break-Even Costs

About 2.6 million barrels of daily production, or 2.8 percent of global output, requires an oil price of $80 a barrel or more to be profitable, the IEA said. Only about 4 percent of U.S. shale output needs prices above that level, it said. Canadian synthetic oil projects are the most dependent on high prices, with about a quarter needing oil to remain above $80, the agency said.

Horizontal drilling and hydraulic fracturing in hydrocarbon-rich underground shale layers have helped U.S. oil production grow 65 percent in the past five years to the highest level since 1986. That’s reduced crude imports by more than 3.1 million barrels a day since peaking in 2005.

Production per well was projected to increase in fields in North Dakota, Texas and Colorado, the Energy Information Administration said yesterday. Companies are getting more oil per dollar spent drilling, driving costs down by as much as $30 a barrel since 2012, Morgan Stanley (MS) analyst Adam Longson said in a report Oct. 13.

Lower Prices

“Prices aren’t low enough to put these projects at risk,” Matthew Jurecky, head of oil and gas research for the London-based research company GlobalData Ltd., said by e-mail yesterday from New York. “The profit margin on most commercial unconventional oil plays will support prices as low as $50, many below that even.”

U.S. shale producers could keep pumping oil economically even if Brent dropped to $60 a barrel, Bjornar Tonhaugen, an analyst with Oslo-based Rystad Energy, said in an e-mailed report yesterday. Brent would need to remain at $50 a barrel for 12 months for North American shale output to drop by 500,000 barrels a day, he said. Morgan Stanley said break-even costs at the Eagle Ford shale formation in Texas range from $30 to $60 a barrel.

“We continue to be impressed by how much operators are improving their operations,” R.T. Dukes, an upstream analyst for Wood Mackenzie Ltd. in Houston, said yesterday by phone. “There’s enough out there that significant development would continue even at $75 or $80.”

Expensive Projects

Oil may have already fallen sufficiently to curb the most expensive shale projects, according to estimates from Goldman Sachs Group Inc. Drilling may slow down in North Dakota with WTI below $90 a barrel, Jeff Currie, the bank’s head of commodities research, said in an interview in London on Oct. 1. Producers in the area decreased activity when WTI plunged below this level in 2012, Currie said.

Jefferies LLC, which advises on mergers and acquisitions, estimates that a drop to $80 a barrel or lower in WTI would trigger a reduction in drilling operations, Ralph Eads, the bank’s vice chairman and global head of energy investment banking, said in an Oct. 1 interview.

Weaker Demand

Global oil consumption will expand by about 650,000 barrels a day this year to 92.7 million, the lowest growth since 2009 and about half the increase projected in June, the IEA said. OPEC boosted production in September, pumping 30.47 million barrels a day, the most since August 2013, the group said Oct. 10 in its latest monthly oil market report. Its next meeting is scheduled for Nov. 27 in Vienna.

Saudi Arabia, which pumped almost one-third of the group’s output last month, won’t alter its supplies much between now and the end of the year, a person familiar with its policy said on Oct. 3.

“They’ve not come out and said ‘we will do what it takes to balance the market’,” said Mike Wittner, head of oil market research at Societe Generale SA in New York. “Right now the economy is weak, and demand is weak in Europe and China. The market wants to see something fairly dramatic.”

Article Source: Smith, G. & Murtaugh, D. (2014).  OPEC finding U.S. shale harder to crack as rout deepens. Bloomberg. Retrieved from http://www.bloomberg.com/news/2014-10-15/opec-finding-u-s-shale-harder-to-crack-as-rout-deepens.html

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