Oil and Gas Work Flow
Content
THE OIL AND GAS INDUSTRY SUPPLY CHAIN
for the
PITTSBURGH REGIONAL ALLIANCE
from
347 Girod St. Mandeville, LA 70448 (985) 626-9868 FAX: (985) 626-9869 [email protected]
TECHNOLOGY ASSESSMENT•STRATEGIC PLANNING•ORGANIZATION DESIGN•SITE SELECTION
Rev. July, 2011
The Oil and Gas Industry Supply Chain for the Pittsburgh Regional Alliance
Rev. July, 2011
CONTENTS INTRODUCTION ................................................................................................................................. 3 SIZE OF DOMESTIC SUPPLY CHAIN .................................................................................................... 3 UPSTREAM ......................................................................................................................................... 6 Exploration .................................................................................................................................... 8 Prior to Leasing .......................................................................................................................... 8 Leasing ....................................................................................................................................... 8 Exploration Wells....................................................................................................................... 9 Development ............................................................................................................................... 10 Development Drilling ............................................................................................................... 10 Hydraulic Fracturing ................................................................................................................ 10 Completion and Production .................................................................................................... 10 Testing and Workovers ............................................................................................................ 11 MIDSTREAM .................................................................................................................................... 11 DOWNSTREAM ................................................................................................................................ 12 INDUSTRIAL CONCENTRATION in the SUPPLY CHAIN ..................................................................... 12 Integrated Oil and Gas Companies .............................................................................................. 12 Exploration and Production Companies ...................................................................................... 12 Storage and Transmission Companies......................................................................................... 12 Oil and Gas Drilling Companies ................................................................................................... 13 Oil and Gas Equipment and Service Companies.......................................................................... 13 THE SUPPLY IS HIGHLY CONCENTRATED ......................................................................................... 13 DRIVERS OF INDUSTRY GROWTH AND EXPANSION ........................................................................ 14 CONCLUSIONS FOR INDUSTRY TARGETING..................................................................................... 15
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The Oil and Gas Industry Supply Chain for the Pittsburgh Regional Alliance
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INTRODUCTION Finding and producing oil and gas is a complex set of activities, including identifying a “prospect” or area of interest, collecting data and evaluating the prospect in comparison with other prospects, obtaining the rights to drill, drilling wildcat well(s), and evaluating the economics of potentially developing the reserves. The “upstream” sector is the portion of the industry involved in extracting the oil and gas from below the ground until it reaches the surface (see Figure 1 for a flowchart of the supply chain). This part of the industry incurs the most risk because of the uncertainty in finding gas in commercially producible quantities and the capital intensive methods needed to extract it (drilling). Recent technological advances, including 2-D and 3-D computer modeling, have reduced the uncertainties a great deal. Although the Marcellus Shale is fairly well understood geologically, some degree of exploration is still necessary on the part of operators to refine their understanding and identify precise well locations. For this reason “wildcat” or exploration wells are still being drilled in Pennsylvania. If a “prospect” turns out to be economical, additional drilling is done and pipelines are installed to transport the hydrocarbons to refineries and from there to market. The “midstream” portion of the industry begins at the "Christmas tree", a large set of valves at the top of every well and continues through the gathering and distribution network to the refinery or chemical plant. The “downstream” part of the industry is comprised of refineries, chemical plants and other types of processing into products and fuels which are then distributed to markets and end users.
SIZE OF DOMESTIC SUPPLY CHAIN The global energy industry accounts for about 10 percent of world economic output1. The oil and gas sector accounts for a major share of it. Oil and gas production, while declining domestically over the last 40 years, continues to be a major force in world markets. Domestic production of 6.7 billion barrels of oil equivalent generated $227 billion of revenue in 2007. Natural gas generated about half of the production and a smaller 43 percent of revenues (see Figures 2 and 3). Natural gas liquids were a significant share of the production and revenues in the industry.
1
The Economist, June 2009 special report on energy
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The Oil and Gas Industry Supply Chain for the Pittsburgh Regional Alliance
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Figure 1.
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The Oil and Gas Industry Supply Chain for the Pittsburgh Regional Alliance
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Figure 2: Production Revenue in 2007 ($227 billion)
Natural Gas 43%
Crude +condensate 45%
Natural Gas Liquids 12%
Source: Compiled from 2007 Census of Business
Figure 3: US Domestic Oil and Gas Production in 2007 (6.7 billion BOE)
Natural Gas Liquids 17%
Crude +condensate 32%
Natural Gas (Barrels oil equivalent) 51%
Source: Compiled from 2007 Census of Business
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The Oil and Gas Industry Supply Chain for the Pittsburgh Regional Alliance
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Of the five sectors in the supply chain, production, referred to by the Census Bureau as extraction, dominates (see Table 1). The entire supply chain is estimated at $800 billion of revenues (valued at the downstream end to avoid double counting of revenues), about 22,000 establishments with 900,000 employees. The upstream portion of the supply chain accounts for about 60 percent of the employment and 75 percent of the establishments in the supply chain.
Table 1. Estimated Size of O&G Supply Chain in 2007
NAICS Name O&G Sales in Share $billions Est. Emp.
2111 213111 213112 333132
237120 4862
32411 32511 3252
UPSTREAM O&G extraction 100% $255 6260 Drilling O&G 100% $22 2109 Support activities for O&G 100% $46 7089 O&G equipment 100% $17 664 SUBTOTAL $340 16,122 MIDSTREAM O&G pipeline construction 100% $30 1986 Pipeline transportation of 100% $17 1514 natural gas SUBTOTAL $47 3,500 DOWNSTREAM Petroleum refineries 100% $580 195 Petrochemicals 100% $78 56 Polymers 100% $101 1338 SUBTOTAL 100% $759 1,589 COMPLETION EQUIPMENT* Steel Pumps Pipe & tube Ind. Valves Compressors SUBTOTAL TOTAL 10% 31% 32% 40% 31% $10 37 $4 167 $3 60 $4 192 $3 107 $25 563 $1171 21,774
150,443 106,859 239,774 48,085 545,161 159,637 24,202 183,839 64,839 9,229 96,485 170,553 10,846 10,666 6,941 15,390 7,693 51,535 899,553
33111 333911 331210 332911 333912
*Sales, Est. & Emp. Adjusted to reflect O&G share of industry Source: Compiled from 2007 Census of Business
UPSTREAM The upstream end of the supply chain (exploration and production tasks involved in getting the hydrocarbons to the surface) accounts for about $340 billion of annual spending (see Figure 4 for a flow chart of upstream activities). Exploration and production services (support activities) are the largest portion of the upstream revenue, followed by oil and gas equipment and drilling.
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The Oil and Gas Industry Supply Chain for the Pittsburgh Regional Alliance
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Examples of companies in the exploration and production services sector include Halliburton, Schlumberger, and Baker Hughes. Drilling and exploration services account for about half of upstream services (see Figure 5 at the end of the document). Eleven other services account for the balance of upstream revenues. In terms of employment, exploration and production services represent about half of the upstream employment.
Figure 4.
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The Oil and Gas Industry Supply Chain for the Pittsburgh Regional Alliance
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EXPLORATION The exploration process begins when an oil company decides to evaluate a particular area or region for oil and gas, and continues until a decision is made to develop a particular field.
PRIOR TO LEASING The exploration process begins long before a well is ever drilled. Geologists and geophysicists study the subsurface characteristics of areas and regions using publically available data combined with some proprietary data in the possession of or ordered by the oil company. These data sources include well logs (measurements made within wells2), and production data from old wells which have become public record, and two or even three-dimensional seismic testing. Large trucks move along the surface and produce shock waves that bounce off rock formations below the surface of the earth. The waves are captured by “geophones” or measurement devices that are strategically placed above ground. The vibrations are translated into electrical signals and processed for review by geophysicists who confer with geologists. The geologists and geophysicists confer to develop “prospects” or targeted areas of interest for potential hydrocarbons. During exploration, the oil company acquires seismic data, computing equipment, and may contract for additional data collection or specialized processing. In addition, many non-core office functions at the oil company are now contracted out, including accounting, IT, and logistics services (helicopters, trucks, workboats, etc.). The geosciences staff, human resources, and the legal/land staff are examples of core functions that continue to be employed by the oil company. Most of the employment associated with the pre-leasing activities occur at the company’s headquarters location.
LEASING Once particular prospects are identified, the oil companies will negotiate a contract or lease for the rights to drill to compensate the mineral owners. Lease terms vary, but generally include a “bonus” or one time payment, calculated per acre, for the right to drill over a specific period of time. A specified royalty interest is negotiated for the owner of the mineral rights of the land, along with the rights to build roads and pipelines, and the lease can contain stipulations or mitigation measures pertinent to protect the environment. The oil company’s staff “landmen” with the legal and contracts management staff handles this portion of exploration.
2
Schlumberger Oilfield Glossary http://www.glossary.oilfield.slb.com/
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The Oil and Gas Industry Supply Chain for the Pittsburgh Regional Alliance
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EXPLORATION WELLS Once the needed property is leased, the oil company – now called the “operator” as described in the lease - must obtain a permit from the state regulatory body to authorize drilling a new well. Items such as surveys, drilling plans, and other technical information frequently accompany a permit application, and the permit may require site specific environmental protection measures, or other permits that pertain to environmental issues. The oil company will contract with outside organizations to obtain the surveys or environmental evaluations, but would prepare drilling schematics or plans in-house. After the Permits are obtained, the drilling site must be prepared and the drilling contractor is hired. Site prep includes the construction of roads, grading of the site, installation of the well pad from which the drilling is done and other associated equipment is located as well. Erosion and drainage control measures are also implemented as needed. The two primary parties in drilling a well are the Operator and the Drilling Contractor that they hire to drill the well. Each party has significant responsibilities for supplying the operation. The Drilling Contractor is responsible for the rig and its crew, and contracts for all rig-associated services, including maintenance mechanics and electricians, food, and first aid for crew. If a piece of equipment associated with the rig (motors that power the drilling process, crane, etc.) breaks down during drilling, the Drilling Contractor is responsible and will purchase or rent the tools, parts and personnel needed for repairs and maintenance. Drilling Contractors that are active in the Marcellus Shale region include Pioneer Drilling, and Helmerich and Payne. The Operator, ultimately responsible for the well and the environmental condition of the site, contracts for all services and materials not associated with the rig. These services include drilling mud, rental pipe, cement and cementing services, evaluation tools and services, and logistics services. Because intangible drilling costs can be used as a tax credit on the Operator’s Federal tax return, there is a strong motivation to rent as much equipment and services as possible. Intangibles comprise about 80% of total drilling costs. The Operator will purchase the tangible equipment (casing, valves, etc.) that will become part of the well. The set of companies that supply rental equipment and services are known collectively in the industry as “service companies.” Operators that are active in the Marcellus Shale are Chesapeake Energy, Range Resources, Chief Oil and Gas, EQT, and Devon. After drilling one or more exploration wells, the information gained during drilling is factored in to the geologists’ and geophysicists’ interpretation of the geology and the maps or computer models are refined accordingly. Reserves are calculated, production is forecasted and the development of the potential “field” is evaluated economically. Moving forward with development of the reserves involves drilling more wells and making estimates and plans for infrastructure needed to get the product to market.
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The Oil and Gas Industry Supply Chain for the Pittsburgh Regional Alliance
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DEVELOPMENT The decision to further develop oil and gas proven by exploration wells marks the end of the exploration phase and the beginning of the development project.
DEVELOPMENT DRILLING Usually, bringing all of the oil and gas to the surface requires more wells than are drilled during exploration. Well-drilling during exploration is kept to a minimum due to the capital intensive nature. The additional wells drilled at this point in the process are referred to as development wells. Some portions of the well pad can be removed and other types of more permanent equipment and infrastructure are installed to accommodate a more permanent operation. As during exploration drilling, the Drilling Contractor is responsible for supplying the rig and its personnel, and the Operator is responsible for everything else.
HYDRAULIC FRACTURING Hydraulic fracturing, necessary to develop the Marcellus and other shales, is a process done during the drilling of wells in which water, sand or other particles (called “proppants”), and additives are pumped into a well at pressures high enough to crack the rock formation. The proppants hold the cracks open, permitting the gas to flow to the surface. The company doing the hydraulic fracturing contracts for sand or proppants, chemicals, water, water recycling or disposal, etc. The Operator, however, is ultimately responsible for the environmental condition of the well site under the terms of the lease with the landowner, and may wish to execute multiple contracts with water recycling and disposal companies. Halliburton and Schlumberger are the industry leaders in hydraulic fracturing.
COMPLETION AND PRODUCTION At this point the wells are “completed” meaning that the final equipment needed for the wells to produce is installed, including the "Christmas tree” – a large set of valves on top of the well, combined with other equipment inside the well. Equipment needed on site includes separation and gas and liquids processing equipment. Natural gas usually moves via pipeline from the producer to the gatherer or transmission company, and goes from there to the distributor. Gas gatherers are primarily engaged in the collection of natural gas at the wellhead from producers or from field lines for delivery to a natural gas processing plant. Gatherers also provide compression, dehydration, and/or treating services.
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The Oil and Gas Industry Supply Chain for the Pittsburgh Regional Alliance
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Gathering and transmission pipe, compressors and related equipment, storage, processing, and transportation infrastructure is installed at this point to connect the field’s production to existing transportation infrastructure. Other needed equipment may include heating equipment, metering and control station equipment, or storage tanks. This is frequently referred to as the “midstream” part of the industry, and the Operator will contract for all of these operations. Completion equipment, such as steel tube, compressors, valves and pumps, accounts for about $25 billion of revenue (see Table 1). Most of the completion equipment is used in the upstream end of the supply chain. Oil and gas companies are a significant share of the overall market in these industries. A third of all tubing, compressors and pumps and about 40 percent of industrial valves are bought by oil and gas customers. The oil and gas portion of these industries involve over 500 plants and employ approximately 50,000 workers.
TESTING AND WORKOVERS Gas production declines over time. After the well has been producing for a while, certain procedures are needed to maintain the equipment inside the well, evaluate the reservoir performance over time, and stimulate production. Hydraulic fracturing, when done after the well has been producing for a while, is one type of workover, done repeatedly on a shale gas well over its life. The Operator will contract with a service company for these types of operations.
MIDSTREAM Midstream services consist of transportation, storage and marketing of products. Pipelines are the principal transportation mode for domestic production. Pipeline construction is a $30 billion per year industry. Pipeline operations represent an additional 24,000 employees. Services provided to oil and gas producers by the midstream firms include transportation, storage, and trading of oil, natural gas, and refined products. Major independent participants include El Paso Corp., Enterprise Products Partners LP, Kinder Morgan Energy Partners LP, TransCanada Corp., and Williams Cos. Refining and Marketing. Gas transmission companies convey the natural gas from the region where it is produced to the region where it is to be consumed. A vertically-integrated oil company whose operations include everything from exploration to end products may choose to transport their production in their own pipelines. Natural gas can also be liquefied to make liquefied natural gas (LNG) and transported internationally in LNG tankers. In addition, gases from various sources may be converted into synthetic liquid hydrocarbons. Companies involved in synthetic fuels include Rentech Inc., Sasol Ltd., Chevron, ExxonMobil, BP, Royal Dutch Shell, and Syntroleum Corp.
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The Oil and Gas Industry Supply Chain for the Pittsburgh Regional Alliance
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DOWNSTREAM Downstream activities consist principally of manufacturing of fuels, petrochemicals and polymers. The Downstream end of the supply chain is the largest in terms of revenues (due to the accumulated value added throughout the supply chain) but is the smallest in terms of establishments and employment.
INDUSTRIAL CONCENTRATION IN THE SUPPLY CHAIN While the supply chain includes over 21,000 companies, less than 1,000 companies account for the majority of revenues and jobs. The principal divisions in the supply chain are Integrated Oil and Gas Companies, Exploration and Production Companies, Storage and Transportation Companies, Oil and Gas Drilling companies, and Oil and Gas Equipment & Service Companies.
INTEGRATED OIL AND GAS COMPANIES The largest companies in the supply chain are termed “integrated oil and gas companies.” These companies are global in scope and are involved in every aspect of the industry from upstream through downstream. Examples of the integrated companies include Chevron, Conoco-Phillips, and Exxon Mobil. Integrated companies headquartered outside the USA include BP, Shell, ENI spa, Petrobras, Petrochina and Repsol SA. Each of these companies has annual revenues exceeding $100 billion. The integrated companies have not been pioneers in shale gas. They have entered the shale gas arena by buying exploration and production companies with properties in the shale gas plays.
EXPLORATION AND PRODUCTION COMPANIES Exploration and Production companies are also referred to as Independents because their upstream activities are not integrated with the downstream operations of refining and petrochemicals. The Independents have been the major drivers of shale gas development. Among the largest independents are the pioneers in shale gas: Chesapeake, Devon, Anadarko and Apache. Each of these independents has annual revenues exceeding $8 billion in 2010.
STORAGE AND TRANSMISSION COMPANIES Several large companies specialize in midstream activities of storage and transportation. The three major players in the pipeline industry are Williams Company, El Paso Corp, and Spectra Energy Corporation. Each of these companies had revenues in excess of $4 billion in 2010.
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The Oil and Gas Industry Supply Chain for the Pittsburgh Regional Alliance
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OIL AND GAS DRILLING COMPANIES The Integrated and Independent companies typically contract their drilling activities to contractors which have the specialized rigs and equipment needed to drill the wells. Leading onshore drilling companies include Noble Drilling, Nabors Industries and Helmerich & Payne. Each of these companies has revenues exceeding $2 billion in 2010.
OIL AND GAS EQUIPMENT AND SERVICE COMPANIES Most of the services in exploration are contracted to companies that specialize in providing equipment and expertise needed to support the drilling and completion of the wells. While this industry has over 7,000 establishments, just a few major companies dominate the market. The majors in this division of the supply chain are Schlumberger, National Oilwell, Halliburton, and Baker Hughes. These four companies all have annual revenues exceeding $10 billion and collectively have annual revenues exceeding $60 billion in 2010. They represent about 54 percent of the market in domestic oil and gas services.
THE SUPPLY IS HIGHLY CONCENTRATED The oil and gas industry is so capital intensive that the majority of the exploration, production, services and equipment manufacturing are conducted by large companies with access to Wall Street and institutional finance. Most production is concentrated among 334 publicly traded companies while the roster of publicly traded companies in the equipment and services market includes 82 companies. In 2009, the seven integrated domestic companies like Exxon Mobil and Chevron had sales totalling $684 billion while the 12 global integrated companies, like BP, Shell and Total, had sales of $1,247 billion. The 28 Independents, by contrast, had sales of $58 billion. In terms of shale gas, the Independents are the pioneers and leaders in the industry. The integrated companies are gaining entry into the shale plays through acquisitions. Exxon, for instance, acquired XTO in 2010 while Chevron acquired Atlas in 2011 to acquire its shale gas resources and technologies. The equipment and services companies are also highly concentrated. Ten publicly traded drilling companies had sales of $19 billion in 2009 in an industry with estimated domestic revenues of $22 billion. The 22 publicly traded service and equipment companies had combined revenues of $86 billion. Concentration ratios produced for the 2007 Census of Manufacturing indicate that the 4 largest companies in the oil and gas equipment industry generated 32 percent of total
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The Oil and Gas Industry Supply Chain for the Pittsburgh Regional Alliance
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shipments while the 8 largest generated 47% of shipment. The top 50 companies in the industry, which has 559 companies, generate 81% of industry revenues. Completion equipment companies are nearly as concentrated. Out of 451 pump companies in the USA, the Top-4 generate 31% of shipments and the top 8 generate 41 percent. Twenty companies in the pump industry generate two-thirds of industry sales. The concentration ratios are nearly identical in the industrial valve industry and the pipe and tube business. The lesson for economic developers is that, in the equipment markets, the action lies with the Top-20 companies. They account for two-thirds of production and employment and are the most likely to have a need for facilities in the Pittsburgh region.
DRIVERS OF INDUSTRY GROWTH AND EXPANSION The oil and gas supply chain is highly cyclical. Prices drive upstream activity because they determine the amount of capital investment that companies can make in new properties. The equipment industries respond accordingly. The relationship between crude prices and drilling activity is apparent in Figure 6. The number of establishments in the Upstream division of the industry grows steadily regardless of price but the job levels upstream track drilling activity (see Figures 7 and 8). The same pattern is apparent in the equipment sector of the industry (see Figures 9 and 10). Gas industry activity in the US has been driven by the shale gas technology since 2005. All of the service and drilling companies report that activity levels in 2010 exceeded levels in 2008 due to horizontal drilling for shale gas. Shale gas plays are redefining the market. For the pipe and tubing division of the industry, industry growth is also being driven by exchange rates. About 70 percent of the Oil Country Tubular Goods (OCTG) used in the domestic industry are imported. With a falling US dollar, the economics of production have shifted back to domestic production.
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The Oil and Gas Industry Supply Chain for the Pittsburgh Regional Alliance
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CONCLUSIONS FOR INDUSTRY TARGETING The initial opportunities for the Pittsburgh region in the O&G supply chain were in the upstream division of the industry. As the Marcellus industry grows, the upstream division will continue to grow and the share of locally produced completion equipment and E&P services will grow as well. Pennsylvania has a larger share of drilling employment and a much smaller share of employment in equipment than Louisiana, Texas and Oklahoma (see Table 2). We believe that the supply chain in Pennsylvania will become more like the supply chain in Oklahoma, Texas and Louisiana over time.
Table 2. Oil & Gas Employment in 2009
Extraction Drilling Support Equipment 2111 213111 213112 333132 TOTAL 8871 8968 29331 8700 55870 19410 4375 17800 6862 48447 84833 31597 76118 40351 232899 113114 44940 123249 55913 337216 2812 1949 2878 312 7951 160688 67756 193589 60360 482393 70% 1.7% 33% 34% 35% 40% 36% 16% 66% 2.9% 14% 13% 25% 9% 14% 16% 64% 1.5% 40% 37% 36% 37% 33% 52% 93% 0.5% 13% 17% 4% 14% 17% 16% 70% 1.6% 100% 100% 100% 100% 100% 100%
LA OK TX Subtotal PA USA LA,OK, TX% PA% US Breakdown LA,OK,TX BD PA Breakdown OK Breakdown TX Breakdown LA Breakdown
Source: BLS QCEW employment series
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The Oil and Gas Industry Supply Chain for the Pittsburgh Regional Alliance
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Figure 5. Breakdown of Exploration & Production Services Revenue in 2007
Support activities for oil & gas operations, nsk 8%
Miscellaneous 13%
Drilling 36% Other repair and maintenance 5% Pumping 1% Installing equipment 3% Perforating 1% Running, cutting, & pulling casings, tubes, or rods 3%
Hydraulic facturing 8% Exploration services 11% Rework 3% Other drilling nsk 3% Cementing 2%
Surveying & Well Logging 3%
Source: Compiled from 2007 Census of Business
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The Oil and Gas Industry Supply Chain for the Pittsburgh Regional Alliance
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Figure 6. Relationship between Crude Price and Drilling Activity
400,000 $100.00
$90.00 350,000 $80.00 300,000 $70.00 250,000 $60.00
Wells Feet(000)
200,000
$50.00
$40.00 150,000 $30.00 100,000 $20.00 50,000 $10.00
Crude price
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
$-
Source: EIA, Baker Hughes
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The Oil and Gas Industry Supply Chain for the Pittsburgh Regional Alliance
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Figure 7. Establishments in Oil & Gas Exploration & Production
30000
25000
20000
Pipeline Const. 15000
Drilling Support Act.
Extraction 10000
5000
0
2001 2002 2003 2004 2005 2006 2007 2008 2009 March or June of Q1-2010 Q2-2010
Source: BLS QCEW employment series
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The Oil and Gas Industry Supply Chain for the Pittsburgh Regional Alliance
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Figure 8. Employment in Oil and Gas Exploration & Production
700000
600000
500000
400000 Pipeline Const. Drilling 300000
Support Act.
Extraction 200000
100000
0 2001 2002 2003 2004 2005 2006 2007 2008 2009 March June of or Q1- Q2-2010 2010
Source: BLS QCEW employment series
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The Oil and Gas Industry Supply Chain for the Pittsburgh Regional Alliance
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Figure 9. Establishments in Oil and Gas Equipment Supply Chain
2,500
2,000
1,500
Compressors
Fab. Pipe Ind. Valves
Pipe & Tube
1,000
Pumps O&G Equip
Steel Mills
500
2001 2002 2003 2004 2005 2006 2007 2008 2009 March or June of Q1-2010 Q2-2010
Source: BLS QCEW employment series
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The Oil and Gas Industry Supply Chain for the Pittsburgh Regional Alliance
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Figure 10. Employment in Oil and Gas Equipment Supply Chain
140,000 $100.00 $90.00 120,000 $80.00 100,000 $70.00 $60.00 Employment 80,000 $50.00 60,000 $40.00 $30.00 $20.00 20,000 $10.00 $Crude Price ($/barrel)
Compressors
Fab. Pipe Ind. Valves
Pipe & Tube
Pumps O&G Equip
Steel Mills Crude
40,000
Source: BLS QCEW employment series
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for the
PITTSBURGH REGIONAL ALLIANCE
from
347 Girod St. Mandeville, LA 70448 (985) 626-9868 FAX: (985) 626-9869 [email protected]
TECHNOLOGY ASSESSMENT•STRATEGIC PLANNING•ORGANIZATION DESIGN•SITE SELECTION
Rev. July, 2011
The Oil and Gas Industry Supply Chain for the Pittsburgh Regional Alliance
Rev. July, 2011
CONTENTS INTRODUCTION ................................................................................................................................. 3 SIZE OF DOMESTIC SUPPLY CHAIN .................................................................................................... 3 UPSTREAM ......................................................................................................................................... 6 Exploration .................................................................................................................................... 8 Prior to Leasing .......................................................................................................................... 8 Leasing ....................................................................................................................................... 8 Exploration Wells....................................................................................................................... 9 Development ............................................................................................................................... 10 Development Drilling ............................................................................................................... 10 Hydraulic Fracturing ................................................................................................................ 10 Completion and Production .................................................................................................... 10 Testing and Workovers ............................................................................................................ 11 MIDSTREAM .................................................................................................................................... 11 DOWNSTREAM ................................................................................................................................ 12 INDUSTRIAL CONCENTRATION in the SUPPLY CHAIN ..................................................................... 12 Integrated Oil and Gas Companies .............................................................................................. 12 Exploration and Production Companies ...................................................................................... 12 Storage and Transmission Companies......................................................................................... 12 Oil and Gas Drilling Companies ................................................................................................... 13 Oil and Gas Equipment and Service Companies.......................................................................... 13 THE SUPPLY IS HIGHLY CONCENTRATED ......................................................................................... 13 DRIVERS OF INDUSTRY GROWTH AND EXPANSION ........................................................................ 14 CONCLUSIONS FOR INDUSTRY TARGETING..................................................................................... 15
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The Oil and Gas Industry Supply Chain for the Pittsburgh Regional Alliance
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INTRODUCTION Finding and producing oil and gas is a complex set of activities, including identifying a “prospect” or area of interest, collecting data and evaluating the prospect in comparison with other prospects, obtaining the rights to drill, drilling wildcat well(s), and evaluating the economics of potentially developing the reserves. The “upstream” sector is the portion of the industry involved in extracting the oil and gas from below the ground until it reaches the surface (see Figure 1 for a flowchart of the supply chain). This part of the industry incurs the most risk because of the uncertainty in finding gas in commercially producible quantities and the capital intensive methods needed to extract it (drilling). Recent technological advances, including 2-D and 3-D computer modeling, have reduced the uncertainties a great deal. Although the Marcellus Shale is fairly well understood geologically, some degree of exploration is still necessary on the part of operators to refine their understanding and identify precise well locations. For this reason “wildcat” or exploration wells are still being drilled in Pennsylvania. If a “prospect” turns out to be economical, additional drilling is done and pipelines are installed to transport the hydrocarbons to refineries and from there to market. The “midstream” portion of the industry begins at the "Christmas tree", a large set of valves at the top of every well and continues through the gathering and distribution network to the refinery or chemical plant. The “downstream” part of the industry is comprised of refineries, chemical plants and other types of processing into products and fuels which are then distributed to markets and end users.
SIZE OF DOMESTIC SUPPLY CHAIN The global energy industry accounts for about 10 percent of world economic output1. The oil and gas sector accounts for a major share of it. Oil and gas production, while declining domestically over the last 40 years, continues to be a major force in world markets. Domestic production of 6.7 billion barrels of oil equivalent generated $227 billion of revenue in 2007. Natural gas generated about half of the production and a smaller 43 percent of revenues (see Figures 2 and 3). Natural gas liquids were a significant share of the production and revenues in the industry.
1
The Economist, June 2009 special report on energy
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The Oil and Gas Industry Supply Chain for the Pittsburgh Regional Alliance
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Figure 1.
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The Oil and Gas Industry Supply Chain for the Pittsburgh Regional Alliance
Rev. July, 2011
Figure 2: Production Revenue in 2007 ($227 billion)
Natural Gas 43%
Crude +condensate 45%
Natural Gas Liquids 12%
Source: Compiled from 2007 Census of Business
Figure 3: US Domestic Oil and Gas Production in 2007 (6.7 billion BOE)
Natural Gas Liquids 17%
Crude +condensate 32%
Natural Gas (Barrels oil equivalent) 51%
Source: Compiled from 2007 Census of Business
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The Oil and Gas Industry Supply Chain for the Pittsburgh Regional Alliance
Rev. July, 2011
Of the five sectors in the supply chain, production, referred to by the Census Bureau as extraction, dominates (see Table 1). The entire supply chain is estimated at $800 billion of revenues (valued at the downstream end to avoid double counting of revenues), about 22,000 establishments with 900,000 employees. The upstream portion of the supply chain accounts for about 60 percent of the employment and 75 percent of the establishments in the supply chain.
Table 1. Estimated Size of O&G Supply Chain in 2007
NAICS Name O&G Sales in Share $billions Est. Emp.
2111 213111 213112 333132
237120 4862
32411 32511 3252
UPSTREAM O&G extraction 100% $255 6260 Drilling O&G 100% $22 2109 Support activities for O&G 100% $46 7089 O&G equipment 100% $17 664 SUBTOTAL $340 16,122 MIDSTREAM O&G pipeline construction 100% $30 1986 Pipeline transportation of 100% $17 1514 natural gas SUBTOTAL $47 3,500 DOWNSTREAM Petroleum refineries 100% $580 195 Petrochemicals 100% $78 56 Polymers 100% $101 1338 SUBTOTAL 100% $759 1,589 COMPLETION EQUIPMENT* Steel Pumps Pipe & tube Ind. Valves Compressors SUBTOTAL TOTAL 10% 31% 32% 40% 31% $10 37 $4 167 $3 60 $4 192 $3 107 $25 563 $1171 21,774
150,443 106,859 239,774 48,085 545,161 159,637 24,202 183,839 64,839 9,229 96,485 170,553 10,846 10,666 6,941 15,390 7,693 51,535 899,553
33111 333911 331210 332911 333912
*Sales, Est. & Emp. Adjusted to reflect O&G share of industry Source: Compiled from 2007 Census of Business
UPSTREAM The upstream end of the supply chain (exploration and production tasks involved in getting the hydrocarbons to the surface) accounts for about $340 billion of annual spending (see Figure 4 for a flow chart of upstream activities). Exploration and production services (support activities) are the largest portion of the upstream revenue, followed by oil and gas equipment and drilling.
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The Oil and Gas Industry Supply Chain for the Pittsburgh Regional Alliance
Rev. July, 2011
Examples of companies in the exploration and production services sector include Halliburton, Schlumberger, and Baker Hughes. Drilling and exploration services account for about half of upstream services (see Figure 5 at the end of the document). Eleven other services account for the balance of upstream revenues. In terms of employment, exploration and production services represent about half of the upstream employment.
Figure 4.
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The Oil and Gas Industry Supply Chain for the Pittsburgh Regional Alliance
Rev. July, 2011
EXPLORATION The exploration process begins when an oil company decides to evaluate a particular area or region for oil and gas, and continues until a decision is made to develop a particular field.
PRIOR TO LEASING The exploration process begins long before a well is ever drilled. Geologists and geophysicists study the subsurface characteristics of areas and regions using publically available data combined with some proprietary data in the possession of or ordered by the oil company. These data sources include well logs (measurements made within wells2), and production data from old wells which have become public record, and two or even three-dimensional seismic testing. Large trucks move along the surface and produce shock waves that bounce off rock formations below the surface of the earth. The waves are captured by “geophones” or measurement devices that are strategically placed above ground. The vibrations are translated into electrical signals and processed for review by geophysicists who confer with geologists. The geologists and geophysicists confer to develop “prospects” or targeted areas of interest for potential hydrocarbons. During exploration, the oil company acquires seismic data, computing equipment, and may contract for additional data collection or specialized processing. In addition, many non-core office functions at the oil company are now contracted out, including accounting, IT, and logistics services (helicopters, trucks, workboats, etc.). The geosciences staff, human resources, and the legal/land staff are examples of core functions that continue to be employed by the oil company. Most of the employment associated with the pre-leasing activities occur at the company’s headquarters location.
LEASING Once particular prospects are identified, the oil companies will negotiate a contract or lease for the rights to drill to compensate the mineral owners. Lease terms vary, but generally include a “bonus” or one time payment, calculated per acre, for the right to drill over a specific period of time. A specified royalty interest is negotiated for the owner of the mineral rights of the land, along with the rights to build roads and pipelines, and the lease can contain stipulations or mitigation measures pertinent to protect the environment. The oil company’s staff “landmen” with the legal and contracts management staff handles this portion of exploration.
2
Schlumberger Oilfield Glossary http://www.glossary.oilfield.slb.com/
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The Oil and Gas Industry Supply Chain for the Pittsburgh Regional Alliance
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EXPLORATION WELLS Once the needed property is leased, the oil company – now called the “operator” as described in the lease - must obtain a permit from the state regulatory body to authorize drilling a new well. Items such as surveys, drilling plans, and other technical information frequently accompany a permit application, and the permit may require site specific environmental protection measures, or other permits that pertain to environmental issues. The oil company will contract with outside organizations to obtain the surveys or environmental evaluations, but would prepare drilling schematics or plans in-house. After the Permits are obtained, the drilling site must be prepared and the drilling contractor is hired. Site prep includes the construction of roads, grading of the site, installation of the well pad from which the drilling is done and other associated equipment is located as well. Erosion and drainage control measures are also implemented as needed. The two primary parties in drilling a well are the Operator and the Drilling Contractor that they hire to drill the well. Each party has significant responsibilities for supplying the operation. The Drilling Contractor is responsible for the rig and its crew, and contracts for all rig-associated services, including maintenance mechanics and electricians, food, and first aid for crew. If a piece of equipment associated with the rig (motors that power the drilling process, crane, etc.) breaks down during drilling, the Drilling Contractor is responsible and will purchase or rent the tools, parts and personnel needed for repairs and maintenance. Drilling Contractors that are active in the Marcellus Shale region include Pioneer Drilling, and Helmerich and Payne. The Operator, ultimately responsible for the well and the environmental condition of the site, contracts for all services and materials not associated with the rig. These services include drilling mud, rental pipe, cement and cementing services, evaluation tools and services, and logistics services. Because intangible drilling costs can be used as a tax credit on the Operator’s Federal tax return, there is a strong motivation to rent as much equipment and services as possible. Intangibles comprise about 80% of total drilling costs. The Operator will purchase the tangible equipment (casing, valves, etc.) that will become part of the well. The set of companies that supply rental equipment and services are known collectively in the industry as “service companies.” Operators that are active in the Marcellus Shale are Chesapeake Energy, Range Resources, Chief Oil and Gas, EQT, and Devon. After drilling one or more exploration wells, the information gained during drilling is factored in to the geologists’ and geophysicists’ interpretation of the geology and the maps or computer models are refined accordingly. Reserves are calculated, production is forecasted and the development of the potential “field” is evaluated economically. Moving forward with development of the reserves involves drilling more wells and making estimates and plans for infrastructure needed to get the product to market.
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The Oil and Gas Industry Supply Chain for the Pittsburgh Regional Alliance
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DEVELOPMENT The decision to further develop oil and gas proven by exploration wells marks the end of the exploration phase and the beginning of the development project.
DEVELOPMENT DRILLING Usually, bringing all of the oil and gas to the surface requires more wells than are drilled during exploration. Well-drilling during exploration is kept to a minimum due to the capital intensive nature. The additional wells drilled at this point in the process are referred to as development wells. Some portions of the well pad can be removed and other types of more permanent equipment and infrastructure are installed to accommodate a more permanent operation. As during exploration drilling, the Drilling Contractor is responsible for supplying the rig and its personnel, and the Operator is responsible for everything else.
HYDRAULIC FRACTURING Hydraulic fracturing, necessary to develop the Marcellus and other shales, is a process done during the drilling of wells in which water, sand or other particles (called “proppants”), and additives are pumped into a well at pressures high enough to crack the rock formation. The proppants hold the cracks open, permitting the gas to flow to the surface. The company doing the hydraulic fracturing contracts for sand or proppants, chemicals, water, water recycling or disposal, etc. The Operator, however, is ultimately responsible for the environmental condition of the well site under the terms of the lease with the landowner, and may wish to execute multiple contracts with water recycling and disposal companies. Halliburton and Schlumberger are the industry leaders in hydraulic fracturing.
COMPLETION AND PRODUCTION At this point the wells are “completed” meaning that the final equipment needed for the wells to produce is installed, including the "Christmas tree” – a large set of valves on top of the well, combined with other equipment inside the well. Equipment needed on site includes separation and gas and liquids processing equipment. Natural gas usually moves via pipeline from the producer to the gatherer or transmission company, and goes from there to the distributor. Gas gatherers are primarily engaged in the collection of natural gas at the wellhead from producers or from field lines for delivery to a natural gas processing plant. Gatherers also provide compression, dehydration, and/or treating services.
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The Oil and Gas Industry Supply Chain for the Pittsburgh Regional Alliance
Rev. July, 2011
Gathering and transmission pipe, compressors and related equipment, storage, processing, and transportation infrastructure is installed at this point to connect the field’s production to existing transportation infrastructure. Other needed equipment may include heating equipment, metering and control station equipment, or storage tanks. This is frequently referred to as the “midstream” part of the industry, and the Operator will contract for all of these operations. Completion equipment, such as steel tube, compressors, valves and pumps, accounts for about $25 billion of revenue (see Table 1). Most of the completion equipment is used in the upstream end of the supply chain. Oil and gas companies are a significant share of the overall market in these industries. A third of all tubing, compressors and pumps and about 40 percent of industrial valves are bought by oil and gas customers. The oil and gas portion of these industries involve over 500 plants and employ approximately 50,000 workers.
TESTING AND WORKOVERS Gas production declines over time. After the well has been producing for a while, certain procedures are needed to maintain the equipment inside the well, evaluate the reservoir performance over time, and stimulate production. Hydraulic fracturing, when done after the well has been producing for a while, is one type of workover, done repeatedly on a shale gas well over its life. The Operator will contract with a service company for these types of operations.
MIDSTREAM Midstream services consist of transportation, storage and marketing of products. Pipelines are the principal transportation mode for domestic production. Pipeline construction is a $30 billion per year industry. Pipeline operations represent an additional 24,000 employees. Services provided to oil and gas producers by the midstream firms include transportation, storage, and trading of oil, natural gas, and refined products. Major independent participants include El Paso Corp., Enterprise Products Partners LP, Kinder Morgan Energy Partners LP, TransCanada Corp., and Williams Cos. Refining and Marketing. Gas transmission companies convey the natural gas from the region where it is produced to the region where it is to be consumed. A vertically-integrated oil company whose operations include everything from exploration to end products may choose to transport their production in their own pipelines. Natural gas can also be liquefied to make liquefied natural gas (LNG) and transported internationally in LNG tankers. In addition, gases from various sources may be converted into synthetic liquid hydrocarbons. Companies involved in synthetic fuels include Rentech Inc., Sasol Ltd., Chevron, ExxonMobil, BP, Royal Dutch Shell, and Syntroleum Corp.
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The Oil and Gas Industry Supply Chain for the Pittsburgh Regional Alliance
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DOWNSTREAM Downstream activities consist principally of manufacturing of fuels, petrochemicals and polymers. The Downstream end of the supply chain is the largest in terms of revenues (due to the accumulated value added throughout the supply chain) but is the smallest in terms of establishments and employment.
INDUSTRIAL CONCENTRATION IN THE SUPPLY CHAIN While the supply chain includes over 21,000 companies, less than 1,000 companies account for the majority of revenues and jobs. The principal divisions in the supply chain are Integrated Oil and Gas Companies, Exploration and Production Companies, Storage and Transportation Companies, Oil and Gas Drilling companies, and Oil and Gas Equipment & Service Companies.
INTEGRATED OIL AND GAS COMPANIES The largest companies in the supply chain are termed “integrated oil and gas companies.” These companies are global in scope and are involved in every aspect of the industry from upstream through downstream. Examples of the integrated companies include Chevron, Conoco-Phillips, and Exxon Mobil. Integrated companies headquartered outside the USA include BP, Shell, ENI spa, Petrobras, Petrochina and Repsol SA. Each of these companies has annual revenues exceeding $100 billion. The integrated companies have not been pioneers in shale gas. They have entered the shale gas arena by buying exploration and production companies with properties in the shale gas plays.
EXPLORATION AND PRODUCTION COMPANIES Exploration and Production companies are also referred to as Independents because their upstream activities are not integrated with the downstream operations of refining and petrochemicals. The Independents have been the major drivers of shale gas development. Among the largest independents are the pioneers in shale gas: Chesapeake, Devon, Anadarko and Apache. Each of these independents has annual revenues exceeding $8 billion in 2010.
STORAGE AND TRANSMISSION COMPANIES Several large companies specialize in midstream activities of storage and transportation. The three major players in the pipeline industry are Williams Company, El Paso Corp, and Spectra Energy Corporation. Each of these companies had revenues in excess of $4 billion in 2010.
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The Oil and Gas Industry Supply Chain for the Pittsburgh Regional Alliance
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OIL AND GAS DRILLING COMPANIES The Integrated and Independent companies typically contract their drilling activities to contractors which have the specialized rigs and equipment needed to drill the wells. Leading onshore drilling companies include Noble Drilling, Nabors Industries and Helmerich & Payne. Each of these companies has revenues exceeding $2 billion in 2010.
OIL AND GAS EQUIPMENT AND SERVICE COMPANIES Most of the services in exploration are contracted to companies that specialize in providing equipment and expertise needed to support the drilling and completion of the wells. While this industry has over 7,000 establishments, just a few major companies dominate the market. The majors in this division of the supply chain are Schlumberger, National Oilwell, Halliburton, and Baker Hughes. These four companies all have annual revenues exceeding $10 billion and collectively have annual revenues exceeding $60 billion in 2010. They represent about 54 percent of the market in domestic oil and gas services.
THE SUPPLY IS HIGHLY CONCENTRATED The oil and gas industry is so capital intensive that the majority of the exploration, production, services and equipment manufacturing are conducted by large companies with access to Wall Street and institutional finance. Most production is concentrated among 334 publicly traded companies while the roster of publicly traded companies in the equipment and services market includes 82 companies. In 2009, the seven integrated domestic companies like Exxon Mobil and Chevron had sales totalling $684 billion while the 12 global integrated companies, like BP, Shell and Total, had sales of $1,247 billion. The 28 Independents, by contrast, had sales of $58 billion. In terms of shale gas, the Independents are the pioneers and leaders in the industry. The integrated companies are gaining entry into the shale plays through acquisitions. Exxon, for instance, acquired XTO in 2010 while Chevron acquired Atlas in 2011 to acquire its shale gas resources and technologies. The equipment and services companies are also highly concentrated. Ten publicly traded drilling companies had sales of $19 billion in 2009 in an industry with estimated domestic revenues of $22 billion. The 22 publicly traded service and equipment companies had combined revenues of $86 billion. Concentration ratios produced for the 2007 Census of Manufacturing indicate that the 4 largest companies in the oil and gas equipment industry generated 32 percent of total
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The Oil and Gas Industry Supply Chain for the Pittsburgh Regional Alliance
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shipments while the 8 largest generated 47% of shipment. The top 50 companies in the industry, which has 559 companies, generate 81% of industry revenues. Completion equipment companies are nearly as concentrated. Out of 451 pump companies in the USA, the Top-4 generate 31% of shipments and the top 8 generate 41 percent. Twenty companies in the pump industry generate two-thirds of industry sales. The concentration ratios are nearly identical in the industrial valve industry and the pipe and tube business. The lesson for economic developers is that, in the equipment markets, the action lies with the Top-20 companies. They account for two-thirds of production and employment and are the most likely to have a need for facilities in the Pittsburgh region.
DRIVERS OF INDUSTRY GROWTH AND EXPANSION The oil and gas supply chain is highly cyclical. Prices drive upstream activity because they determine the amount of capital investment that companies can make in new properties. The equipment industries respond accordingly. The relationship between crude prices and drilling activity is apparent in Figure 6. The number of establishments in the Upstream division of the industry grows steadily regardless of price but the job levels upstream track drilling activity (see Figures 7 and 8). The same pattern is apparent in the equipment sector of the industry (see Figures 9 and 10). Gas industry activity in the US has been driven by the shale gas technology since 2005. All of the service and drilling companies report that activity levels in 2010 exceeded levels in 2008 due to horizontal drilling for shale gas. Shale gas plays are redefining the market. For the pipe and tubing division of the industry, industry growth is also being driven by exchange rates. About 70 percent of the Oil Country Tubular Goods (OCTG) used in the domestic industry are imported. With a falling US dollar, the economics of production have shifted back to domestic production.
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The Oil and Gas Industry Supply Chain for the Pittsburgh Regional Alliance
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CONCLUSIONS FOR INDUSTRY TARGETING The initial opportunities for the Pittsburgh region in the O&G supply chain were in the upstream division of the industry. As the Marcellus industry grows, the upstream division will continue to grow and the share of locally produced completion equipment and E&P services will grow as well. Pennsylvania has a larger share of drilling employment and a much smaller share of employment in equipment than Louisiana, Texas and Oklahoma (see Table 2). We believe that the supply chain in Pennsylvania will become more like the supply chain in Oklahoma, Texas and Louisiana over time.
Table 2. Oil & Gas Employment in 2009
Extraction Drilling Support Equipment 2111 213111 213112 333132 TOTAL 8871 8968 29331 8700 55870 19410 4375 17800 6862 48447 84833 31597 76118 40351 232899 113114 44940 123249 55913 337216 2812 1949 2878 312 7951 160688 67756 193589 60360 482393 70% 1.7% 33% 34% 35% 40% 36% 16% 66% 2.9% 14% 13% 25% 9% 14% 16% 64% 1.5% 40% 37% 36% 37% 33% 52% 93% 0.5% 13% 17% 4% 14% 17% 16% 70% 1.6% 100% 100% 100% 100% 100% 100%
LA OK TX Subtotal PA USA LA,OK, TX% PA% US Breakdown LA,OK,TX BD PA Breakdown OK Breakdown TX Breakdown LA Breakdown
Source: BLS QCEW employment series
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The Oil and Gas Industry Supply Chain for the Pittsburgh Regional Alliance
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Figure 5. Breakdown of Exploration & Production Services Revenue in 2007
Support activities for oil & gas operations, nsk 8%
Miscellaneous 13%
Drilling 36% Other repair and maintenance 5% Pumping 1% Installing equipment 3% Perforating 1% Running, cutting, & pulling casings, tubes, or rods 3%
Hydraulic facturing 8% Exploration services 11% Rework 3% Other drilling nsk 3% Cementing 2%
Surveying & Well Logging 3%
Source: Compiled from 2007 Census of Business
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The Oil and Gas Industry Supply Chain for the Pittsburgh Regional Alliance
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Figure 6. Relationship between Crude Price and Drilling Activity
400,000 $100.00
$90.00 350,000 $80.00 300,000 $70.00 250,000 $60.00
Wells Feet(000)
200,000
$50.00
$40.00 150,000 $30.00 100,000 $20.00 50,000 $10.00
Crude price
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
$-
Source: EIA, Baker Hughes
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The Oil and Gas Industry Supply Chain for the Pittsburgh Regional Alliance
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Figure 7. Establishments in Oil & Gas Exploration & Production
30000
25000
20000
Pipeline Const. 15000
Drilling Support Act.
Extraction 10000
5000
0
2001 2002 2003 2004 2005 2006 2007 2008 2009 March or June of Q1-2010 Q2-2010
Source: BLS QCEW employment series
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The Oil and Gas Industry Supply Chain for the Pittsburgh Regional Alliance
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Figure 8. Employment in Oil and Gas Exploration & Production
700000
600000
500000
400000 Pipeline Const. Drilling 300000
Support Act.
Extraction 200000
100000
0 2001 2002 2003 2004 2005 2006 2007 2008 2009 March June of or Q1- Q2-2010 2010
Source: BLS QCEW employment series
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The Oil and Gas Industry Supply Chain for the Pittsburgh Regional Alliance
Rev. July, 2011
Figure 9. Establishments in Oil and Gas Equipment Supply Chain
2,500
2,000
1,500
Compressors
Fab. Pipe Ind. Valves
Pipe & Tube
1,000
Pumps O&G Equip
Steel Mills
500
2001 2002 2003 2004 2005 2006 2007 2008 2009 March or June of Q1-2010 Q2-2010
Source: BLS QCEW employment series
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The Oil and Gas Industry Supply Chain for the Pittsburgh Regional Alliance
Rev. July, 2011
Figure 10. Employment in Oil and Gas Equipment Supply Chain
140,000 $100.00 $90.00 120,000 $80.00 100,000 $70.00 $60.00 Employment 80,000 $50.00 60,000 $40.00 $30.00 $20.00 20,000 $10.00 $Crude Price ($/barrel)
Compressors
Fab. Pipe Ind. Valves
Pipe & Tube
Pumps O&G Equip
Steel Mills Crude
40,000
Source: BLS QCEW employment series
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