Natural Gas Fuels Steel Industry Rebound, Job Creation

Kari Lydersen

A natural gas importation terminal on the Isle of Grain, England.

But questions persist about environmental effects of gas extraction

Construction may still be down worldwide, with no big recovery in sight. But the steel industry is rebounding thanks to natural gas, as recent coverage (including this Wall Street Journal article) describes.

The Journal says steel mills are now operating at about 70 percent, up two-thirds from early 2008. That’s thanks largely to quickly growing demand for new natural gas pipelines — to transport the gas to homes or businesses — and pipes or other components for exploration. The domestic natural gas industry has been steadily expanding in recent years, fueled in part by concerns about the environmental and national security implications of oil (which have heightened exponentially since the Gulf of Mexico disaster), and health and environmental concerns about mining and burning coal.

As the Journal noted, the Indian company Welspun will hire 230 more workers and institute 24-hour operation at its Arkansas plant, making oil and gas pipelines. ArcelorMittal is restoring some of its previously slashed steel production in northwest Indiana. And the French company Vallourec SA is expanding its operations to produce natural gas pipes.

In addition to new pipes and components for new exploration and transport, old natural gas pipes must also be replaced. When they are allowed to erode, dangerous accidents can occur — for example, the fatal explosion in Bellevue, Wash., in 2004 that sparked an assessment and costly upgrade plan for a massive network of pipes in the region.

The biggest natural gas project in the country is the potential exploitation of the Marcellus Shale (beneath parts of Appalachia) including Ohio, Pennsylvania, New York and West Virginia. The coalition promoting drilling the shale had promised more than 100,000 jobs would be created just in Pennsylvania this year.

But another study released in March indicated that less than 3,000 new jobs have been created in the state related to the project since 2007. And only a small portion of the jobs that are or will be created are long-term, unionized and otherwise positive. The study says:

Pennsylvania workers simply aren’t trained to do the actual drilling jobs, at least not in large numbers. That’s why, for now, so many roughneck and rig crews rotate in and out of Pennsylvania but are based elsewhere. Jobs, while being performed here, might be appearing on Texas labor sheets.

This largely untapped Marcellus Shale is credited for the recent announcement of a new steel plant opening in Trumbull County, Ohio, to employ 50 people initially and 120 later on. The factory will make connectors needed for natural gas exploration, on the site of a former steel plant.

The site Geol​o​gy​.com reports:

Hundreds of thousands of acres above the Marcellus Shale have been leased with the intent of drilling wells for natural gas. However, most of the leased properties are not adjacent to a natural gas pipeline. The total natural gas pipeline capacity currently available is a tiny fraction of what will be needed. Several new pipelines must be built to transport millions of cubic feet of natural gas per day to major markets. In addition, thousands of miles of natural gas gathering systems must be built to connect individual wells to the major pipelines.

The new steel mill in Ohio is being launched by the world’s largest pipe manufacturer, according to local coverage, the Illinois company TMK IPSCO, subsidiary of a Russian company. An executive said the jobs are dependent on the Marcellus Shale, which he called a national treasure.” 

But tapping the shale raises plenty of environmental and human impact concerns of its own, including the potentially devastating effects of hydraulic fracturing, or hydro-fracking.” Toxic chemicals derived from diesel and including benzene, toluene and xylene are injected into methane gas or coal beds to extract gas during fracking. Fracking is known to contaminate the water supply — a precious resource for low-income well users in Appalachia — and result in other serious environmental effects.

Citizens’ groups have called for a moratorium on the practice in New York state, and a monitoring plan for liquid waste — sometimes radioactive — created by the operations. In April, the EPA said it would take a closer look at fracking.

Kari Lydersen is a Chicago-based reporter, author and journalism instructor, leading the Social Justice & Investigative specialization in the graduate program at Northwestern University. She is the author of Mayor 1%: Rahm Emanuel and the Rise of Chicago’s 99%.
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