Exterran CEO: More Shale Industry Growth to Come
YOUNGSTOWN, Ohio -- The president and CEO of Exterran Holdings Inc. says he's optimistic about the future of his company's new manufacturing plant here, and is equally enthusiastic about the potential of the oil and gas industry in the region on which its business depends.
"We think we're just getting started in the development of this natural, vast resource that's in the Marcellus and Utica," said Brad Childers, shortly after he and other dignitaries cut the ribbon for Exterran's $13.2 million fabricating plant. "We expect more to come."
Childers said the site along Salt Springs Road proved a perfect fit because it straddles oil and gas reserves in both the Utica shale play in eastern Ohio and Marcellus play in Pennsylvania.
"It's a great center point and transportation hub for both the Marcellus and the Utica," he said.
The Exterran plant here manufactures equipment for separators and high-pressure vessels installed at well sites. Exterran also supplies processing and compression equipment for oil and gas infrastructure projects for a global market.
Newly accessible shale plays such as the Marcellus and Utica require unconventional exploration methods such as horizontal drilling, which allows rigs to drill laterally and extract oil and gas from tightly packed rock formations 8,000 feet below.
Eastern Ohio and western Pennsylvania aren't accustomed to an aggressive oil and gas industry. Thus, the pipeline and processing networks in this region are largely inadequate to support exploration on a large scale. That means more business for Exterran, Childers said.
"What's really happening for these new plays is that all the infrastructure required to develop the oil and gas has to be built," he explained. "So, we're seeing a total rebuild of the infrastructure for the industry in North America. And that is our business."
The new plant brings the company closer to its customers in the region and closer to a market that many project will deliver vast quantities of oil and gas for decades, Childers says. "This makes us do it more efficiently."
At Tuesday's press event to mark the opening of the plant (READ STORY), Childers was joined by Gov. John Kasich, Tom Humphries, president and CEO of the Youngstown/Warren Regional Chamber, David Mustine, managing director of JobsOhio, Mayor Chuck Sammarone, and Tom Waltermire, president of Team NEO,.
"It's just another positive sign that the Valley's on its way back," Kasich told reporters following the event. "This is a great day for the workers and families."
U.S. Sen. Sherrod Brown, D-Ohio, could not attend the ceremony, but issued a statement praising Exterran's decision to locate its 65,000-square-foot plant in Youngstown.
Kasich reiterated comments he made during the ceremony that Ohio has climbed in the rankings of being considered a state friendly to business. "We are jumping up in the ratings among all the states for being business-friendly,” he said, “which is really important."
Others disagree. In a statement released to the press, Ohio Democratic Party Chairman Chris Redfern noted that the state lost 20,400 jobs last month, the most of any state in the country.
"While Governor Kasich governs by photo-op, the state of Ohio is falling behind," Redfern said. "Ribbon cuttings are nice, but real economic security for Ohioans is better."
And, those in the oil and gas industry have collectively opposed the governor's proposal to raise the severance tax on oil and gas extraction across the state.
"Today, the oil industry is paying 20 cents on an $80 or $90 barrel of oil," Kasich said. "We think we ought to make it 4%," which would still be the lowest rate in the country, he noted.
Raising the severance tax would allow the state to reduce other taxes that affect working families and other residents. "I don’t think the out-of-state oil companies ought to take all their profit and high-tail it home,” the governor said. “I'd like some of that to be left here in the state.”
Kasich emphasized that the industry is here to stay, that his objective is to see all Ohioans benefit.
While there is some "scattered opposition" to oil and gas development -- especially the industry's use of hydraulic fracturing -- Kasich said the majority of Ohioans support the industry.
"This is a state that is openly embracing this," Kasich stated. "At the end of the day, there is massive support for the development of oil and gas in the state of Ohio and the jobs that are connected to it."
Exterran, Kasich noted, is a good example of an energy midstream company that is hiring locally.
But the big challenge is to convince other companies in the industry to communicate their workforce needs with state officials so Ohio residents can be adequately trained for jobs in the industry.
"This is a constant effort to monitor," Kasich said. "We will work with our community colleges, our four-year schools, our technical schools, and we've got to train people for the jobs that are going to come our way."
Without this training, Ohioans that need work might be left behind as the oil and gas industry develops.
"We don't want people out of state coming in here and leaving," Kasich stressed. "We want Ohioans to be embedded in this industry."
MORE: Exterran CEO, Kasich Cut Ribbon at New Plant
Copyright 2013 The Business Journal, Youngstown, Ohio.
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