The Boomtown Impact Model
from Oil and Gas Drilling
Lessons learned from Wyoming
Jeffrey Jacquet
Environmental Sociologist
Cornell University
[email protected]
607-351-9886
Contents
1. Introduction to Oil and Gas development
2. History of western boomtown
development
3. Lessons learned from Sublette County,
WY
4. Recommendations
Three Phases of Oil and Natural Gas
Development
Development Phase (Short Lived/Labor Intensive)
• Well-pad and Access Road Construction
• Local collection pipeline Construction
• Drilling of the Well
• Fracturing of the Well
• Reclaiming some Disturbance
Production Phase (Long lived/Small & Steady Labor Force)
• Trucking Water and condensate from Well Site
• Monitoring Production
• Occasional Well Work-Overs (partially re-drill/re-frac)
Reclamation Phase
•Dismantle and Reclaim well-sites
Jonah/Anticline Fields Direct Workforce
Through The Three Phases:
Graph: Ecosystem Research Group/Jacquet
The Number of Rigs Drive Everything
Number of Rigs = Amount of Development = Size of Workforce = Impact
Operator
Construction
Companies
Drilling Company
Other Companies
Frac’ing Company
Welders
Excavation
Trucking
Water Trucking
Directional Drillers
Equipment Set up, Cranes
Water
Well Logging
Man Camps, Porta-potties
Bottled Water
Roustabouts (general Labor)
Man Camps, etc
Finishing Rigs
Drilling Mud Companies
Water Well Drilling
Drill Bits, Drill Pipe, Supplies
Road Construction
Crane Operators
Local Pipelines
Security
Typical
Development Phase
Organization Chart
History of Boomtowns
1970s Energy Boom =
100s of boomtowns across
Western US
Initially labeled “Gillette
Syndrome”
Books, Magazines,
Congressional hearings,
etc.
National Geographic, Feb, 1981
“Boomtown Social Disruption”
• Rapid Population Growth
• Housing Shortages
- Hotels
- Apartments
- Man-camps
- Houses
National Geographic, Feb. 1981
• Stress on Local Governments
- Increased crime
- Increased emergencies
- Social Services
- Planning and Zoning
Social and Economic Issues
• Economic prosperity is not
evenly distributed
• Conflict between “newcomers
and old timers”
• Conflict over role of local
government to fix problems
Police Magazine, 1981
• Money to mitigate impacts is
not available or is late to
arrive
The Problem Triangle
The Social Disruption
Boomtown Model
Limitations to the formation of Public Policy and Mitigation
(Markussen 1978)
 Jurisdictional unevenness. The impacted communities
can’t actually control the development
 Insufficient control of land use: the local government can’t
use zoning or siting arrangements to ease adjustment.
 New Comers vs. Old Timers. Old residents resist changes
and taxes needed to deal with growth. New residents demand
services not traditionally needed.
The Social Disruption
Boomtown Model (Cont.)
Limitations to the formation of Public Policy and Mitigation
(Markussen 1978)
 Severity of growth. Sheer numbers of people overwhelm public
services and community life.
 Volatile production patterns. The boom-bust cycle forces local
government to weigh immediate needs with unknown future.
 Monopoly of information: The industry holds nearly all information,
and an incentive to misinform exists.
 Risk. Uncertainty of future development causes hesitation in
private/state/federal/local loans, grants, and support.
Gilmore’s 4 stages of Boomtown
Attitudes
1. Enthusiasm
• Concentration on Positive Impacts
• Negative impacts are either unknown or dismissed
• Lots of pro-industry spin, but little objective knowledge
2. Uncertainty
• Town starts to change
• Realization that negative impacts have arrived, and might grow
• Begin to Research/Analyze Situation, however few resources to draw
upon
• Industry and State Gov. claims nothing can be done
• Pro/Anti growth divisions emerge within the community
Gilmore’s 4 stages of Boomtown Attitudes
(Cont.)
3. Near Panic
•Industrial Activity and impacts develop far faster than expected
•Town starts to change dramatically (what happened to my community?)
•Residents become confused, angry at officials and each other
•Gov. Services overloaded - officials ill-equipped, unprepared
•Realization that increased revenues will not match expenditures
•Any ongoing planning efforts are found to be misdirected, under-funded
4. Adaptation
•Core problems are identified
•Planning and mitigation strategies are developed
•Residents become solidified in their beliefs
•Development opponents start to accept situation
•Sense of Progress develops despite overwhelming impacts
Lessons Learned from Sublette County
Wyoming
•Pre-boom Population of ~6,000
•Three principal towns – Pinedale, Big Piney, Marbleton
•Mix of tourism economy and production of old gas wells
•Average age increasing – H.S. Graduate Exodus
•Seasonal economy - high winter unemployment
•High % of investment income (not blue collar)
Southwestern Wyoming
Scatter Plot of Monthly Sublette County EMS runs and Drilling Rigs in Sublette County,
WY 2001-2007 (Sig. <.001)
140
130
120
110
EMS Runs
100
90
80
70
60
50
40
30
R Sq Linear = 0.695
20
0
5
10
15
20
25
30
35
Monthly Drilling Rigs
40
45
50
55
60
Average Daily Traffic
Avg. Daily Traffic Northern Marbleton Town Limits 2000-2006
4,800
4,600
4,400
4,200
4,000
3,800
3,600
3,400
3,200
3,000
2,800
2,600
2,400
2,200
2,000
1,800
1,600
1,400
1,200
1,000
800
600
400
200
0
Source: Wyom ing Departm ent of Transportation
All Other Vehicles
Big Trucks
3,690
2,690
2,820
2,170
1,740
1,640
1,500
830
160
160
150
2000
2001
2002
340
420
440
2003
2004
2005
2006
Monthly Sublette County Unemployment Rate 01/90 - 02/07
Source: Wyom ing Departm ent of Em ploym ent, Research & Planning
7.5
7.0
6.5
6.0
5.0
4.5
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
Year
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
0.0
1990
Unemployment Rate
5.5
(Thompkins County, NY was $1,175,010,000 in 2006)
ERG/Jacquet 2008
Inflation Rates SW Wyoming, Wyoming, US 2000-2007
Source: State of Wyoming
ERG/Jacquet 2008
Economic Two-Sided Coin
Very High Wages:
• $15-20/hr starting wage for general gas field labor with no experience
• $23/hr starting wage for rig workers with no experience
• $10/hr effective bare-minimum wage for any job in surrounding area
• No-questions-asked job interviews
• Super-fast advancement in all areas
• Median family wage 2000: $49,000 2007: $69,000
Very High Cost of Living:
• Inflation rates quadruple the national average – as high as 9%
• Average rental – $1200/month for a mobile home, more for a house
• Lots of Driving Costs
• Mechanics charge $100/hr at minimum
• Home Values (and taxes) increasing at 17%/year
Economic Two-Sided Coin (Cont.)
Non-Gas Field Businesses and Residents struggle:
• Every business is short-staffed
• Businesses often closed for certain hours or days per week due to lack of
employees
• Retail Sector stagnant or declining
• Commercial Space is very expensive
• Quality of Customer Service rapidly declining
• Very hard to afford unless tied to oil and gas industry
• Fixed Income residents hit the hardest
• Utilization of Immigrant Labor
Some Successful Mitigation efforts
• Police Meth Task Force
• 1% optional sales tax increase (96% will come from gas
industry)
• Impact fees for developers
• Funneling money into infrastructure (can be spent
directly, can’t take it away later)
• Hiring new staff, lots of new planning
• Pace of Development Projections from Industry
• Master-planned subdivisions for long-term growth
Unsuccessful Mitigation Efforts
•
•
•
•
•
Overbuilding of Hotels
Unplanned “rural sprawl”
Cost of Living remains high
Lots of conflict over role of govt.
No plan for post-drilling community
Basic Preparation Steps:
• Create Intra-Governmental Task Force:
– Share information
– Communication
• Create Baseline Socioeconomic Profile.
– Know basic information to gauge impact
• Track and Project Rig and Well Counts.
– Know details of industry activity trends
• Create Impact Projections
– Planning is the process, not the outcome
Intra-Governmental Task Force:
• Invite Industry
• Invite all County, Towns, State &
Community Agencies
• Create a clearinghouse for Information:
– Existing or New Organization
– Needs Proper Funding/Staffing – hire staff/contractor
if needed – can be big task
– Needs to be County/Community Specific
– State wide or regional probably not effective
Baseline Socioeconomic Profile:
to define what is “normal” and to react quickly
Historical trends ■ Current capacities
Problem Thresholds
Government/Community Services:
EMS ■ Roads ■ Fire ■ Health Care ■ Social Services ■
Police ■ Water ■ Sewer ■ Courts
Broader Socioeconomic Trends:
Workforce ■ Economic Sectors ■ Unemployment ■ Wages
■ Housing Prices ■ Housing Availability ■ Temporary
Housing Hotels
Track and Project Rig and Well
Counts:
•
•
•
•
Monthly Trends of Rigs Drilling in the Area
Number Wells In Area
Map of Drilling Rigs and Wells
Work with industry, state, and your own
knowledge to devise drilling projections –
both short and long term
• Update drilling projections as conditions
change
Create Impact Projections:
• Given the development scenarios – what will the
employment and population impacts be?
• What will the demand be on local services?
• How much will it cost to mitigate these demands?
• How can planning/development process be
adapted to new pressures?
• What changes will take place in economy?
• What can be done to take advantage of the
positives and lessen the negatives?
• How to attract long-term workers?
The Boomtown Impact Model
from Oil and Gas Drilling
Lessons learned from Wyoming
Jeffrey Jacquet
Environmental Sociologist
Cornell University
[email protected]
607-351-9886