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E21 ^ | 02/25/2014 | E21

Posted on 02/26/2014 4:54:39 AM PST by thackney

A key feature of America’s ongoing oil and gas production renaissance is that the vast majority of the jobs created have not come from the “Big Oil” companies, but from small businesses.

Manhattan Institute senior fellow Mark Mills shows the dramatic effect of small businesses on oil and gas production and vice versa in his new report, “Where the Jobs Are: Small Businesses Unleash Energy Employment Boom.”

The five large oil companies operating in the United States (Exxon, BP, Chevron, Shell, Conoco) account for only ten percent of direct oil and gas jobs. The vast majority of jobs come from more than 20,000 other firms directly involved in the oil and gas industry which produce over 75 percent of America’s oil and gas output. Excluding gasoline stations—which are overwhelmingly owned by small business and together employ nearly 1 million people—the median independent oil and gas firm has fewer than 15 employees.

While many smaller oil and gas companies have experienced spectacular growth in recent years and have become quite large, they are all still small by global standards. The majority of the approximately 60 companies that fit in this category have an average market cap of about $1 billion, making them by definition “small-cap” companies. Even the biggest of these companies (Anadarko, Apache, Pioneer, EOG, EQT, Devon, and Continental) have market capitalizations that are a fraction of the world’s largest oil and gas companies’.

Small oil and gas companies work almost entirely onshore. The multibillion-dollar deepwater offshore rigs are left in the domain of global, large corporations. All the dramatic growth in production and employment in recent years has occurred on onshore shale fields.

Though none of the thousands of small oil and gas companies are household names, they have played central roles in igniting job growth throughout the country. As Mills makes clear, “the enormous expansion in employment, exports, and tax revenues from the domestic oil and gas revolution is largely attributable to a core and defining feature of America: small businesses.”

In total, about 10 million Americans are employed directly and indirectly in a broad range of businesses associated with oil and gas. Even more jobs are being created indirectly because of the availability of abundant, low-cost energy. This gives America a strong international competitive advantage. As with the oil and gas industry itself, the majority of these businesses will continue to be small businesses.

Most Americans are employed by firms with fewer than 500 employees (see graphic). American small businesses employ half of all workers and generate nearly half the nation’s economic output.

Small businesses are not only the core engines of growth, but they also grow more rapidly than large companies. Taking into account the painfully slow economic recovery, there could not be a more critical time to find ways to foster more small businesses of all kinds. Recent history shows that oil and gas-related jobs can be created quickly. Small businesses display large amounts of flexibility which help contribute to rapid growth.

Small businesses in general have long contributed disproportionately to job growth. More than 60 percent of all net new jobs over the last 40 years have come from small businesses.

The new American shale oil and gas boom—and the associated jobs bounty—has come mainly from small businesses using new technologies and deploying private capital, almost entirely on state and private lands.

U.S. oil production has increased 53 percent over the past 5 years to nearly 8 million barrels a day, but federal acres leased for mineral rights decreased over that same period. Only 40 million acres of federal land are now leased, whereas 130 million acres were leased 30 years ago.

The remarkable gains in production on state and private lands across the country are not guaranteed to continue. They are at risk if new federal restrictions that would lower productivity and growth

If common-sense policy changes such as opening up the vast federal lands for energy exploration were adopted, more jobs and more small businesses could arise and help grow the economy.

Mills ends his report with a call to action for policymakers. He states, “Policymakers at state and federal levels do not need to fund pilot projects, raise taxes, or otherwise create government programs to stimulate yet more output and jobs from the oil and gas sector. To expand the bounty, policymakers should ameliorate, suspend, or remove regulations that create impediments to the creation, survival, and growth of small businesses generally and to domestic hydrocarbon businesses in particular.”

If the economy is to regain its footing and enter a prolonged period of strong growth, let us hope policymakers heed Mills’s call.

TOPICS: News/Current Events
KEYWORDS: energy; jobs; myths; naturalgas; oil; smallbusiness

1 posted on 02/26/2014 4:54:39 AM PST by thackney
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To: thackney

I’ve got a Production Super, two pumpers and a relief pumper and they handle all the production, I sit on my butt and post on FR. As soon as I get the permit’s I’m doing a 3 well package on the south end of the ranch, the first one will be a horizontal and will be my first, kinda excited about that one. If ya got good people it don’t take many!

2 posted on 02/26/2014 5:10:23 AM PST by Dusty Road
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To: Dusty Road

the first one will be a horizontal and will be my first, kinda excited about that one.

What is the expected horz reach?

3 posted on 02/26/2014 5:19:04 AM PST by thackney (life is fragile, handle with prayer)
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To: thackney

Remember now we’re poor boys down here so we’re only going about 5200 ft.

4 posted on 02/26/2014 5:34:47 AM PST by Dusty Road
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To: Dusty Road

I hope that goes well for y’all. How much time do you expect for drilling then completion? Multi-stage fracturing?

5 posted on 02/26/2014 5:43:58 AM PST by thackney (life is fragile, handle with prayer)
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To: thackney

As someone who knows very little about this business I want to say thanks to you for always posting good information about this vital industry.

6 posted on 02/26/2014 6:05:45 AM PST by Straight Vermonter (Posting from deep behind the Maple Curtain)
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To: thackney

Thack we’re looking at 7.2 but I’m hoping we can come under that, I’ve got a sale line close and the battery is already there, just having to add another 500. We’re only going to start with 10 stages but we’re leaving ourselves room for a few more. We’re starting out cheap!

7 posted on 02/26/2014 10:22:34 AM PST by Dusty Road
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To: Dusty Road

Thanks for all the info, I do appreciate it.

What kind of down time would you expect to add more stages a future time? I know crap happens and could make this a meaningless number, but what would you hope to get.

8 posted on 02/26/2014 11:09:42 AM PST by thackney (life is fragile, handle with prayer)
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To: thackney

Right now this is all we’re willing to put into it, we’re already producing from this zone, we know right where it’s at. Should the tail end start to fall off we may or may not come back down the line and shoot and frac again. This is a big move for us and almost three times the cost, we’re going to watch this one close. It takes a long time to recover that amount of money.

9 posted on 02/26/2014 3:34:04 PM PST by Dusty Road
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