THE RESIDENCY ALLOCATION OF PETROLEUM AND NATURAL GAS EMPLOYMENT: A METHODOLOGY AND EDUCATIONAL PRACTICUM
THE RESIDENCY ALLOCATION OF PETROLEUM AND NATURAL GAS EMPLOYMENT: A METHODOLOGY AND EDUCATIONAL PRACTICUM by
Kenneth W. Kucera B.A., University of Colorado, 1977
A thesis submitted to the Faculty of the Graduate School of the University of Colorado in partial fulfillment of the requirements for the degree of
Planning and Community Development
To Dan Schler, James Williams and the staff and principals of Briscoe, Maphis, Murray, and Lamont, Inc., for the assistance and opportunities for research that have been afforded me, I extend my appreciation and thanks.
To Wanda with love, for her unfailing patience and support.
I INTRODUCTION........................................... 1
II DEMOGRAPHIC IMPACT ASSESSMENT.......................... 5
Assessment Factors.................................. 5
Project Characteristics........................... 6
Site Characteristics.............................. 7
Characteristics of Inmigrating Workers............ 8
Legislative Mandates and Pragmatic
Project Accuracy.................................... 9
The Demographic Impact Assessment Process.......... 10
Project-Impact Area............................. 11
Baseline Population.............................. 11
Inmigrating Workers.............................. 13
Residency Allocation............................. 14
Demographic Characteristics...................... 14
III RESIDENCY ALLOCATION/SETTLEMENT PATTERN
Residency Allocation Factors....................... 18
Direct and Indirect/Induced Employment............. 25
Residency Allocation Techniques.................... 27
Gravity Models................................... 27
Judgment Techniques.............................. 32
Current Survey Patterns......................... 34
Alternative Techniques............................ 35
IV CONCEPTUALIZATION: THE PETROLEUM AND NATURAL
GAS INDUSTRY........................................ 37
Oil and Gas Development Stimuli..................... 38
Quantity and Composition of Hydrocarbon
Oil and Gas Development Activity
Development Activities or Phases.................. 47
Oil and Gas Employment Groups..................... 47
Development Phase Requirements...................... 48
Identification of Development Phase
Development Phase Requirements.................... 51
1. Initial Interest Phase...................... 51
2. Lease Acquisition Phase..................... 53
3. Intensive Geophysical Exploration.... 54
4. Pre-Drill Phase............................. 56
5. Drill Phase................................. 58
6. Well Completion Phase....................... 61
7. Well Production Phase....................... 64
8. Field/Reservoir Development................. 65
Oil and Gas Employment Characteristics.............. 67
Oil and Gas Employment Overview................... 67
The Oil and Gas Industry Work Force............ 68
Oil and Gas Employment Group Characteristics 70
Plant/Facility Construction...................... 73
Residency Types................................ 74
Select Demographic Factors..................... 75
Plant/Facility Operation......................... 76
Residency Types................................ 76
Select Demographic Factors..................... 77
Field Gathering Construction..................... 77
Residency Types................................ 77
Select Demographic Factors..................... 78
Seismic Crews.................................... 78
Residency Types................................ 78
Select Demographic Factors..................... 79
Drill Crews...................................... 79
Residency Types................................ 80
Select Demographic Characteristics............. 81
Oil and Gas Well Service Employment.............. 81
Pre-Drill Services............................. 83
Residency Types.............................. 83
Select Demographic Factors................... 84
Drill Services................................. 85
Residency Types.............................. 85
Select Demographic Factors................... 87
Well Completion Services........................ 87
Residency Types.............................. 88
Select Demographic Factors................... 89
Well Production................................. 89
Residency Types.............................. 90
Select Demographic Features.................. 90
Regional Oil and Gas Industry Syntax................ 99
General Oil and Gas Industry Description...... 99
Regional Oil and Gas Industry Syntax............. 102
Application of Location Theory................... 104
Application of Central Place Theory.............. 108
Regional Industry Dynamics....................... Ill
Socioeconomic Impacts of Oil and Gas
Development Activities........................... Ill
Summary: Factors Determining Regional
Industry Syntax.................................. 113
Area Settlement Factors.......................... 113
Industry Related Factors......................... 116
V RESIDENCY ALLOCATION METHODOLOGY.................. 120
Allocation Method Objectives....................... 121
Discussion of Model Definition and Orientation. 128
The Residency Allocation Model..................... 130
The Local-Industry Input Process (L.I.I.P.).. 131
Model Part I: Description and Operations...... 138
Elements 1.0 and 2.0........................... 138
Element 3.0..................................... 142
Element 3.0 A................................... 142
Element 3.0 B................................... 145
Basing Analysis for Secondary Places
of Work (PW2).............................. 145
Operation of Service Basing Analysis,
Figure 4................................... 148
Element 3.0 C................................... 157
LocalIndustry Input Process (L.I.I.P.)................................... 157
Element 4.0..................................... 158
Number of Workers, by Place of Work
in Service Structure....................... 158
Element 5.0..................................... 158
Number of Workers by Primary Place of
Model Part II: Description and Operations 159
Element 6.0 A................................... 159
Workers by Secondary Place of Work (PW2): Restricted and Non-Restric-ted Residency................................ 159
Element 6.0 B................................... 162
PW2 Workers with Restricted Residency,
By Place of Residence...................... 162
Element 7.0 A................................... 163
Workers by Primary Place of Work (PWi): On-Site Housing vs. Non-Restricted Residency......................... 163
Element 7.0 B................................... 166
PWi Workers in On-Site Housing, By Place of Residence
Element 8.0 A............................ 167
Allocation Process: Non-Restricted PWi
and PW2 Workers............................. 167
Element 8.0 B................................... 172
Residency Preference Survey................... 172
"Round One" of the Residency Preference
"Round Two" of the Residency Preference
VI SUMMARY........................................ 182
Key Findings........................................ 183
Conceptual Findings............................... 183
Process Findings.................................. 185
Implementation or Application of Residency
Allocation Process and Products................... 187
1 Resource-Development Activity Relationships.............. 44
2 Judgmental Estimate of the Source of 100
Development Workers....................................... 71
3 Summary of Key Employment Group Characteristics... 91
4 Summary of Key Employment Group Characteristics... 93
5 Summary of Key Employment Group Characteristics... 94
6 Summary of Key Employment Group Characteristics... 95
7 Summary of Key Employment Group Characteristics... 97
8 Select Demographic Characteristics of Oil and Gas
Employment Groups......................................... 98
9 Oil and Gas Industry Syntax Factors Affecting
Service Structure Basing and Worker Residency Allocation............................................... 140
10 Aggregated Factors Affecting Residency
11 Employment by Regional Service Center................... 154
12 Employment by Secondary Service Center.................. 155
13 Employment by Primary and Secondary Places of Work 160
14 Secondary Workers with Restricted Residency, By
Place of Residence....................................... 164
15 Primary Workers in On-Site Housing...................... 168
16 Non-Restricted Primary and Secondary Workers...... 169
17 Example of Information Sheet............................ 176
1 Elements of Industry Conceptualization............ 39
2 Development Phase Requirement Schematic.......... 50
3-A The Residency Allocaltion Model Part I:
Orientation to Place of Work...................... 132
3-B The Residency Allocation Model Part II: Residency
Allocation Process................................ 133
4 Basing Analysis....................................... 146
5 Part II: Residency Allocation Process.,,..,....... 161
6 Example of Base Map................................. 174
The Studio 3 project's purpose is to select and/or formulate a process providing the necessary edification and methodological framework capable of credibly estimating the settlement patterns or residency allocation of employment directly associated petroleum and natural gas development activities. This process places high importance on community and industry involvement. The methodological framework would be applicable to rural areas currently experiencing the bulk of the Rocky Mountain region's new oil and gas development.
Determining the settlement patterns or residency distribution of direct/primary employment is a vitally important step in the demographic impact assessment process for not only conventional oil and gas development, but for all energy developments. As a result of the development of oil and gas projects, rural communities may experience growth of such a large magnitude that community service demands and public costs become inordinate, with the result being an overall decrease in area quality of life. Other communities within impact areas may receive small population increases with corresponding amounts of population growth-related impacts.
In most cases, the ethos or nature of communities will be altered as a result of area energy developments and the influx of project-
related population. Local decision-makers and planners are often more concerned with the location or distribution of oil and gas-related population growth than with questions relating to the levels of overall population growth. Its importance relates not only to community, county and multi-county level planning, but has implications for industry planners as well.
The residency framework of analysis to be selected and/or formulated in this study is termed a conceptual model that is process oriented. That is, the framework is conceptual in delineating a series of ideas comprehending the essential attributes necessary to determine oil and gas employment allocation, derived from specific instances, occurrences, or empirical studies. The framework is process-oriented because it depicts a system of operations necessary for the production or formulation of residency allocation patterns. (The system does not attempt to quantify the system of operations through application to a case study.)
As important as formulating the framework for the allocation analysis, is the conceptualization of the oil and gas industry. Without understanding the working components and processes specific to the oil and gas industry, it is impossible to design or select a system to address adequately the problem of determining residency allocation. The peculiarities of petroleum and natural gas development contribute to the difficulty in assessing demographic and related impacts, particularly the residency allocation or settlement patterns of industry employment. The contemporary difficulty in assessment of residency allocation is the result of several factors: the fragmented or dispersed nature
of the oil and gas industry; the inherent uncertainty as to whether developments will be productive or not; the dearth of research materials addressing socioeconomic characteristics and impacts of oil and gas developments and the application of allocation methods to oil and gas projects; and so on. Oil and gas employment allocation to places of residence must address these factors through the subsequent tasks: further conceptual refinement and delineation of industry employment groups, their residency characteristics, and the characteristics and organization of a regional oil and gas industry; and, an analysis of the strengths and weaknesses of contemporary allocation methods when applied to oil and gas developments.
A high degree of importance is placed on community and industry involvement in the allocation process. To handle the complex problems posed by rapid oil and gas development effectively, ways must be found to involve citizens, local government officials, and industry in understanding residency allocation problems and issues. Important purposes for local and industry involvement include: provision of much-needed inputs to the residency allocation process, to provide locals with information that may assist in community planning and strategies enhancing community control of oil and gas-related impacts, develop and nurture lines of communication benefiting both communities and industry, and dissemination of allocation-related information to industry and inmigrants.
The study is subsumed into four primary chapters: the demographic impact assessment process, residency allocation/settle-ment pattern determination, conceptualization of the petroleum and
natural gas industry, and methodological framework selection or formulation. The purpose of discussiong the general demographic impact assessment process is to provide a sense of the niche and importance of residency allocation within the wider context of demographic impact assessment. The residency allocation/settlement pattern determination chapter describes the factors that affect residency allocation patterns, as well as the commonly used methods to estimate residency allocation of energy project employment. The purpose of conceptualizing the oil and gas industry is to comprehend the working elements and processes that determine the organization and characteristics of a regional-scale industry. Without conceptualization, it is impossible to establish working hypotheses on how residency allocation patterns can be determined. The selection or formulation of an appropriate allocation method for oil and gas employment involves synthesizing information on the strengths and weaknesses of commonly used allocation methods with the characteristics and organization of the oil and gas industry.
DEMOGRAPHIC IMPACT ASSESSMENT
Determining the size, distribution and demographic characteristics of energy resource-related development is a critically important step in the socioeconomic impact assessment of such developments. The process of projecting these populations is known as demographic impact assessment, of which, residency allocation or settlement pattern determination of project-related populations is a key component. To fully comprehend the importance of residency allocation and its niche within the demographic impact assessment process, it is first necessary to briefly describe the entire impact assessment process in terms of the principles or steps used to complete the process.
A number of factors must be considered in formulating an assessment program of methods/techniques that will provide the most accurate,pragmatic impact process possible. (In specific parts of the assessment process, different or variable techniques can be used, depending on project and politically-related factors.) These factors relate to the characteristics of the impact events and the needs of policy makers in impact areas. The distribution of project impacts, their magnitude, and the assessment techniques used will be
affected by several factors:1
1) The characteristics of the project;
2) The nature of the project site area;
3) The characteristics of the inmigrating workers; and
4) Legislative mandate and pragmatic considerations.
Project characteristics affect the distribution of their impacts and magnitude. Several key factors relating to project characteristics must be addressed:
Plant Location. Projects in proximity to high-to -moderate density population centers having large employment bases are likely to obtain more of their workers locally than are projects located in relatively sparsely populated areas. This means projects located in high density population areas are less likely to require a significant inmigration of new employees.
Direct Project Employment. Projects with large employment demands lead to higher levels of worker inmigration than do projects with much lower worker needs. (It's obvious that direct employment requirements of a project play a major role in determiniation of population impacts.)
Indirect-Direct Worker Ratios. The numbers of associated, service, indirect, or induced employment generated by a project has a significant impact on area population growth. The higher the number generated, the greater a project's impacts are on population growth.
Length of Project Phases (Construction and Operations.) The length of project construction and operation phases affect patterns of population change. In most instances, the employment and corresponding population trends will peak during construction phases. Afterwards, a decline is experienced, followed by a relatively stable level during the project's operations period.
Amount of Local Hiring, Developer's Employment Practices.
The numbers of local residents hired for project-related employment and the developer's policies toward local hiring will affect population growth. Fewer inmigrants are needed if more local residents are hired.
The characteristics of the general project site will affect population growth and its distribution within the project impact area. Among these characteristics are:2
Local Labor Force Skills and Availability. The level of local hiring by a developer will depend in large part on the availability and skill levels of the local population. If a large number of people are available in the project area with skills required by project development and operation, fewer inmigrants will be needed. (Again, much depends on the developer's hiring policies.)
Number and Characteristics of Area Settlement Sites. The characteristics and the numbers of possible settlement sites will affect both the population impacts and new population
distribution among sites, as a result of project
development. A key settlement site characteristic is the ability to absorb population growth. If an impact region has a large number of communities with well-developed service bases, less dramatic levels of population growth with corresponding impacts are likely than in regions with fewer communities and with settlement sites lacking the service bases necessary to absorb population increases.
Growth Preferences of Local Communities. Community growth preference may affect population growth in project impact areas. Growth in large urban centers is probably less likely to be affected by this factor. However, resident desires in rural communities that may preclude, inhibit, or promote community growth are often communicated directly to potential inmigrants.
Characteristics of Inmigrating Workers
Another dimension of project-related assessment is the
characteristics of inmigrating workers. The demographic characteristics of inmigrating workers and their families are essential in determining population growth. Demographic characteristics considered will include: marital status, average family size, age and sex distribution of workers and dependents, community service and settlement preferences. These characteristics will affect the levels of total population growth in an impact area, and the characteristics and distribution of new population.
Legislative Mandates and Pragmatic Considerations
In addition to these factors, the impact assessment mandated by legislative acts and the pragmatic considerations of local and regional decision-makers will affect how a demographic impact assessment is constructed. The guidelines that concern the appli-
cation of the National Environmental Policy Act (NEPA) have mandated the provision of assessments that supply direct information needs to, and are readily comprehended by, decision-makers in government. States may require project-impact assessments that supplement the work completed for a Federal EIS, under NEPA guide-lines.
Projections of energy resource development populations vary in accuracy according to the characteristics of the projection area
and the projection methodology that is used. It is important that the assumptions underlying a population projection be carefully examined. Shryock and Siegal note several factors contributing to
greater accuracy of projections. Projections are usually more accurate if performed:
1) For a large geographic region rather than for a smaller component area;
2) For total populations, rather than for population subgroups;
3) For shorter periods of time, as opposed to longer ones;
4) For geographic areas where past population or development
trends are more likely to continue than new and different patterns;
5) For areas undergoing slow changes rather than rapid ones; and,
6) With data for areas directly related to population change (migration data, births and deaths), rather than employing data characterized by indirect or symptomatic indicators of population change (housing units, utility hook-ups, automobile registration counts, and so on).
Few of the aforesaid factors operate to increase projection accuracy in areas undergoing rapid energy-related resource developments.
The Demographic Impact Assessment Process
The basis of formulating a project-related demographic impact assessment process lies in projecting an area baseline population (population without project impact) and an impact-related population. This involves a number of important steps. The subsequent material delineates the process steps, expounds the nature of these steps, and notes different alternative methodologies available for step completion. (The assessment process will be addressed in generalities. A detailed discussion is beyond the scope and purpose of this section.) The general demographic impact assessment process includes:1
1) Determination of the project-impact area;
2) Projection of the baseline population for the project
3) Determination of project-related direct and indirect inmigrating workers;
4) Projection of the residency allocation or settlement patterns of inmigrating workers; and,
5) Determination of the project-related population, through estimation of the demographic characteristics of inmigrating workers and dependents.
The delineation of a project-impact area is often determined by demographic factors. The demographic impact area of a project is often seen as the area in which project-related populations will locate. The communities within the impact area are usually within a commuting distance of the project, making them likely residence localities for project-related employees.
The projection of the baseline population in the impact assessment process generally has two parts. The first, the projection of the total population at the regional or county level.
The second part involves an allocation of the total population to subareas (i.e., census divisions) within the total impact area.
The total population projection for the entire impact area has been formulated through the use of either a single or several separate employment ratio(s), a cohort-survival, or cohort-component method. (For a detailed discussion of these methods, note: Chalmers and Anderson, 1977(3), and Denver Research Institute, 1979(17).) The primary method currently in use is the population-
to-employment ratios, although its accuracy over long projection periods is dubious. The long-term propensity for inaccuracy is giving rise to the increased use of cohort procedures which provide more demographic details with more long-term accuracy.
The population projection procedure also involves the allocation of population to subareas. Subarea allocation is essential if population impacts are to be projected for communities, most school districts, or other sub-county jurisdictions. In most cases, total population projections are made at the regional level (when population-to-employment ratios are used), with allocations of population being subsequently made to counties, census divisions, communities within census divisions, etc. Allocations can be made from the regional level to communities and non-municipal areas with a summing of population to obtain county totals. If population projections are formulated at a county level, these totals can be allocated for projections of community and non-municipal populations, then aggregated to obtain regional totals.
In summary, baseline population projections can use several standard projection techniques, in particular the economic based, ratio-ing and cohort techniques. The assumptions and limitations upon which impact assessment projection techniques are based must be recognized and accounted for, as is the case in standard population projections. It should be noted that five methods are currently available for general or standard population projections: extrapolative, ratio-based, land-use, economic-based, and cohort component-based techniques. The basic disparities in these
standard methods are in their data requirements, accuracy of demographic process simulation, and detail of outputs.
Determination of project-related direct and indirect inmigrating workers involves several procedures and the use of numerous assumptions. The projection of inmigrating workers is a widely-accepted starting point for projecting project-related population. The reasons for this acceptance include: data on project labor requirements are usually readily accessible; the migration of workers related to energy resource developments is primary employment related, although non-economic factors can play a significant role;8 and, there appear to be few alternatives to the use of employment as a base for projecting project-related populations. Determination of project-related inmigrating workers can be achieved through the following procedure:9
1) Estimate the numbers of direct employment by data obtained from the project developer. The number is multiplied by an employment multiplier that describes the number of indirect or induced workers per direct worker. The multiplication yields the estimated size of indirect or induced employment;
2) Given the estimates of direct and indirect employment requirements, estimates of the proportions of these requirements that can be supplied by the local popu-
lation are made; and,
3) Project employment supplied locally is subtracted from the total project employment requirements, giving the number of workers that must inmigrate to satiate project needs.
The key data needs in this procedure are the direct-indirect employment multiplier and the local worker ratios. The employment multiplier is available from state or other local economic data (such as an input-output table). The local worker ratios
have been summarized in several publications: Murphy and Williams, 1978(9); Bender, 1975(10); Murdock and Leistritz, 1979(11).
The next step in the demographic impact assessment process is the projection of the residency allocation or settlement patterns of inmigrating workers. This is a step similar to population allocation to subareas in the baseline population projection. However, the primary concern in impact projection residency allocation is the distribution of employees in relation to the project site(s). (Baseline population allocation will focus on distribution within a delineated county or region.) This step has critically important implications, regarding impacts that are projected for local areas. Chapter III of this report will address residency allocation/settle-ment pattern determination in detail.
Determination of the demographic characteristics of inmigrating workers and their dependents is the final major step in the impact assessment process. This generally involves assuming a
standard demographic profile for project workers and their dependents. This profile is applied to the projection of inmigrating workers to obtain project-related population figures. A number of worker profiles are currently available (e.g., Mountain West, Inc., 1975(12), 1977(13); Leholm, et al., 1976(14); Wieland, et al., 1977 (15)). Projection of project-related population by multiplying the numbers of inmigrating workers by the average family size per worker is the simplest technique. There are complex methods that use multiple worker-related characteristics applied to the number of inmigrating workers. These characteristics include:
1) Percent of workers by age, sex, and marital status;
2) Percent of workers with dependents in the area;
3) Number of dependents by age and sex;
4) Employment status of dependents; and,
5) Occupational and industrial status of dependents.
The aforesaid steps of the assessment process involve the use of numerous assumptions. These assumptions cover a wide range of topics, including: demographic characteristics of inmigrating population, worker settlement patterns and preferences, impact area baseline conditions, project development scenarios, local worker participation rates, and so on. Given the uncertainty inherent in the demographic impact assessment, the projections are only approximations of impacts that will occur.
RESIDENCY ALLOCATION/SETTLEMENT PATTERN DETERMINATION
Step number four of the demographic impact assessment process is determination of the residency allocation or settlement patterns of inmigrating workers. The focus of this step is not the allocation of workers within a geographic region or county, but the distribution in relation to the project site(s). Worker distribution may involve residential localities within several distinct geographical jurisdictions.
Energy project-related impacts on a particular community cannot be determined by knowing the overall county population increase. Population projections on the community level .are required. This can be accomplished through determination of the residency allocation or settlement patterns of inmigrating workers. Community-level population projections are necessary for local officials to plan for expansion and development of new facilities and community services, to estimate the need for capital expenditures, the project-related effects on local revenues, and to avoid unrealistic expectations that can lead to the misallocation of scarce public resources.
As a result of the development of energy projects, rural communities may undergo a doubling or tripling of population in
only two or three years. These high levels of growth can place severe demands on public services and housing, as well as substantially increasing the requirements for public and private investments.16
Energy project development can have a wide range of effects on impact area communities. Some communities may experience growth of such a large magnitude that community service demands and public costs become inordinate with the result being an overall decrease in area quality of life. Other communities may receive small population increases, with corresponding amounts of population growth -related impacts. Some areas may experience growth in levels that afford manageable and beneficial population increases. In most cases, the ethos or nature of the communities will be altered as a result of area energy developments and the influx of project-related population.
Local decision makers and planners are often more concerned
with the location or distribution of energy-related population growth than questions relating to the levels of overall population growth. Many decisions are contingent upon procuring information related to population distribution: private and public service expansion, general allocation of resources, attempts to alter the location of project-related population growth sites, etc. Relatively large projects may have little impact if the population increases are channeled into large urban centers where available housing and accessible public services are in abundance. In contrast, many rural areas have public service levels that are inadequate. The number of vacant housing units may seem adequate to
absorb population increases, but much of this housing stock is substandard. In rural communities such as these, a sudden increase in population may require large private and public investments to cope with this growth. But at what locality should investments of this type be made? The determination of population distribution takes on critical importance.
Residency Allocation Factors
There is general concensus that factors influencing residency allocation or settlement patterns of energy-related workers may include the following:17
1) Location of project(s);
2) Length of project phases (e.g., construction and operation);
3) Commuting time and patterns to employment site(s);
4) Present availability and quality of public facilities and services (e.g., utilities, schools, public services, recreation facilities);
5) Present availability and quality of private facilities (e.g., retail goods and services and medical care) and the presence of employment opportunities for any other wage-earners in families;
6) Present availability, cost, and quality of housing;
(NOTE: items 4-6 can be indicative of a dearth of settlement sites that workers have to choose from.)
7) Announced plans for new housing developments, as well as public and private facilities and services (known as
8) Residential choices of people presently working at or near point(s) of new employment;
9) Receptiveness of a community to having new residents;
10) Decisions of local government regarding local zoning and other regulatory restrictions;
11) Local land ownership patterns;
12) Special incentives (e.g., residency policies of project developers toward their employees, availability of subsidized housing, availability of special transit systems, etc.);
13) Cost and availability of credit;
14) Local tax structure.
The subsequent materials represent a brief discussion of the epithet of the previous factors and how they can influence the residency allocation of inmigrating workers and dependents.
In general, project-related workers are apt to reside in communities in proximity to the work site(s), contingent upon such communities being similar to more distant settlement sites. Work site accessibility tends to be a less important factor as the length of the project employment period decreases. 18 Accordingly, residential distance from the work site(s) is generally an important factor in worker settlement selection, but the effects of distance can be offset by other factors.
Commuting patterns of project workers have significant implications for residency allocation. Impact area communities expecting rapid growth from energy development may actually
experience little growth as a result of changes in community patterns. Changes in patterns may be a harbinger that communities or areas not expected to grow, may experience high levels of growth. Empirical studies have shown that distance is less important in the residency patterns of construction workers, as opposed to operations workers. 19 Data reveals that the percentage of workers residing close to the project site are much higher for operational workers than for construction workers.
More information can be obtained on the commuting patterns of energy workers if one examines the workers' area of prior residencethat is, if the workers were residing in the area before the commencement of project construction, they are considered local workers,or if they inmigrated to procure employment at the project site, they are considered non-local in origin. Whether the workers are considered local or non-local appears to affect their commuting distances. Data points out disparities between the commuting
distances of local and non-local workers in energy development areas. Many local workers do not change residences in procuring employment at project work sites. Non-local workers do attempt to obtain residences that are in proximity to project location(s).
The empirical studies of Mountain West Research demonstrates that distance does inhibit the residency choices of inmigrating workers. 19
The effects of distance on residency allocation may be largely attributable to settlement site availability factors rather than disparities in worker demographic characteristics. Empirical studies of urban commuting patterns have generally
corroborated the idea that workers with higher incomes and those that are younger, more highly educated, and married, are more likely to commute longer distances than are workers who are single, poorly educated, and low income earners. In rural areas, this has been shown not to be the case. 20 The worker characteristics per se, except for their pre-employment place of residence, are not closely linked to commuting patterns.
The residency allocation factor of distance and public service availability (which is indicative of the population size of impact area communities) appear to be the most important determinants of worker residency allocation. 15 As distance from work site to a place of residence increases, the level of inmigrants a location receives decreases. The larger the population of a place of residence, the greater the number of project related workers and dependents it can expect to receive. Even so, numerous other factors need to be addressed that have the capability of altering residency allocation patterns in ways that are difficult to predict when using only distance and population coefficients.
Communities with obvious public service and facility advantages over other settlement sites are often attractive loca-tions for inmigrating workers and dependents. Public service and facility systems would include schools, paved streets, utility systems, recreational activities, etc. Systems such as these are often a function of community population size.
Different size communities generally support disparate levels and types of community services, and thus generate different magnitudes of attraction for inmigrating workers.22 In general,
data indicate that communities with populations over 1,000 are more likely to attract a larger proportion of the energy project-related workers than are smaller communities. The dearth of alternative settlement choices may significantly influence the residency pattern in some areas. Construction and non-local employment groups tend to congregate in communities with a population of over 1,000 residents. Energy developments may not provide high levels of growth for all communities within development impact areas. For communities with populations of a few hundred people, energy projects may provide minimal growth. In contrast, community service bases for places of 1,000 population or more may be sufficient to attract inmigrating populations resulting in substantial growth.
The availability, cost and quality of private services, private facilities, and housing, is an important decision factor in residency determination of inmigrating workers and dependents.
Little discussion is required here because the advantages of having adequate stocks of these items in a particular community is apparent in residency attractiveness considerations.
Entrepreneurial factors can act as incentives in luring inmigrants to a particular community or area. In rural areas lacking adequate housing, private services and facilities, a developer, by making it known that plans are in the offing to provide these, places the community or area in a position to attract more inmigrants than could be expected without the new development. The timing of such development announcements is of critical importance.
The communities themselves may engender incentives to attract increased levels of entrepreneurial activity and population by promulgating plans to develop key public facilities and services necessary for the construction of future shopping areas and/or subdivisions. For example, a community may plan or construct a key trunk road, sewer line, or water treatment facility, making it possible for entrepreneurs to develop a particular area.
The residential choices of people presently working in the area under question or inmigrating within a short period of time will affect the attractiveness of a community to other inmigrants. Present local workers may deplete select types of available housing within the area's stock that are desired by the energy-project employment group(s) inmigrating to the area. Without these types of housing being available, the inmigrants may search for places of residence elsewhere. The level of basic employment activity present in the project impact area in the form of mining activities, conventional oil and gas extraction, power plants, and so on, needs to be assessed to determine how inmigrant residency preferences may be curtailed.
The receptiveness of a community to having inmigrating population from energy development, although difficult to assess in certain cases, can affect the residency allocation of workers and dependents. Through citizen and governing body attitudes transmitted directly by contacts with corporate representatives and workers, and indirectly through contacts with citizens of other communities, travelers, and so forth, it is not terribly difficult to assess how amenable an area is to encouraging or discouraging
inmigrating worker residency. A community may wish to discourage inmigration because of the fear of potential social and cultural disruption, resulting public service and facility needs, shortages of private goods and services, local inflation being fueled, revenue shortfalls, aesthetic deterioration, local employment being lost to other job sectors, distrust and fear of newcomers, or misocainea. The encouragement of inmigration into a particular community can stem from desires to procure increased revenue sources, economic diversification, area business stimulation, a "development at any cost" mentality, to broaden social and cultural dimensions of an area, a way to obtain public services and facilities that are deemed necessary, a genuine commitment to a local contribution to national energy needs, an end to area out-migration, and so on. Communities may go so far as to run development ad campaigns aimed at developers, energy companies and inmigrating workers, to inculcate a positive image for the community as a place of residence.
Decisions of local government regarding zoning and other regulatory restrictions are noteworthy as incentives or disincentives for inmigration. A community or county may zone or refuse a rezoning application that makes it difficult or impossible to develop a shopping area, subdivision or even an energy project, drastically altering residency allocation patterns. Other regulatory restrictions in the form of fire codes, health codes, and building codes can be used to encourage or encumber developments necessary to facilitate population growth.
Local land ownership patterns may proscribe community expansion necessary to facilitate inmigrating population. A community may be situated such that new development is possible only in prescribed areas. Should these prescribed areas be owned by corporations, government agencies, or private land-owners unwilling to relinquish development rights, the result may be that no development is forthcoming in that area. The result would be an altering of residency patterns to distribute inmigrating populations to other areas.
The cost and availability of credit may influence worker residency. High mortgage interest rates may encourage renting with corresponding consequences. Newcomers may have difficulty arranging loans, thus proscribing home buying.
The local tax structure may discourage local residency by inmigrants. High community taxes may encourage rural residency or living in outlying communities.
Direct and Indirect/Induced Employment
An important distinction in estimating the residency allocation or settlement patterns is that between the population associated with direct project employment and that associated with indirect or induced employment. Each type of project-related employment is apt to have a different set of criteria for determining where to reside. The more refined approaches to residency allocation differentiate between the direct project employment and
the indirect or induced employment, in terms of how the different
residency characteristics of these groups affect the distribution of population. The distribution of direct employment is influenced by commuting time to the project site and community attractiveness. (Commuting time is an important consideration for construction workers; however, they are not as likely to be strongly influenced by community attractiveness factors. Construction workers will many times reside in man-camps, mobile homes, recreational vehicles and may even travel home on weekends to be with their families. Accordingly, much of their income may not be spent locally. On the other hand, operations workers may consider both commuting distance and community attractiveness as important residency characteristics since these workers represent permanent area residents.) The residency allocation of indirect or induced workers will be linked to the location of trade and service sector jobs located in larger communities of the impact area, established shopping patterns, and the opportunities presented by the expansion of new and existing business. 2I* (In this report, allocation of oil and gas employment to places of residence is limited to direct project employment.)
It should be noted that research on the accuracy of formal residency allocation methodologies or models in rural areas is lacking, along with credible data on decision criteria, and ranking and trade-offs used by project-related workers in making residency decisions. These problems will be discussed in more detail in subsequent materials.
Residency Allocation Techniques
The actual allocation/distribution can be projected by
using one or a combination of four different approaches:
1) Gravity Models. These methodologies are predicated on the theory that a community is more attractive as a place of residence the larger it is and the closer it is to project site(s);
2) The Judgment Technique. This approach, also known as an ad hoc or community weighting method, uses proportions derived in judgmental fashion to distribute the population impacts to specific communities;
3) The Delphi Technique. This approach is similar to the Judgment Technique, the difference being the utilization of expert opinions to establish factors affecting distribution proportions.
4) Current Survey Patterns. This method uses current residency allocation information for appropriate worker groups, derived by survey, to project the settlement patterns of future inmigrants.
Gravity models have been used extensively in demography,2526 regional economic studies, and in demographic impact projections. The gravity models are predicted on the physical relationship stating the force of attraction between two bodies is directly proportional to the product of their mass and inversely proportional
to the square of the distance that separates them. In other words, community size and distance from the project site(s) serve as an indicator of the relative attractiveness of communities as places of residence. Using an analogy, the gravity model states that workers from project i^ will choose to live in community j_ in direct proportion to the attractiveness of community j_, and in inverse proportion to the square of the distance separating the project and the community. In arithmetic form, these assumptions may be stated in the subsequent manner:
workers from project j going to community i; population of community i;
distance from project site j to community i.
For all communities in an impact area, the subsequent equation is
Where: M. = fraction of the total inmigrants locating in community i;
P_^ = population of community i;
D. = distance between community i and the work site, raised to the power a; and,
W^ = the relative qualitative attraction of community i.
(The values for the distance exponent (a) and the community attraction index (w) for any community may be specified by the user. In the module,
= 1. The W-Â£ could conceptually assume any positive value consistent with the user's analysis of the relative attraction of various communities. Wi values other than 1.0 specified by the user are generally based on local information regarding perceived attractiveness factors such as the relative availability of housing and key public services.
The major role of the variable is to allow users to test the sensitivity of community level impact projections to settlement pattern assumptions. The standard values for the distance exponent parameters are estimated by using data representative of settlement commuting patterns of employment groups.)
As previously mentioned, the basis of the gravity model is the premise that relative attractiveness of communities as places of residence is an indicator of their size, as well as their distance from project site(s). Size of a community may serve as an approximation of its level of available amenities (e.g., services and facilities), while the distance factor, many times weighted by an exponent, measures the negative factor of travel/commuting time.
A distance exponent is often weighted by a value of 2, reflecting the idea that the farther a community is from a project, the less likely that project's workers will choose that community as a place of residence. Given these premises, fewer workers will be distributed to a given community as distances between projects and the community increases. Different attractiveness and distance factors can be used for each type of project-related employment, to more adequately reflect worker group residency characteristics.
Further modifications to the gravity model are manifest in the idea of the project location given primary emphasis.30 If a project site is in proximity to a relatively large community, a
population allocation is explicitly specified for the area. The impacts not allocated to the project site community or area can be distributed to other study area communities via a gravity model. The University of Wyoming study cited30 allocated 85 percent of the project-related impact to the community in which the facility was located, with the residual impact distributed by a gravity model.
If the gravity model is to be used in the allocation process, several assumptions, modifications, and/or caveats must be carefully addressed via calibration of community attractiveness indices and distance exponent factors:
1) The validity of standard gravity model application to rural
areas is dubious. Assumptions implicit in the gravity model in need of examination include uniform levels of communication between community members, uniform abilities of communities for facilitating population service demands, and factors concerning the applicability of the model under disparate phases of community development are not clearly delineated. These concerns accentuate the need for careful assessment of model results;
2) In a project impact area, are larger communities actually more attractive than smaller areas? This attractiveness is in terms of schools, recreation, shopping, availability of medical services, and so on. If the user feels this is not the case, careful consideration should be given to the weighting factor incorporated into the model. The weighting factor should then better account for attractiveness
factors other than size;
3) The housing preferences of workers as well as housing availability in communities is an important consideration. The percentage distribution of housing-type preferences of workers can be applied to projections of inmigrating residents for each impact area community. For each community, the projected housing type demand is then compared with local estimates of community ability to supply the required housing. If housing supply constraints are exceeded in a community, the community in question may have to be deleted as a residential alternative. The result will be that residual workers will be redistributed to other places of residence. The housing preferences, prices, availability, and community capabilities to meet new housing demands, can be reflected in weighting factors incorporated into the model. (An implicit weakness in the model, as well as other allocation techniques, is the dearth of empirical information that objectively specifies how workers trade-off commuting time,type of housing unit preferred, and proportion of budget spent on housingtogether, expressing idiosyncratic behavior of inmigrating workers);
4) The gravity model is more of a predictive mode of allocation, with a low level of conceptual justification supporting its use.1 The model's overall explanatory power for residency
allocation is low.
This method uses proportions, derived judgmentally or qualitatively, to distribute the impacts to select communities.
The judgmental method assigns points to various communities within the impact area based on geographic factors, community attractiveness factors (e.g., amenities offered by communities, availability of housing, housing costs, and so on), distance from the project site(s), opinions of local planners, and the disposition of commu-
31 30 oil
nity leaders and officials toward growth and development. *
(The maximum possible point scores for each of the aforesaid categories are established by method users after local interviews.) Points given to each community are summed and used to calculate the percentage of the estimated population increase, as a result of project development and operation,that each community would accrue. This can be referred to as estimating an impact capture rate for each community.
The judgments concerning the numbers of points accrued by communities from the categories noted in the previous paragraph can be made more credible through several means:
1) Survey existing employers in the study area to ascertain the residential allocation of their employees;3033
2) Procurement of information on commuting patterns of workforces from other similar projects in the area;3435
3) If the commuting pattern information noted in number 2) is not available, the existing population distribution in the area is often used with minor modifications to take account
2C a *7 3 p
of the distance of communities from the project(s);
4) If a high degree of uncertainty prevails as to the likely residency patterns associated with a development action, the implications of several disparate residency pattern
12 3 9
assumptions may be studied;
5) An analysis of the effects of other study area activity upon the proposed development action. 39,1|CI 41 The attractiveness of an area as a place of residence is dependent upon what is located there. This, in turn, relates to the total activity levels in the area. If a community is already experiencing rapid growth and related problems as a result of other development activities, this may make the community less desirable to proposed development action workers as a place of residence.
Even though this allocation technique is not predicted on a formal modeling methodology, it does have advantages. It uses, or allows, a large degree of judgmental flexibility and related modification based on input from knowledgeable local officials and residents, as well as extrapolation and interpretation of the area's past development trends and experience.
The judgment techniques suffer from some of the same problems faced by the gravity model. Namely, a dearth of credible data on the idiosyncratic behavior related to how inmigrating workers determine individual residency decisions and trade-offs in commuting time, housing preferences,housing costs, etc.; the collection of this data from local people is difficult and time-consuming; and the accuracy of determinations made for this technique is dependent on the accuracy of local perceptions.
This technique is similar to the procedure described for the judgment technique. The difference is that the Delphi techniques employ more concerted and definitive efforts using judgment techniques. A sample of persons is selected to determine community factor weights who are representative of community cadres with different types of knowledge of residency choice factors. This sample of people may include: local leaders, merchants, general residents, real estate agents, housing developers, industry representatives, and so on. The initial evaluations completed by these groups are summarized and used as the basis for additional rounds of questionning. The purpose of the Delphi process is to procure a high level of consensus on the attractiveness of communities to project-related workers. This technique has been used in northwestern Colorado to allocate worker impacts for several counties and communities.1+2
The Delphi technique is still dependent on local judgments. However, the knowledgeable individuals required to make careful examinations and re-examinations of community attractiveness factors give it advantages over the other allocation techniques. (A more detailed discussion of the structure and implementation of the Delphi approaches is found in Chapter V.)
Current Survey Patterns
To project the residency allocation of inmigrants using this method, the current settlement patterns for appropriate employment groups in the area are established through residency
surveys. The survey data will establish the proportions of energy employment residing in the various impact area communities. These allocation percentages are then applied to the total number of projected inmigrant energy workers for the impact area over time to obtain the workers projected to reside in the study area communities.
The current survey pattern approach predicates projections on residency patterns established at one point in time. It is obviously risky to base projections on allocation parameters established for one point in timepaterns of regional residency in rural areas can be very dynamic in nature. These survey patterns can be applicable to an area only if patterns can be established from a significant number of energy workers already residing or working in the area, or if the area has a documented history of energy worker residency. A "virgin" energy area with no previous development is virtually exempt from this survey allocation process.
In addition to the four allocation techniques discussed previously, use is being made of techniques that use either alternatives to population in the gravity model or that synthesize judgmental techniques with the gravity technique.434445 Weiland, et al., (1979) found that improvements could be made in the predictive ability of the gravity techniques if sales tax receipts are substituted for population in the equations. (The sales tax receipts will presumably reflect degrees of established business infrastructure.) It has been suggested that hybrid techniques combining gravity techniques with community attractiveness factors,
may be more effective than single methodologies in determination of worker residency distribution. **3 1,4
CONCEPTUALIZATION: THE PETROLEUM AND NATURAL GAS INDUSTRY
Conceptualization is the function or process of forming ideas that enable a person to grasp the meaning of something. (Paraphrased from Webster's Third New International Dictionary,
G. and G. Merriam Company, Publishers.) It can be a series of ideas comprehending the essential attributes of an item or abstraction. The conceptualization of field data is an essential starting point in formulating a working hypothesis.
The purpose of this chapter is to conceptualize the working components and processes that determine the organization of a regional-scale oil and gas industry. The reason for this is as simple and straight-forward as it is important. Without conceptualization, it would be impossible to establish a working hypothesis on how residency allocation of oil and gas employment can be determined.
The chapter has been divided into eight sections. Development Stimuli
Quantity and Composition of Hydrocarbon Resource Oil and Gas Development Activity Description Development Activity Requirements Oil and Gas Employment Characteristics
Regional Oil and Gas Industry Syntax
Socioeconomic Impacts of Oil and Gas Development Activity
Summary: Factors Determining Regional
Figure 1 graphically illustrates the relationships and interactions among these chapter sections, and their corresponding products. These interactive products will become evident as these sections are perused.
Oil and Gas Development Stimuli
Since the early 1970's, Americans have become increasingly aware of the hazards of over-reliance on petroleum and natural gas imports. The contemporary emphasis on domestic oil and gas production has caused severe socioeconomic-related problems in many resource development areas. While some regions of the country have experienced oil and gas development and the problems associated with these development "booms," the other "frontier" areas have not undergone this process, and thus have not dealt with the problems associated with local oil and gas development.
Decisions to explore and to develop oil and gas resources are predicted on both economic and non-economic factors. Economic criteria include: oil and natural gas price trends, lease costs, the perceived quantity and accessibility of oil and gas accumulations, remoteness of potential oil and gas bearing areas, the quality of geologic data affirming the existence of deposits, and federal or state taxing policies on production.1*6
Elements of Industry Conceptualization
Non-economic factors may be significant in exploration and development decisions. These factors may include: permissive or restrictive government policies, legal obstacles to exploration and development, the availability of drill rigs and related equipment and supplies, and the aggresiveness of interested operators and exploration firms.46 Significant changes in any of these factors could encourage or discourage industry interest in an area.
In a positive milieu of economic and non-economic factors, operators/producers are given numerous options for procuring conventional oil and gas supplies.
1) Activate or re-stimulate older wells for additional production. This may require the implementation of new and expensive enhanced recovery methods.
2) Explore and drill wells in remote, difficult-to-access areas, searching for undiscovered accumulations of oil and gas.
3) Further explore and develop discovered, but previously uneconomical oil and gas deposits (e.g., extensive low-BTU natural gas reserves in the Overthrust Belt).
4) Further explore and develop deeper oil and gas pools in existing fields.
5) Pioneer advances in geophysical exploration techniques, drilling methods, and production/processing technology, to provide the means to assess and access oil and gas deposits more effectively.
6) Explore and develop foreign sources of oil and natural gas for domestic consumption.
Quantity and Composition of Hydrocarbon Resource
The type and quantity of an estimated hydrocarbon resource, the existing industry facilities and infrastructure within a resource area, and economic considerations, all drive the type of industry activity necessary for resource development. (In this context, development refers to the activities necessary to find, extract, process and transport oil and gas to consumer markets.) Economic considerations were briefly addressed in the previous section. Determination of the existing industry facilities and infrastructure in a resource area is simply a matter of consultation with appropriate industry sources, regional or state government agencies, and trade journals. It is necessary to discuss briefly the types of hydrocarbon resources that may be found, and their general implications regarding the type of development activities that may be required should industry opt for development. (The type of development activities necessary directly influence levels of industry employment and corresponding impacts on resource areas.) There are a number of groups of hydrocarbon resources that may be found within the Rocky Mountain and High Plains states.
These hydrocarbon groups are found in various mixes:
I. Natural Gas
A. Non-Associated (NA)
1. "Sweet" natural gas
2. "Sour" natural gas
B. Associated-dissolved (AD)
1. "Sweet" natural gas
2. "Sour" natural gas
A. Crude Oil
B. Natural gas liquids
2. Natural gasoline
The subsequent Information briefly describes what these hydrocarbon resources consist of:47
Natural gas is a mixture of hydrocarbons in a gaseous state classified by occurrence into the following sub-groups:
Non-associated gas natural gas that is not in contact with or associated with crude oil within a reservoir;
Associated gas free natural gas that occurs as a gas cap, in contact with and above an oil accumulation within a reservoir;
Dissolved gas natural gas dissolved in crude oil within a reservoir;
Sweet gas natural gas containing no hydrogen sulfide;
Sour gas natural gas containing hydrogen sulfide;
* Crude oil is a mixture of hydrocarbons found in a liquid state within underground reservoir rocks and remaining in a liquid state until it is produced from wells. Crude oil may have varying amounts of sulfur.
Natural gas liquids are "those portions of reservoir gas which are liquified at the surface in lease separators, field facilities, or gas processing plants. Natural gas liquids include but are not limited to ethane, propane, butanes, pentanes, natural gasoline, and condensate."1*8 The quantity and composition of discovered resources have
direct links to the type of development activity needed for extraction and transportation to consumer markets. The question can be asked, given a "significant" quantity of discovered resource, what is the likelihood of specific development activities being required? Table 1 depicts generalizations that describe relationships between the types of resources that may be found in an area, and the type of development that may be required to extract the resources.
Oil and Gas Development Activity Description
Given the quantity and composition of an estimated oil and gas resource, the required development characteristics can be estimated. In this context, development characteristics refer to the type of activities required to develop the oil and gas resource, along with corresponding type and number of industry employees.
RESOURCE-DEVELOPMENT ACTIVITY RELATIONSHIPS
Oil & Gas Development Activity Natural Gas
Non-Associated Gas (NA) Associated-Dissolved Gas (AD) Liquids
Sweet Sour Sweet Sour Crude Oil Natural Gas Liq.
Initial Interest X X X X X X
Lease Acquisition X X X X X X
Geophysical Exploration o1 O1 o1 ol o o1
Pre-Drill X X X X X X
Drilling X X X X X X
Well Completion X X X X X X
Well Production X X X X X X
1. Central Separation o2 o2 o2
2. Sweet Gas Separation A3 A3
3. Condensate Stabilization o'*
4. Pressure Maintenance ER A5 A5 05
5. Sour Gas Dehydration A6 A6
6. Sour Gas Processing A3 A3
7. Sulfur Handling Facility A7 A7
8. Liquid Refinery A8 A8 A8 A8
9. Pumping Station A9 A9 A9 A9 09 O9
10. Compressor Station A10 A10 A10 A10
11. Major Pipeline A11 A11 A11 A11 o" o11
Legend: X Necessary Development Activity
0 High Probability of Activity Occurrence, See Footnote A Variable Need for Activity, See Footnote
Tahle 1 Footnotes
1. If the resource being developed is in a known, highly productive area, the developer may forego intensive geophysical exploration.
2. Central field separation units are characteristic of sweet gas areas, containing numerous wells, and having large reserves of liquid hydrocarbons. They are normally located within a resource field to separate liquids and gas from wellhead production before sending the separate products to other processing facilities.
3. Sweet gas processing facilities (also known as NGL separation units) remove natural gas liquids and other impurities from wellhead gas streams. The need for such plants is predicated on the proximity of availability and unused capacity in existing area facilities. If existing facilities are not available, they may have to be constructed. Sweet gas processing facilities have large ranges in processing capacity.
4. These facilities are normally located within the field. Stabilization removes gas from wellhead liquid streams.
5. Pressure maintenance facilities are generally applicable to oil reservoirs with sweet gas caps, or sweet gas-condensate reservoirs. Condensate reservoirs, because of their sensitivity to pressure changes once production commences, normally require pressure maintenance operations.
6. Sour gas dehydration facilities are generally applicable to smaller sour gas fields located within the potential service range of a large, existing sour gas processing plant. The dehydration unit removes water from the sour wellhead gas, enabling gas transmission through pipelines for relatively long distances.
7. The need for sulfur handling facilities is predicated on the proximity of, availability, and unused capacity in existing facilities. If existing facilities are not available, the development activity is generally necessary. Elemental sulfur is a byproduct of sour gas processing. Sulfur handling facilities are usually paired with existing sour gas processing plants.
8. The need for refinery development is predicted on the proximity of, availability, and unused capacity in existing facilities, within the region or interstate area. Much production of oil, condensate, and other liquids, are piped long distances to existing refining centers, 9
9. Because most refineries are located long distances from liquid extraction areas, the liquids must be pumped through pipelines to these distant centers. Associated-dissolved gas areas, and
Table 1 Footnotes (continued)
even large non-associated gas fields may produce enough natural gas liquids to warrant a pumping station.
10. The need for compressor stations is based on the proximity of, availability, and unused capacity in existing area facilities. If existing facilities are not available, they may have to be constructed. Compressor stations will compress gas so that pipeline transmission is possible. Stations can be constructed as separate facilities, or incorporated into gas processing plants.
11. Major pipelines are usually necessary to carry large quantities of liquids and gas to processing facilities, or to consumer markets.
NOTE: It is assumed that natural gas liquids are
produced by and associated with most large NA and AD gas areas.
The development activity table is not meant to be an infallible means of forecasting development activities, only to state general development-resource relationships.
Development Activities or Phases
The types of oil and gas development activities identified and discussed in this report include: initial interest, lease acquisition, geophysical exploration, well development (including pre-drill or well-site preparation, drilling, and well completion), well production, and field/reservoir development (including all processing and refining plants/facilities). Each activity or phase represents a separate and unique stage of the overall oil and gas development process, because of the differing purposes of the work. A number of the activities may occur concurrently within a developing area.
Oil and Gas Employment Groups
The oil and gas industry work force necessary to develop an estimated resource has been subdivided into nine employment groups: seismic/geophysical survey crews, drill crews, pre-drill services, drill services, well completion services, well production operation and services, field gathering system construction, plant/facility construction, and plant/facility operations.1*9 Each employment group corresponds to an appropriate oil and gas development activity. There is no calculated overlap. This employment group-to-development activity relationship can be stated as follows:
Seismic/geophysical crews Geophysical Exploration
Well development, drilling Well development, pre-drill Well development, drilling
Well completion services
Well production operation and services
Field gathering .........
. Well development, well completion
. Well production
Field/reservoir develop ment
Field/reservoir develop ment
Field/reservoir develop ment
Initial interest and lease acquisition do not have corresponding employment groups in this system because very small numbers of people are involved, the activities are difficult to detect and much of the work is accomplished by industry employees based in large cities (e.g., Denver, Houston, Chicago, Midland, etc.). Detailed profiles of the employment groups will be covered in a subsequent section of this chapter.
Development Phase Requirements
Each oil and gas development activity or phase has a general set of activity requirements or suitability factors that must be fulfilled if development-phase functions are to be carried out in an area. The result of determining the development requirements is a profile of the various needs of each development phase. Once activity requirements are described, the basis of regional oil and gas industry organization or syntax may be established.
Identification of Development Phase Requirements
These requirements can be divided into three groups: labor requirements, material consumptions, and a generic or "other"
category.50 The subsequent flow diagram/schematic delineates the components that comprise these groups and demonstrates the relationships or movement of data and resulting products within the requirement-determination process. (The requirement process is applicable to rural or "frontier" development areas. Personal experiences in the Wyoming-Utah-Overthrust Belt offer a key ingredient in the process.)
Within each component of the requirement groups, a number of additional information factors must be addressed. The subsequent outline notes these factors, and, if necessary, defines them.
I. Labor Requirements
C. Developer Hiring Practices
II. Material Consumptions
A. Transportation Requirements
1. Degree of mobility required
2. Transportation Modes
3. Transportation Networks
B. Facility Requirements
1. Type and Amount of Utilities
2. Type and Amount of Land
3. Locational Relationship to Place(s) of Work
4. Real and Personal Property
C. Agglomeration Economy Factors. The importance of
establishing strong external economies or close areal
associations with select types of development, service
Development Phase Requirement Schematic
D. Capital Cost/Investment
1. Labor Intensive. Refers to companies who may not require large capital outlays in equipment and machinery. Rather, the emphasis may be on laborconsuming activities.
2. Capital Intensive. Refers to firms with large capital outlay requirements in equipment and machinery.
A. Socioeconomic Infrastructure. The importance of the availability of adequate housing, schools, public facilities and services, retail establishments, civic organizations, etc.
B. Community Attitudes. The receptiveness and cooperation a community can afford industry.
C. Environmental Factors.
The subsequent material describes the requirements of each oil and gas development phase. The process is twofold. First, each phase is briefly described in terms of purpose and general information. Second, each phase is discussed in terms of generalized labor, material, and 'other' requirements, necessary to complete its purpose. (The requirement discussions are meant only to provide general information, not to quantify these requirements.)
Development Phase Requirements
1. Initial Interest Phase._______________________________________
Description: Before an area with possible oil and gas
deposits can be either explored or developed, a
company or individual must first establish an initial interest in doing so. Large amounts of time and resources are expended by petroleum and natural gas production companies (operators) to establish initial interests in areas. This is accomplished by means of exploration and/or research which will substantiate whether or not an area is a potential site of petroleum and natural gas accumulations.
The small number of employees needed to complete these assignments in an area are normally based in regional or national offices of operators and exploration companies. Many of these personnel are based in large cities, such as Salt Lake City, Denver, Midland, Houston, and Chicago. They may travel on temporary assignments to areas undergoing the initial interest phase of oil and gas development.
The initial interest phase is difficult to detect because operators and exploration companies are very reluctant to divulge initial exploration information, small numbers of employees are involved, and a large portion of the exploration or research can be completed via non-field investigations.
Activity Requirements: Because this phase of oil and gas
development engenders little, if any, impact on areas, the activity requirements will not be addressed.
2. Lease Acquisition Phase.____________________________________
Description: Once initial interest has been established for
an area, the next step in the development process may be to search out the land ownership, and, if possible, to lease or purchase both the surface and mineral rights. A mineral lease serves as an accord between the mineral developer and the controller or owner of a mineral, granting permission to explore and develop that mineral.
There are three general types of land ownership: "fee," Federal/State, and Indian.51 The "fee" lease is negotiated for privately-owned land. The Federal and State leases are negotiated for the oil and gas beneath publicly owned lands. The Indian lands lease is one negotiated with tribal governments for the right to explore and drill on Indian owned lands.
The small number of employees needed to complete lease acquisition assignments in an area are generally based in land departments of the regional or national offices of operators and exploration companies. A large portion of these personnel are located in large cities, such as Denver, Midland, Houston and Chicago. They may travel on temporary assignments to areas undergoing lease acquisition.
Acquisition of oil and gas leases does not imply that further exploration is a certainty. Any further development activity must occur on these leased lands.
The only time constraints on the occurrence of these development activities are those dictated by the lease expiration dates.
Activity Requirements: The actual leasing of a land parcel
is an administrative action, and, in itself, constitutes no area impacts. Accordingly, the activity requirements of lease acquisition will not be addressed.
3. Intensive Geophysical Exploration.___________________________
Description: With the initial interest and lease acquisition
phases completed, the operators/developers are able to commence more advanced phases of oil and gas exploration. Geophysical exploration techniques provide additional geological information on an area's subsurface, aiding in the establishment of possible drill sites. (It must be noted that geophysical exploration does not actually verify the existance of petroleum and natural gas. It only "maps" the subsurface geology, providing clues as to where oil and gas may be located. Actual verification of oil and gas deposits must be done by drilling.)
There are no easily accessible information sources precisely defining when and where geophysical exploration will occur. Not all leased areas will experience intensive exploration. Intensive geophysical exploration is common in areas where production has not been
There are currently three types of geophysical exploration commonly used: gravitational field, magnetic field, and seismic survey. Seismic surveying is the most widely used exploration method. In seismic survey, shock or seismic waves are propagated, and travel through, or are reflected from, disparate rock layers. The waves are recorded by sensors, yielding a "picture" of the subsurface rock structure. Geophysical exploration equipment is generally transported by truck or helicopter.
Crew size generally varies from 30 to 40 workers, depending on the technology used.52
Skills required vary from relatively unskilled laborers to highly trained computer technicians.
Some local hiring may be done to replace less skilled workers, but highly skilled people are generally hired or transferred from non-local sources.
A high degree of mobility is required. Geophysical exploration normally requires the construction of temporary, unimproved cross-country roads or trails. Trucks and/or helicopters are primary sources of transportation.
In areas experiencing high levels of exploration
activity, a temporary to semi-permanent service base or crew headquarters may be established to store and repair equipment, and to manage area survey operations. The service base may require a limited amount of utilities, up to one-half acres of flat terrain, and several structures for office, storage, and repair space. A key ingredient in location decisions is the proximity to areas being surveyed.
Survey firms do not require links and close associations with, or the development of, external economies, by locating close to other types of oil and gas firms.
Outfitting geophysical crews is both labor- and capital-intensive in nature.
Socioeconomic infrastructure and positive community attitudes do not appear to be a major decision factor, because of the extreme mobility and transiency characteristics of survey firms and personnel in "frontier" areas.
4. Pre-Drill Phase.53___________________________________________
Description: Once lease acquisition and geophysical exploration
have been completed, the operator/developer has reached an important decision point. If exploration activities have given encouraging indications for oil and gas
accumulations, a decision may be made to drill an exploratory, or "wildcat" well to ascertain whether or not oil or gas is present in quantities supporting commercial development. Should the operator decide to drill an exploratory or a development well (one in a known field), a number of functions are necessary before drilling equipment can be set up and become operational. Collectively, these activities comprise the pre-drill or well site preparation phase. The activities include: surveying the drill site to locate where the drill rig is to be erected; excavating and earthmoving to construct access roads, landforms, drill pad and other ancillary facilities; and, acquiring the necessary drilling permits.
Minimal requirements of 1 3 workers are generally necessary to complete one well.52
Worker skills generally consist of proficiency in operating heavy construction equipment.
Much of the hiring may be done locally, since predrill activity is many times performed by locally based construction firms that may also work in local economic sectors other than oil and gas.
A moderate degree of mobility is required to move heavy construction equipment along public and
private roads, to access drill sites.
In areas experiencing high levels of well development activity, a permanent service base may be established to store and repair equipment and to manage operations. The service base requires limited utilities, up to an acre of flat terrain to store and repair machinery, and a limited number of structures. A key ingredient in the base location volition is proximity to places of work in known fields and "wildcat" areas.
Pre-drill firms do not require close locational associations with, or the development of external economies, by basing close to other types of oil and gas development companies.
Companies performing pre-drill work are capital intensive.
Socioeconomic infrastructure and positive community attitudes may not be a major locational consideration in many cases because many companies are already well established in communities close to field work and personnel are relatively easy to procure.
5. Drill Phase.53_______________________________________________
Description: The drill phase uses a drilling rig and crews to
bore/drill a hole down to suspected oil and gas bearing
rock strata. In most cases, an operator will contract with a drilling company to drill the well. The drilling contractor has the responsibility to erect and dismantle the drill rig, hire and maintain the rig operating crews, and is directly responsible for conducting the drilling program for the operator. Once the drilling commences, it is a continual process seven days a week, 24 hours a day, until the drilling is completed. Drill crews normally work three 8-hour shifts, or two 12-hour shifts per day.
The actual drilling process involves numerous activities including: water hauling, well logging/ surveying, chemical treatments, cementing, procurement and distribution of a wide range of parts and supplies, machine shop services, roustabout or general labor services, etc. Most services are supplied from a rather limited system of services bases/locations.
For the purpose of discussing drilling activity requirements, the phase will be bifurcated into on-site drilling and drilling services.
Drill crews average 22 workers per rig. Provision of various drill services to one well will support an average of 3.67 service workers for one year (man-years) 52
Worker skills required in both on-site drilling and
supplementary services vary from relatively unskilled laborers to highly trained service technicians, drill rig "toolpushers" and their subordinate drillers.
Drilling contractors generally work to see that drill crew personnel remain intact. However, high turnover rates dictate that, in rural areas, most hiring will come from non-local sources. Many drill service positions are difficult to fill with workers from rural areas, because of the specialized skill levels required.
On-site drilling requires the ability to move the rig long distances. If available, locally-based trucking firms are generally contracted for rig transportation. Drill services require a high degree of mobility to perform work at widespread drilling sites. Services are transported via fleets of trucks.
On-site drilling requires little in the way of area facilities, other than the drill rig and drill site. If an area is experiencing high levels of drilling, a drilling contractor may establish a service-repair yard, or a branch office to manage drilling operations, in proximity to the drilling activity. Most drilling service firms, particularly the capital intensive ones, tend to congregate in
communities relatively close to high activity areas, where adequate types and levels of utilities are available, and large amounts of relatively flat terrain are available to construct permanent yards and structures. Once the firms are established, they will use their mobility to provide services to distant areas.
Many drill service firms require the development of strong external economies, thus, tend to locate in proximity to one another.
On-site drilling is capital intensive. Drilling services can be capital intensive (e.g., cementing, wireline survey,trucking, parts and supplies), or labor intensive (roustabout services).
Development and maintenance of adequate socioeconomic infrastructure and positive community attitudes can be a major consideration for larger drill service firms, in order to help retain qualified workers, and in firm basing decisions. The factors do not appear as important for drilling contractors, because of high levels of rig transiency .
6. Well Completion Phase.53______________________________________
Description: After drilling is completed, the decision that a
well is commercially productive initiates the completion
phase of development. The drilling rig is dismantled and moved to another location, and a completion rig is moved in and erected. The large, truck-mounted completion rig is used to physically complete the well to facilitate oil and gas production. Completion phase activities involve a wide range of services including: cleaning or swabbing the well, installation of production casing and tubing, perforating, acidizing and fracturing, roustabout or general labor activities, cementing, procuring and distribution of a wide range of parts and supplies, installation of well-site surface and subsurface production equipment (e.g., "Christmas tree," pumpjack, heater-treater, stock tanks, separation units), etc. Most completion services are supplied from a rather limited system of service bases/locations.
Provision of the various completion services to one well will support an average of 3.5 service workers for one year (man-years).52
The worker skills required vary from relatively unskilled laborers to highly trained service technicians .
Many completion service positions are difficult, if not impossible, to fill in rural areas. The high skill levels dictate that much of the hiring be done non-locally, or that workers be transferred from
. Completion services require a high degree of mobility. Services are transported via fleets of trucks.
. Most completion service firms, particularly the capital intensive ones, tend to congregate in communities relatively close to high activity areas having adequate levels of utilities, and where large amounts of relatively flat land are available to construct permanent yards and structures. Once the firms are established, they will use their mobility to provide services to areas increasingly farther away.
Many completion service firms require locations enabling strong external economies to develop. Accordingly, firms tend to locate in proximity to one another.
. Completion services can be capital intensive (e.g., acidizing and fracturing, cementing, trucking, parts and supplies, wireline surveys), or labor intensive (roustabout services).
. Development and maintenance of adequate socioeconomic infrastructure and positive community attitudes can be a major consideration for larger completion
service firms to help retain qualified workers and in firm basing decisions.
7. Well Production Phase.53____________________________________
Description: After wells have been completed, production may
commence in an oil or gas field, provided appropriate processing and product transmission systems are operational. The well production may operate concurrently with the pre-drill/site preparation, drilling and completion, of other wells. Wells in production must be serviced and maintained. The well's productivity is carefully monitored. "Work-over" crews will visit wells on a regular basis to perform well upkeep and improvement measures. If well production drops below specified levels, re-stimulation (re-fracturing and reacidizing) and related activities can be performed. Maintenance and monitoring of wells will continue throughout their production "lives."
Labor requirements are not large. On average, one producing well in a developing area will support 0.25 production-related workers per year (man-years) 5 2
Worker skill requirements are generally moderate-to-high.
In rural or "frontier" areas, many production-related
workers are hired or transferred from non-local sources.
High mobility is not a requisite for well maintenance and operations firms. Re-stimulation workers do have high mobility characteristics, since they are associated with completion service f irms.
Most well production companies are located in proximity to the wells they maintain or service, usually at operator field offices. Field office real and personal property, along with utility requirements, are normally not inordinate.
The importance of establishing external economies through shop/office basing decisions is not evident.
Production services appear more labor intensive because of the high degree of supervisory and managerial requirements.
Adequate socioeconomic infrastructure and positive community attitudes are important to well production activities.
8. Field/Reservoir Development.53_______________________________
Description: Temporary processing facilities may be used in
the early stages of field development, but as development continues and oil and gas reserves are quantified,
permanent oil and gas processing plants/facilities are constructed. The type and extent of such facilities depend on field size, volume of oil and gas produced, number of producing wells, the volume of associated gas and water, the duration of the field production,, the type and mixture of hydrocarbons being extracted, and proximity to existing fields and processing facilities.5k
The number requirements vary from a handful of workers to thousands, depending on the type and size of the facility being constructed.
The work force skills vary from unskilled laborers to highly trained craftsmen and supervisory personnel .
Because of the substantial labor requirements of most construction projects, most of the workers are hired or transferred from non-local sources.
High degrees of mobility are not required. Heavy industrial transportation capability is required.
Construction requirements are normally considerable: large amounts of utilities (i.e., water, waste disposal, electricity); large amounts of flat terrain, usually located within a producing field, in proximity to it, or centrally located to serve
a number of fields; and extensive real and
personal property requirements.
The construction projects are usually both capital and labor intensive in requirements.
It should be noted that a rural construction project of from 50 to 100 workers or more generally requires the establishment of a man-camp or single status residency facility.55
Adequate area socioeconomic infrastructure and positive public attitudes are important.
Oil and Gas Employment Characteristics
The purpose of this section is to describe select demographic characteristics of oil and gas employment groups. These characteristics include: places of work, settlement patterns/ propensities, common housing characteristics, age profiles, marital status, general dependency factors, and information on local hiring These employment characteristics are an outflow of the development activity requirements of the oil and gas industry, as well as from area settlement factors. (For a review of industry development phases vis-a-vis required employment groups, refer back to Chapter IV, "Oil and Gas Development Activity Description.")
Oil and Gas Employment Overview
In contrast to other types of energy development workforces, the conventional oil and gas workforce can be divided into
eight development phases, six of which are significant for impact determination purposes. (Whereas most energy developments have two distinct phases, i.e., construction and operation.) Although the oil and gas phases are sequential, the six "significant" phases often occur simultaneously within a given area. In addition, in contrast to other energy development where the general work force is hired and managed by a single or a combination of major companies, conventional oil and gas employment is allocated among a number of major and minor developments, a vacillating group of geophysical survey and drilling contracts, and hundreds of oil and gas well service companies.
The Oil and Gas Industry Work Force
Work force characteristics form some of the key socioeconomic impacts of oil and gas developments, and have substantial influence on other impact dimensions. The subsequent discussion addresses general work-force characteristics, as they relate to the industry as a whole, not to individual employment groups.
The majority of oil and gas workers are under 30 years of age, semi-skilled, and transient.56 They are characteristically single or recently married. They reside in motels, RV's, boarding houses, rented apartments or single family homes, and mobile homes. Most will not purchase homes because their tenure in a particular location is uncertain, or for a limited amount of time.1*6 (Homes are usually difficult to acquire and costly in the "boom" areas.
Bank credit is generally difficult to establist, also.)
There is a smaller, more permanent nucleus of older employees. These workers are generally management/supervisory
personnel, or skilled professional technicians. The older employees are usually married, have school-age children, and enjoy sufficient
income and job security to buy a home.
Once several significant oil and gas discoveries have been made and a large amount of field/reservoir development and well production is assured, a relatively permanent industry work force can be expected in an area. A group of skilled workers, professionals, and management personnel may reside in the area for several decades. Many other skilled, semi-skilled and unskilled workers may remain in the area for two to eight years, depending on field/reservoir development programs or their decision to seek other employment.56
Although most of the oil and gas developments are conducted by specialized groups of workers from regional and secondary service centers, or from distant corporation headquarters, the industry does hire workers locally. The number hired depends on hiring policies of individual firms, the abundance of local workers with relevant skills, the urgency of housing shortages for inmigrants, etc.**6
In general, the lower the education and skill requirements of a job, the greater abundance of workers available locally. The greater the distance to an employer's base of operations, the greater the propensity to hire local workers instead of transferring already employed workers long distances, or hiring non-locally.
Lower skilled local workers can be hired whenever needed, already have housing, and need not be supplied with living allowances or costly per diem.
Most new locally-available industry jobs are not taken by the officially unemployed, but by people who change jobs or are not regularly in the labor market (e.g., ranchers, students, or homemakers).1*6 With industry jobs paying well, it is not surprising that many local workers change jobs. This can result in an inflation of local wages as established businesses try to compete with the oil and gas industry to retain employees.1*6 The subsequent illustration by Wenner points this out:
Let us assume that Apex Company, which does its own exploration, and the drilling contractor it has hired, need 100 more workers in an area. Table 2 suggests What could happen and how the hiring pattern could differ, depending on the location of the development activity. It illustrates that the majority of workers are not likely to be drawn from the ranks of the local unemployed. (Of course, this does not reflect potential hiring from an area labor force having needed skills and experiencing a very high unemployment level.)
Oil and Gas Employment Group Characteristics
The following demographic characteristics will be described vis-a-vis each oil and gas employment group: place of work characteristics, settlement propensities or general residency type (e.g., single status camp, non-local transient, and permanent), common housing characteristics, age profiles, marital status, general dependency factors, and inferences on levels of local hiring.
Place of work factors have key implications for worker settlement patterns. The location of the place(s) of work in relation to worker group places of residence can be divided into two types:
JUDGMENTAL ESTIMATE OF THE SOURCE OF 100 DEVELOPMENT WORKERS
Activity Occurring Near
A. Company employees transferred from some distant point (some will reside locally and others may move to nearby communities). 67 46
B. Industry workers who moved here after hearing of new employment opportunities through company contacts. 5 5
C. Cotamuters from nearby communities, some of whom were unemployed. 9 9
D. People hired locally, but who left other jobssome of which are now vacantdue to the lure of higher wages. 5 14
E. Women or farmers not previously seeking employement, and thus not "unemployed." 6 4
F. College students taking summer jobs or high school students entering the labor market for the first time, some of whom may choose careers in the oil and gas industry. 4 10
G. Unemployed local workers, formally identified as such by the State Employment Service. 4 12
Locally hired workers who are already residents will result in no demographic impacts. Increased income for these workers will enable them to purchase more local goods and services. Inmigrants will cause much greater economic impacts because of required housing and services.
Determining settlement patterns of oil and gas workers is a key step in impact assessment. These will be discussed in subsequent materials, where individual employment groups characteristics are described.
groups with a primary place of work (PWi) and those with a secondary place of work (PW2). A primary place of work refers to work within resource fields or "wildcatting" areas. There are employment groups who will predicate their residency and commuting patterns on the locations of these primary places of work. Workers will choose a place of residence and commute directly to the primary place of work. A secondary place of work refers to the location of service firm bases or other company offices, not that of fields or "wildcat" areas. There are employment groups who premise residency decisions on the locations of these secondary places of work. Workers will choose a place of residence and commute directly to the firm location (From the firm location, workers may then travel to primary places of work.) In summary, it is important to recognize what place of work a worker will premise his commuting pattern decision upon. A worker group commuting directly to the work site in a field or "wildcat" area, will not hase his residency on the location of service firms, but on where the field work may be. This work group has an orientation to primary places of work (PWi). An employment group commuting directly to a work place at a service firm or company location, will not base its residency on the location of field work, but on where the firms are based. The worker group has an orientation to secondary places of work, (PW2).
Within employment groups, three different types of residency propensities can be identified. They commonly include single status camps, non-local transient, and permanent.56
Single status camps are temporary, on-site (field) industry supplied housing for single workers. This type of housing manifests
itself in man-camps comprised of large numbers of mobile homes or barrack-like structures. Drill sites may have groups of mobile homes to house drill crews. In most cases, single status camps are not located within communities, but in proximity to the field work site. Single status workers have a primary place of work (PWi) orientation from places of residence.
Non-local transient workers are temporary/short-term workers, residing in area communities. These workers generally seek non-standard housing types, located within area communities, e.g., motel rooms, boarding houses, recreational vehicles, or small trailers. Many of the workers are involved with short-term work contracts, based with firms in distant communities doing work locally, or involved in a development function of such short duration that residency in a standard housing unit is not justified. Non-local transients would not be counted in the 1980 Census population in households and usually have a primary place of work (PWi) orientation from places of residence.
Permanent workers live in area communities for the duration of their particular area projects, or because they are based with firms located in the area. These workers generally reside in standard housing units; e.g., single family, detached, multi-family units, and mobile homes. Permanent workers usually have a secondary place of work (PW2) orientation from places of residence.
This group consists of general laborers, craftsmen, and supervisory personnel, necessary to construct processing plants and
the ancillary facilities that accompany them. Plant construction work forces may represent "long-term" area employees, residing in area communities for two to three years. Other projects may place workers in areas for only six to twelve months. Individual project work forces may vary from 50 workers or less to nearly 2,000.5b Construction work forces will represent significant consumers of local community retail goods and other services.
Most large plant/facility projects house their general work force in single status man-camps, in proximity to construction sites. Smaller man-camps have been known to locate within communities.
Large construction projects or projects located in remote areas tend to place high percentages (80 85 percent) of their work forces in single status man-camps. **9 (Allowing large portions of construction forces to seek housing in nearby communities can cause serious problems.) In general, most construction projects with 50 to 100 construction workers or more will have man-camps.55 If a construction project is in the general vicinity of communities with available housing units, and the project is on the smaller end of the project spectrum, it is possible to have greater flexibility in allowing workers to reside within the area's communities. The workers not living in man-camps are likely to choose rental units, mobile homes, and so on, within the project area. Instead of 80 to 85% of the workers living in man-camps, only 40 to 60% may reside there.1*9 The absence of a project man-camp means many workers may seek temporary housing in communities close to the project site.
Project supervisory personnel tend to live in "special" living situations (e.g., small mobile developments removed from a general man-camp or located within a nearby community or, to a limited extent, in single family homes).
Plant/facility construction workers tend to be very "sensitive" to the amount of distance between place of work and place of residence. That is, they tend to reside close to the construction site ( 10 miles or less in Overthrust Belt case studies).1*9 Places of residence will depend in large part on the location of the project, access routes, and man-camp plans.
There may be a small, variable number of construction workers classified as non-local transients. These are people who would be involved in short-term, subcontracting work, completing some specialized task for the project's primary contractor. These workers may live in motels, light trailors or campers, etc., for the period of time they are working in the area.
Select Demographic Factors56
The age profile of plant/facility construction workers shows a preponderance of younger workers. In the Overthrust Belt surveys, 78.5 percent of workers were between the ages of
20 and 39.
Nearly 90 percent of the work force surveyed in Overthurst studies were single-status or unmarried.
As for those workers who were married with family, the average family size was 3.52 members.
The vast majority of these workers are non-local in origin.
A permanent staff is required to maintain operations at processing plant/facilities and ancillary plants once they are completed. Operation staffs vary widely in size, depending on the type and size of the facility. Small, highly automated units may require no more than one or two permanent operations employees, while large sour-gas processing plants may require over 100 workers.
Operations employees represent permanent area residents. (These workers are not classified as single-status or non-local transients.) This employment group displays a marked "sensitivity" to the amount of distance between place of work and places of residence. Both general operations and supervisory personnel generally reside in communities close to their place of work (40 miles or less in Overthrust cases), provided that adequate housing supplies are available.56 The location/nature of access routes,in relation to the facility and potential places of residence, will play a key role in residency determination. If appropriate places of residence are not available close to the facility (i.e., adequate housing stock is not available in nearby communities, or communities are not within easy commuting range), a "company town" or "subdivision" may be constructed in proximity to the facility, consisting of single family homes or mobile home parks. Characteristic housing types for operations groups are generally single family, mobile homes, or multi-family units.
Select Demographic Factors56
In contrast to plant/facility construction workers, 90.5 percent of plant/facility operations workers in the Overthrust Belt were married.
The vast majority of these workers are non-local in origin.
No data on age profiles and family sizes for married workers were available from Overthrust Belt cast studies and surveys.
Field Gathering Construction
Field gathering construction employment is charged with installation of pipelines that transport oil and gas production from wells to appropriate processing facilities. This development activity can be associated with either well completion or plant/ facility construction, because gathering systems may be constructed by firms performing select well-completion work, or by subcontractors linked to processing plant construction.
For practical purposes, field gathering employment generally falls under non-local transient and permanent residency groups. Because of the limited amount of employment required to construct these systems, no single-status camps are needed. The temporary subcontracting work may be carried out by transient workers from distant communities who will generally want short-term residency quarters such as motel rooms, boarding houses, or R.V.'s. Construction work performed by local completion service firms means
many of the workers will have permanent local addresses.
(Due to the dearth of empirical data on this employment group, one can only make assumptions regarding the proportion of the employment group likely to be in either the non-local transient or permanent residency groups.)
Select Demographic Factors
Because of the lack of empirical data, and for the sake of brevity, it was assumed that field-gathering construction employment has the same demographic characteristics of age, marital status, and dependencies as plant/facility construction.
Geophysical exploration for potential oil and gas accumulations is performed primarily by seismic crews and their support personnel. Because of the seasonality of this work, seismic crews may reside in an area for only several months, or less.
Seismic crews are extremely transient in their places of work as well as their places of residence. In general, crews are non-local transients, because they seek temporary places of residency close to their places of work (in many cases, within 20 miles).56 Favored housing types include RV parks, motels, and short-term rental apartments.56 Crews will migrate from one place of residence to another within a region, making the establishment of single-status camps impractical. Up to 5 percent of seismic employment may be permanent in nature, because geophysical exploration firms may locate service bases within regional service
centers.56 The permanent population consists of a small number of office staff and managers. These permanent employees prefer single family homes, multi-family units, or mobile homes, as places of residence.
At times, it is very difficult for seismic crews to obtain sufficient quantities of temporary residential quarters. This is especially true in areas lacking temporary units, or in high level tourist areas where motel owners may be reluctant to lease large blocks of rooms for survey crews, opting for tourist leases instead. These situations make RV residency very popular.
Select Demographic Factors56
The age profile for seismic crew employment shows a preference for younger workers surpassing that of most other employment groups. Of workers surveyed, 88.9 percent were 29 years of age, or younger.
Of seismic workers surveyed, 54.9 percent were married, with family.
The average family size for married workers was not available.
The vast majority of seismic workers are non-local in origin.
Drill rig crews vary in size from 21 to 22 workers, depending on the rig's operator.56 In many cases, the total rig crew is comprised of four smaller crews of five workers each. Each drill
rig has one to two "toolpushers," or rig supervisors. In contrast with the sharp employment "peaking" noted among plant/facility construction, drilling employment will generally not show this extreme tendency. High area demand for drilling rigs, coupled with the high monetary loss to drilling contractors if their rigs are inactive, serve as incentives to prevent drill rig employment from demonstrating sharp fluctuations over a years time. Total drill crew employment levels are dependent on the extent and success of exploration drill programs as well as on the length and intensity of field development programs of operators.
Drill crew employment exhibits the full range of residency types.1*9 Many rigs have mobile housing units or single-status camps at the drill sites. The propensity for on-site camps depends on area settlement factors. In remote areas, up to 60 percent of rigs may have single-status camps for crews. If drilling is pro-ceding in an area with available housing, or in an area where sour gas can be encountered while drilling, the number of rigs having onsite housing may be very low or non-existant.
A significant portion of drill rig crews may be considered non-local transients. Crews on short-term assignments, or those not able to obtain desired housing, may procure motel rooms, small trailors, or rooms in boarding houses, during the duration of their assignments. Others may reside in these same types of dwelling units during the work week, then commute long distances to be with
families on weekends.
Drill crews may fall into the permanent residency type. Crews generally reside in the same community as the drill crew foreman (driller). Drilling contractors discourage crewmembers from commuting to the drill site from many scattered locations.
Many workers are not averse to commuting long distances on a daily basis. These workers may establish a permanent place of residence and work at scattered sites around the place of residence. (Stays in these dwelling places may last several years.) It is not uncommon in the Overthrust Belt to have one-way commuting times of up to 1% hours. (Housing shortages in the communities close to places of work undoubtedly account for part of this long-distance commuting tendency.) In the case of permanent residency crews, typical housing types obtained include mobile homes, apartments, and single-family rental units.
Select Demographic Characteristics56
The age profile of drill crew employment shows more young workers between the ages of 20 and 29, than any other employment group 92.0 percent. Of drill crew members surveyed, 97.6 percent were between the ages of 20 and 39.
Drilling employment showed 51.2 percent were married with family.
The average family size for married workers was 3.20.
The vast majority of drill crew workers are non-local in origin. Oil
Oil and Gas Well Service Employment
Oil and gas services manpower includes a wide variety of
specialized skills essential to oil and natural gas development. Services performed by companies/firms on a contract, fee or other basis, include:
1. surveying the drill site;
2. excavations for drill sites and ancillary facilities;
3. grading, road construction, and foundation building;
4. well logging and specific types of testing;
5. drill mud services;
6. installation of casing;
7. rental tools and equipment;
8. parts and supplies
11. running tubing;
12. completion rig services;
13. acidizing and fracturing;
14. cleaning and swabbing wells;
15. installation and maintenance of well equipment, both surface and subsurface.
The highly fragmented nature of the oil and gas industry is nowhere more apparent than in the service industry. In the Wyoming-Utah-Idaho Overthrust Belt, more than 300 firms are involved with oil and gas well service functions.52 It is estimated that more than one-half of these firms have only one-to-five employees. Numerous well service companies are capable of performing a wide range of service functions, while others are very limited in their
range of service provision.
To comprehend the services sector, and to provide a basis for projecting its employment allocation, it is necessary to understand the service industry employment characteristics. For the purpose of easy comprehension, the service sector has been divided into four elements: pre-drill, drill, well completion, and well production.
Pre-drill service employment is involved in preparing a site for drilling. Once preparations are complete, drilling need not follow immediately. It is common in the Overthrust to have a lag time of five or six months between the start of site preparation activities and actual drilling.58 Most of this lag time represents a no-activity situation at the well site. Many of these predrill services are performed by locally based firms whose work may also include general construction and trucking. These firms are termed "cross-over" firms since they perform work for both the oil and gas industry and in unrelated economic sectors.
Pre-drill service firms tend to locate in communities in proximity to places of work (fields). The large specialized firms locate in regional service centers. Smaller, indigenous "crossover" firms tend to be in smaller communities close to outlying places of work. Pre-drill firms are "sensitive" to the amounts of distance from places of work to company bases.
Residency Types. As mentioned previously, well site preparation is many times performed by locally based contractors whose employees are drawn from the local labor force. Once well
development activity reaches high levels, specialized pre-drill service firms may locate in the area supplanting much of the oil and gas business of indigenous firms.
The majority of service employment is of the permanent variety. Workers will remain in the area as long as pre-drill work is available, and obtain standard housing (e.g., single family, multi-family, or mobile home).
The remaining portion of service employment will be in the form of lon-local transients. Transient employment levels can be much lower around regional service centers with established firms than in remote areas where these services are not well established. The percentage of workers may be 10 percent or less around regional centers and 25 percent in remote areas. Motel rooms, RV's, small trailors, and boarding houses are the prevalent dwelling units of pre-drill transients. It is assumed they will reside in communities or select areas within 60 miles of the place of work.
Select Demographic Factors.56
Of the service employment surveyed, 53.7 percent was between the ages of 20 and 29; 32.9 percent between the ages of 30 and 39 (the highest percentage of any employment group); and almost 5 percent were teenaged.
Of the service workers surveyed, 67.7 percent were married, with families.
The average family size for married workers was 4.00.
A large proportion of pre-drill service employment is
local in origin.
Drill services employment supports drilling operations by providing particular goods and services, including: cementing, casing, parts and supplies, drilling fluids, machine shop services, rental tools and equipment, electrical contracting, trucking services, well logging and testing, roustabouts or general laborers, etc. Many of the drilling services are highly specialized, capital intensive, very mobile, and tend to locate in regional service centers, sending workers to drill sites as needed. Other drilling services with less specialized, more labor-intensive natures, can be performed by locally based firms whose work may also include general electrical, machine-shop related, or trucking services. These firms are referred to as "cross-over" firms since they perform work for the oil and gas industry as well as other economic sectors. In summary, the propensity of drill service firm locations is two-fold. Specialized, very mobile, capital-intensive firms (e.g., cementing, drilling fluids, and well logging and testing) tend to congregate in regional centers. Less specialized, more labor-intensive services (e.g., parts and supplies, machine shops, electrical services, trucking and roustabouts) locate in the regional centers, but may also base in secondary centers or in communities close to field development areas, as the result of the growth of indigenous "cross-over" firms.
Residency Types. Specialized drill service employees generally work at firms based in a regional service center. These employees will generally seek permanent housing in the community where their firms are based. During initial "boom" periods, some
of these employees may not find satisfactory residences in the regional center and choose to reside in outlying communities, as far as 40 miles away, or live temporarily in non-standard housing.56 This "spillover" of regional center based employees is likely to diminish as time passes, partly due to improved housing opportunities in the regional center, and partly to a widespread employer preference to have their employees residing close to service firm bases. To help meet this end, large service companies with large amounts of available capital may provide "front-end" money to purchase or construct company housing within regional service centers.
As these regional center based, specialized firms provide their services for short periods of time in remote areas, their workers become non-local transients. These workers will generally seek motel rooms, boarding houses, or short-term rental units, as temporary places of residence. (The service workers would still be counted as permanent residents of the regional service center, not as non-local transients elsewhere.)
The less specialized, more labor-intensive drill services are less concentrated in regional service centers. The majority of firms will, still, locate in the regional center, but a number will base in outlying communities close to resource areas. As permanent residents, they tend to reside in single family, multi-family or mobile home residences.
As the less specialized firms provide their services for short periods of time in remote areas, their workers become nonlocal transients. They generally seek the same types of housing as
the more specialized service firm workers.
Select Demographic Factors.5 6
84.3 percent of drill service workers surveyed were between the ages of 20 and 39, with 60.4 percent between the ages of 20 and 29.
Of the service workers surveyed, 52.0 percent were married, with family.
The average family size, for married workers, was 3.75.
The majority of drill service workers were non-local in origin.
Well Completion Services
Once a well has been drilled and proven to be economically productive, the well must be completed." Completing a well requires a number of different firms with specialized skills. They perform completion rig services, acidizing and fracture work, trucking services, producing casing and cementing, well logging and testing, perforating, parts and supplies, completion fluid services, installation of well site surface and subsurface production equipment, etc. Many of the completion service firms are specialized, very mobile, and capital intensive. Thus they tend to congregate in regional centers. Other services are less specialized, more labor intensive, and can be performed by locally based firms whose work may include general electrical, trucking, plumbing, or construction work, as well as activities in other economic sectors. In summary, the completion service firms are similar to drill service firms in that firm location patterns are two-fold. Specialized, capital
intensive, very mobile firms (e.g., acidizing and fracturing, completion rig services, cementing, well logging and testing, and fluid services) tend to base in regional centers. Less specialized more labor-intensive services (e.g., roustabout, equipment installation, trucking services, parts and supplies), locate in the regional centers, but may base in secondary centers or communities close to the field development areas. Many may be the result of the growth of indigenous "cross-over" firms.
Residency Types. Specialized completion service employees generally work at firms located in a regional service center. These workers will usually seek permanent housing in the community where their firms are based.56 As with drilling services, during initial "boom" periods, many of these employees may not find adequate housing in the regional center and opt to reside in outlying communities, or live temporarily in non-standard housing. This "spillover" of regional center based employees is likely to subside as time passes, due partly to improved housing supplies in the regional center and to widespread employer preference to have their employees residing close to service offices and yards. To help alleviate the housing problems, large service companies with capital available, may provide "front end" money to purchase or construct company housing within regional service centers.
As these regional center based, specialized firms, provide services in remote areas, their workers become non-local transients. Motel rooms, boarding houses, or short term rental units are widely sought as temporary places of residence. (The service workers would