The Electrical Worker online
November 2014

Fueling the Comeback
Energy Boom Powering Construction Recovery
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Better known for its zydeco music clubs and restaurants serving up boiled crawfish, Lake Charles, La., has recently become one of the leaders of the United States' energy revolution — a revolution that has not only radically changed the country's energy portfolio, but has revived a sluggish construction industry, putting tens of thousands of electricians back to work.

Just ask Lake Charles Local 861 Business Manager Jeffrey Sanders. "I haven't been this optimistic since the 1970s," he said.

Every member of his local is working, with an additional 100 travelers in town. "We increased our membership by 30 percent since January," he said.

One of the biggest jobs they are working on is the Golden Nugget casino, a 30,000-square-foot entertainment complex and luxury hotel.

But what's really powering the construction boom in Lake Charles is liquefied natural gas, better known as LNG.

"Pretty much all future work in this area hinges on natural gas," Sanders said.

LNG is natural gas that is converted to liquid form for ease of transport. Built a few years ago, the first local LNG facility in the area was designed to receive natural gas imports. But the rapid growth of gas drilling in the U.S. has made exporting — not importing — a lucrative field for energy companies, forcing a major retooling of the facility.

The Lake Charles Liquefaction Project recently received permission from the U.S. Energy Department to export domestically produced gas.

Two other multibillion dollar export facilities are also in the works, including a $15 billion gas-to-liquids terminal to be built by South African energy giant Sasol.

All in all, more than $240 billion in natural gas and oil related projects are coming to the shores of the Gulf of Mexico, stretching from Brownsville on the Texas/Mexico border up through Florida.

"Oil and gas are such a huge stimulus to the economy," says International Representative Tom Davis, who serves as business development representative for the area.

Industry-related jobs have grown by 40 percent since 2007. And the economic effect extends beyond the oil and gas projects themselves.

"We're seeing new industrial and commercial projects going up to support LNG," Sanders said. "Buildings for power tool shops, vendors to back up these big jobs."

Shale Fortunes

Powering this new construction boom is shale gas. Extracted through the sometimes controversial practice of hydraulic fracturing, natural gas extracted from shale deposits has surpassed nuclear power as the U.S.'s second-leading electricity source, just behind coal.

Largely untapped just a few years ago, shale gas is not only helping the U.S. toward energy independence, it's transforming the U.S. from an energy importer to exporter.

Its rapid expansion has tightened labor markets across vast regions of America.

"Take the Dakotas, Iowa, Nebraska, we're super-busy," said International Representative John Bourne, who handles business development in the Midwest.

IBEW members throughout the region are working on pipeline compressor stations that help transport gas to customers in the U.S. and the world, he said.

Increased natural gas capacity has also translated into other industrial projects, including fertilizer plants and ethylene crackers, which process ethane, a component of natural gas, into ethylene, which is used in many industrial and commercial products like plastic and adhesives.

Millions of dollars are also being invested in natural gas processing plants further east, including Ohio, Maryland and Pennsylvania, home to the Marcellus Shale, the largest source of natural gas in the U.S.

In Youngstown, Ohio, a city devastated by the collapse of the steel industry in the 1980s, building infrastructure for gas development has led to an industrial revival in the Rust Belt town.

"We've been building processing plants, compressor stations and steel mills that produce parts for the drills," said Local 64 Business Manager James Burgham, who also represents the Third District on the International Executive Council. "We've been very busy, and it's due in large part to gas drilling."

On the West Coast, the $7.7 billion Jordan Cove liquefied natural gas export facility in Oregon is expected to employ more than 2,000 workers at the peak of construction. Owner Veresen has agreed to build it under a project labor agreement.

Investor's Business Daily reported earlier this year that more than 100 new plants and factories related to oil and gas production will come online by 2017.

"When all are up and running, another $300 billion will be pumped into GDP and 1 million more jobs will be created," wrote reporter Mark Mills.

Increased oil production is also fueling the construction boom. The Bakken formation — a 200,000-square-mile rock unit whose deposits are more accessible due to today's extraction techniques — has turned North Dakota into the second biggest oil-producer in the nation, just behind Texas.

"The best way to describe the work picture in North Dakota is out of control," Bourne said. In addition to oil field work, thousands more tradesmen are required to help build the pipeline infrastructure to transport crude oil to processing and export facilities throughout North America.

For Minot, N.D., Local 714 — located in the heart of the Bakken formation — that has meant full employment for years now, with more than 400 travelers in town as well.

An Uneven Recovery

More than five years after the worst recession in decades — one that hit construction especially hard — things are looking up for the industry in a big way.

And it's not just in the boom towns of North Dakota or the Gulf Coast.

Construction spending is at its highest level since 2008, reaching a seasonally adjusted rate of $981 billion.

The construction unemployment rate, which topped 25 percent in 2010, is down to 8 percent, two points higher than the national jobless rate.

A tighter labor market combined with more aggressive organizing, has boosted building trades membership by 100,000 in the last year. The IBEW's Construction and Maintenance branch alone has grown by 11,000 members in the last two years.

This translates into higher wages for union workers, with the median earnings of construction workers represented by a union increasing by more than $500 a year.

But pockets of higher than average unemployment can still be found, making this recovery uneven.

Public spending still remains a weak spot for construction due to deadlock on Capitol Hill, with spending declining in 2014 compared to the previous year.

The 2009 stimulus act pumped up infrastructure spending as a percentage of GDP, but last year it dropped to its lowest point in 20 years.

Spending stalled out for two reasons. One, the Great Recession caused a steep drop in tax revenue for states and cities — the largest provider of infrastructure spending — forcing deep cuts. The Washington Post found that transportation spending in California fell by 31 percent from 2007 to 2009.

Second, the sequester, the 2013 budget-cutting mechanism set in place by Congress, automatically slashed billions from the federal budget, starving highways, bridges and school facilities across the U.S. of funds.

Continuing deadlock on Capitol Hill has kept federal spending levels frozen, delaying needed investment in an increasingly aged and decrepit infrastructure.

Green Lines

While natural gas and oil remain the main drivers of the energy-related construction boom, renewable power is increasingly becoming a major area of job growth.

Solar and wind still make up less than 13 percent of the U.S.'s total electrical generating capacity, and it will likely take decades for renewables to surpass coal and other carbon-emitting energy sources.

But declining costs and state government incentives have made renewable power one of the fastest growing sectors in the industry.

The International Energy Agency estimates a near tripling in wind capacity and a tenfold increase in solar by the end of the decade.

And that's translating into work.

Bourne says that the IBEW is working with Clean Line Energy Partners, a Texas-based corporation, to get approval for three high-voltage power lines to transmit renewable energy produced in the Midwest to customers in the east.

One, the Grain Belt Express Clean Line, will connect wind energy produced in Kansas with customers in Missouri, Illinois and Indiana. A second will deliver up to 3,500 megawatts of wind power from Oklahoma to states throughout the Southeast, while the third, Rock Island, will transmit wind power generated in Iowa to major population centers in the Midwest.

"We have been working with locals to have our members attend and voice their support where regulatory hearings have been held," Bourne said.

In Iowa, 1,600 IBEW members have sent letters of support to public officials.

California remains at the forefront of green energy, with an official mandate to have 33 percent of the state's energy mix come from renewable resources by 2020.

San Diego Local 569 has been an active promoter of solar power for years, boasting one of the most advanced photovoltaic training programs in the state.

"Five years ago, our members made a $1 million investment in the community and opened the Imperial Electrical Training Center to make sure renewable projects were creating good, middle-class jobs for local workers," said Local 569 Business Manager Johnny Simpson at an August event. "Since then, IBEW members have logged more than 1.6 million hours building 1,000 mw of clean energy in Imperial County and we have put 1,000 local residents to work."

Partisan politics have prevented Congress from moving on the federal level, but lawmakers in both red states and blue states — from Massachusetts to Kansas — have passed renewable energy standards mandating that more customers get their electricity from green sources.

Getting the Work

The tightened labor market means that customers are more interested in contractors who can provide skilled workers right away as opposed to who's offering the lowest bid, Davis says.

This gives the IBEW the opportunity to make inroads at companies and in regions that aren't necessarily union-friendly.

A main focus of the IBEW's strategy is building relationships with industry stakeholders and public officials, says Bourne. That means advertising what the union has to offer.

"Every time there is an article in the paper about the skilled worker shortage, we need to invite the public to tour our training centers to see what we do," Bourne said. "If a company needs a particular specialized training, we must show them we can do that."

The Code of Excellence is also a key tool for the business development team. The code's focus on safety is especially important in the oil and gas industry. The quick pace of development has led many contractors to take shortcuts on safety. It's no surprise that an oil and gas worker is more likely to be killed on the job than a coal miner.

"A lot of these companies don't have enough qualified people who know what they are doing," Minot Local 714 Business Manager Randy Bartsch said.

The 2010 BP oil spill in the Gulf of Mexico has made energy giants conscious about avoiding accidents, so the IBEW's safety record is a big plus in getting work.

IBEW locals are also working to build from the bottom up, recruiting skilled workers into the trades.

Bartsch says his local has maintained a steady presence at job fairs and runs ads on the radio to promote the IBEW. Local 714 also supports Dakota Construction Careers, a building trades' initiative to recruit workers for the North Dakota oil industry.

Ohio Local 64 Business Manager Burgham says his local's secret to getting the work is to build a track record of successful on-time and under-budget projects.

"The reason we hang on is because of the quality of our work and the combined knowledge our membership brings to the project," he said.

Next month, we report on construction industry changes in Canada.


Increased oil and gas production, like from this drilling rig in Shreveport, La., has translated into tens of thousands of new jobs.

Credit: Daniel Foster


The natural gas boom has turned the United States from an energy importer to an energy exporter.

Photo Credit: WCN 24/7


U.S. Energy Production by Fuel