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Indirect Economic Impacts


Indirect Economic Impacts

TOPIC DESCRIPTION

Contributing to sustainable growth of the U.S. economy and the communities where EQT operates and sells its products through job creation, tax revenue generation and access to affordable and reliable domestic energy.

Why Managing It Matters

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Explanation of the material topic and its Boundary

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EQT's operations have a significant influence on the local economies where we operate by supporting economic growth via job creation and tax revenue generation. Intentional management of our positive impacts enables us to build strong relationships with our communities and lessen the United States’ reliance on foreign energy.

Management Approach, Performance and Evaluation

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The management approach and its components

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Evaluation of the management approach

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EQT tracks the indirect economic impacts of our business operations to better understand and communicate how our operations contribute to the economy. We annually commission an independent analysis of the direct and indirect economic impacts of our activities on both local and U.S. economies. Sustainability consulting firm ERM analyzed our year-end 2018 data and compiled the results into a study entitled, “EQT Corporation 2018 Economic Impact Analysis.”

Supporting National and Local Economies

As a domestic energy company, EQT provides abundant, easily accessible, affordable natural gas to the United States, lessening the country’s reliance on other nations for energy. This reduces overall energy prices and helps to increase national security.

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Significant indirect economic impacts

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According to ERM’s analysis, we provided $4.66 billion in value-added contributions to the U.S. Gross Domestic Product (GDP). Of this $4.66 billion in economic benefits:

  • 82.5%of contributions occurred in six states where EQT operates
  • 17.5% of contributions related to out-of-state suppliers that provided goods and services for operational activities in EQT’s operating area

EQT GDP CONTRIBUTIONS (MILLIONS OF DOLLARS)
Target
5000

4000

3000

2000

1000

0

$4,564

$1,335

$190

$44

$31

$11

$10

$2,943

 

$4,436

$1,960

$790

$47

$138

$114

$48

$1,339

 

$4,663

$2,539

$405

$5

$7

$624

$2

$1,081

 
201620172018
Pennsylvania
West Virginia
Kentucky
Texas
Ohio
Virginia
Rest of U.S.

Our direct activities produced approximately $2 billion of GDP, and the indirect GDP impact through our suppliers was $643 million. Our total induced impact — that is, the impact of spending by EQT employees, contractors and suppliers — was approximately $2 billion.

EQT ECONOMIC IMPACT (MILLIONS OF DOLLARS)
Target
5000

4000

3000

2000

1000

0

$4,563

$1,980

$1,877

$706

 

$4,436

$2,363

$1,403

$670

 

$4,661

$2,016

$2,002

$643

 
201620172018
Induced
Direct
Indirect

Labor Impacts

We also generate revenue for the communities and states where we live and work through job and wealth creation. Our operations — all in the U.S. — support local economies via taxes paid, road infrastructure improvements, local hiring of personnel and through use and support of local service establishments. We provide millions of dollars in royalty payments to our mineral owners and sustain local jobs for employees, direct contractors and suppliers to support our daily operational activities.

In addition to EQT’s direct employees, we supported approximately 23,000 ancillary jobs across our operations in 2018 — a 58% decrease over our 2017 operations; however, the 2018 analysis excluded data from our midstream business unit, whereas the 2017 report included operations across both upstream and midstream operations. This includes direct contractors — who make up most of EQT’s visible workforce — suppliers and supply chain employees who support our production, gathering and transmission activities.

Employment contributions also include the earnings spent by those employees, contractors and suppliers — or the induced impact — which drives employment in sectors providing various goods and services to the company.

ESTIMATED U.S. LABOR IMPACTS (NUMBER OF JOBS)*
Target
50000

40000

30000

20000

10000

0

34,209

21,750

5,850

4,800

1,809

 

40,697

25,891

5,974

7,116

1,716

 

23,733

15,203

3,800

3,765

965

 
201620172018
Induced Employment
Supplier Employment
Direct Contractors
EQT Employment

*2016 and 2017 data include midstream operations, which are now part of Equitrans.

Taxes

In 2018, EQT activities generated nearly $270 million in state and local tax revenues, supporting state and local governments.

2018 State and Local Tax Payments (Millions of Dollars)

  Pennsylvania West Virginia Kentucky Texas Ohio Virginia Rest of U.S.* Total
Property taxes $41.2 $5.5 $0.2 $0.3 $8.4 $0.1 $19.6 $75.3
Income tax $33.8 $4.8 $0.2 $0 $8.1 $0 $16.5 $63.4
Sales tax $43.6 $8.9 $0.3 $0.3 $11.8 $0.1 $22.9 $87.9
Other personal taxes $3.4 $0.5 $0 $0 $1.0 $0 $1.7 $6.6
Other taxes on production and imports $7.8 $2.1 $0 $0 $1.3 $0 $4.0 $15.2
Other $12.2 $0.9 $0 $0 $1.1 $0 $5.0 $19.2
TOTAL $142 $22.7 $0.7 $0.6 $31.7 $0.2 $69.7 $267.6
*Other states benefit economically from EQT’s activities because EQT directly receives goods and services from companies located outside of its operating areas.

Supporting Local and Diverse Suppliers

Our board of directors and management team support a strategic sourcing approach in which we seek out small and diverse local suppliers whenever possible to strengthen EQT’s ability to deliver high performance to our customers and communities. We consider diverse suppliers as those that are Minority Business Enterprises (MBE), Women’s Business Enterprises (WBE) and/or Veteran Owned Businesses (VOB). We identify these suppliers through collaboration with regional and national councils such as the African American Chamber of Commerce of Western Pennsylvania and the National Minority Supplier Development Council. We also work with coalitions such as the Women’s Business Enterprise National Council and the American Association of Blacks in Energy.

Further, we encourage our top vendors to consider diverse subcontractors as it helps these businesses develop relevant experience and expand business opportunities that may not be directly possible with EQT. Our targeted procurement initiatives include:

  • Encouraging top suppliers to seek out and include diverse businesses in their bids and as part of their proposed solution
  • Giving greater consideration to vendors who complete and submit a subcontracting document with their proposal identifying where and how they will utilize diverse vendors as part of the bidding process
  • Conducting meetings with our top contractors to provide supplier diversity education, outline reporting requirements for subcontracting with diverse suppliers, and identify specific products purchased by the top contractors to help align them with diverse firms selling those products
  • Tracking diverse vendor usage by asking our top contractors to provide their monthly spend with diverse subcontractors and local suppliers
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Proportion of spending on local suppliers

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In 2018, we spent 82.5% of our procurement budget on suppliers physically located within EQT’s operational footprint. We sponsored or participated in outreach events to target local and diverse suppliers including:

  • Regional Matchmaker Events: designed to connect diverse suppliers with corporations and EQT’s majority-owned top suppliers for potential business opportunities, in its seventh consecutive year, EQT successfully encouraged 62 of its majority-owned top suppliers to attend and participate in over four hundred one-on-one meetings with diverse vendors
  • Annual International Matchmaking Event: to prepare young women and minority students to become future entrepreneurs, EQT invited students to participate at this annual EQT-sponsored event where they met EQT senior leaders and experienced diverse business owners
  • Education sessions on supplier diversity in the natural gas industry, where EQT shares our experience and best practices promoting the use of local and diverse businesses.
DEFINITION