The first Ohio shale well in the Utica and Marcellus Shale formations was drilled in February 2011. In the short time since, the formations have attracted some $64 billion in private sector investment.
“Those looking to invest in Ohio’s shale opportunity have confidence in the state and the business environment it fosters,” says Dana A. Saucier Jr., Senior Managing Director for Energy and Chemicals and Food & Agribusiness at JobsOhio. “The prevailing sentiment is that it’s an attractive place to deploy capital.”
Smart Business spoke with Saucier about the opportunities that exist in Ohio because of the Utica and Marcellus Shale formations.
What is the state of Ohio’s shale business?
As of mid-2017, the shale industry has invested $63.9 billion dollars in investment in upstream, midstream and downstream activities since 2011.
The rig count peaked in 2015 before prices started to decline in the global oil market, causing the drill count to go down. However, in Utica and Marcellus, the volume of output continued to increase, which speaks to the productivity of those shale wells.
In the past year, as prices have rebounded, drilling activity has picked up again, and so have the rig counts. There also have been new natural gas pipelines that enable more capacity to be extracted and taken to market. It’s brought an uptick in additional investment in the past 12 months of around $10 billion dollars.
Utica and Marcellus as a region represents 85 percent of shale gas growth in the U.S. since 2012. This region has been extremely impactful in leading the U.S. in shale production, and less than 10 percent of all the available acreage has been drilled. Its future is bright as downstream opportunities continue to manifest.
What has been the economic impact of Ohio’s shale business to the state?
The gross state product to Ohio because of these investments is approaching $100 billion. The industry has also directly added as many as 12,000 jobs in the state — jobs that tend to pay above-average salaries. When indirect jobs are added in, such as welders and fabricators, maintenance and logistics, that figure exceeds 100,000.
The state is also benefiting from the taxes paid. For example, the tax revenue from a large, newly constructed power plant in Eastern Ohio that’s using shale natural gas and turning it into clean power funded a K-12 school system, so the benefits are felt across the board.
What types of business investments have come from those looking to capitalize on Ohio’s shale resources?
The most obvious investments have come from the industry itself, beginning with the oil and gas exploration, pipelines, refineries, and natural gas power plants leading downstream to the petrochemical industry that use these feedstocks. What is less obvious to many is that Ohio’s shale resources have made the state attractive to other industries where energy costs are very important to the cost of manufacturing.
It’s not just important that Ohio develops its shale resources, but that we use these feedstocks here in Ohio because job creation expands drastically as value is added to the commodity. Ohio’s shale growth offers enormous potential to expand its tremendous existing ecosystem in the chemical, plastics, resin, adhesive, polymer and coatings industries.
What does Ohio offer to those businesses investing here?
With a time-tested manufacturing and high-tech legacy, Ohio possesses a highly trained, cost competitive and productive construction workforce ready and capable of building the necessary facilities. Post construction, the talent will be available to operate once they’re up and running. Ohio’s university feeder system connects many industries to the well-trained and talented workforce. And the state has an attractive tax environment.
Ohio offers access to the most productive and low-cost shale formations in the world, and has one of the nation’s largest concentration of chemical manufacturers. The state’s central geographical location puts businesses within a day’s reach of 60 percent of the North American market. As amazing as it’s been so far, the best days are ahead. ●
Insights Economic Development is brought to you by JobsOhio