This is the first in a series of anticipated articles discussing the results of an in-depth research project exploring the impact of the billions of dollars already invested and planned to be invested in Ohio to harvest what we commonly refer to as the Utica Shale. As a co-chair of one of the entities that commissioned the report, my intent with these articles is to provoke thought and educate those wanting to gain perspective on such a large capital-intensive project. If you have any questions or comments about this or future First Alerts on the research project, please contact me directly at dfischbach@calfee.com.

In September, researchers at the Center for Economic Development’s Energy Policy Center at Cleveland State University’s Maxine Goodman Levin College of Urban Affairs completed a comprehensive look at the opportunities for shale development in Ohio. The Economic Growth Foundation’s Regional Economic Competitiveness Strategy (RECS) Shale Committee¹ and JobsOhio commissioned the report to provide interested parties with a better idea of the opportunities for growth of Ohio’s oil and gas industry. RECS is an approach developed by the Regional Competitiveness Council as a collaboration of northeast Ohio’s corporate, chamber of commerce and foundation leadership to understand the drivers of Northeast Ohio’s economy.

About the Report

The report was issued in three parts: Mapping the Opportunities for Shale Development in Ohio; Economics of Utica Shale in Ohio: Supply Chain Analysis; and Economics of Utica Shale in Ohio: Workforce Analysis. Data was acquired through: a review of Ohio Department of Natural Resources records, industry and company data; conference presentations; and personal interviews. The report is the culmination of a multiyear effort significantly complicated by commodity price volatility.

The report was released to the public November 18th and is available here. The report provides:

  • Data showing the wide range of opportunities that shale development offers Ohio. These include:
    • Opportunities provided by each phase of development, including exploration and production, natural gas processing, and downstream petrochemical manufacturing;
    • Opportunities within the supply chain; and
    • An analysis of workforce needs and opportunities.
  • A projection for future Utica throughput (the total hydrocarbon volume flowing through the pipeline and processing system) volumes based on production data, estimates a decline curve, and forecasts drilling activity.
  • An evaluation of throughput for the next five years.
  • A comparison of throughput to processing capacity and projected pipeline takeaway capability.
  • A full analysis of the region’s competitive advantages for building natural gas liquids-based petrochemical operations at the manufacturing level.
  • Understanding of the regional demand for downstream plastics materials.

The report also reflects the potentially transformative nature of the Utica Shale in Ohio. Growth opportunities are discussed in a number of areas including drilling and production, gathering, compressing, transporting, storing, treating, separating, processing and fractionation. Also discussed are downstream activities including use of natural gas in power generation, refining operations and compounding, and distribution and conversion of petrochemicals into commercial plastics products.

The report analyzes a number of aspects of the development process and its impact. These include how the abundance of natural gas has resulted in lower energy costs for those who rely on it; the importance of ethane and Ohio’s surplus supply; the implications on workforce development and future need, and future investments which may occur.

Impact on Ohio’s Economy

One particularly interesting finding in the report is that the development of the Utica Shale is projected to create a surplus of ethane in the region, which should attract petrochemical refining companies and manufacturers who use the product. Ohio’s plastics and petrochemical industry should also attract investments from petrochemical and plastic manufacturers. Ohio is positioned to have more than just an extractive economy where minerals are taken out of the ground and shipped elsewhere to create wealth. There are opportunities to transform the produced commodity and from them products in the region, employing local workforce and building supply chain locally.

Next Steps

The research report is sure to be an educational read but make sure you allocate enough time. There are three sections for a reason. We plan to summarize each section of the report in upcoming First Alerts. Until then we welcome your thoughts, comments, and suggestions.