Login | December 12, 2019

State's shale industry sparks $78 billion in investment in the past decade

KEITH ARNOLD
Special to the Legal News

Published: December 3, 2019

Proximity to Utica and Marcellus shale formations in the eastern part of the state is the greatest contributing factor to the tens of billions of dollars of investment plugged into the Ohio economy during the past decade, a new JobsOhio report detailed last week.
The shale formations, which offer a large supply of low-cost natural gas, natural gas liquids and oils, account for more than 85 percent of U.S. shale gas production growth since 2011.
And with further development of downstream investments, the shale energy sector is forecast for continued growth. IHS Markit released estimates earlier this year that show that by 2040, the Utica and Marcellus shale region, of which the Buckeye State is a significant part, will supply nearly half of all U.S. natural gas production.
"As the upstream and midstream sectors continue to mature, our focus is to land more downstream investment," said Matt Cybulski, director of energy and chemicals at JobsOhio. "This strategy has two focal points: Helping companies already in Ohio expand to take advantage of cheap natural gas and natural gas liquids, and attracting new greenfield developments such as ethane crackers, methanol plants and other related investments.
"These downstream projects result in significant amounts of construction jobs, are typically very capital intensive, and create high quality, long-term permanent jobs. Communities thrive when these facilities are opened or expanded and that is our long-term goal."
Total investment in the state's resource rich shale energy sector has reached $78 billion since tracking began in 2011, according the report, a byproduct of a Cleveland State University study.
The report provides the most recent data available and covers shale investment through the second half of 2018, according to a press release.
Researchers at Cleveland State's Energy Policy Center at the Maxine Goodman Levin College of Urban Affairs, found that though drilling investments were slightly down in the second half of 2018, total upstream investments were up.
Total shale-related investment in Ohio for the second half of 2018, including upstream, midstream and downstream, was around $3.82 billion, the report detailed.
Upstream activities, such as drilling or royalties, accounted for more than $3.5 billion of this total.
The Ohio Department of Natural Resources Division of Oil and Gas reported 117 new wells were drilled during the third and fourth quarters of 2018 - 40 fewer than in the first two quarters of the year.
Longer laterals, however, are resulting in higher production and increased investment per well, the report provided.
The volume of gas-equivalent shale production in the second half of 2018 was 17.7 percent higher than in the first half of the year, with total upstream spending in the second half of 2018 exceeding that for the first half by around $173.4 million.
In Ohio, with Belmont, Monroe and Carroll counties representing the most active areas, 117 wells were listed as "drilled, drilling or producing."
The state saw limited investment in midstream infrastructure with the total midstream investment for the second half of 2018 equaling $231.8 million. Investment consisted primarily of a gathering system build-out, with the most spent on gathering lines followed by a gathering system compression and dehydration, the report detailed.
No new gas processing or fractionation was added during this period. Several new pipeline projects, however, commenced in 2019 and will be accounted for in future reports.
In downstream developments, two combined heat and power plants with a total capacity of 22.5 MW were installed, representing an estimated investment of $34.1 million, the report found.
No natural gas power plants broke ground in the second half of 2018.
However, more than $1.5 billion worth of natural gas power plant construction starts occurred in May 2019 - the South Field Energy facility in Columbiana County and the Long Ridge Energy center in Monroe County - and are to be included in the next report.
Additional third and fourth quarter downstream investment identified included $3.8 million in compressed or liquefied natural gas refueling stations.
A pause in new major pipeline, processing and petrochemical project construction during the study period led to a drop in midstream and downstream investments from the first half of 2018.
Energy officials, however, expect an uptick in midstream and downstream investment for the near-term given the billions of dollars in projects that are either in the late planning stages or broke ground as of 2019.
The study is the fifth in a series Cleveland State has prepared on the subject.
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