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Investment in Ohio’s shale energy sector rises to $3.1 billion
KEITH ARNOLD
Special to the Legal News
Published: December 30, 2024
Total investment in Ohio’s shale-energy sector was approximately $3.1 billion in the second half of 2023, according to a study by the Energy Policy Center at Cleveland State University’s Maxine Goodman Levin School of Urban Affairs.
The report, the 16th of a series prepared for the state’s private non-profit economic development corporation, JobsOhio, covered shale-related investment from July 2023 through December 2023 and showed that cumulative shale-related investment has risen steadily during the 12-year period ending last year.
“Since 2011, the shale-related investment in Ohio’s energy economy has steadily increased to $108.2 billion,” JobsOhio President and CEO J.P. Nauseef said in a news release.
The study calculated cumulative oil and gas investment in Ohio through December 2023 at about $108.2 billion, with $76.7 billion in investment linked to activities such as exploration and production; $22 billion linked to storage, processing and transportation; and $9.5 billion related to refining, distribution and end use.
The three areas of investment in the oil and gas industry are identified as upstream, midstream and downstream investment.
Upstream is the early stages of the oil producing process, which includes exploration and production of oil. Midstream is the transportation and storage of oil while downstream is the conversion of crude oil and natural gas to finished products.
According to the study, upstream investments were down by about $332 million during the second half of 2023 compared to the first half of the year, which reflected a decline in the number of new wells drilled.
Midstream investment rose by 69 percent over the previous six-month period, reaching $290.4 million.
The figure was further broken down, with the study identifying $166.9 million spent on gathering lines, $91.9 million spent on compression and $31.5 million spent on natural gas liquids pipelines.
The study noted that seven natural gas-powered plants consumed
13 percent of Ohio Utica gas production for power generation during the second half of 2023, generating the equivalent of approximately 35 percent of the electricity consumed in the state across all sectors.
“Total shale-related investment was up $1 billion in the second half of 2023 compared to the first half of the year, due largely to construction starting on a major natural gas power plant,” the policy center’s Research Supervisor Mark Henning said. “This level of overall investment will likely continue as upstream producers continue to ramp up activities in the region’s oil window, where we have seen new well development more than double during the first half of 2024 compared to the second half of last year.”
The report listed an average oil-to-price ratio of 6:1 since the beginning of 2023.
Officials said that as the spread between oil and natural gas prices has increased, discovery and development costs for oil have fallen due to innovations improving operational efficiency of shale-well production.
The study suggested that the application of artificial intelligence to upstream operations could drive additional improvements.
“As natural gas exploration technology continues to evolve, Ohio’s abundance of resources can play an essential role in supporting economic growth in industries like advanced manufacturing, health care, polymers, construction, aviation and automotive,” Nauseef said.
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