Bloomberg Misses the Mark on Utica Development
In its recent coverage of the Ohio shale industry, Bloomberg News suggested that the oil and gas industry is leaving Ohio in droves. It’s fitting that baseball season is underway, because the report was an unequivocal swing and miss.
The central problem with Bloomberg’s narrative is that it only focused on oil development, and thus completely ignored the amazing story of the natural gas liquids (NGLs) activity occurring in eastern Ohio. And that liquids story is nothing to cast aside so easily. In fact, thanks in large part to NGLs, the oil and gas industry is already helping Ohio return to economic prosperity, employing 38,000 people in the state — a number that will only continue to grow.
More specifically, the increasing investment in Ohio is due to the vast potential of NGLs in the Utica/Point Pleasant formation in the eastern part of the state. For this reason, Ohio has already seen over $7 billion worth of natural gas processing and infrastructure investment from midstream companies like Momentum, Markwest, Dominion and Caiman Energy. In addition, Ohio currently has 20 different operators developing in the Utica Shale of eastern Ohio. Major companies like Halliburton, Schlumberger and Baker Hughes are also setting up shop here in Ohio to provide well servicing for the operators.
If Bloomberg News thinks companies are packing up and leaving the state, it would certainly be news to these multi-billion dollar firms who are investing in Ohio for the long haul.
So what, exactly, does Bloomberg consider evidence for a mass exodus from Ohio? The story observes that four of the biggest operators have “put up all or part of their acreage for sale,” apparently unaware of the virtual truism in that statement (selling just one acre would be encapsulated in a “all or part of their acreage” proclamation, for example).
In case you think we’re just being dismissive, let’s look at Chesapeake Energy, the first company cited by Bloomberg. Chesapeake has leased more than a million acres in the Utica Shale/ Point Pleasant formation, but Bloomberg failed to mention that, instead only stating that the company put up 94,000 acres for sale — which is less than ten percent of Chesapeake’s total leased acreage. Chesapeake has also spent over $3 billion in the Utica to date. Adding insult to injury for Bloomberg’s investigative reporting division, the company has repeatedly said they wanted to focus on their core area of Carroll, Harrison and Columbiana Counties.
The lack of context extended into other areas of the story as well. The Woods McKenzie analyst cited by Bloomberg estimated that, by 2017, the Utica will be producing 200,000 barrels of oil a day. Unfortunately, that number was compared to the massive Eagle Ford Shale in Texas, which is projected to be producing more than 1.1 million of oil per day in 2017. What was ignored, though, is that 200,000 barrels per day is nothing trivial for Ohio, especially considering the fact that the state produced only 13,000 barrels of oil per day before the Utica Shale opportunities manifested themselves.
That’s right: Thanks to the Utica, Ohio’s oil production is set to increase fifteen fold by 2017 — a fact that a major news organization suggests is some sort of failure!
Look, the fact is this: Companies are going to focus on the NGL window while they continue to work on developing more and more of the oil window in the Utica. That doesn’t mean they’re leaving in droves; on the contrary, these companies are putting up billions of dollars in capital to develop wells, build infrastructure, and even prove the next wave of fields.
Need more proof? BP, Hess, Chevron and XTO are setting up shop and developing here in Ohio. Other major companies like Chesapeake, CONSOL, Rex Energy, PDC Energy and Gulfport, meanwhile, continue to post significant production numbers throughout eastern Ohio. And thanks to their continuing investments, Ohio’s economy is on the rebound as we become a major player in the energy space.
Those facts may not make for the conflict-inspired headlines that unfortunately define the current news media, but we Ohioans know better, and the state is better off because of what the industry has done for all of us here in the Buckeye State.