Appalachian Basin

New Study Shows Utica Shale’s Positive Economic Impact in Ohio

In the latest Ohio Utica Shale Gas Monitor from Cleveland State University, researchers re-examined the overall impacts of Utica Shale development, finding strong growth in sales tax revenues, a rapid growth in permitting and activity, job creation, and even a redefining development boundaries.  All of this activity has boded well for eastern Ohio, as companies are investing billions of dollars in a portion of the state that has needed an economic boost for quite some time.

Following the data made available by companies and the Ohio Department of Natural Resources, the latest Ohio Utica Shale Gas Monitor changed its area of focus and redefined the Utica Shale activity area to more accurately represent where development will take place in the near future. From the report:

  • “Drilling and permitting have shifted in recent months, indicating the industry is migrating activity south and east, focusing its areas of investment. The number of counties with strong shale activity has gone to eight from 15, and moderate activity has gone to five from 30.” (p. 3; emphasis added)
  • “Strong shale counties have the highest potential for producing commercial amounts of NGLs. The strong shale counties are along Ohio’s eastern border in the Northern Appalachian portion of the state: Belmont, Carroll, Columbiana, Guernsey, Harrison, Jefferson, Monroe, and Noble.” (p. 4)
  • “Moderate shale counties are to the north and immediate west of the strong counties. Mahoning, Portage, Stark, Trumbull, and Tuscarawas are the five moderate counties.” (p. 4)

The activity in the strong shale counties is progressing at a substantial rate, too. With Chesapeake as the clear leader in the development of the Utica Shale, other companies like Gulfport Energy, Antero Resources, PDC Energy, Rex Energy, CONSOL and Hess are all ramping up their Utica activity. More from the report:

  • “By the end of 2012, the number of horizontal wells drilled in the strong shale counties had increased by 758% from the previous year, while the number of wells permitted had climbed by 482%.”  (p. 16; emphasis added)
  • “An additional 164 wells were permitted during the second quarter of 2013 alone, an increase of 321% compared to the same quarter of 2012.” (p. 2)

In the strong shale activity counties, the report found sales tax also rapidly increased. These collections can be connected to companies developing wells, building natural gas processing facilities, landowners receiving lease and royalty payments, money being spent by companies and workers in the community, and increased hotel receipts for lodging of skilled workers. This revenue, it should be stressed, helps plug public budgets and benefits all Ohioans.

  • “Second quarter sales receipts equaled to $1.3 billion in collection versus $1.16 billion in receipts in the second quarter in 2012 marking a 12.2% growth in collections. The moderate shale counties also saw significant growth in sales tax receipts increasing by 10.7%.” (p. 4; emphasis added)
  • “Strong Shale counties experienced a 20.4% increase in total sales activity in 2012 ($15.5 billion), compared to 2011 ($12.8 billion).” (p. 14; emphasis added)
  • Sales receipt growth was robust in strong shale counties through the first quarter of 2013, with growth at or above 10% during each of the first three months.  This continues to be the fastest growth in the state.” (p. 14; emphasis added)

When discussing employment numbers, the report did point out that employment in strong shale counties was slower than anticipated with employment dropping by about a half percentage point in the first quarter and eight-tenths of a percent in the second. However, the report noted several factors played significant roles in the limited employment calculations, including the unfortunate loss of jobs in non-shale industries:

  • “Growth in shale jobs is being offset by employment losses in other industries.” (p. 14)
  • “The employment data analyzed here reflects total employment in Ohio counties and does not specifically focus on sectors or industries (i.e. manufacturing, construction, transportation) that are more likely to be more directly impacted by shale development.” (p. 22)
  • “As others within the shale arena have noted, Ohio’s workforce is still being trained and prepared to work within the oil and gas industry.” (p. 22)

Without the first two external factors, growth would have been much more significant in the strong shale counties.  As we move forward, the Ohio Oil and Gas Energy Education Program has already identified 70 programs that colleges, vocational schools and career centers have developed to train Ohio residents to pursue a career in the oil and gas industry.  The training from these institutions will help our residents secure even more of these high-paying jobs as we move forward.

Additionally, the development of the Utica Shale has provided a significant savings for Ohio’s residential and commercial consumers.  Since the Utica Shale began to take off in the third quarter of 2011, natural gas prices have stayed lower than the national average. The CSU report found Ohio’s prices were 85 cents lower than the national average and $1.12 lower for commercial consumers. These substantial savings were much appreciated last week, as we all tried to keep warm in subzero temperatures.

As noted in the report, Ohio remains to be in the exploration phase of development, and pipelines and other infrastructure continue to be built out, providing good jobs and economic stimulus.  As Ohio moves into the production phase, increased benefits from shale development will only continue to grow statewide.  Whether it is sales tax revenues for the counties, employment in the industry, or lower energy prices, Utica Shale development is a clear for Ohio and its workers.

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