Appalachian Basin

The State of the State is Strong Thanks to the Utica Shale

While Governor Kasich is set to give his 2012 State of the State address in Lima, Ohio, which is coincidentally home to a large refinery that could benefit from increased Utica Shale/Point Pleasant production, the Columbus Dispatch wrote an editorial touting the many successes of the Governor since the inception of his administration.  While the author did tout the tremendous impact that shale development is having on Ohio, he missed out on some key points that show eastern Ohio is on its way to being a leader in the state.

Ohio’s state of shale is still in its infancy, but over the past year, Ohio has been home to some major announcements.  Midstream facilities and pipeline infrastructure are being built and infusing nearly $7 billion dollars into eastern Ohio while employing Ohioans to construct these facilities.  Chesapeake has already invested billions of dollars and hired 550 employees dedicated to their Ohio operations, while other companies are starting to move in to get their Ohio operations underway.  Halliburton is constructing a facility in Muskingum County, which will employ more than 300 Ohioans when completed. All of this activity has helped Ohio lower its unemployment rate to 6.9% a full point below the national average.

These advances are especially significant when discussing eastern Ohio.  This is an area of the state that has always heard about the prosperity of “the 3c’s”, Columbus, Cleveland and Cincinnati. The brain drain, which has recently been used to describe Ohio graduates leaving the state, has always been a common place in eastern Ohio.  The economic turnaround that has always been mentioned in other regions of the state has never applied to us–until now.  Now, we have an opportunity to create a real difference in our area through Utica Shale/Point Pleasant development.

This opportunity was noted by a recent study conducted by the Ohio Department of Jobs and Family Services. The review found Utica Shale development is providing Ohioans, especially those in the eastern part of the state, with the opportunity to claim jobs that have a pay range of $58,765 to $73,934, which is far greater than the statewide average.  These jobs are helping bring children back to the towns where they were raised to look for a new opportunity, instead of “the 3 C’s” or at worst another state far from their family.

These jobs are bringing increased revenue to counties and lower unemployment which in turn increases our economic base and investments into our communities.  These improvements can already been seen in Ohio.  Sales tax revenue has grown throughout the producing region of the state thanks to investment by companies and spending by landowners.

Carroll County, home to most of Chesapeake’s wells, has seen its unemployment rate drop by 3% while increasing their sales tax revenue by 25% in just one year.  Harrison County’s unemployment has dropped by 2.2% while increasing its sales tax revenue by 21% in just one year.  Noble County has seen its unemployment rate drop by 2.6% while increasing sales tax revenue by 20% in one year’s time.  All three of these counties have one thing in common: they have largely been left behind by previous economic development in the state.  Now it appears this dynamic might finally be changing thanks the development of our state’s oil and natural gas resources.

The best part of this news is that we are only in the beginning stages of this development.  All three processing plants are still being built and should be at least partially on line this year.  M3’s processing plant will be up and running in Columbiana and Harrison Counties this year.  MarkWest’s processing plants in Harrison and Noble Counties will be operational as well.  Once these plants are up and running, development will increase even more bringing more jobs and investment to the region.

There are still many tweaks and refinements that need to be made to fully take advantage of this opportunity.  Currently Utica Shale/Point Pleasant development only represents a handful of counties.  There is still much more research and development that needs to take place.

These companies are not asking for handouts, but for time. They need time to configure the best and most effective techniques to make Utica Shale/Point Pleasant development work in as many counties as possible in Ohio to help get our state back on track.  These investments in research and development cost hundreds of millions of dollars, while not guaranteeing a return in investment.  We have already seen that Utica Shale/Point Pleasant wells won’t work as far west as Medina County, but there are plenty of more counties that need that time to make them work just east of there.

Money is flowing into our state from out of state companies hoping to make the Utica/Point Pleasant as great as possible.  This influx of capital is reinvigorating our state with estimates of our gross domestic product increasing by $112 billion in 2013.  But we must allow this growth to happen, without unnecessary deterrents.

The state of shale is very promising in Ohio and will continue to be an important driver of the economy as long as Ohio lets the industry do what it does best: work.  As it is working, it will drive prosperity west while delivering jobs to Ohioans and revenue to both the local and state economy.

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