Appalachian Basin

Steel And Chemical Industries Eye Ohio Thanks to Shale

Steel and chemical companies are both eying Ohio thanks to Utica Shale development.  In recent weeks both industries have been touting the fact that due to shale development, their industries are seeing brand new opportunities.  Both industries, which have been extremely important to Ohio’s past, present, and future, have been seeing a downtrend in in the state for many years and are now poised to return to their role as former powerhouses of Ohio’s economy.

Due to shale development, Ohio’s steel industry is seeing a resurgence by making tubular steel and fittings for shale development.  In Youngstown, V&M Star has begun producing the tubular steel as has US Steel in Lorain.  Although that has been a very important story to Ohioans and one we should all be proud of, it should be noted that companies producing tubular steel aren’t the only steel companies taking advantage of shale development.

Thanks to the low cost of natural gas, companies like Nucor Steel, who have a plant in Marion, are now looking to use natural gas instead of coal to make direct-reduced iron (DRI).  Purifying iron ore has mostly been done by using coal, but due to increased air regulations the burning of coal and the low cost of natural gas, companies are now making the switch.  The use of natural gas at DRI facilities are nothing new, but the savings created by shale development has now piqued interest in the steel industry.

That technology has been around 30 years, but for 29 years gas prices in the U.S. were so high that the technology was not economical….This is how steel will be built moving forward.- Michelle Applebaum, Steel Market Intelligence (Shale-gas revolution spurs wave of new U.S. steel plants, 1/2/13)

Even though Nucor is not slated to use DRI technology at their plant in Ohio, this new development is leading to a new joint venture between Bluescope Steel Ltd. and Cargill Incorporated planning to build a new natural gas DRI plant in Ohio.

While steel plants are very important to Ohio’s history and continues to provide good paying jobs to Ohioans, the chemical industry is also a tremendously important industry to Ohio residents.  According to the Ohio Chemistry Technology Council, Ohio employs 45,865 people, and indirectly contributes 155,943 jobs to the economy.

With the chemical industry being so important to Ohio, it was very exciting to hear American Chemistry Council President and CEO Cal Dooley speak so highly about the remarkable effect shale development is having on their industry.

The United States has gone from being the highest cost major gas producer four to five years ago to the current lowest cost producer.- Cal Dooley (ACC: Plentiful natural gas creates advantages for US chemical industry, 12/11/12)

With the low cost natural gas and natural gas liquids components, the chemical industry has its eyes set on making a comeback in the United States.  This enthusiasm bodes well for Ohio.

Plastic manufacturing, which is a major portion of the chemical industry in Ohio, will be a great benefactor because ethane, a key component in natural gas liquids, will be processed by plants like the M3 and MarkWest plants in eastern Ohio.  With this new development, Appalachian Resins is looking to build an ethylene/polyethylene production facility in Ohio.

Low cost natural gas is having a ripple effect that is beginning to bounce Ohio back from stagnation.  In 2010, natural gas derived from shale saved Ohio residents $1.5 billion in energy savings.  Now, these savings are also bringing important industries back to Ohio from plentiful low-cost natural gas.

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