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Shale seen as $10B boost to Ohio economy by 2014

September 27, 2012
By LARRY SHIELDS , Salem News

SALEM - The shale boom will explode the Ohio economy by adding $10 billion to it by 2014, Linda Woggon, executive vice president of the Ohio Chamber of Commerce and executive directory of the Ohio Shale Coalition, said.

She was the keynote speaker at a breakfast hosted by the Salem Area Chamber Area of Commerce before about 70 guests at the Salem Community Center on Wednesday.

Her talk was based upon an Ohio Shale Coalition study released last February and combined with recent Utica shale data.

The added $10 billion will mean a one-percent increase in the Gross State Product, she said.

Based on 2011 through 2014 numbers, total activity, including leases, right of ways, royalties, roads and bridges, drilling and related downstream figures show the total spent in Ohio at $291,581,483 in 2011; $1.7 billion in 2012; $5.83 billion in 2013; and $9.65 billion in 2014.

Total shale activity during the four years amounts to just under $17.5 billion and will generate some 65,000 jobs statewide.

"We'll have some growth issues," she said, "if we work together we can do this and do well ... it's exciting."

Woggon said the study shows why shale energy is being called a "game changer" for Ohio's economy .

"So when people say this is a game changer the numbers seem to support it," she said while noting that by 2014 there will be an additional $500 million in state and local taxes with no increases to taxpayers.

"That's a significant amount of new taxes," she said.

Increases and projected tax collections are $16,522,865 in 2011; $73,422,148 in 2012; $271,539,607 in 2013; and $433,528,922 for 2014.

This relates to local, direct spending activity for construction of drill pads, wells and related infrastructure that increased to 29.7 percent from 2011 and will jump to 38 percent next year to 41.4 percent by 2014.

Woggon said Ohio is poised to become "one of the largest oil and gas producers in the world" with the potential to become energy self-sufficient while opening itself to exports.

As of late August, there were 359 horizontal drilling permits issued with 129 wells drilled and 27 producing.

There are 41 drilling rigs currently in the state. Chesapeake Exploration is the biggest player with well over one million acres (about five percent of Ohio's land area) under lease and currently Carroll and Columbiana counties lead in permit and drilling activity followed by Jefferson County.

"This is just the very beginning," Woggon said.

Larry Kosiba, executive director of the Salem Area Sustainable Opportunity Development Center, asked how local businesses can become more engaged.

"We're fighting an uphill battle," Kosiba said, explaining most of the attention winds up going to the three "Cs," Cleveland, Columbus and Cincinnati.

"How do we get you to help us, to let companies known we're here?" he asked.

Woggon said they can "get with you" and form a committee but pointed out that on OhioShaleEnergy.com there are supply chain opportunities for commerce.

"It's a website for any company to put their data in," she said adding it even has a GPS component.

"There's a lot of information in there for vendors to put in their services."

Salem businessman George Morris III asked if there was enough water "to do all this?"

Woggon said, "One thing Ohio has always had is water ... it's the numbers ... they sound like a big numbers" but she explained you have to consider the rate of replenishment.

"One of the great things about Ohio is that we do have the water to do things."

Mark A. Matusick, manager of corporate development for Chesapeake Energy, said, "Natural gas production is one of the most efficient uses of water."

City Councilman Dave Nestic asked if the price of natural gas was taken into account in the projections and the direction and Woggon said the prices were down and the estimates were "conservative" and added, "if it goes up we'll certainly see more robust activity."

Matusick said Chesapeake was learning more about the geology every day ... the amount of liquids and the timing ... the ability to response quickly.

Legislation helps producers plan, but as far as what direction they move "geology leads," he said, adding, "just the drilling alone ... you're talking about decades ... but the thing to do is educate yourself on supply opportunities."

Larry Shields can be reached at lshields@salemnews.net

 
 

 

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