Ohio’s shale energy industry attracts nearly $78 billion in investment since 2011
COLUMBUS, OHIO – Total investment in Ohio’s resource rich shale energy sector has reached $78 billion since tracking began in 2011, according to a Cleveland State University (CSU) study.
Prepared for JobsOhio, the report represents the most recent data available and covers shale investment through the second half of 2018. Earlier in the year, IHS Markit released estimates that by 2040, the Utica and Marcellus shale region, of which Ohio is a significant part, will supply nearly half of all U.S. natural gas production.
The study from CSU’s Energy Policy Center at the Maxine Goodman Levin College of Urban Affairs, showed drilling investments were slightly down in the second half of 2018 compared to the first half, but total upstream investments were up. Total shale-related investment in Ohio for the second half of 2018, including upstream, midstream and downstream, was around $3.82 billion. Total investment from 2011-2018 totaled about $77.7 billion.
Upstream activities, such as drilling or royalties, accounted for more than $3.5 billion of this total. According to the Ohio Department of Natural Resources Division of Oil and Gas, 117 new wells were drilled during the third and fourth quarters of 2018, 40 fewer than in the first half of the year. Yet longer laterals are resulting in higher production and increased investment per well. Data indicates that the volume of gas-equivalent shale production in the second half of 2018 was 17.7% higher than in the first half, with total upstream spending in the second half of 2018 exceeding that for the first half by around $173.4 million.
In Ohio, with Belmont, Monroe and Carroll counties representing the most active areas, 117 wells were listed as “drilled, drilling or producing.”
Total Estimated Upstream Utica Investment: July — December 2018
- Lease Renewals and New Leases: $741,380,000
- Drilling: $1,456,700,000
- Roads: $7,020,000
- Lease Operating Expenses: $231,000,000
- Royalties: $1,104,980,000
- Total Estimated Upstream Investment: $3,541,080,000
Ohio saw limited investment in midstream infrastructure with the total midstream investment for the second half of 2018 equaling $231.8 million. Investment consisted primarily of a gathering system build-out, with the most spent on gathering lines followed by a gathering system compression and dehydration. No new gas processing or fractionation was added during this period. However, several new pipeline projects commenced in 2019 and will be accounted for in future reports.
Total Estimated Midstream Investment: July — December 2018
- Gathering Lines: $111,180,000
- Gathering System Compression and Dehydration: $89,640,000
- NGL Storage: $6,000,000
- Rail Transloading Facilities: $25,000,000
- Total Estimated Midstream Investment: $231,820,000
In downstream developments, two combined heat and power (CHP) plants with a total capacity of 22.5 MW were installed, representing an estimated investment of $34.1 million. No natural gas power plants broke ground in the second half of 2018. However, more than $1.5 billion worth of natural gas power plant construction starts occurred in May 2019 — the South Field Energy facility in Columbiana County and the Long Ridge Energy center in Monroe County — and will be included in the next report. Additional Q3 and Q4 2018 downstream investment identified include $3.8 million in compressed or liquefied natural gas refueling stations.
Ohio’s House Bill 6, which will subsidize regional nuclear and coal generation, may slow future natural gas power plant development in Ohio.
Total Estimated Downstream Investment: July — December 2018
- CHP Plants: $44,100,000
- Natural Gas Refueling Stations: $3,825,000
- Petrochemical Plants: $125,000
- Total Estimated Downstream Investment: $48,050,000
A pause in new major pipeline, processing and petrochemical project construction during the study period led to a drop in midstream and downstream investments from the first half of 2018. An uptick in midstream and downstream investment is anticipated in the near-term given the billions of dollars in projects that are either in the late planning stages or broke ground as of 2019.
“As the upstream and midstream sectors continue to mature, our focus is to land more downstream investment,” said Matt Cybulski, director of energy and chemicals at JobsOhio. “This strategy has two focal points: helping companies already in Ohio expand to take advantage of cheap natural gas and natural gas liquids, and attracting new greenfield developments such as ethane crackers, methanol plants and other related investments. These downstream projects result in significant amounts of construction jobs, are typically very capital intensive, and create high quality, long-term permanent jobs. Communities thrive when these facilities are opened or expanded and that is our long-term goal.”
Much of this growth can be attributed to Ohio’s proximity to the Utica and Marcellus shale formations in eastern Ohio, offering a large supply of low-cost natural gas, natural gas liquids and oils, and accounting for more than 85% of U.S. shale gas production growth since 2011.
