Utica Shale News : The Utica Shale has never gained the attention and respect it deserves as a major natural gas and natural gas liquids resource in the United States (NGLs).
Ohio’s Underappreciated Economic Machine: The Utica Shale
“We sometimes feel like the Utica is the shale industry’s’red-headed stepchild,’” Mike Chadsey said when we spoke last week, reminding me that, as a redhead, he’s allowed to make that comparison.
Mike is the Director of Public Relations for the Ohio Oil and Gas Body, which is the state’s largest trade association.
Because of its closeness to and coexistence with the massive Marcellus Shale natural gas formation, the Utica has gotten very little attention despite being a key resource play.
However, the Utica has been the driving force behind a resurgence of an industry that began in Ohio decades before the famous Spindletop find in Texas in 1901.
Long before that, Cleveland had established itself as a key trade centre for the early American oil industry, with the state housing one of the world’s largest refining facilities. Ohio has long been known as an oil and gas state.
Another boom in the state has occurred in the last decade, this time focusing on natural gas and the different liquids constituents included in the high output from the Utica Shale deposit, rather than oil.
Instead of new refineries, Ohio has seen the construction of a slew of new natural gas processing and fractionation plants, as well as billions in new investments from a thriving chemicals and plastics sector that uses natural gas and NGLs as feedstock.
By the end of 2019, the Utica boom, which began in earnest in 2011, has generated in over $86 billion in new capital investments and over 200,000 new jobs for Ohio residents.
Unemployment rates had risen as high as 15.5 percent in 2009, but had since fallen to the 5% to 6% level ten years later.
But then came the bust of 2020, and the Utica region, like every other shale region in the country, was heavily impacted.
As corporations scrambled to cut costs wherever they could, the global petroleum demand collapsed a year ago, resulting in a similar drop in new industrial capital investment.
These reduction impacted firm headcounts, resulting in the loss of some of the previous decade’s job growth.
Despite the industry’s continuous, steady recovery that began last September, opponents have launched a campaign to persuade government leaders to dismiss the business as a source of future economic growth.
Representatives from a range of anti-industry groups pressed this message at a meeting last week in St. Clairsville.
The Ohio River Valley Institute’s principal researcher, Sean O’Leary, said his team would be releasing three papers in the coming weeks.
“It will be a storey of locations where there has been a big increase in economic output but no equivalent increase in measures of local economic prosperity,” he added.
“The narrative of no jobs and little positive impact that the Institute suggested during their recent event is soundly rejected by the billions of dollars that have been invested by the natural gas industry in towns across Appalachia over the last ten years in royalty checks, new buildings, and new infrastructure,” the Ohio Oil and Gas Association wrote in an email to me.
“If this long and difficult epidemic has taught us anything, it is the importance of onshoring production, notably plastics, which were the first and only line of protection for our first responders and hospital staff until the current vaccine deployment.
We need to shorten the supply chain so that emissions are reduced, more jobs are created here at home, and Appalachian communities have more chances to diversify their economies.
Any observer’s view of the future for Ohio and the Utica at this time is likely to be influenced by whether they want to focus on last year’s COVID-driven bust, or on the benefits and growth that occurred before to March, and the current, encouraging recovery.
There are compelling reasons to choose the latter, more hopeful perspective. Goldman Sachs GS +1.4 percent GS +1.4 percent GS +1.4 percent GS +1.4 percent GS +1.4 percent GS +1.4 percent GS +1.4 percent GS +1.4 percent GS is up 1.4 percent.
The company previously stated that it is positive on natural gas this year, predicting an average price of $3.25 per Mmbtu until the end of October.
The firm also expects significant demand for liquefied natural gas exports from the United States due to rising natural gas prices in foreign markets (LNG).
Since its origin, oil and gas has been a cyclical business, and it has usually been the target of such attacks during and after downturns like the one in 2020. This sad rule undoubtedly applies to the Utica Shale.
However, things are beginning to look up as global demand improves, the rig count and number of frac spreads increase, and the lost jobs of 2020 begin to reappear.
Projections of the industry’s demise have always been overstated, and it’s quite likely that predictions of the Utica Shale’s demise will be no different.
