Shale Industry Still Booming in Ohio

Feb 6, 2018 | News, Newsletter

By Gilbert Michaud, Ph.D.
Assistant Professor of Practice, Ohio University.

Colton Smith.
Voinovich Research Scholar, Ohio University. 

Ohio has a legacy of coal mining, especially in the Appalachian region of the state, but a recent shale gas boom, in addition to energy efficiency programs and the increasing cost-effectiveness of renewable energy resources, has resulted in a decreased reliance on coal.  Natural gas production in Ohio has continued to grow in recent years despite falling production throughout the rest of the country.  This can be attributed to the prime locations and continued extraction of the Utica and Marcellus shale formations in Ohio, which began in earnest in 2012.  Both are sizeable national shale plays, and, in fact, the Utica may soon match the Marcellus formation in terms of production, the latter of which is the largest formation in the U.S.

Both the Utica and Marcellus shale booms in Ohio were, in part, caused by advances in hydraulic fracturing (i.e., ‘fracking’) techniques which allowed previously untapped natural gas to be extracted more easily.  To illustrate, in 2012, Ohio withdrew roughly 7,041 million cubic feet (MMcf) of natural gas per month, a figure that rose to 42,698 MMcf in 2014 and 121,430 MMcf in 2016 (a 1,600% increase over four years).  Ohio now accounts for over 5% of the U.S.’ natural gas supply, and new wells continue to be brought online.  Moreover, six new midstream gathering and processing facilities recently finished construction, while two new pipelines, the Rover and Nexus, are being worked on which will collectively transport 4,800 MMcf of gas per day in Ohio.

Further, there are 11 new natural gas plants currently in the planning or construction phases, which will cost an estimated $9.8 billion, and are predicted to produce power nearly twice as efficiently as current coal facilities.  This surge in natural gas production has resulted in the state GDP contribution from oil and gas activity to nearly triple over the last five years.  According to Ohio University research, Ohio’s shale industry employs now over 150,000 and contributes roughly $28 billion of economic impacts to the state.  In order, the top five counties by total shale-related economic impact per capita are Noble, Monroe, Belmont, Guernsey, and Washington – all of which sit in the Appalachian region.

Overall, whether shale employment growth will actually continue in Ohio will depend on the viability of continued drilling in the Utica and Marcellus shale plays and the presence of demand for oil & gas to match increasing production.  Regardless, the installation of new infrastructure (e.g., the Rover and Nexus pipelines) will enable Ohio’s economy to further capitalize on the state’s plentiful natural gas resources while this fracking boom cycle lasts.  There are numerous economic development and policy implications to consider moving forward with this industry in Ohio, but it remains apparent that the state continues to benefit from the financial and employment impacts of this unique resource to the region.  Smart planning and policy decisions, as well as workforce training, can help enhance this shale resource extraction boom while also progressing Appalachian regional poverty and mitigating any potential negative environmental impacts.

You can reach Gilbert Michaud at michaudg@ohio.edu or Colton Smith at cs029613@ohio.edu

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