May 2019
A Free Monthly Publication
RUST BELT NO MORE
NATURAL GAS INDUSTRY HAS
GENERATED $45.8 MILLION IN TAXES IN EASTERN OHIO IN THIS ISSUE: NEW STUDY CONFIRMS WHY INDUSTRY SHOULD COME HERE – guest editorial
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MAY 2019
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Table of Contents MAY 2019
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A Look Ahead Gas & Oil Events
G ROUP PUBLISHER
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Natural Gas Industry has Generated $45.8 Million in Taxes in Eastern Ohio
Bill Albrecht
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Rust Belt No More
EXECUTIVE EDITORS
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New Study Confirms Why Industry Should Come Here - Guest Editorial
Ray Booth rbooth@daily-jeff.com Ted Daniels tdaniels@the-daily-record.com
CONTENT CO ORDINATOR Doris Sigg
dsigg@the-daily-record.com
“Ohio Gas & Oil” is a monthly publication. Copyright 2018.
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Petrochemical Plant in Belmont County?
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What is a Cracker Plant?
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Pipelines Bring Economic Boost to Region
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Natural Gas Production in Ohio has Surged since 2011
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Ascent Resources
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Ohio Well Activity
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Horizontal Drilling Activity Graph
On The Cover:
Gas and Oil production in Ohio has increased quickly over the past decade and is benefitting communities in the form of huge tax benefits for projects such as schools and community centers.
MAY 2019 ADVER TISING John Kridelbaugh Cambridge, Ohio Office jkridelbaugh@daily-jeff.com 740-439-3531 Wooster & Holmes, and Ashland, Ohio Offices kgearhart@the-daily-record.com 330-287-1653 419-281-0581 Mindy Cannon Alliance & Minerva, Ohio Offices mcannon@the-review.com 330-821-1200 Nancy Whitehead Kent, Ohio Office nwhitehead@recordpub.com 330-541-9449
L AYOUT DESIG NER Phil Luks
pluks@recordpub.com
A Division of GateHouse Media Ohio 212 E. Liberty St. Wooster, OH 44691 330-264-1125 editor@spectrumpubs.com. MAY 2019
A Look Ahead
Gas & Oil Events MAY 4, 2019 COSI BIG SCIENCE CELEBRATION
COSI 333 W Broad St, Columbus, OH 43215 About Big Science Celebration: The COSI Science Festival Big Science Celebration at the Peninsula is the culminating event of the four day festival, taking place on Saturday, May 4, 2019 from 11 a.m. – 4 p.m. The event will bring thousands of people to the Peninsula, including Washington Blvd., Genoa Park and COSI, for a day of interactive activities hosted by Columbus’s own science, technology, engineering and mathematics focused organizations. This FREE event is open to all, but the primary target audience will be families with school ages children, with a special focus on those with limited access to science education resources. ALL Big Science Celebration exhibits must be designed to engage the public in an interactive, hands-on way with some aspect of science, technology, engineering, and/or mathematics. We encourage you to be creative! Help the public understand what your organization does for our community and beyond. Help us address workforce challenges by bridging the STEM skills gap and allowing our community’s children to see themselves in scientists and scientists in themselves.
MAY 4-5, 2019
OOGEEP SPRING 2019 FIREFIGHTER TRAINING ABOUT THE TRAINING
While responding to oilfield emergencies is rare, it can be challenging. Join more than 1,500 Ohio firefighters (and departments from 7 other states) that have taken this training to learn common practices, references and standards used by
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the fire service and the natural gas and oil industry. The training program incorporates the following three (3) sections: 1) Interactive classroom presentations and special activities. 2) Hands-on fire behavior labs. 3) Opportunity to participate in a unique oilfield tour. (This will be coordinated on a separate date.) This emergency response program provides insight into how natural gas and oil is explored, drilled, produced and transported, and the importance of establishing a unified command in the event of an emergency. Upon completion of the training, each participant will receive a certificate of attendance, an “Oilfield Emergency Response Training” patch, challenge coin, class photo, field guide, Class B Foam and many other materials. (Reciprocating patches and challenge coins are greatly appreciated). Participants will also receive documentation for up to 12 CEU contact credit hours. These CEU credits must be approved by each department’s Fire Chief in accordance with State Fire Training regulations.
experience in the oil and gas industry and/ or fire service.
TRAINING LOCATION
Wayne County Fire & Rescue Regional Training Facility 2311 South Millborne Road, Apple Creek, OH 44606
HOTEL LOCATION
Hilton Garden Inn 959 Dover Road, Wooster, Ohio 44691
SCHEDULE
DAY 1 – SATURDAY, MAY 4, 2019 8:30 AM – Registration and Full Hot Breakfast 9:00 AM- 4:00 PM – Interactive Classroom Presentations and Special Activities. Lunch will be provided. Optional Evening Reception/ Dinner – Details will be announced at the training. DAY 2 – SUNDAY, MAY 5, 2019 (Must attend day 1) 8:30 AM – Check-in and Full Hot Breakfast 9:00 AM – 4:00 PM – Hands-on Fire Behavior Labs. Lunch will be provided. OILFIELD TOUR (DATE TBA) INSTRUCTORS (Must attend day 1 and 2 to be eliLead Fire Instructor: gible) Chief Brent Gates, New Concord If indicated on the registration form, Fire Department information will be provided about – Ohio Certified Fire Instructor this opportunity to participate in a – Adjunct Instructor Ohio Fire Acad- unique oilfield tour. emy – Board of Directors, Ohio Fire Chiefs’ Association INTERSTATE OIL AND GAS – President, Southeast Fire Chiefs’ COMPACT COMMISSION Association – More than 40 years experience in COLLECTIVELY REPRESENTING emergency response and fire edu- THE STATES 2019 ANNUAL BUSINESS cation Other Instructors: MEETING: Includes a team of 15+ state certi- Skirvin Hilton Oklahoma City Hotel fied fire instructors, emergency re- Oklahoma City, Oklahoma sponders and industry experts with Join us for this year’s Annual Busimore than 500 years of combined ness Meeting in Oklahoma City,
MAY 5-7, 2019
Events continued on page 5 OhioGas&Oil
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Natural Gas Industry
has Generated $45.8 Million in Taxes in Eastern Ohio JON BAKER | The Times-Reporter GateHouse Ohio Over the past nine years, the oil and gas industry has brought jobs, better roads and increased tax revenues to counties and school districts throughout eastern Ohio. That was the message that Mike Chadsey, director of public relations for the Ohio Oil and Gas Association, brought to members of the New Philadelphia Rotary on Tuesday. After he made his presentation, he stopped at The Times-Reporter office to discuss issues related to the industry. “I am grateful to have had the opportunity to speak to the Rotary Club today,” he said. “My message was, as Tuscarawas County, you are not on the outside looking in, regarding shale development. There is much going on locally that is positive and directly connected to the oil and gas industry.” Between 2010 and 2015, the industry has paid $45.8 million in taxes in six Ohio counties - Belmont, Carroll, Guernsey, Harrison, Monroe and Noble, he said. During that time, it paid $14 million in property taxes in Carroll County and $11 million in Harrison County. In addition, the industry has spent $302.6 million to improve 639 miles of highway in eastern Ohio. That includes $44.7 million in Carroll County for 99.33 miles of roads and $31.4 million in Harrison County for 54.75 miles of roads. Energy companies have invested $8.1 billion on five pipeline projects. Kinder Morgan spent $500 million to build the 215-mile-long Utopia Pipeline, and Energy Transfer spent $4.3 billion to build the 570-mile-long Rover Pipeline. Both pipelines run through Harrison, Carroll and Tuscarawas counties. Tax dollars generated by the industry have benefited local school districts. Carrollton Exempted Village Local Schools is building a $38 million school for grades six through 12 at no cost to taxpayers. Carrollton is paying 61 percent of the project with money from an enterprise zone agreement with Carroll County Energy, which operates a natural gas-powered power plant in Carrollton. The plant, built at a cost of $900 million, can generate power for 750,000 households. Tax revenue from the Rover Pipeline is allowing Conotton Valley Union Local Schools to build the
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$18 million Rocket Center at its educational complex north of Leesville, also at no cost to taxpayers. The 80,000-square-foot facility will house a gymnasium, eight-lane indoor competition pool, six-lane bowling alley, daycare center, senior center, a walking track, fitness equipment, a cafe and health clinic.
“That’s why your natural gas bill is probably one of your lower - if not lowest - utility at your home.” And Tuscarawas Valley Local Schools in Zoarville will be using its money from the Rover Pipeline to create safe, state of the art pre-kindergarten-12 facilities for all students on the Tusky Valley Road Campus. Chadsey noted that Ohio is now producing more natural gas than it is consuming. “That’s why your natural gas bill is probably one of your lower - if not lowest - utility at your home,” he said. Ohio has had a long connection to the oil and gas industry. The first discovery of crude oil in the United States occurred in Noble County in 1814. A second well was dug in 1816. The 1816 well survives today, at Thorla McKee Park at the intersection of state Routes 78 and 564. On October 7, 2014, the 200th anniversary of the first well was celebrated with dedication of the park, operated by the Noble County Historical Society.
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Events continued from page 3
Oklahoma, May 5 - 7, 2019 at the Skirvin Hilton Oklahoma City Hotel in Downtown OKC. Register today for one of IOGCC’s most highly anticipated meetings with other state regulators, federal officials and industry executives.
MAY 10, 2019
OOGA REGION 1 & 2 GOLF OUTING Wooster Country Club 1251 Oak Hill Road Wooster, Ohio 44691
MAY 11, 2019
STATE SCIENCE DAY
Location: The Ohio State University Columbus, OH 43210 About State Science Day: Each year, thousands of Ohio students complete independent research projects. These students
present their research at the local and the District level, and the highest-rated projects go on to compete at State Science Day. This event is the high-point of studentbased scientific-research, and in 2019 it will be entering its 71st year. OOGEEP’s Role: OOGEEP supports the school science fair programs by offering students information on ideas and resources for crude oil and natural gas related projects, sponsoring OAC’S STEM STATE SCIENCE FAIR AWARD #139, AND JUDGING AT THE STATE SCIENCE FAIR. Criteria for selection of OOGEEP’s Award #139 includes: outstanding work or knowledge gained about natural gas and/or crude oil in the areas of geology, engineering, chemistry, microbiology, physics and environmental sciences. Learn more about this award through the OHIO ACADEMY OF SCIENCE.
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Rust Belt No More
DAN ALFARO | Energy In Depth - Ohio In real estate, as the old adage goes, it’s all about “location, location, location.” If last year’s U.S. Department of Energy (DOE) natural gas liquids (NGLs) report put the Appalachian region on the map, a more recent update serves as a big, bright neon “welcome” sign. The DOE’s recently released Natural Gas Liquids Primer forecasts that surging Appalachian Basin natural gas production will quadruple total eastern United States natural gas production from 2013 levels by 2050. And because the Appalachian Basin is a major “wet gas” producer, the DOE also projects natural gas liquids production will increase more than 700 percent in the region from 2013 levels by 2023. For those who may not be familiar with the term, “wet gas” includes ethane, propane, butane, iso-butane and natural gasoline, which is separated at processing plants and is then used to make numerous everyday
petrochemical products Specifically, the DOE report brings to focus larger projections for ethane production from the Marcellus and Utica shale plays than had been previously estimated, as well as updates on infrastructure developments in the Appalachian region, and “research and development opportunities related to natural gas and NGLs production, conversion, and storage.” “The Appalachian region has experienced near-exponential growth in natural gas production and that production is expected to increase for decades to come. The U.S. Energy Information Administration (EIA) projects natural gas production in the East region, where the Appalachian Basin is the principal contributor to production, to quadruple from 2013 to 2050.”
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Much attention has been given to the natural gas liquids production coming out of the Appalachian Basin, and with NGL production in Appalachia projected to increase more than sevenfold, there is cause for enthusiasm for the opportunities these resources bring to the region. The report states: “The natural gas produced in Appalachia contains valuable resources in the form of natural gas liquids Rust continued on page 7 MAY 2019
Rust continued from page 6
(NGL), including ethane and propane. When separated The Shale Crescent of the Northeast is enjoying a big from the natural gas stream, ethane and propane are boom of its own, and it’s only going to get bigger in the key feedstocks for the petrochemical industry, used to years to come.” produce compounds for making plastics and resins.” The EIA data and DOE recommendations highlighted in the report reinforce the IHS findings, showing the Appalachian Basin to be the most profitable – and attractive – place to build a petrochemical plant in the country. Indeed, the opportunity (and feasibility) to build out what would serve as “second center of U.S. petrochemical and plastic resin manufacturing, similar to the Gulf Coast,” is something the Department of Energy has been eyeing for some time, as noted by Energy Secretary Rick Perry in his testimony before Congress this spring: “To develop [the Gulf’s petrochemical industry] in another region of this country, the Appalachian, makes Source: EIA sense because you’re sitting on top of Marcellus and Utica, which are prolific gas fields, and helping tranAs EID covered before, the Appalachian Basin is driv- sition the workers who are either out of work or not ing national NGL production records, and it’s these working in jobs that are satisfactory from their pernatural gas liquids that have the potential to attract spective into higher-paying refining and petrochemical new investments and industries to the region. The DOE type jobs. That is a something we’re working on acreport notes that “leaders across the Appalachian re- tively today at DOE.” gion have identified the potential economic opportuIn order to realize the potential to build out the petnity presented by these significant NGL resources,” and rochemical and plastics manufacturing industries, the one of the key objectives of the agency in updating the DOE report notes the increase in the needed infrastrucBelt continued on page 9 report was to “contribute to the dialogue” of efforts underway to capitalize on these opportunities. These leaders include the governors of the tri-state area – Ohio, Pennsylvania, and West Virginia – who renewed their Memorandum of Understanding (MOU) to “continue efforts to maximize growth in the shale gas region” earlier this spring. Likewise, Shale Crescent USA, an economic development initiative looking to encourage business growth in region, has been proactively engaged with industry leaders and stakeholders to draw attention to the great Authorized Dealer of BARBCO Underground Construction Equipment advantages the region has to offer, thanks to its natural resources. This is no small undertaking, but the DOE’s findings, WHATEVER YOU NEED TO GET THE JOB DONE coupled with a recent IHS Markit study, “The Potential Economic Benefits of an Appalachian Petrochemical Industry,” has Shale Crescent preparing Appalachia – or the “Shale Crescent” region – to realize its potential to bring about a third “industrial revolution.” As energy expert David Blackmon notes in his most www.TRS.RENT • 844.333.2754 recent Forbes piece, the IHS study projections for the CANTON, OHIO Appalachian Basin underscores the significance of the play, drawing comparisons to the juggernaut Permian Basin: • AUGER BORING MACHINES & AUGERS “The IHS Markit report also projects that, if the Marcellus region were a country, it would currently rank • CUTTING HEADS & CASING ADAPTERS third globally in natural gas production, behind only the • GUIDED BORING PILOT TUBE SYSTEMS rest of the U.S. and Russia. • TUNNEL ATTACHMENTS FOR BORING MACHINES “So yes, there is indeed a big oil boom taking place in the Permian Basin, but it is far from the only petroleum• CRADLE BORING MACHINES based energy boom driving the U.S. economy today. WO-10677618
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New Study Confirms Why Industry Should Come Here Guest Editorial GREG KOZERA | Shale Crescent USA John Chambers, Former Executive Chairman and CEO of Cisco Systems, now Venture Capitalist said “If you don’t innovate fast, disrupt your industry, disrupt yourself, you’ll be left behind.” We have all seen this happen. Walmart disrupted small businesses on Main Street. Amazon disrupted Walmart. We can now have almost everything Walmart sells delivered cheaply to our front door. What next? When we returned from Japan last year my wife, Lynnda, decided that she needed a heated toilet seat like she experienced in Tokyo. Saturday night at 10 PM she went to Amazon and ordered one. It arrived Monday afternoon and was operational on Monday eve-
ning. The power of disruption. Once again Shale Crescent USA has become “the disrupter”. Our IHSMarkit study released last March at the World Petrochemical Conference (WPC) said that the Shale Crescent USA Region is the most profitable place in the world to build a petrochemical plant.
“Research continues to drive home the myriad economic advantages for manufacturers in the Shale Crescent region...”
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This turned the petrochemical industry upside down. There probably wasn’t an executive (except those on our Team) that expected a small Marietta, Ohio, based non-profit organization to show up on the main stage of the World Petrochemical Conference in Houston with this industry- changing information. A new study commissioned by Shale Crescent USA, Estimated Logistics Benefits of the Shale Crescent USA Region Versus the U.S. Gulf Coast for Natural Gas and LPG, was released last week at this year’s WPC in San Antonio, Texas. It highlights chemical industry development opportunities for the region based on predicted volumes and cost of natural gas and methane, propane and normal butane (LPG) production in the Marcellus and Utica shale plays; the estimated logistics-related cost advantage of feedstock supply; and the cost to distribute the chemical products to regional customers. The report follows the March 2018 study conducted by IHSMarkit, which evaluated the prospects for a world-scale ethylene and polyethylene plant based on ethane feedstock in the Shale Crescent USA region. “Research continues to drive home the myriad economic advantages for manufacturers in the Shale Crescent region when compared to other, more traditionStudy continued on page 10 MAY 2019
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ture and also identifies the need for continued investment in infrastructure expansion: “Industry has made significant investments in natural gas and NGL infrastructure to support the boom in production in Appalachia this decade. New investments to take advantage of the NGL resources in the region have been identified by industry, and forecasts for production over the decades to come highlight the opportunity for additional investments across the NGL supply chain.” Source: EIA Right now, there are more than $23 billion worth of pipelines planned across the three states. In addition, as covered previously by EID, there have been a number of new processing plant projects coming online over the past few years. Source: EIA For example, MarkWest has invested billions of dollars on processing plants in Ohio alone, which include: A Cadiz processing plantthat separates methane and ethane from a mixed stream of natural gas liquids and transports the products in separate pipelines. A Seneca processing plant that separates methane from a mixed stream of natural gas liquids. A Hopedale fractionator, which separates a mixed stream of natural gas liquids into purity products, including butane, isobutane, propane and natural gaso-
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line. Likewise, there are a number of proposed cracker plants in various stages of development, including the Shell ethane cracker in western Pennsylvania and the proposed PTT Global Chemical ethane cracker project in Ohio. Source: EIA These plants are vital to the effort, as the facilities break down ethane into ethylene – the building block of petrochemicals – and convert it into derivatives – like polyethylene – that are key to ensuring Appalachia’s bright plastics and petrochemical future comes to full fruition. There is no question the “ongoing renaissance in oil and natural gas production” has led to incredible benefits for the Appalachian region*. The safe, responsible development of the region’s geological gifts has brought manufacturing back, and answered some prayers by returning the steel industry to its natural habitat. It’s also bringing jobs, increasing tax revenues for the states, savings for energy consumers, and even improving our air quality. The Rust Belt, No More, Appalachia has a bright future ahead, and this new DOE report goes a long way to showcase its great potential.
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ally accepted energy and chemical hubs,” said Wally Kandel, spokesperson for Shale Crescent USA. “Investors are catching on that the Marcellus and Utica Shale formations offer unprecedented benefits; there are few other places in the world, if any, where the supply, manufacturing facilities and end users are all in close proximity. We look forward to welcoming more international chemical and energy companies to the region to open or expand their business and reap these benefits.” “The Shale Crescent USA region will be a significant contributor to the supply of natural gas, ethane, and LPG well into the future,” said Anthony Palmer, vice president, chemical consulting at IHSMarkit. Based on US EIA numbers from 2008 to 2018, Shale Crescent USA accounts for 85% of the USA’s natural gas growth. Gas production in the Shale Crescent USA was up 26.5 billion cubic feet per day (BCF/D). This compares to a growth of only 2.3 BCF/D for the entire state of Texas. The Study said that our region has a cost advantage because of transportation and logistics for the NGLs and derivatives produced in the Shale Crescent region as compared to supply from the U.S. Gulf Coast. More disruption from Shale Crescent USA: Methane: 15% lower feedstock cost
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Propane: 6% lower feedstock cost Butane: 13% lower feedstock cost Methanol: 26% lower delivery cost Integrated Ammonia/Urea: 12% lower delivery cost Integrated PDH/Polypropylene: 11% lower delivery cost The US Gulf Coast has long served as the United States’ primary energy and petrochemical hub, the Shale Crescent region’s abundant natural gas and NGL supply – combined with its access to water for transportation and processing, as well as its proximity to the vast majority of North American demand for thermoplastics –make it a prime candidate for a second U.S. petrochemical hub. This is why our lunch presentation at WPC, “Disruption of the Petrochemical Profitability Equation” had standing room only and why we had to turn people away because the room was full. The new profitability equation is; Petrochemical Profitability= Build on top of feedstock + In the center of customers What this means for people in our region is, we are now the place for companies to relocate and expand. They are getting the message based on our private meetings with high level executive decision makers in San Antonio. Our prospect list is growing. Our mission is to bring high-wage jobs and to create a higher standard of living with a clean environment for the people in our region. San Antonio brings us a step closer. We are already seeing job and wage growth. Our goal is to accelerate this. One big change at WPC this year is we know people in the petrochemical industry, and they know us. At every break or evening reception I saw decision makers that I know and they knew me. We had meaningful conversations. People found us and wanted to visit. We have created awareness. Our goal now is to create preference for our region. That is starting. We have been incredibly blessed with natural resources. I don’t believe this was an accident. I also believe, it is our responsibility to use them to benefit people in our region and the world. A thought to ponder. © 2019 Shale Crescent USA Greg Kozera, gkozera@shalecrescentusa.com is the Director of Marketing and Sales for Shale Crescent USA. He is a professional engineer who has over 40 years of experience in the energy industry. Greg is a leadership expert with a Masters in Environmental Engineering and the author of four books and numerous published articles. MAY 2019
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Petrochemical Plant
in Belmont County? RAY BOOTH | GateHouse Ohio If the development of a “world-scale” petrochemical plant in Belmont County comes to fruition, the economic impact will be felt far and wide in this region, according to experts in the gas and oil industry. Dan Alfaro of Energy In Depth - Ohio referred to what he called “profound” economic impact. “The latest report coming from the International Energy Agency shows petrochemicals are going to be the largest driver of global oil demand in the decades to come, while another recent report from IHS shows the Ohio River Valley region to be the most profitable place in the country to build a new petrochemical plant,” Alfaro said. “Just a few months ago, Energy Secretary (Rick) Perry was trumpeting the notion that the potential for a petrochemical hub in Appalachia presents a once in a lifetime opportunity for this country, and he is right. These investments here make sense, financially, for the industry. “Shell’s cracker facility just over the border in Pennsylvania was a big first step for the region in harnessing the potential we have here for success now and in the future with more projects like this being planned and ultimately coming to fruition. “These projects are massive investments that have profound, positive economic implications for the area in terms of job creation, regional investment and revenue generated for the communities they’re operating in. The development of the Utica and Marcellus in Ohio
A delegation of company executives, including Daelim Industral Company Limited Chief Executive K.S. Kim, Daelim CEO and Vice Chairman Sean Kim, Daelim Chairman Haewook Lee, PTTGC America President and CEO Toasaporn Boonyapipat and PTTGC America General Manager Panod Awaiwanond visited Columbus to meet with Ohio Governor Mike DeWine, Ohio Lieutenant Governor Jon Husted and other state leaders. Credit: Daelim Industrial Company Limited
has been a great boon to the region’s economy and workforce, and the arrival and growth of a petrochemical industry that’s drawn here because of the abundance of natural resources and geographic advantages of the area is going to have the same sort of positive impact.” Nick Homrighausen, executive director of Community and Economic Development for Harrison County, calls the area to be affected by the cracker plant as “polymer alley,” referring to what he believes will be outgrowths of industrial development up and down the east side of Ohio. “From the standpoint of surrounding counties,” Homrighausen said, “we have a massive amount of existing pipelines and existing plastic and polymer plants in the area who will benefit from ‘feed stock’ being available. As an example, Homrighausen pointed to Boltaron in Newcomerstown and plastic plants in the Dover and New Philadelphia areas. He also mentioned the cooperation of officials throughout the region, mentioning Norm Blanchard of the Community Improvement Corporation in Cambridge and Guernsey County. “This is a marathon, not a sprint,” Homrighausen said. “We’re all hoping to see development over the coming years. There’s nothing quick about this process.” The U.S. subsidiary of PTT Global Chemical (PTTGC America) has selected a site in Mead Township along the Ohio River in Belmont County, for the possible construction of a world-scale petrochemical complex, which is also known as an ethane cracker. PTTGC America’s Board of Directors has approved the execution of an agreement between PTTGCA and a subsidiary of Daelim Industrial Co., Ltd., a leading Korean construction and chemical company, to conduct a feasibility study and secure funding for the development of the complex. The website for the project notes that petrochemical complexes are “enormous capital investments with long lifespans and employ highly skilled workers: chemical engineers, chemists, lab technicians and other highly paid employees...If built, this facility would create hundreds of full-time jobs, thousands of construction jobs and multibillion dollars in investments. The Ohio Environmental Protection Agency completed its environmental review of the project, issuing the air permit and the waterways discharge permit in December of 2018. The EPA said these permits ensure that the facility, if built, will not have an adverse affect Belmont continued on page 15
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What is
a Cracker Plant? Nicholas A. Homrighausen, executive director of Community and Economic Development in Harrison County, considers economic growth in broad terms and long terms. And he says the development of a world-scale petrochemical plant in Belmont County has the potential to change the economic structure throughout the region. Dana Saucier and Matt Engelhard of JobsOhio recently joined Homrighausen for a discussion about the economic impact of what is commonly called a “cracker” plant. What is a cracker plant? A cracker plant separates ethane from natural gas to produce the small hydrocarbon gas known as
ethylene, the building block of plastics and other industrial products. Like many hydrocarbons, ethane, a colorless and odorless gas, is isolated by the cracker plant and used as a petrochemical by-product. Its chief use is as feedstock for ethylene production. The plants use extreme heat to “crack” the molecular bonds in ethane and create smaller molecules to produce the ethylene. The ethylene is further processed to create a resin that is used to produce plastics products. Ethylene is used in the production of polyester resins, films and fibers, and for making water-based adhesives, paper, antifreeze, coolant, air-
craft de-icers and solvents. It is also used to ripen fruit and a welding gas, but has many more everyday applications. Ethylene is a critical building block for the petrochemical industry, and is among the most produced organic compounds. While it has not reached final approval, the U.S. subsidiary of PTT Global Chemical (PTTGC America) has selected a site in Mead Township along the Ohio River in Belmont County, for the possible construction of the world-scale petrochemical complex. PTTGC America’s Board of Directors approved the execution of an agreement between PTTGCA and a Cracker continued on page 13
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Cracker continued from page 12
subsidiary of Daelim Industrial Co., Ltd., a leading Korean construction and chemical company, to conduct a feasibility study and secure funding for the development of the complex. PTTGC America chose the site because of its location on the Marcellus and Utica shale region and its tremendous access to major highway, rail, pipeline and port infrastructure that would increase efficiency while reducing the environmental and financial costs of transportation. Site preparation has started with the removal of trees. Key approvals have also been received from the Environmental Protection Agency. Homrighausen notes that Harrison County is in good position to take advantage of any potential development with its existing infrastructure and space to build. “What we have is the ability to deliver stock to the shell cracker,” Homrighausen said. “When and if it moves forward, we will be able to
provide feed stock which allows us to supply plastic and polymer plants in addition to those companies that need the ethane or propane, etc. It allows us to be at the table with those companies. We have land available for development and if the cracker plant becomes a reality we have already done the groundwork to attract companies.” Saucier said that when the discussion about the cracker plant started, JobsOhio “immediately put together a whole analysis chain, looking at the chemical chart and looking at those raw materials all the way down to the consumer levels, including uses of ethylene and then polyethylene. Many different companies use these, such as auto components, medical components and other downstream Ohio companies.” Homrighausen agreed, saying “We’re right smack dab right in the middle to attract all that industry. Whatever kind of pipelines there
are, we can tap into it. Whatever your need is, we can address it. “I feel encouraged from Harrison County perspective. What’s been transpiring, from clearing trees to the EPA rulings, are huge points for me to make with companies.” Saucier noted it’s been a relatively short time for what has been transpiring. “The shell play started in February of 2011, which is really just a few short years ago,” he said. “There has been $70 billion dollars in upstream, midstream and downstream developments. Upstream is drilling. Midstream is what Nick is talking about, taking raw products, separate into different components and all those things in pure components. Harrison County is kind of ground zero for that. When you look at last nine years, $70 billion is an astonishing number. If you look at this region, including western Pennsylvania and northern West Virginia, it’s the third largest developer in the industry.”
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Belmont continued from page 12
on the air, the water or the health of the surrounding communities. At a meeting hosted by the Ohio EPA in Shadyside late last year, Mike Chadsey, director of public relations for the Ohio Oil and Gas Association, was quoted as saying he strongly supports the project and the “thousands of jobs and billions in economic investment and growth it will bring to the entire area.” “Tonight we heard some comments from those who oppose the project of the F.U.D. factor variety, which is fear, uncertainty and doubt,” Chadsey said. “While misleading comments earn headlines, they do nothing to advance the well-being of folks in this community. Plastics are not the evil they were made out to be this evening. Plastics enhance the human condition.” Also speaking were Belmont County Commissioners J.P. Dutton and Mark Thomas and Belmont County Port Authority Director Larry Merry. PTT spokesman Dan Williamson was quoted in the Martins Ferry Times Leader saying despite the fact that some people spoke against the project, the feedback he has heard about the companies’ plans has been “overwhelmingly positive.” He said that was reflected during the hearing in comments from labor organizers such as Ginny Favede of Project BEST and local government officials, including Dutton and Mead
Township Trustee Ed Good. “We heard a diverse chorus of people from both sides of the river who are very excited about the project,” Williamson said. “That is what we have consistently heard from the community since people started talking about the project.” Williamson also complimented the OPEA officials who conducted the hearing. “The EPA has been extremely professional in how they’ve been dealing with this … ,” Williamson said, terming the agency a “class act.” “It was really nice to hear a robust discussion of the project,” he added. “PTTGC and Daelim appreciate everybody who came out. It was a long night, a cold night. The fact that some 140 people come out to talk about the project from a variety of perspectives was healthy.” PTT Global Chemical (PTTGC) is Thailand’s largest and Asia’s leading integrated petrochemical and refining company. With more than 4,000 employees around the globe, the company says its vision is “to be a leading chemical company for better living, helping to create a better quality of life through our products and production processes.”
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Pipelines Bring
Economic Boost to Region EDD PRITCHARD | Canton Repository, GateHouse Ohio The second phase of oil industry development within the Appalachian Basin has seen construction of pipelines to move natural gas from well fields to processing centers, according to a study by Energy In Depth. Pipeline construction projects have fed $32.6 billion of investments and generated more than 124,000 jobs as companies build more than 3,500 miles of pipelines, the oil and gas industry marketing agency said in the study. The Appalachian Basin covers parts of Ohio, Pennsylvania and West Virginia, and includes the Utica Shale formation in southeastern Ohio. Over the past 10 years, drilling in the region has increased because hydraulic fracturing of shale rock releases more dry and liquid natural gas. Of 25 pipeline projects approved by the Federal Energy Regulatory Commission, seven pass through Ohio. The list includes the Nexus pipeline that crosses through northern Stark County and the Rover line that passes through several townships in the southern part of the county. Nexus and Rover are among five operational pipelines, according to the the study. Three other pipelines are partially operational, while 17 pipeline projects are under construction or seeking approval. Construction of two ethane cracker facilities — one west of Pittsburgh and the second planned for Belmont County — could lead to more pipeline projects, Energy In Depth suggested. The crackers will use natural gas liquids to produce ethane, a key component for making plastics. The investment in pipelines shows the Appalachian Basin’s viability to continue producing and supplying natural gas and natural gas liquids in the years ahead, said Dan Alfaro, a spokesman for Energy In Depth.
Ohio has 2,167 wells producing in the Utica Shale formation, while another 875 wells have received permits and are being drilled, according to numbers provided earlier this month by the Ohio Department of Natural Resources.
Pipeline construction, like this 2017 Rover project through southern Stark County, has boosted the region’s economy, according to a study by Energy In Depth. (GateHouse Ohio / file photo)
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Natural Gas Production in Ohio
has Surged since 2011 SHANE HOOVER | Canton Repository, GateHouse Ohio Before oil and gas companies started drilling Ohio’s Utica Shale eight years ago, Richard Simmers, chief of the state’s Division of Oil and Gas Resources, asked his counterparts in other states what to expect. “They described the shale industry as kind of tidal wave,” Simmers recalled at the recent Utica Midstream conference in North Canton. “You’re going to hear rumors of it coming, and then it’s going to come, and it’s going to come fast and hard, and it did.” Oil and gas companies have drilled more than 2,500 horizontal shale wells in Ohio, causing the state’s oil and natural gas production to surge.
of the Department of Natural Resources. “These numbers, we project, are going to be pretty consistent for the next two years,” Simmers said. Utica Shale wells have caused Ohio’s natural gas production to surge. Last year, they produced 2.35 trillion cubic feet of natural gas, more than twice what the state consumes in year. “Gas production is growing very, very quickly,” Simmers said, explaining that natural gas production had increased every quarter since ODNR began quarterly tracking in 2013. Pipelines and processing plants have been built throughout the region to handle all of that natural gas, and four gas-burning electric power plants have been built, with more in the planning stage. Ohio has gone from producing less than 14 percent of the natural gas it consumed in 2011, to producing more than twice what it used last year. Although the Utica Shale primarily produces natural gas, the formation also contains a significant amount of oil, Simmers said. Last year, shale wells produced almost 20 million barrels of oil. Reach Shane at 330-580-8338 or shane.hoover@ cantonrep.com
Drillers came to Ohio planning to explore the Utica and Marcellus shales beneath the eastern half of the state, but most horizontal drilling — sometimes called fracking — has concentrated in the Utica Shale deposits in counties near the Ohio River. In the early days of shale drilling, the average well was 6,000 feet deep and 4,000 feet long. Now, the average well is being drilled 8,500 to 10,000 feet deep and 12,000 feet long; some wells are as long as 20,000 feet, Simmers said. Last year, 358 new horizontal shale wells were drilled, according to the Division of Oil and Gas, which is part MAY 2019
OhioGas&Oil 17
Ascent
Resources JOHN LOWE | GateHouse Ohio A company founded just five years ago has evolved into a major force in the gas and oil industry with operations primarily in eastern Ohio. Established in 2014, Ascent Resources LLC has grown to 400 employees and about 500 wells throughout Ohio, Joe Starkey said. Starkey, operations manager for Ascent Resources, spoke Thursday morning during the monthly “Coffee and Commerce” meeting of the Cambridger Area Chamber of Commerce. “We have more than 300,000 [leasehold] acres from here to the [Ohio River],” he said. Ascent is headquartered in Oklahoma City, but its largest field office is here in Cambridge. Ascent drills about 100 oil and natural gas wells annually, Starkey said. Starkey updated the audience Thursday about the status of the company. Also, for the benefit of the non-industry members of the audience, he explained some of the process
involved in drilling the wells to extract the oil and natural gas. Recently, Ascent is exploring changes to its drilling strategy “to gain efficiencies,” he said. For example, the company is using the smaller, intermediate rigs to drill the vertical portion of the wells. Then, it brings in the big rigs to drill the horizontal portion of the well. The pipe between the wellhead and the target may be four miles long. The time from beginning to drill a well until beginning production may range from 180 to 220 days, Starkey said. With the technology available now, the company is operating wells in the Utica shale formation in the area extending from the Ohio River to eastern Guernsey County. The Utica formation extends further into Ohio. However, the further west it extends, the closer to the surface it rises, Starkey said. It may seem counterintuitive, but the more shallow the depth of the formation, the more costly and difficult it is to extract the minerals with horizontal drilling, he said. Why? Because the deeper the formation lies, the greater is the pressure of the earth above it. That greater pressure is what helps push the oil and gas to the surface. Since 2014, Ascent Resources has become one of the largest producers of oil and natural gas in the country among non-public companies. It is the top producer of natural gas in Ohio and among the top three producers of petroleum.
WO-10677613
Congressman Visits Cambridge Municipal Airport
18 OhioGas&Oil
Pictured left to right, airport Operations Manager Terry Losego, Congressman Johnson, and airport trustees Chris Rocco and Doug Law. Behind them is a 4,000 gallon 100LL avgas tank being installed to replace a system that was retired in October. The new avgas system is expected to be in operation at the end of April. Photo by Michael Neilson / GateHouse Ohio
MAY 2019
OHIO WELL ACTIVITY by the numbers
UTICA SHALE
MARCELLUS SHALE 25 11 9 21
67
Wells Permitted Wells Drilling Wells Drilled Not Drilled Wells Producing Inactive Plugged Total Horizontal Permits
Data as of 4/6/19
478 141 248 2141
3046
Wells Permitted Wells Drilling Wells Drilled Not Drilled Wells Producing Inactive Plugged Total Horizontal Permits
Source: Ohio Department of Natural Resources
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TOP COUNTIES WITH HORIZONTAL DRILLING ACTIVITY BY NUMBER OF SITES
1. Belmont County........ 633 2. Carroll County......... 526 3. Monroe County........ 482 4. Harrison County....... 465 5. Guernsey County...... 264 6. Noble County.......... 223 7. Jefferson County....... 223 8. Columbiana County... 161 9. Mahoning County....... 30 10. Washington County... 22 11. Tuscarawas County.... 20 12. Portage County........ 15 Trumbull County........ 15 13. Stark County............ 13 14. Coshocton County....... 5 15. Morgan County.......... 3 Muskingum County...... 3 Holmes County........... 3 16. Knox County.............. 2 17. Ashland County.......... 1 Astabula County......... 1 Geauga County.......... 1 Medina County........... 1 Wayne County............ 1 I VARIOUS SSTAGES: PERMITTED DRILLING, ,D WELL SITESS IN PLETED PRODUCING, PRODUCINGPLUGGED, PLUGGED DRILLED, COMPLETED, SOURCE: OHIO DEPARTMENT OF NATURAL RESOURCES AS OF D L A 4/6/19
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