November 5, 2013
Recent news that eastern Ohio’s natural gas deposits could be worth $20 billion was big news when Gov. John Kasich announced this prediction recently in conjunction with the jobs potential it represents. His much-quoted line, “I don’t want any foreigners working on wellheads…that is, people who come from Pennsylvania, Maryland, West Virginia and Kentucky, and those distant foreigners from Texas,” spurred humor and a tone of seriousness. Although Ohio is a long way from a massive natural gas industry, the U.S. Geological Survey did update its estimates in August 2011 for the Marcellus Shale region underlying New York, Pennsylvania and Ohio, saying it contains 84 trillion cubic feet of undiscovered, recoverable natural gas. Chesapeake Energy Corporation would play a key role in the Marcellus Shale venture.
Drilling for natural gas in the Utica Shale formation and a second formation, known as the Marcellus Shale, underway in southeastern Ohio for the past few years, is dwarfed by the thousands of Marcellus Shale wells already operating in Pennsylvania. The Marcellus has a smaller footprint in Ohio than the Utica and lies beneath Ohio’s easternmost counties. The Utica deposits are geologically older and lie below the Marcellus formations.
In reality, the confirmation that Ohio could move into a new realm of energy production and thereby create hundreds of new jobs, also drew mixed reviews from environmentalists, industries, municipalities, and economists, concerned about groundwater contamination and other issues. Oil recovery from shale is going to stay a hot topic in Ohio for quite a while. The controversy stems from the way that natural gas is extracted from the shale.
Hydraulic fracturing, known as “fracking,” blasts chemical-laced water into the ground to access stores of gas in the once out-of-reach shale formations, on average 7,000 to nearly 10,000 feet underground. The actual amount of gas contained in these deposits has not been fully determined. However, with fracking technology now available, as much as 100 years of natural gas supply could be available, thereby significantly reducing the US dependence on foreign oil.
Earlier in 2011, the business-backed Ohio Shale Coalition was created to promote the economic benefits of hydraulic fracturing. The coalition says a group of Ohio universities will do an economic impact study, with preliminary results available before year end. Also in 2011, Ohio opened up parks and other public land to drilling over opposition from environmentalists.
Jack R. Pounds, President of the Ohio Chemistry Technology Council, recently discussed the Utica Shale formation in terms that easily translate to the Marcellus. Pointing out that high energy costs, which have been evolving since the 1970s oil embargo, have led to the declining manufacturing base that has severely damaged Ohio’s economy, Pounds said, “Shale gas can be a game changer.” It could change the world.
Fracking technology is at the heart of this game changing scenario, according to Pounds. “Until fairly recently, vertical wells were the only option for extracting natural gas. Now, hydraulic fracturing using vertical shaft and horizontal drilling has revolutionized oil and gas drilling. One well using horizontal hydraulic fracturing can produce the same amount of gas/oil as 25 of the old vertical wells—and with a horizontal reach of 10,000 ft.”
Pounds also pointed out that Ohio leaders are currently working hard with key chemical industry leaders to consider locating a natural gas “cracker” in Ohio in the midst of the shale fields. A “cracker,” which would represent an investment upwards of $ 2 billion, would produce ethane, propane, and other components in the gas. He commented, “Having a chemical facility in Ohio that can ‘crack’ the shale gas and produce the basic ‘building blocks’ that are relied on by the chemical industry would revitalize Ohio as a center of chemical industry investment. I would expect a dramatic surge of investment in new and expanded chemical production in Ohio as companies would try to locate facilities near the source of the most critical raw materials for the American chemical industry.”
An Associated Press article on July 30, 2011 reported that Consol Energy drilled a Utica well that produced 1.5 million cubic feet of gas in a day in Belmont County in eastern Ohio. The company plans to spend $35 million drilling six exploratory Utica wells this year. The article went on to state that 17 Utica shale wells had been drilled in Ohio as of late May, according to data from the Department of Natural Resources.
The Dayton Daily News (September 10, 2011) listed the following moves and announcements during just that week, to indicate how fast the issue is coming to a head.
- Hess Corp., said it expanded its reach into shale deposits with a series of lease purchases in Ohio worth $750 million. The latest purchases give Hess 85,000 acres that it expects to begin exploring in the fourth quarter.
- David Mustine, a former oil company executive and chief of the Ohio Department of Natural Resources, changed jobs to work for the new JobsOhio economic development office as general manager for energy. Mark Kvamme, JobsOhio chief investment officer, said “Oil and gas in Eastern Ohio has the potential to permanently transform that end of the state and position Ohio overall for a renaissance in manufacturing that depends on the low-cost, reliable energy that shale can provide.”
- State Sen. Michael J. Skindell, D-Lakewood, introduced legislation calling for a moratorium on hydraulic fracturing until federal review of environmental impacts.
- Chesapeake Energy Corp., the Oklahoma City-based company, told shareholders it had leased 1.25 million acres to get at the deep Ohio Utica Shale formation. Chesapeake estimated, based on two years of drilling, that it could be worth up to $20 billion to the company. It spent $1 billion just to lease the acreage. Chesapeake’s CEO Aubrey McClendon, with a huge stake in potential Ohio gas reserves, lashed out at critics during an industry meeting, calling them fear-mongering extremists who want Americans to live in a world where “it’s cold, it’s dark, and we’re all hungry.”
Meanwhile, not every state is welcoming fracking with open arms. New Jersey’s Republican Gov. Chris Christie late last month vetoed a permanent ban on fracking, but imposed a one-year fracking moratorium so that state and federal regulators could evaluate its safety. New York has a moratorium in place, and fracking bans have been imposed in the cities of Pittsburgh, Buffalo, and Detroit.
Obviously, the fracking technology is going to be the subject of a lot of interest and likely technology advances in the near future. The stakes are high. As Pounds says, “Natural gas is a source of feedstocks for high value-added products of chemistry that are needed to sustain American industry. Access to low-cost natural gas can revitalize the U.S. chemical industry, and with it, much of Ohio’s economy.”
Pounds cautions that sustainable development of shale gas needs to be done correctly. “We will need to manage development in partnership with communities, the State, and private enterprise.” “Although few problems have occurred to date, those problems have all related to design and operational failures that are being addressed by Ohio legislation, such as SB 165.”
With provision for well design and operation, disposal of fracturing chemicals, air and water monitoring / protection, and process disclosure, SB 165 is a major step towards protecting the environment while gaining affordable access to a huge resource. “Doing it right will include addressing local issues, pipelines, environmental concerns, and strategies for how local communities can best benefit,” says Pounds. Done properly, voluntary and legislated controls on fracking can result in giving southeastern Ohio a share of economic wealth and provide for the U.S. a major decrease in the dependence on foreign oil.
The Ohio Chemistry Technology Council exists to represent the chemistry industry in the public policy arena in Ohio; to advance understanding of the contributions of chemistry to our modern lifestyle; and to promote the highest standards of environmental, health, safety, and security performance. The Ohio Chemistry Technology Council is a member-driven organization–with each member company having an equal voice in establishing the Council’s priorities. Since 1988, the Ohio Chemistry Technology Council has been the only organization in Ohio dedicated exclusively to advancing the interests of companies engaged in the business of chemistry. That sole focus on the chemistry industry allows the Council’s members to work together to pursue mutually beneficial policy outcomes, and to offer Council programs and services that address the chemistry industry’s unique character and interests.