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Published: Monday, 12/30/2013

Ohio's Utica shale spurs job growth

JIM MACKINNON AND BOB DOWNING
THE AKRON BEACON JOURNAL

Ohio’s still-fledgling shale industry is slowly generating job growth.

Jobless rates in the state’s eastern and southern areas — where Utica shale drilling, or fracking, is taking place — remain on average higher than the rest of the state.

But in the handful of eastern counties seeing the most intensive interest and drilling, unemployment rates have fallen significantly from their highs of just a few years ago.

“The industry is growing but it remains a relatively small piece of Ohio’s overall economy,” said Ben Johnson, spokesman for the Ohio Department of Jobs and Family Services.

The state’s latest shale study, released earlier this month, showed job growth in what Ohio calls “core shale-related industries” grew more than 30 percent — up 1,929 jobs — from the start of 2011 through the first quarter of 2013. Ancillary shale-related industries also showed growth over that same period.

“The industry is growing, and has grown significantly the last two years,” Johnson said. But total shale jobs figures — estimated from 9,000 to 11,000 — remain small when put in the context of Ohio’s overall 5.3 million jobs, he said. (The state’s next quarterly shale report likely will be out in February and based on figures from the second quarter of 2013.)

The number of producing wells also remains relatively small in the state.

As of Dec. 21, Ohio had approved 1,030 Utica shale permits. Of 658 wells that have been drilled, just 249 are in production. A total of 40 rigs are drilling in Ohio.

Unemployment has dropped significantly in five eastern Ohio counties where Utica shale drilling is underway. In the three years since November 2010:

  • • Carroll County’s jobless rate dropped from 12.7 percent to 7.6 percent last month.
  • • Guernsey County’s rate fell from 12 percent to 8 percent.
  • • Belmont County, from 9.7 percent to 7.8 percent.
  • • Harrison County, from 12 percent to 7.7 percent.
  • • Jefferson County, from 13.4 percent to 9.7 percent.

The unemployment rate “would have been much worse in those counties” if not for Utica shale drilling, said Shawn Bennett of Energy in Depth-Ohio, a pro-drilling trade group.

Governments in Ohio’s main drilling counties — Carroll, Harrison, Noble, Guernsey and Belmont — have also seen a major boost in sales tax revenue. Tax revenue grew from $15.5 million in 2011 to $22.9 million in 2013, an increase of nearly 50 percent, Bennett said.

“Exploration and production today within the Utica shale play by Ohio’s oil and gas industry has lowered and continues to lower unemployment,” said Mike Chadsey of the Ohio Oil and Gas Association. “More families in eastern Ohio are better off and more moms and dads have work thanks in large part to shale production either directly or indirectly.”

A Cleveland State University study of Utica shale fracking released in August said drilling is creating wealth in almost all of Ohio’s 88 counties.

The study said job growth is muted by the slow pace of so-called midstream infrastructure development; the use of highly specialized workers in the ongoing exploratory development phase of the Utica shale; and the still-early stages of training for Ohio’s “incumbent” workforce.

Significant money is being spent to develop Ohio’s Utica shale industry.

Midstream projects include a $400 million cryogenic processing plant in Kensington that started operations in late July and employs about 63 people. It is the first new processing plant to begin operation in Ohio as part of a $1.1 billion system of gas-processing plants that include facilities in Columbiana and Carroll counties. In addition, pipelines are being built from Utica well sites that include 63 miles of gas-gathering pipelines, a 35-mile line to transport natural gas liquids from Kensington to Scio in Harrison County and a fractionation plant in Scio to separate and ship the liquids.

The Cleveland State study found job creation was highest in strong and moderate Utica shale counties through the first quarter of 2013 compared to what it termed weak and non-Utica counties. So-called shale counties had modest job growth in the first quarter of 2013 while other counties showed job declines, the Cleveland State study reported.

Since 2011, sales tax growth has outpaced job growth in Ohio’s shale counties, according to the study.

Critics of shale fracking say the industry has been producing far fewer jobs than promised. Policy Matters Ohio in late November was among the groups criticizing shale industry job production figures as part of a report released by the Multi-State Shale Research Collaborative.



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