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Ohio Utica Shale

Shale job estimates may have been too conservative, expert says

By Bob Downing Published: November 9, 2012

From the Cleveland Plain Dealer and reporter Robert Schoenberger:

CLEVELAND, Ohio -- An influential shale gas researcher said his early estimates of 1 million U.S. manufacturing jobs created by the ongoing energy boom may have been overly conservative.

"That figure didn't include what we're seeing in the automotive sector. It didn't include what we're seeing from parts of the steel sector," said PwC U.S. Industrial Products Manager Bob McCutcheon, who made his 1 million jobs by 2025 prediction in March. At the Cleveland Engineering Society's Annual Industrial and Manufacturing Conference, McCutcheon said he may have underestimated the amount of excitement surrounding the boom.

With huge reserves in eastern Ohio, western Pennsylvania and several Western states, scientists believe there are massive reserves of natural gas across the country that can be cheaply extracted using a process called hydraulic fracturing or fracking. Drillers pump large quantities of high-pressure fluids into wells the break apart underground structures, freeing gas trapped in rock formations.

Environmentalists have criticized the practice, questioning what impact the fluids may have on the water supply.

As shale gas has developed, natural gas prices have fallen, so many entrepreneurs are looking for new ways to use the material. Automakers are increasingly offering vehicles powered by natural gas, and large trucking companies are considering switching entire fleets to run on compressed or liquefied fuels.

McCutcheon said all of those conversions would create jobs that he had not projected in his earlier study.

McCutcheon's analysis earlier this year focused on how much cheap gas would lower electricity rates and other energy costs in the United States. Natural gas has been trading for about $3 per 1,000 cubic feet across the country through much of this year. In Asia, it costs closer to $12, he said.

Over the past 20 years, many companies have moved manufacturing to China to take advantage of low-cost labor. And while labor rates in China are rising, McCutcheon said the gap is still so massive that the United States can't compete in labor costs.

But with energy costs higher in China, the cost of transporting finished goods from that country going up and higher demand for products here from shale gas exploration companies, he said U.S. total manufacturing costs are below China's for several industries.

"We're in an environment today that we haven't seen in a generation," McCutcheon said.

Much of that benefit should be seen nationwide as lower natural gas costs should cut energy costs by about the same amount in all parts of the country. Where Ohio and Pennsylvania have the biggest opportunity to add new jobs, he said, are the areas surrounding gas drilling.

Ohio has already seen large growth in the steel industry from mills in Lorain, Canton and Youngstown expanding to make parts for gas producers. But McCutcheon said chemical companies could also benefit. Natural gas is a huge component in many plastic and polymer materials, and producers of those materials could cut costs by being close to gas wells.

"The Ohio River Valley has a lot of potential here," he said, comparing the growth the region could see to its boom years a century ago. "Access to the waterway, access to cheap energy. Those are some of the reasons why this area flourished in the past."

Earlier in the day at the conference, JobsOhio advanced manufacturing director Kristi Tanner, said the state is trying to identify companies that could benefit from the state's shale boom and reach out to them.

"We expect to see continued activity, continued results coming out of that sector," Tanner said.



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Utica and Marcellus shale web sites

Ohio Department of Natural Resources' Division of Oil and Gas Resources Management State agency Web site.

ODNR Division of Oil and Gas Resources Management. State drilling permits. List is updated weekly.

ODNR Division of Geological Survey.

Ohio Environmental Protection Agency.

Ohio State University Extension.

Ohio Farm Bureau.

Ohio Oil and Gas Association, a Granville-based group that represents 1,500 Ohio energy-related companies.

Ohio Oil & Gas Energy Education Program.

Energy In Depth, a trade group.

Marcellus and Utica Shale Resource Center by Ohio law firm Bricker & Eckler.

Utica Shale, a compilation of Utica shale activities.

Landman Report Card, a site that looks at companies involved in gas and oil leases.FracFocus, a compilation of chemicals used in fracking individual wells as reported voluntarily by some drillers.

Chesapeake Energy Corp,the Oklahoma-based firm is the No. 1 driller in Ohio.

Rig Count Interactive Map by Baker Hughes, an energy services company.

Shale Sheet Fracking, a Youngstown Vindicator blog.

National Geographic's The Great Shale Rush.

The Ohio Environmental Council, a statewide eco-group based in Columbus.

Buckeye Forest Council.

Earthjustice, a national eco-group.

Stop Fracking Ohio.

People's Oil and Gas Collaborative-Ohio, a grass-roots group in Northeast Ohio.

Concerned Citizens of Medina County, a grass-roots group.

No Frack Ohio, a Columbus-based grass-roots group.

Fracking: Gas Drilling's Environmental Threat by ProPublica, an online journalism site.

Penn State Marcellus Center.

Pipeline, blog from Pittsburgh Post-Gazette on Marcellus shale drilling.

Allegheny Front, environmental public radio for Western Pennsylvania.