By Jim Mackinnon
Beacon Journal business writer
Charmaine Horvath didn’t go to Firestone Country Club early Monday morning to hit golf balls on the famed course.
Instead, Horvath sat with about 100 people inside a large meeting room at the club to learn about how newly accessible — and apparently vast — supplies of oil and natural gas thousands of feet underground in the Utica shale could change people’s lives and grow Ohio’s economy.
“I’m just excited. I don’t think the majority of people in this area understand what is going on right now,” the Akron resident said. “And I think they need to know.”
The Utica shale was the topic for the 15th Northeast Ohio Logistics Conference & Golf Open. The event was sponsored by the Northeast Ohio Trade & Economic Consortium and the Port of Cleveland. Many of the participants attended to find out how their businesses can become part of the Utica shale supply chain.
Morning program speakers used the phrase “game changer” to describe the just-started tapping of the Utica shale — using hydraulic fracturing, or fracking, and horizontal drilling — that underlies the eastern half and southern parts of Ohio.
The Utica shale likely will become the nation’s third largest shale producer of oil and natural gas, including gas liquids, after the Bakken shale in North Dakota and Eagle Ford shale in Texas, said Steve Fillingham, senior associate at Colorado-based Energy Analysts International (EAI) Inc.
Conservatively, Ohio will be pumping 250,000 barrels of oil daily out of the Utica in just a couple of years, Fillingham said. It is possible that as much as 500,000 barrels of oil will be coming out of the shale each day, he said.
“That’s big,” Fillingham said.
Better forecasts will have to wait until at least 500 Utica shale wells are drilled in the state, he said. A little more than 100 wells have been drilled to date this year; the state estimates that will swell to more than 1,900 wells in 2014.
Early Utica shale industry reports on oil potential are “weighted on the good side,” Fillingham said. “That’s why there’s so much excitement. … We can’t count out the potential for 500,000 barrels a day. … 300,000 barrels may be conservative.”
The growth of Utica shale means that railways and trucking companies will be in huge demand to help set up drilling rigs to haul away oil and related liquids, participants said.
“The industry will tell you they need trucks, trucks, trucks,” said Chip Collier, partner and co-chairman of the energy practice group at law firm Benesch Friedlander Coplan and Aronoff in Cleveland and Columbus. Meanwhile, the trucking industry will say it needs “drivers, drivers, drivers,” he said.
Kevin Spencer, executive vice president at North Canton-based KAG Logistics, said his company is starting to move into the shale business.
“We’re at the infant stages,” he said. KAG, which has about 7,000 employees nationwide, is looking to expand into delivering water and fracking sands, he said.
“We’re the last-mile delivery” and logistics provider, Spencer said.
Relying on railroads
Railroads also will have a growing role in shale development, including helping reduce the number of trucks on local roads, another speaker said.
“If you don’t have a short-line railroad in your county for Utica shale, get one,” said Ken Prendergast, executive director of nonprofit rail industry group All Aboard Ohio.
“This is a time of dynamic change,” Prendergast said. “The biggest mistake is to underestimate the scale of what is happening around us.”
Shale development means that rail lines will be built in Ohio and dormant lines resurrected, he said.
The Wheeling & Lake Erie rail system is right in the “sweet spot” to take advantage of the Utica shale as well as the Marcellus shale that also runs in Ohio and Pennsylvania, said Steve Franckhauser, director of HbK Energy offices in Boardman, Pa.
Ohio stands to benefit by the likely building of a large Shell Chemical cracker plant in nearby western Pennsylvania, Franckhauser said. The cracker plant complex would break down ethane from Marcellus shale natural gas and produce ethylene, a primary petrochemical building block.
Shell will need thousands of employees to build the Beaver County facility and many of those potential workers likely will come from eastern Ohio, Franckhauser said.
Franckhauser said he learned that Shell has not started offering relocation packages for employees to move into the Beaver County area where it wants to build the petrochemical plant.
“They are looking at long-term rental facilities,” he said. “That will tell you it [the cracker plant] is not a done deal.”
Northeast Ohio’s infrastructure that is already in place will help the region benefit from Utica shale, Franckhauser said.
“It’s a great time to be here,” he said. “Frankly, you’re the survivors. If you survived this long, you have very bright days ahead.”
Jim Mackinnon can be reached at 330-996-3544 or email@example.com.
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.
The Ohio Environmental Council, a statewide eco-group based in Columbus.
Earthjustice, a national eco-group.
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.
Pipeline, blog from Pittsburgh Post-Gazette on Marcellus shale drilling.
Allegheny Front, environmental public radio for Western Pennsylvania.