Study projects Utica shale contributions to Ohio's economy

Development of the Utica shale will bring more than 65,000 jobs, contribute $4.86 billion to Ohio’s economy, and result in $3.3 billion of labor income, or an average of $50,225/job, by 2014, a study commissioned by the Ohio Shale Coalition concluded.

A $229.6 million investment during 2011 in the Utica play raised the state’s gross product, measured by value added, by $162 million, which translated into 2,275 jobs and nearly $100 million of increased labor income, researchers at Cleveland University, Ohio State University, and Marietta College found.

“Since updates in technology have made drilling in the Utica shale possible, people have been euphoric over the economic prospects of shale development in Ohio,” said Linda Woggon, executive director of OSC, which the Ohio Chamber of Commerce formed in June to supply information about the shale oil and gas industry to Ohioans.

“Our goal was to take a very reasonable approach to the numbers and develop conservative projections,” she indicated on Feb. 28 as the study was released in Columbus.

The study presents “a very conservative, baseline case” for the type of potential economic growth in Ohio from Utica shale development, observed Karen A. Harbert, president of the US Chamber of Commerce’s Institute for 21st Century Energy. “Today’s study and others recently released project significant new sources of jobs and revenue across Ohio and neighboring states which will contribute to increasing our nation’s energy security and putting America back to work,” she said.

The study’s research team modeled a likely economic development impact model for Ohio from Utica shale development based on anticipated leasing, road construction, and well drilling and completion expenditures, and building of post-production gas infrastructure. The calculations include not only expenditures’ direct effects, but also indirect (subsequent business) and induced (household spending) effects. The model shows average labor income rising over time as the work shifts from leasing and road construction to drilling and infrastructure maintenance.

It projected that nearly 17% of the additional jobs would come from oil and gas service companies, at a $69,000/year average per job, and employment doubling between 2013 and 2014. “The largest growth in employment will be in construction-related trades as wells are drilled and midstream facilities are constructed,” the study said.

Another nearly 11,000 local construction jobs, paying an average of $48,000/year each, could be created from construction of new manufacturing facilities and other non-residential structures, including midstream infrastructure, as well as pipelines, roads, and bridges, it said. “Truck drivers will be in great demand as servicing companies, wholesalers, delivery services, and construction companies ramp up their employment to meet demand,” it said.

The study’s model estimated that by 2014, more than 1,500 jobs for engineers and architects and 1,000 positions for environmental compliance technicians will be established. There also will be demand for more than 1,800 office workers and nearly 500 technical consultants, it suggested. Managers earning an average $109,000/year will have the highest salaries, followed by consultants earning an average $75,000/year, it said. Petroleum landmen also will be in demand, although the study did not attempt to project how many will actually find work in Ohio.

Data is incomplete because the state’s shale oil and gas industry is in its infancy, the study said. Models may be updated as more data becomes available, it indicated. “It is also important to note that the study term only goes to 2014, at which time the industry will likely yet be growing in Ohio,” it said.

Contact Nick Snow at nicks@pennwell.com.

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