Economic Impact

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    Poly(ethylene) Wants a Cracker: OH Study Predicts Ethane Tsunami

    A researcher and “Executive in Residence” from Cleveland State University, Andrew Thomas, writes about a new study produced by the University “to better understand the ramifications of huge quantities of natural gas and liquid ethane being produced in Ohio.” Unfortunately we were unable to track down a copy of the full study and its results, but we do have the summary as contributed by Thomas in writing for Crain’s Cleveland Business. And wow, what insights we gain! Thomas says the study he worked on concludes that even in this down market, Ohio’s production of natural gas liquids (NGLs), specifically ethane, is on a rocket ride to the moon. He says, “Ohio’s about to see an ethane tsunami.” He also says if all four ethane crackers that have been floated as possibilities for the region get built, that would only sop up one-third of the ethane supply projected to be produced in the Marcellus/Utica. Here’s the high-level but very exciting and insightful news coming from this study…
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    Here’s How Drilling Slowdown Affects the Marcellus Supply Chain

    Yes, the slowdown in drilling IS having effect–everywhere, including the Pennsylvania Marcellus Shale. Supply chain companies–those companies not directly involved with drilling but supply goods and services to other companies that are directly involved–are feeling the effects. From hotels and restaurants to a men’s clothing store, the slowdown is having an effect. But it’s not all bad news…
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    Susquehanna County Residents Love Burning Locally Produced Gas

    Susquehanna County, PA, which sits just across the border from where MDN is written in Broome County, NY, is one of the miracles in the Marcellus Shale. Cabot Oil & Gas, among a few other drillers, have extensive operations in Susquehanna County. In fact, all of Cabot’s PA wells are located in that one county, and Cabot produces (at last check) over 1.5 billion cubic feet of natural gas PER DAY. It’s an amazing story. One of the ironies has always been that rural counties like Susquehanna that produce natural gas often aren’t able to use the gas they produce due to lack of pipeline infrastructure. The entire county has 43,000 residents (11,700 families). The largest “city” in Susquehanna County is the county seat of Montrose, population 1,600 (750 households). It’s just not all that economical to run natural gas pipelines to homes around the county–even though residents live atop an embarrassing riches of natural gas. One company, Leatherstocking Natural Gas, changed all that in late 2013 when they started to run pipelines to residences and businesses around Montrose. How has it turned out? The people who are hooked up and burning Marcellus gas locally produced have high praise…
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    State Official Calls Shale Impact “Profound” on PA Agriculture

    Recently the Pennsylvania Agriculture Department Executive Deputy Secretary, Michael Smith, addressed the Natural Gas Task Force for the County Commissioners Association of Pennsylvania (CCAP) in Hershey. He had some interesting things to say about shale development in the state. Among them: Shale’s impact on agriculture in the state will be “profound” and “transformative.” Did he mean that in a good way, or a bad way? Yes…
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    Guernsey County, OH a Microcosm for Shale Economics in Northeast

    Have we entered the oil and gas apocalypse? If you’re one of some 230,000 oilfield workers out of a job in the past year, you may think so (who can blame them?). The reality is, however, that although rig counts are down (way down), permits issued are down, and in general drilling of new wells is down–drilling IS still happening. Businesses in the supply chain–those servicing the upstream and midstream sectors–are still making money. Not as much money, but we haven’t entered the apocalypse–not yet anyway. Example: Cambridge (Guernsey County), Ohio, where drilling happens less these days–but drilling still happens and local businesses like restaurants make more money than they did prior to the Marcellus/Utica fracking miracle…
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    Prominent Energy Law Firm Closing Down – Lack of Business

    It’s always fun to bust on lawyers–everyone’s favorite pass time, right? “How many lawyers does it take to screw in a light bulb?….” All joking aside, we love lawyers here at MDN. Well, most of them, anyway. Some of our best customers (and biggest supporters) are lawyers. And we love them right back–because you’re nuts if you sign ANYTHING to do with oil and gas without first running it by a qualified attorney. We’ve always said it, and we always will. You need a good lawyer. So it pains us to report that a prominent energy law firm is closing up shop. Burleson LLP, headquartered in Houston, opened an office in Pittsburgh six years ago. Burleson founder and managing partner, Rick Burleson, announced to the firm on Monday that not only is he shutting down the Pittsburgh office, but ALL of the firm’s offices, including HQ in Houston. Why? The slowdown in the oil and gas sector. You don’t lose 233,000 jobs over the course of a year in a single industry without major ramifications for other businesses involved in that industry…
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    Important New CSU Study Reveals Shale Supply Chain Opportunities

    We are SUPER excited about a new study dated September 2015 but released just yesterday by economists and researchers at Cleveland State University (CSU). The study, broken into three parts, looks at economic development opportunities offered by Ohio’s Utica Shale. One of the three parts is titled, “Economics of Utica Shale in Ohio: Supply Chain Analysis.” We eagerly goggled it up and found that the authors use charts very similar to those developed by MDN and our own Supply Chain Tutorial (see Where Does YOUR Business Fit in the Marcellus/Utica Supply Chain? [FREE]). We have a copy of all three sections of the new CSU study (below). We *highly recommend* this study as worth your while to digest. Before we developed our own Supply Chain Tutorial we had not seen anyone mapping NAICS codes to each stage of the drilling and midstream process. The CSU study adopts MDN’s convention of mapping NAICS codes and goes well beyond our tutorial, which is why we’re so excited. If you work for a company that wants to see if there may be an opportunity to win business in the Marcellus/Utica industry, plan to spend some time with this study!…
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    Dominion Investing $10.1B, Creating 20K New Jobs in VA Next 5 Yrs

    It’s a shame to have to prove to people what should be self-evident–that building new natural gas electric plants and natural gas pipelines will bring both new jobs and inject billions into a state’s economy–but that’s what you sometimes have to do. You have to prove it to counteract the negative drumbeat from radical anti-drillers and leftist mainstream media. So Dominion, a huge utility/pipeline company operating in 14 states including the Marcellus/Utica region, commissioned a study that looks at how many jobs and how much money will be pumped into the State of Virginia over the next five years if all of the pipeline and electric plant projects they have on the books happen. The study (full copy below) finds Dominion is set to invest $10.1 billion and create nearly 12,000 jobs over the next five years in the Old Dominion. A sizable portion of the new projects and jobs are tied to natural gas…
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    Fall 2015 List of Shale-Related Infra Projects in OH – $33.7B!

    We’re excited to share with you an update to a report we LOVE. The sharp researchers at law firm Bricker & Eckler produce a twice yearly called “Shale Economic Development Overview.” It is a list of projects details, by county in Ohio, of those projects started or planned because of shale drilling. The Spring 2015 edition is embedded below. The first edition of this list was published in October 2013 and showed projects worth $12.2 billion. In October 2014 that number had risen to a staggering $21.5 billion. In the Spring 2015 edition, the total rose to $28 billion. This new edition for Fall 2015 shows a total investment in Ohio’s economy of a staggering $33.7 billion! The fact that investments in Ohio continue to increase is a testament to the fact that although drilling has greatly slowed, the midstream (pipelines and processing plants) have not…
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    Exceptionalism: Why the Marcellus Stands Alone Among Shale Plays

    In a recent analysis of the shale oil and natural gas industry in the U.S., Reuters analyst John Kemp says that there are big differences in shale oil and shale gas when it comes to price. He posits that oil output will be “less resilient” than gas when it comes to maintaining profitability with lower prices. Kemp offers the following comments and rationale for why and how the Marcellus (and Utica) has changed the natural gas industry–what he called “Marcellus Exceptionalism”…
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    Dictator-in-Chief B.H. Obama Rejects Keystone XL Pipeline

    Dictators do as dictators want to do. Last week the U.S. Dictator (used to be called President), Barack Hussein Obama, decided to cave to his kook left enviro-Nazi fringe and rejected granting permits to build the TransCanada Keystone XL pipeline–a pipeline that would flow oil from the tar sands of Canada all the way to the Gulf Coast for refining. It’s a huge blow to our relationship with our neighbors to the north and sets back U.S./Canadian relations by decades. It also prevents 20,000 jobs from being created. But dictators don’t care about any of those trifling details. They want what they want and you have to live with it–because you’re a serf. A dullard. You don’t know what kind of energy you should buy and use–so our Dear Leader will do it for you. No this isn’t a story about the Marcellus/Utica strictly speaking, but it is illustrative of what we are all up against–fossil fuel hysteria–the flames of which are fanned by people like Obama. Below is reaction from a number of senators, labor unions, the oil and gas industry and others to this travesty…
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    Marshall County Commissioner Still Opposes $615M Electric Plant

    say what you meanIn August 2014 the Marshall County, WV board of commissioners (a 3-person board) voted to approve a plan to build a Marcellus Shale-powered electric plant in the county (see Marshall County Votes to Accept Gas-Powered Electric Plant). The vote was a bit complicated. In a nutshell, Moundsville Power, a company owned by developers from Buffalo, NY, proposed a deal to the county. They want to build a 549-megawatt plant costing $615 million. But if Moundsville owns the plant, it’s subjected to high property taxes. Moundsville proposed selling the plant to the county but running it for them. In essence the county will own the plant on paper. Because it’s county owned, no property taxes! However, Moundsville would make rental payments to the county–or payments in lieu of taxes (PILOT). The payments would not be as much as if it were taxed–about $13 million less over 30 years. But the county still gets $31 million over those 30 years–and $31M is a whole lot better than $0. Moundsville would not have built the plant at all if not for the PILOT arrangement. One of the three commissioners, Bob Miller, voted against the plan. Now he’s trying to convince the state legislature to overturn the PILOT plan, although he says he still wants the deal with Moundsville to go forward…
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    OH Pipeline Projects in 2016: $8B of Investment, $360M in Taxes!

    tax revenueIn a somewhat related story posted today, MDN tackles the thorny issue of taxing pipelines in Pennsylvania. As serendipity would have it, last week Energy in Depth posted an excellent article on the financial impact pipelines are having in Ohio. Would you believe it if we told you that not only will an astounding $8 billion be spent to build new pipelines in the Buckeye State in 2016, but also an estimated $360 million in ad valorem property taxes (taxes on pipelines) will roll in to local municipal coffers. Next year. And every year thereafter! Here’s the numbers broken down by who is doing the spending and paying the taxes, and which pipelines will generate the most economic activity in Ohio next year…
    Read More “OH Pipeline Projects in 2016: $8B of Investment, $360M in Taxes!”

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    Dartmouth Research: Fracking’s Benefits Extend Hundreds of Miles

    crickets chripingIt’s always fascinating for us to see which universities tout the research papers published by their professors and students, and which don’t. And which papers they decide to promote, and which they don’t. Publish a study that knocks fracking as somehow damaging the environment? That’s worth a full-blown press release and calls to the New York Times to see if you can get some juicy PR. Publish a paper that concludes, oh, the economic benefits of fracking actually extend out for hundreds of miles? Not a peep. In fact such a study was released by Dartmouth researchers called “Geographic Dispersion of Economic Shocks: Evidence from the Fracking Revolution” (full copy below). The report concludes: “Every million dollars of oil and gas extracted produces $66,000 in wage income, $61,000 in royalty payments, and 0.78 jobs within the county. Outside the immediate county but within the region, the economic impacts are over three times larger. Within 100 miles of the new production, one million dollars generates $243,000 in wages, $117,000 in royalties, and 2.49 jobs.” You might think such good news would be emblazoned on major newspapers across the country. Nope. Nothing. Nada. Zippo. That kind of objective research, that finds fracking benefits society, doesn’t fit the liberal bias of mainstream media. So they ignore it. If they don’t cover it, it essentially doesn’t exist. What a shame…
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    API Says Completions Down 44% Y/Y, What About Marcellus/Utica?

    bad timesYes, we know “it’s bad out there” in the oil and gas industry. We know that rig counts went over a proverbial cliff starting in January of 2015 (see the graph below from Baker Hughes). Along with dropping rig counts comes a corresponding drop in the number of wells drilled and completed. According to research conducted by the American Petroleum Institute, U.S. oil and natural gas well completions decreased 44% in the third quarter of 2015 compared to year-ago levels. We wondered if those numbers held true for the Marcellus/Utica too. Here’s what we found…
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    Here are the Real Faces of the Marcellus Shale

    Faces of ShaleSometimes it seems like the oil and gas industry, particularly in the Marcellus/Utica region, is some monolithic entity. It is not. Shale is all about people. The Marcellus Shale Coalition has just released a powerful new video called “The Faces of Shale” (watch it below). In the video average people talk about the shale industry and what it has meant to them–by providing jobs and income. It literally puts a face to what is sometimes a faceless entity. Who doesn’t love to hear someone else’s story?! Don’t listen to the lies Big Green pedals. Instead, listen to the people whose lives have been transformed by the miracle of fracking in the Marcellus Shale–people who thank God for the Marcellus…
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