Ohio Report Shows Huge Growth in Utica Shale Drilling
For David Mustine, the head of JobsOhio, the Utica shale in Eastern Ohio represents jobs. And he’s excited about that.
MUSTINE: "We are off to a good start, a strong start, but the best is yet to come."
Mustine says as the shale industry grows, so do the businesses that supply it or facilitate it. And this new report by the Ohio Department of Natural Resources shows that growth is going to happen quickly. It says since 2011, Utica shale oil production has increased 93 percent and Utica shale gas has increased 80 percent.
Jim Zehringer, the Director of the Ohio Department of Natural Resources, doesn’t use the word "fracking," but he says the new horizontal Utica shale wells are rivaling the production of the conventional oil and gas wells.
ZEHRINGER: "Based on the production so far from the Utica wells and the projections made by ODNR for drilling activity in the next few years, the Utica may surpass conventional oil and gas production as early as 2015."
To give you an idea of what that means, a single Uitca well in 2012 produced as much oil as 312 conventional wells and as much natural gas as 448 conventional wells. There were 87 Utica wells in 2012, and Rick Simmers with the Divison of Oil and Gas Resource management says projections show that number will continue to grow.
SIMMERS: "In 2014, with the 750 permits that are issued, we anticipate that approximately 400 wells will be drilled in that year, and that about 300 additional wells will go into production, bringing the cumulative total wells to production to approximately 662. And finally in 2015, with 1000 permits, we anticipate 500 wells will be drilled, about 350 new wells will go into production and we will have a cumulative Utica production of just over 1000 wells."
The ODNR experts say this will likely mean lower utility bills for Ohioans. But it also means something else:more revenue for the state.
Still, Zehringer says it could bring in much more, if Ohio lawmakers would pass the increase in the severance tax on oil and gas that Gov. John Kasich proposed in his two year budget plan earlier this year.
ZEHRINGER: "Gov. Kasich believes Ohio's income tax is too high and our oil and gas severance tax is too low. I met with numerous drilling company officials representing major companies of the Utica shale. None of them said they would leave because of the increase in the severance tax. In fact, if companies leave Ohio for another gas producing state, they would find severance taxes or associated fees that are as much as twice as high as what the governor has proposed. We believe it is important to become more aligned with other states on this issue."
But so far, the Republican dominated General Assembly does not buy that argument and has scrapped the severance tax as part of their two-year budget proposals.
Zehringer says the growth in the industry is rapid but he says it also must be controlled responsibly. And he says his department is taking steps to make sure drilling does not have negative effects on Ohio’s environment.
ZEHRINGER: "Now we also need more frequent data reporting. The oil and gas industry continues to find more efficient ways to tap this great natural resource our country possesses. It is crucial that we continue to progress with the industry so our staffing levels and regulations are current and effective. As oil and gas production grows, we need to receive these production numbers more frequently. This will allow us to adjust to the growing need and not fall behind from a regulatory standpoint."
Some environmental groups have been doing some monitoring of their own on the growth in Utica shale drilling and they promise to continue to put pressure on state agencies to make the wells safe for Ohio’s communities.