Is Shale Meeting Expectations In Ohio?
A national information agency that tracks the oil and gas industry, Rigzone, reported earlier this week that nationwide hiring in the industry appears to have slowed to its lowest point in four years.
Most of the new hiring has been connected with shale, so it suggests a slowdown in shale-related jobs.
State employment figures are compiled by Ohio’s Department of Job and Family Services (ODJFS) but, frankly, are hard to decipher when it comes to shale related employment.
And that’s not just our reading of it.
“Their numbers and estimate are all over the place, and frankly our college has problems with the ODJFS report,” laments Ned Hill. He's a Cleveland State University professor who studies economic development.
What the state’s official figures do show is about 600 Ohioans got jobs in shale production in the last quarter of 2012 – the latest figures available.
And it seems to show fewer than 3,000 core industry Ohioans got jobs in shale since the boom began.
There’s more than that when you add in ancillary and indirect jobs related to shale, such as Ohio steel plants supply piping and other materials to the shale industry.
“We’ve got the second expansion of a steel pipe plant in Youngstown that’s going on. Loraine has added a third shift for its pipe plant. ArcelorMittal down in Mansfield is going full bore because of their pipe plant. And you saw the split in Timken Steel into two separate companies," summarizes Hill. "And a lot of that is really driven by the sales they’re doing, into the industry.”
Jacob Duritsky, Managing Director of Research for Team NEO also tracks shale development. He concedes the projected employment numbers may not be there yet.
“Maybe collectively, we got a little ahead of ourselves?” he asks.
Duritsky points to another sign of activity. He says nearly 1,100 wells have been permitted in the Utica Shale region, and out of that number, over 300 have been drilled and are currently producing. Even so, that measure too, he acknowledges, hasn’t quite matched the predictions.
“We probably needed to temper our expectations a bit," says Duritsky. "But I think now that people are starting to hear reports of production numbers, the companies in the (Utica) play are starting to kinda narrow down their sweet spots.
"I think people get a sense that this is real and it’s happening.”
At this week’s shale conference held by Crain’s Cleveland Business, Robert Chase, a Marietta College professor of Petroleum Engineering and Geology, told WCPN the pace of shale development is actually good.
“I think we’re right on track," says Chase. "The development of a play like the Utica, it takes a long time. You start with exploration wells, defining whether there’s a dry gas area that we’ve discovered, and then we’ve found a wet gas area, and then part of the play is oil rich but it’s shallower, and doesn’t have the pressure, so….we’re still…this is very early in the play.”
Still, it’s hard not to look at places like Texas or North Dakota, where their natural gas and oil booms have made headlines with lots more jobs and production.
Tom Stewart of the Ohio Oil and Gas Association urges patience.
“If you’ve studied shale plays across the country, you’ll find that all of them had a slow start," says Stewart. "...people tried to validate their acreage, understand the science, and they delineated out the best areas to work. Then activity dramatically ramped up. I believe that that’s happening actually at an accelerated pace in Ohio as opposed to earlier plays primarily because the people doing the Utica have established experience.”
Industry analysts still expect Ohio’s shale to significantly contribute to overall U.S. oil and gas production over the next several years if not decades, with the nation reaching production levels it hasn’t seen in over 40 years.