Drilling Down

Report: Investment in Utica Shale Rises $5.7 Billion

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YOUNGSTOWN, Ohio – Investments in the Utica shale in eastern Ohio and energy-related projects in the region have risen $5.7 billion since last spring, according to a report issued by the Columbus law firm of Bricker & Eckler LLP.

Despite the weak oil and gas market and energy companies’ pullback in exploration, spending on midstream and downstream operations continues, observes Matt Warnock, partner and chairman of the law firm’s oil and gas industry group. Bricker & Eckler issues an update on projects twice a year, once in the spring, the other in the fall.

The firm tracks projects and spending that involve mostly infrastructure and end-users, he says, excluding leasehold investments and drilling expenditures. “We started the chart about 2½ years ago,” he said Thursday, “and have been tallying it ever since.”

Warnock says much of the investment at the moment is directed in two major segments of the market – continuing pipeline development and the construction of energy plants that use natural gas as a fuel.

“Large pipeline projects such as Leach XPress, Rover Pipeline, Specter Energy and Nexus will require huge investments to transport large quantities of gas,” he says. “The other segment is the movement towards natural-gas power plants.”

Since his firm’s last report, Warnock says, some $5.7 billion worth of projects have been added to the list. Companies have invested $33.7 billion in Ohio. In October 2013, that number stood at $12.2 billion.

The report lists 162 projects, 16 of them new since Bricker and Eckler’s spring report.

There were no new projects added to the mix that are slated for Mahoning or Trumbull counties, the report shows. However, it does include the completion of an electrical transmission system by First Energy Corp. constructed to supply power to the Kensington Utica East Ohio Midstream LLC’s processing plant in Columbiana County. The value of that project was not provided.

Among the major new projects on the report:

  • A $1 billion investment by MarkWest Energy Partners LP and the Energy Mineral Group to develop a dry gas gathering system that is expected to come online by the end of this year.
  • A $400 million natural gas gathering system by Summit Midstream Partners and XTO Energy that consists of 115 miles of gathering pipeline with four compressor stations.
  • A $200 million natural gas-to-liquids refinery planned for 2016 by Velocys in Ashtabula County.
  • The $415 million expansion of the Ohio Valley Connector Pipeline System by EQT Corp. in Monroe County.
  • A $640 million investment in natural gas gathering and water service assets in Belmont and Monroe counties by Rice Midstream Holdings and Gulfport Energy Corp.
  • A $1.75 billion pipeline project by Columbia Pipeline Group – Leach Xpress – that is expected to run through several counties in Ohio, Pennsylvania and West Virginia.

The report also includes several small-business expansions across the state with unknown values, Warnock says. “It never ceases to amaze me how many of these smaller projects have a ripple effect on the eastern part of the state,” he says.

Published by The Business Journal, Youngstown, Ohio.