Drilling Down

Utica Shale Counties to Watch in 2018

By Jackie Stewart, Energy in Depth
YOUNGSTOWN, Ohio – While 2017 was the year of midstream development and pipeline construction in Ohio, 2018 will be the year of major investment decisions by large end-users of natural gas and natural gas liquids.

Without a doubt, the most important Utica Shale developments to watch for in 2018 will revolve around the development and final decisions for massive downstream investment in petrochemical projects, the pipeline infrastructure and production to fuel them, and the storage to support them.

For the first time ever, Belmont County has surpassed Carroll County in number of drilling permits, and PTT Global Chemical will make a final investment decision in 2018 on a multi-billion-dollar ethane cracker plant proposed in the county.

And while it’s obvious Belmont County will receive national attention for all those reasons, we can’t deny that the most shocking Ohio Utica shale county of 2017 was Jefferson County. Jefferson County has its own story to tell with its vital connection to the Shell Chemical Appalachia LLC (Shell) ethane cracker in Pennsylvania and a budding rebirth in steel manufacturing.

For all of these reasons, Energy in Depth’s extensive research and analysis has led us to select Belmont and Jefferson counties as the “Ohio Utica Counties to Watch” in 2018. We are anxious to see what happens in both of these counties next year.

Three Reasons to Watch Belmont County

1)  2018, perhaps more than any other, could be one of the most pivotal years for Ohio, since the prospects of PTT Global Chemical moving closer to a final investment decision to invest in a multi-billion ethane cracker continue to look promising.

In February, news reports said the company announced it would make a final investment decision by the end of this year. While PTT has never actually time-stamped its decision, a memorandum of understanding was signed with JobsOhio in October that will, “establish a community infrastructure development plan to enhance the well-being and quality of life for the communities in the area surrounding PTTGC America’s planned petrochemical complex in Belmont County, Ohio, after the Final Investment Decision.”

With the clock running out on 2017, it’s likely a final investment decision will be delayed until some time in 2018. It’s a gross understatement to say that this decision is critical for Ohio and for the region. It’s also safe to say that Ohio is “all-in” on trying to secure a favorable decision for this world-class petrochemical project, as PTT Global Chemical’s plant would be a region-changing event.

2) For each of the past four years, Energy in Depth has targeted Belmont County as the “Utica Shale County to Watch.”  However, this year was particularly noteworthy: For the first time ever, Belmont County took the top spot for permits to drill with 530. This represents a 64% increase over the lows realized in May 2016.

3) Third quarter Utica shale production results for 2017 are not yet in, but production results for each quarter so far this year have continued to climb, and Belmont County has consistently shown top producing wells.

For example, one of Belmont County’s operators, Antero Resources, the largest producer of natural gas liquids in the United States, has 151,000 net acres of lease holdings in the rich gas/condensate window of the Utica play located in eastern Ohio. According to the company’s November overview, the Marcellus and Utica shales are increasingly becoming more liquids focused, while at the same time the Appalachian Basin has been driving the growth of natural gas production nationwide. Belmont County continues to be in the heart of what operators consider the Utica Shale core and we would certainly expect production to continue to impress in 2018.

Three Key Reasons to Watch Jefferson Co. in 2018

1) After the year Jefferson County has had when it comes to permits and natural gas production, we can’t help but ask, what’s going on in Jefferson County these days?  Permits to drill year over year are up over 100% in this county. And for the first time in years, Jefferson County hit the top-10 list for natural gas production for the fourth quarter of 2016.

Natural gas production grew by 587% from 2015 to 2016. And in the first two quarters of 2017, while not as prolific as other counties, Jefferson County still showed impressive results. Recall that it was Jefferson County that made national news in 2012 because of its Utica Shale development, as Reuters reported:

“In a region more accustomed to hard times than optimism, residents hope that a boom in shale gas drilling using the controversial technique of hydraulic fracturing – or fracking – will lead to wealth, jobs and a reservoir of domestic energy that could dramatically boost the area’s fortunes.”

2) Following decades of plant closures, steel manufacturing is showing signs of life in Jefferson County and along the Ohio River once again. And the local residents are calling the manufacturing rebirth an “answer to prayer.”

As Energy in Depth reported in September, after being closed for eight years, a Jefferson County steel mill is now open for business and shipping 19,000 tons of domestically produced steel on the Ohio River thanks to low natural gas prices made possible from shale development.

The Mingo Junction-based mill is operating under new ownership and now has125 employees, with plans to add up to at least 145 more. That’s something Mingo Junction Mayor Ed Fithen, a former employee at the mill, never thought he’d see: “After being down for eight years – I worked there for 35 — I said this place will never start up. It’s too down.”

So will this kind of news continue? The National Association of Manufacturers thinks it will. The trade group just released a study that found that over 94 percent of respondents feel positively about their own company’s outlook and optimism is the highest in the survey’s 20-year history!

3) Another reason why Jefferson County is on the map is that it’s home to a proposed pipeline project that will provide the feedstock to Shell Chemical Appalachia LLC’s major petrochemicals complex in Beaver County, Pa. Shell’s proposed Falcone Pipeline will provide a critical transportation source for more than 100,000 barrels of ethane daily to the $6 billion petrochemicals complex.

In addition to adding 1,000 local jobs during the pipeline’s construction, the overall economic benefits to the region from the pipeline and ethane cracker could lead to 100,000 permanent new chemical and plastic products manufacturing jobs by 2025, according to the American Chemistry Council. The study also found that the region could stand to gain $2.9 billion in new local, state, and federal tax revenues as well.

There’s no doubt that 2018 is going to be an exciting year. It will be a year filled with a lot of questions, optimism and what the people of Appalachia hope will ultimately continue to be an “answer to prayer.” And we believe Belmont and Jefferson Counties will be the primary locations to watch closely to see if this next exciting phase of shale development continues to become a reality.

Editor’s Note: The author, Jackie Stewart, is with Energy In-Depth, and oil and gas industry advocacy group.

Published by The Business Journal, Youngstown, Ohio.