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Utica Shale Gravy Train

by Judd Ballard

What does the Utica Shale really mean?  It depends on who you ask.  The corporate big wigs hopping the plane from Houston right now may have a different answer from the southeast Ohio farmers, or even the northeast Ohio laborers.  But what does it mean to the state of Ohio as a whole?  If you answered anything but dollar signs, then you’ve had too much time to think about giving an honest answer.  Many Ohioans don’t stop to consider the potential environmental effects.

But that’s just what it means for many people, and in times of recession perhaps nothing else matters.  You can literally hear the cash register chiming, attracting investors from all over the world.  Get a piece of the pie while you can.  Nothing like a little gravy train with biscuit wheels rolling through eastern Ohio.

If the Utica Shale is as abundant and potentially prosperous as we have been led to believe, then everyone will likely want to find their seat on the train.  The Utica Shale covers parts of eight states and Ontario, CAN, and in parts of Ohio is only 3,000 feet below the Marcellus Shale, which is less than 4,000 feet below the surface.

The major players who set up shop in different parts of Pennsylvania scored on the economic boom that was Marcellus Shale.  However, they couldn’t be closing doors any faster in Pennsylvania and migrating to Ohio, more than willing to play a little Utica Shale roulette if you will.  Upwards of $1Billion has already been spent in Ohio in acquiring drilling leases in different parts of the state. $5,000/acre…how can anyone turn that money down?  And the potential for 10-20% year over year royalties makes the decision even tougher.  Would you really think twice about the environmental effects?

Could mean a lot of jobs.  Could mean a nice jolt into the economy. Potential economic impact beyond the jobs and corporate revenues are undeniable.  The state will want in on their piece of the pie also, hopefully not in the form of tax increases, but something to support the infrastructure needs.  The capital investment is not going to be taxed (remember kinder, gentler).  Rather, the Governor has proposed assessing an impact fee and extending the severance tax to natural gas liquids.

Many companies and municipalities have a lot of money riding on this – roads, pipelines, equipment, manpower, housing.  If this doesn’t turn out as expected a lot of people are out a lot of money.  How does that affect the landowners who were offered deals on the drilling leases?

Ohio Attorney General Mike DeWine is doing his part in addressing the environmental concerns that many people have.  To date, it represents the loudest voice offering the dissenting opinion about the potentially long-term hazardous effects.  It is obviously his responsibility but let’s hope it’s not too little too late.  Just yesterday, Ohio Lieutenant Governor Mary Taylor spoke at Zane State Community College playing cheerleader and touting the potential economic impact from the Utica shale development.

I’ll keep my fingers crossed this is the economic boom Ohio is in need of.

 

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