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Dayton Business Journal...
Report: Ohio oil
production could save rust belt
by Brittany Hart, DBJ Staff Reporter
Tuesday, April 26, 2011
An energy analyst says that oil production in Ohio could be a huge
boost to the economy and even be the ‘savior of the rust belt’.
Ohio’s oil production could be “the savior of the rust belt,” according
to an energy analyst.
The Buckeye state may become a large oil producer if acreage held by
Chesapeake Energy Corp. (NYSE: CHK) and EV Energy Partners (NYSE: EVEP)
is found to be prospective, said Ethan Bellamy, a senior research
analyst covering the energy sector at Robert W. Baird & Co.
The Ohio Oil and Gas Association reports that the Ohio oil industry
already has a major economic impact — $665 million in 2009 when also
factoring in the natural gas sector. The industry also employs about
4,600.
To date, there have been more than 268,000 wells drilled in Ohio,
ranking the state as one the most active in the nation, the association
says.
Speedway SuperAmerica LLC, one of the nation’s largest gas station and
convenience store chain, is based in Clark County.
Nearly all of Ohio’s oil production takes place on the eastern side of
the state, with most wells in Licking, Knox, Cuyahoga and Noble
counties.
The Utica Shale is a geologic formation about a mile below the earth’s
surface in roughly half of Ohio’s counties in the eastern part of the
state that could hold as much as $600 billion worth of oil and natural
gas, according to a report in the Lancaster Eagle-Gazette.
For a presentation to the Ohio Oil and Gas Association last month,
Larry Wickstrom, the state’s geologist, said he estimates up to 15.7
trillion cubic feet of natural gas and 5.5 billion barrels of oil could
be recovered from Ohio’s share of the Utica Shale, according to the
Lancaster report.
The association’s most recent study of the state’s oil industry showed
during 2009:
• Ohio oil producers had 64,400 wells in operation;
• There were nearly 5,700 registered well owners, including 4,200
registered in Ohio;
• There were about 550 oil and natural gas wells drilled in 40 of
Ohio’s 88 counties;
• They produced more than five million barrels of crude oil;
• They produced more than 88 billion cubic feet of natural gas; and
• They had a combined market value of crude oil and natural gas
production of more than $665 million during 2009.
Independent producers like most of those in Ohio, including Atlas
Energy, are developing America’s oil and gas resource base, the
association says. Independent producers drill 90 percent of domestic
oil wells that produce 68 percent of America’s crude oil.
Ohio also lays claim to the first discovery of oil from a drilled well,
when in 1814 a saltwater well driller discovered oil at a depth of 475
feet in Noble County, according to the association. Ohio’s first
commercial oil well was placed into production in 1860 in Washington
County.
Domestic oil production is gaining importance as recent clashes in the
Middle East have caused oil prices to spike to $110 to $120 per barrel
as some oil companies evacuated their operations in that part of the
world. In turn, gas prices in Ohio hit the key $4 price mark April 26 —
up more than $1 year-over-year — and reached $5 in several states
across the country.
The high prices are getting the attention of politicians in Washington,
D.C., as well. President Barack Obama said he is forming a task force
to seek out fraud or manipulation in oil markets that may be
contributing to higher gas prices.
Energy costs have a huge impact on businesses, both consumer and B2B.
Economists say high oil and gas prices affect more than just prices at
the pump, and can hit everything from transportation to exports and
even consumer spending. That means companies such as Best Buy Co. and
Apple Inc., which is trying to build and ship more of its new iPad 2
mobile tablets, can be impacted.
Rising fuel prices can have a serious impact on U.S. trucking companies
as well, and the Dayton region has long been a hub for trucking
companies because of its central Midwest location and the intersection
of Interstates 75 and 70.
The oil spike also has hurt airlines, with many carriers that fly out
of Dayton International Airport raising prices for airfares as much as
30 percent in recent months.
AMR Corp.’s American Airlines unit said Wednesday it is cutting its
flight schedule 1 percent later this year as a result of higher jet
fuel costs.
Read it with links at the Dayton Business Journal
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