Ohio Utica Shale Counties to Watch in 2018: Belmont and Jefferson

by Jackie Stewart, Energy in Depth

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 entirely around the development and final decisions for massive downstream investment in world-scale petrochemical projects, the pipeline infrastructure and production to fuel them, and the storage to support them.

Given all that’s occurred this year and is in the works for next, it’s no surprise Belmont County has made our list of “Ohio Utica Shale Counties to Watch” for the fourth consecutive year.  For the first time ever, Belmont County has surpassed Carroll County in number of drilling permits, and PTT Global Chemical (hopefully) 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 simply cannot deny that the most shocking Ohio Utica Shale County of 2017 was, without a doubt, 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, our 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 Key Reasons to Watch Belmont Co. In 2018

1) Will PTT Global Chemical make its final investment decision in 2018? We sure hope so!

This year, 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 stated that the company announced it would make a final investment decision by the end of this year. While the company itself has never actually time stamped its decision, a Memorandum of Understanding was signed with JobsOhio, the economic development arm of the State of Ohio, 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) Will Belmont County hold the top spot for number of permits in Ohio? Time will tell.

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

Rank	County	May 2016 Permits	December 2017 Permits	% Change
1	Belmont	323	530	+64%
2	Carroll	506	525	+4%
3	Harrison	381	404	+6%
4	Monroe	239	370	+55%
5	Noble	188	219	+16%
6	Guernsey	188	215	+14%
7	Columbiana	133	151	+14%
8	Jefferson	71	144	+103%
9	Mahoning	30	30	+0%
10	Washington	21	22	+5%
*Source ODNR

3) Will 2018 show continued growth in natural gas and natural gas liquids production? With pipelines going into operation, the forecast looks bright.

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 leaseholdings located in the rich gas/condensate window of the Utica Shale play located in eastern Ohio. According to the company’s November overview, and as you can clearly see below, 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) Is Jefferson County making a comeback? Production and permitting data show signs of life.

After the shocking 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 percent 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 percent 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) Will shale continue to drive steel manufacturing back to life along the Ohio River in 2018? Manufacturers think so.

Following decades of steel mill 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 EID 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 has re-opened under new ownership and now has125 permanent employees, with plans to add up to at least 145 more, something Mingo Junction Mayor Ed Fithen, a former employee at the mill, never thought he’d see,

“After being down for 8 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 (NAM) thinks it will.  In fact, NAM 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) Did you know that Jefferson County plays a vital role to the success of a world-class petrochemical project?  That’s right — Jefferson County will be home to the pipeline that feeds the $6 billion petrochemical complex in Pennsylvania.  

Another reason why Jefferson County is on the map is that it’s home to a vital proposed pipeline project that will provide the feedstock to Shell Chemical Appalachia LLC’s (Shell) major petrochemicals complex in Pennsylvania. 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 (ACC). The ACC study also found that the region could stand to gain $2.9 billion in new local, state, and federal tax revenues as well.

Source: http://www.timesonline.com/news/20171018/shell-spends-additional-600k-on-pipeline-easments

Conclusion

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 feel 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.

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