STEUBENVILLE - The vice president of the Ohio Oil and Gas Association says recent studies suggest Appalachia's Marcellus shale, when fully developed, figures to be the second largest natural gas field in the world, even without taking the potential of the much larger underlying Utica shale into account.
And that, he said, puts Ohio at the heart of it all.
"The technology and the ability to find new types of reserves probably means, according to a recent survey that was put out, 5.5 billion barrels of oil and 15.5 trillion cubic feet of natural gas from the state of Ohio," said Tom Stewart. "It's a huge oilfield, with huge, huge potential."
Tom Stewart, vice president of the Ohio Oil and Gas Association, discussed the state’s oil and gas industry at the Steubenville Country Club during Thursday’s investor’s luncheon sponsored by the Jefferson County Chamber of Commerce. - Linda Harris
Stewart, guest speaker at the Jefferson County Chamber of Commerce's quarterly investor's luncheon in November at the Steubenville Country Club, said a recent study by OOGA's Education Program suggests that during the next four or five years shale could generate as many as 200,000 jobs and as much as $135 million in local taxes so "the opportunities out there are fantastic."
And he said so much natural gas "is being found with so much efficiency" that Americans are now enjoying a $20 a barrel advantage in the oil market. "As disgruntled as Americans are over $3 a gallon gasoline and oil prices, they're getting a $20 advantage over the rest of the world, and that's expected to continue for the foreseeable future," he said.
"This plentiful supply of oil and gas here in the U.S. wasn't supposed to happen, but it did. Just five or 10 years ago we were talking about shortages of energy and our growing dependence (on foreign oil). Now, we're going to be able to produce enough for our needs. So much oil and gas is now being produced in the U.S., it's making a tangible difference."
Stewart, who earlier in the day addressed a regional oil and gas forum sponsored by U.S. Rep. Bill Johnson, R-Marietta, said Marcellus and Utica oil and gas reserves represent a huge competitive advantage for the Appalachian region. Chemical companies that abandoned the United States 10 or 15 years ago to build plants in oil-rich countries overseas are clamoring now to come home.
"Now they're knocking on our door, desperate to get back into the U.S. because of the hypercompetitive advantage we have over producers in other countries," he said. "They want to set up at least three plants in the Appalachian basin because there's so much natural gas coming out of Marcellus."
While critics argue that shale drilling potentially poisons the air and puts water supplies at risk, Stewart said that fracturing, the controversial process of injecting water, sand and some chemical additives into the shale to release oil, gas and other liquids trapped in it, has been done since 1947 in the U.S. without incident. He said roughly 1.2 million wells have been hydraulically fractured in the U.S. over the years - some 80,000 of them in Ohio without a proven case of groundwater contamination linked to the process.
In response to questions, Stewart said it's in the industry's interest as well as the public's to ensure wells are properly constructed and monitored. He said Geauga County's notorious Bainbridge incident in 2007, when methane buildups in the water supply caused one home to explode and forced the evacuation of 19 others, was the result of a sub-standard well casing, and said Ohio's recently enacted Senate Bill 165 will protect residents from a reoccurrence.
That law, he said, spells out strict requirements for well construction and inspection, as well as the fracturing process itself and chemical disclosures. It also gives state environmental regulators new enforcement authority, he said.
"You need to know wells have been constructed properly, you need to know they've been inspected property and that the people doing the inspections are being funded properly," he said. "A process is in place so you can have faith and trust" in the safeguards that have been put in place.
Others cited the importance of making sure Ohioans benefit from the thousands of new, high-paying jobs shale is expected to bring to the Upper Ohio Valley. Stewart said the key to making that happen is to ensure the local work force is equipped with the skills needed by the energy companies.
"It's a very technical industry," Stewart added. "You don't put somebody on a rig floor unless they're trained and understand what they're doing, but companies are sensitive to the issue, and they want to get local people into these jobs. The transition will happen, but we just need to get Ohio workers trained."
And he said the economic fallout from the shale play is already being felt. Youngstown, decimated by the decline of steel during the past two decades, now is reveling in the $650 million Vallourec is spending to beef up production of small-diameter steel tubing for shale drilling.
"It's an education process, what I saw happening here today," he said after the meeting. "People are trying to get up to speed with how it's done, what are the issues, how will we resolve the issues. It always comes down to jobs, how to take advantage of that and get economic strength."