Hundreds of thousands of jobs could be created and billions of dollars in tax revenue and royalty payments could be generated in Ohio in the coming years as a result of a predicted economic oil and gas boom, according to results of a study released Tuesday.
The economic impact study was released by the Ohio Oil and Gas Energy Education Program (OOGEEP). It was commissioned from Cleveland-based economic research firm Kleinhenz and Associates, Inc. and included input from experts at several Ohio colleges, including Marietta College.
The study provides data about how the state’s natural gas and crude oil industry positively impacts Ohio’s economy today, and includes the first comprehensive study about how planned oil and gas development in Ohio’s Utica Shale formation might impact the state over the next five years.
Utica Shale has been drilled for more than 100 years, but because of new technology such as horizontal drilling, industry experts expect that huge oil and gas deposits could be unlocked.
“Horizontal drilling replaces 10 vertical wells,” said Rhonda Reda, executive director of the OOGEEP.
There are many who oppose horizontal hydraulic fracturing – often called “fracking” – because of environmental concerns.
“The department of energy has indicated in studies that horizontal fracking can cause methane to leak into water tables,” said Nolan Moser, energy and clean air program director with the Ohio Environmental Council. “There are quite a few toxic chemicals that can be released in air emissions – the Ohio EPA (Environmental Protection Agency) is looking at how to regulate those.”
Reda said the study took 10 months to complete and it is an update to a similar study that was done in 2008. It includes projections for the state as a whole, but not data for individual counties.
“You should update a study every couple years, but, also because there’s been so much discussion about the potential of Utica Shale, it was important to begin to collect that data so it can help us prepare us over the next five years for workforce development and getting local people trained for some of these new jobs,” she said.
According to the results of the study released Tuesday, by the year 2015, Ohio’s natural gas and crude oil industry could help create and support more than 200,000 Ohio-based jobs from the leasing, royalties, exploration, drilling, production and pipeline construction activities for the Utica Shale reserve.
Additionally, the study indicates royalty payments to landowners, schools, businesses and communities could soar in the next five years.
“We’re anticipating we can distribute statewide more than $1.6 billion in royalty payments between 2011 and 2015,” Reda said. “To put that in perspective, that exceeds the total amount of royalties paid between 2000 and 2010, so it’s pretty significant.”
Total tax revenue from oil and gas exploration and development in the Utica Shale formation is projected to be about $479 billion over the next five years, according to the study. That includes severance, commercial activity, ad valorem (property), federal, state and local taxes.
“It could be a great shot in the arm for the state of Ohio and local communities,” Reda said.
Moser said those who are in favor of fracking need to “take it slow, take it easy and take a step back”, allowing time for environmental regulations to be put in place.
“Let’s take the time to do this right and the gas will still be there at the end of the day,” he said.
Ohio Rep. Andy Thompson, R-Marietta, pointed out that the House and Senate have passed Senate Bill 165 to put a regulatory structure in place to govern oil and gas exploration in Ohio.
“I think for an economy like ours and with the appropriate regulatory structure we have, the timing is right,” he said. “Southeast Ohio has been waiting a long, long time to see some form of prosperity.”
There are currently more than 64,000 active wells throughout 49 counties in Ohio, with more than 274,000 wells having been drilled in 76 of the state’s 88 counties.
There are 15,075 oil and gas wells in Washington County, with 4,485 currently producing, according to the Ohio Oil and Gas Energy Education Program.
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