Issue: September/October 2012
Ohio’s Utica shale has midstream processing facilities bubbling up in the Mahoning Valley.
Eric Planey thinks back to 2008, when V & M Star started negotiations and development of its $1 billion facility in Youngstown. As vice president of international business attraction for the Youngstown-Warren Regional Chamber, Planey pinpoints the moment as the beginning of the area’s economic comeback.
“To see a modern steel factory, which is not dirty and gritty but [filled] with incredible machinery, with lots of computer-controlled equipment,” says Planey. “To see that and know that [V&M Star] is being built on former brownfield property is very symbolic of the renaissance that our area is going through right now. It’s a physical manifestation of all the work that’s been done to turn this area around.”
And it’s not just V & M Star, which produces steel pipes and tubes used in the hydraulic fracturing process. Caiman Energy, headquartered in Dallas, and NiSource, parent company of Columbia Gas of Ohio, have both planned multimillion-dollar midstream facilities, which process gas and oil extracted from nearby sites and ready it for refining. These companies are an important step in building the gas and oil industry in Northeast Ohio as the Mahoning Valley sits between two of the largest shale deposits in the country — Utica and Marcellus.
In July, for example, Caiman secured $800 million in equity commitments to help build the infrastructure to collect gas, oil and other fluids, separate them and prepare them for distribution.
But this could be just the tip of the oil well. “Over the next couple of decades, [there are] going to be hundreds of rigs drilling thousands of wells,” says Planey. “In terms of the processing facilities, there have been three that have been announced thus far, but they don’t generally get announced until there is a lot more that’s played out.”
The area’s connection to the oil and gas industry is projected to bring 9,904 jobs to Ohio by 2015 and 39,983 by 2035. That’s in addition to the 31,462 jobs attributable to the industry as of 2010. Direct Utica gas exploration and development expenditures amounted to $246 million in 2011, but are estimated to hit $14 billion by 2015, according to an economic impact study by Kleinhenz & Associates.
It’s an economic surge that the Mahoning Valley is well-suited for, Planey says. “We are a city that has a very large industrial infrastructure from our past, being a steel town,” he says. “So it’s not like we’re reinventing infrastructure. We’re utilizing the existing infrastructure that’s been underutilized for so long.”
IB: Why are these midstream facilities important to the Mahoning Valley?
Job creation, both permanent and temporary, including the construction jobs. So all the spinoff associated with constructing these multihundred-million-dollar facilities are just enormous. It’s so much capital and money flowing into this area that raises the whole economy. ... These are jobs that require people with technical certifications and engineering degrees. And these are people that are coming here, and they’re buying homes and putting their children through school here. It’s just that overall effect.
IB: What might the results look like in Youngstown in five or 10 years?
Youngstown-Warren is already a comeback story. If you look at our unemployment rate, it’s generally hovering at or below the state and national average, consistently for about a year now. And that’s the first time that’s happened since the mid-1970s. … Five years from now, we’re going to be an example of how a city can come back from decades of Rust Belt recession to being a leading innovator for the whole region.
IB: What are some of the basic things people should know about the gas and oil industry?
Relative to Ohio, all the companies that have come here want to be significant players in the community. They want to be a participant, meaning anything from looking for charitable work to help fund, and making sure they can hire local employees whenever possible. They want to coexist with us in the community, and that’s very important. When it comes to all the safety issues — all the environmental issues — we have to remember that these are people who live here, and they want to live in a peaceful, safe, environmentally friendly environment.
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