Shale drilling has not produced as many jobs in Ohio as industry groups had predicted, several speakers said at a conference Thursday in West Virginia.
The number of jobs tied to drilling for natural gas and liquids in the Utica Shale region of eastern Ohio stands at about 8,000, said Stephen Herzenberg, executive director of the Keystone Research Center in Harrisburg, Pa.
Shale drilling created an estimated 23,000 jobs in Pennsylvania and another 6,000 in West Virginia from 2005 to mid-2014, he said.
Some industry groups and various studies several years ago predicted as many as 200,000 shale-related jobs in Ohio. In 2011, Ohio State University predicted 20,000 new jobs.
Those numbers were way off, and the number of jobs will be measured in the tens of thousands, not hundreds of thousands, Herzenberg said in the daylong teleconference at Wheeling Jesuit University. The Federal Reserve Bank of Cleveland organized the session.
“The employment impacts [from Utica Shale] are much more modest,” said Dr. Mark Partridge, Swank Chair in Rural Urban Policy at Ohio State University.
Each Utica Shale well creates about 100 drilling jobs, and those jobs generate 50 additional spinoff jobs in the local community, he said.
Shale jobs represent one-tenth of 1 percent of all jobs in Ohio, Partridge said.
Ohio has about 3,000 workers who are drilling and about 3,500 workers building pipelines, many of whom have come to Ohio from other drilling states, he said.
Many Ohio jobs linked to drilling include truck drivers who deliver chemicals, sand, steel and water to drilling sites for service companies, said Amanda Woodrum of Policy Matters Ohio.
In other news from the conference, landowners in the six major oil/natural gas areas in the United States will be paid $39 billion in royalties in 2014, said Jason Brown of the Federal Reserve Bank on Kansas City. That covers about 160,000 leases. The land areas include Ohio’s Utica Shale and Pennsylvania’s Marcellus Shale that produced about $30 billion worth of natural gas and liquids in 2014.
Fewer rigs are being shut down in the Utica and Marcellus shales than in other shales around the country as commodity prices drop, said Iryna Lendel, assistant director of the Center for Economic Development at Cleveland State University.
Drillers today using horizontal drilling and hydraulic fracturing, or fracking, are successful 98 percent of the time, she said, while traditional vertical-only wells have a 70 percent success rate.
Lendel predicted that Ohio likely will drill 584 to 664 new Utica wells in each of the next four years. That would mean Ohio would jump from 1,248 horizontal wells in 2016 to roughly 3,240 wells in 2019, she said. That is based on 40 rigs working in the state.
Ohio could get a bigger economic boost by pulling more ethane from the natural gas. More infrastructure is needed in Ohio before that can be done, but that would make the Utica Shale more attractive to drillers, Lendel said.
Ethane is the No. 1 natural gas liquid and can be used as a valuable commodity to make plastics.
Several speakers said the industry’s boom-and-bust pattern is occurring again, and state and local policymakers need to enact policies that protect the public interest. Those could include hiking Ohio’s severance tax on drilling commodities to help drilling communities.