The energy-rich Marcellus and Utica shale fields in the Ohio River Valley are already proving to be assets for oil and gas drillers.

They also represent a dynamic new opportunity for refineries and manufacturers located downstream from the drilling, according to “Mapping the Opportunities for Shale Development in Ohio,” a study released by Cleveland State University in 2015.

The 2015 study follows up on a 2012 study jointly conducted by Cleveland State, The Ohio State University and Marietta College that examined the economic value of the region’s oil and gas development.

The authors make five key points about the potential of Ohio shale to impact the state’s downstream job and industry development.

  1. The Utica and Marcellus shale fields yield abundant and low-cost ethane, now and in the foreseeable future.

  2. Ethane is a valuable feedstock for petrochemical production in plastics and polymers.

  3. The region’s proximity to the feedstock makes it economically advantageous for cracker plants — the refineries that turn ethane into ethylene and polyethylene — to settle in the region.

  4. That cluster of activity will draw manufacturers that rely on the feedstock for plastic and polymer production.

  5. This hub is already in the opening stages of development. Three major cracker plants are initiating plans to build here, with projects in various phases of implementation.

A Booming Petrochemical Hub

Ohio is ranked sixth in the production of chemicals, which includes plastics. The petrochemical industry employs more than 44,000 Ohioans, with average wages of just under $74,000 — exceeding the state’s average manufacturing wage by 33 percent.

The Cleveland State study reports that abundant ethane production from the region’s shale fields is rapidly creating a new petrochemical hub in the Ohio River Valley. Three ethane refineries are undertaking site development activities that began when natural gas and natural gas liquid prices were higher. Even with the current plunge in gas prices, all three have continued development activities, recognizing that energy costs fluctuate and are likely to rebound.

The study predicts that downstream plastic manufacturers will soon follow due to the savings generated by proximity to the ethane feedstock — a critical raw material for production.

The study’s co-author, Iryna Lendel said that once a hub starts to develop, it typically attracts like-minded companies and individuals that share trade and knowledge. The Ohio River Valley is predicted to become an industry hub, much as Silicon Valley draws digital technology firms to Northern California.

While there are built-in advantages to building such a hub, a leading benefit is the close proximity between suppliers and customers, which supports reduced shipping costs, greater collaboration and reliability.

Making a Move

According to the Cleveland State shale study, it’s not a matter of if cracker facilities will be established and begin operation, but when. It could be five or six years before the facilities go online, making now the ideal time for manufacturers to start planning their moves. Lendel says early movers are better positioned to secure the most affordable land and will have the best manufacturing opportunities.

Site selectors are encouraged to contact FirstEnergy’s Rapid Response Shale Team to learn more about the opportunities available in the Ohio Shale region. 

Click here to read the full shale study, “Mapping the Opportunities for Shale Development in Ohio,” from Cleveland State University.

Discover how FirstEnergy can help you help your clients take advantage of Ohio’s shale energy opportunities. Call us at 330-255-1701 or visit us at www.firstenergycorp.com/economicdevelopment. Stay up-to-date on the latest Economic Development news on LinkedIn.

 

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Last Modified: May 10, 2016