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Many people have questioned whether the drilling for natural gas in the Utica and Marcellus shale formations would have a significant impact on the creation of new jobs in Ohio. While still evolving, the answer to that question appears to be yes.

A number of key statistics indicate a very positive trend. For example, core shale-related employment, which includes the areas of pipeline construction and well drilling, increased 56 percent from the second quarter of 2011 to the second quarter of 2013. The average wage of shale-related jobs in Ohio is $70,160 in core industries and $59,516 in ancillary industries, which includes the areas of freight trucking and environmental consulting. These wages are much higher than the average wage of all Ohio industries, which is $44,532. Online job postings statewide in the core and ancillary shale-related industries totaled 4,698 in the fourth quarter of 2013 alone.

Another factor weighed in job creation is whether opportunities for growth exist within the market. Recent indications suggest that shale-related employment has increased the number of higher paying positions, as highly specialized workers are needed to successfully build and maintain the infrastructure. These skilled workers are also critical to the elevated numbers of people seeking employment in the oil and gas industry.

There have been a steadily increasing number of well-paying jobs created in the educational sector as well. Local colleges are offering expanded training classes and programs focused on the shale industries. These colleges include Bowling Green State University, Cleveland State University, Kent State University, Miami University, Ohio University, the Ohio State University, the University of Akron, the University of Cincinnati, and the University of Toledo. A charter high school in Columbiana County known as the Utica Shale Academy is focused on oil and gas jobs and is scheduled to open by September 2014. The Academy will specialize in science, technology, engineering, and math and will focus on energy issues, specifically oil and gas.

One needs to look no further than the double-digit sales tax growth since 2012 in key Utica shale counties in Ohio to confirm the positive impact on the state and local economies. Sales receipts in key Utica counties rose 20 percent in 2012 and rose 12.5 percent through the second quarter of 2013. As a result, 164 new wells were permitted in these areas in the second quarter of 2013, a 321 percent increase compared with the second quarter of 2012. Further, through Feb. 1, 2014, energy companies have obtained permits for 1074 Utica shale wells and drilled 707 wells, according to the Ohio Department of Natural Resources.

The key shale counties in Ohio will continue to see a positive effect on job creation as the infrastructure continues to develop. These key shale counties include Columbiana, Carroll, Jefferson, Harrison, Guernsey, Belmont, Noble, Monroe, Mahoning, Trumbull, Portage, Stark, and Tuscarawas. However, developing the proper infrastructure takes time. For example, North Dakota's Bakkan play started in 2006. When asked how long it took North Dakota to build the pipelines necessary to transport the product to market, North Dakota public information officer Alison Ritter stated that North Dakota “is not done yet.” Ned Hill, Dean of the Levin College of Urban Affairs at Cleveland State, agrees that it takes time to build a solid infrastructure: “We are not going to see this field fully built out for another few years. It doesn’t mean we’ve missed the boat. It means the boat has not yet pulled up to the dock.”

 Many indicators point to the development of the proper infrastructure in the key shale counties. For example, pipeline and processing companies operating in Ohio have invested $4 billion in Ohio in the recent years, according to the Ohio’s economic development agency. Total shale industry spending in Ohio is projected to reach as high as $10 billion in 2014. Additionally, Halcon Resources Corp. is installing an 8-inch steel pipeline in the area of its '"Brugler” well in Trumbull County. Halcon workers are also laying a 16-inch natural gas steel pipeline in Trumbull County. Both of these lines will connect to a Dominion East Ohio distribution line. A third Halcon line that connects its ''Phillips'' well in Mercer County, Pa., along the Ohio border is already in production. There are also 134 “gathering” lines planned for eastern Ohio.

While the economy is not growing as quickly as some economists hoped, there can be no doubt that shale oil and gas development is making a significant, positive impact on the state and local economies.

For more information, please contact:

Michael L. Snyder
216.348.5754
msnyder@mcdonaldhopkins.com

Beth I. Gillin
216.348.5457
bgillin@mcdonaldhopkins.com

 

Energy Practice Group

Many of the attorneys in our Energy Group have spent more than a decade serving public utilities and/or oil and gas clients and therefore offer a unique perspective in understanding the legal issues currently presented in the energy industry. Our clients include public utilities, renewable energy companies, energy developers, the oil and gas industry, industrial companies and suppliers. Our Energy Practice has a multi-disciplinary approach to counseling our clients and covers litigation, governmental affairs, real estate law, environmental law, capital markets and other practice areas.
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