Policy Documents

Research & Commentary Hydraulic Fracturing in Ohio

October 24, 2011

Chesapeake Energy has announced that exploratory hydraulic fracturing wells in the Utica shale, a deep rock formation stretching from upstate New York to Kentucky, have produced significant quantities of natural gas in Ohio. The wells in Harrison and Carroll counties have extracted yields so large the production investments could be recovered in as little as two or three months. With such promising returns, investment in the Utica shale region is likely to increase.

Utica shale natural gas is projected to be “wet,” meaning it would contain high percentages of natural gas liquids such as propane and butane. Separating out the liquids from the natural gas can increase profitability when natural gas prices are low relative to oil. The Utica’s composition contrasts with that of the Marcellus shale, which in the United States is typically “dry,” or lacking in natural gas liquids, except on its western edges.

The economic benefits associated with drilling in the Utica shale are significant and are already being realized in neighboring states. An independent study commissioned by the Ohio Oil & Gas Education Program found the industry could directly create more than 200,000 jobs by 2015, increasing Ohio’s economic output by $22 billion. This would increase tax revenue by more than $478 million through additional business, income, and severance taxes.

As of 2009, Ohio generated only 3.4 percent of its energy from natural gas, with 83.7 percent coming from coal and 11 percent from nuclear. MIT’s Future of Natural Gas study found electric utilities across the nation are moving towards increased use of natural gas. Nationwide, 88 percent of new generation capacity since 1989 has been fired by natural gas. Ohio is likely to move in this direction as utilities adapt to comply with pending EPA regulations when deciding whether to upgrade existing coal-fired power plants or transition to cleaner-burning natural gas.

The following documents provide additional information about the safety and benefits of hydraulic fracturing.

Research & Commentary: Hydraulic Fracturing (Fracking) of Natural Gas
http://heartland.org/policy-documents/research-commentary-hydraulic-fracturing-fracking-natural-gas
Heartland Institute Senior Fellow James M. Taylor provides a primer on hydraulic fracturing, discussing the overstated environmental impact and providing a series of useful links to additional research on the topic.

Ohio Hydraulic Fracturing State Review
http://heartland.org/policy-documents/ohio-hydraulic-fracturing-state-review
STRONGER, a nonprofit, multi-stakeholder organization that reviews state oil and gas regulations, released its review of Ohio’s hydraulic fracturing in January 2011. The organization generally endorsed Ohio’s hydraulic fracturing regulatory program and offered recommendations on ways to improve the state’s chemical reporting system and evaluation of water withdrawals.

Utica-shale Wells Going Gangbusters
http://www.dispatch.com/content/stories/business/2011/09/29/utica-shale-wells-going-gangbusters.html
Following Chesapeake Energy’s natural gas yield announcements, the Columbus Dispatch reported on the Utica shale region’s potential. The report notes that whereas traditional natural gas wells in Ohio produce about 100,000 to 500,000 cubic feet of gas per day, a hydraulic fracturing well would produce 2 to 10 million cubic feet per day.

Fracking in Ohio—Economics and the Environment
http://beta.wosu.org/allsides/fracking-in-ohio-economics-and-the-environment/
“All Sides” host Ann Fisher talks to Pennsylvania journalist Seamus McGraw and Ohio Oil and Gas Association Executive Vice President Thomas Stewart about the future of natural gas in Ohio. McGraw maintains natural gas can have a positive effect on communities when properly regulated and administered.

Utica-Point Pleasant Shale Geology, Drilling Activity and Resource Assessment in Ohio
http://heartland.org/policy-documents/utica-point-pleasant-shale-geology-drilling-activity-and-resource-assessment-ohio
In a presentation to the Southeastern Ohio Oil & Gas Association, representatives from the Ohio Department of Natural Resources discuss the development potential of the Utica shale and talk about how much water is used in the process. At peak development, water use will be less than 1 percent of Ohio’s daily consumption—usage below that of the state’s golf courses.

Ohio’s Natural Gas and Crude Oil Exploration and Production Industry and the Emerging Utica Gas Formation
http://heartland.org/policy-documents/ohios-natural-gas-and-crude-oil-exploration-and-production-industry-and-emerging-ut
An independent study commissioned by the Ohio Oil & Gas Energy Education Program found the Utica shale could directly support more than 200,000 jobs in Ohio by 2015. This development could increase economic output by $22 billion and increase wages by $12 billion.

Shale Development
http://ohiodnr.com/tabid/23415/default.aspx
The Ohio Department of Natural Resources Web site provides tip sheets and detailed datasets on shale resources in the state, including information on leasing, mandatory pooling, and environmental safety.

For further information on this subject, visit the Environment & Climate News Web site at http://news.heartland.org/energy-and-environment, The Heartland Institute’s Web site at http://www.heartland.org, and PolicyBot, Heartland’s free online research database, at www.policybot.org.

Nothing in this message is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. If you have any questions about this issue or the Heartland Web site, you may contact Heartland energy and environment legislative specialist John Monaghan at jmonaghan@heartland.org or 312/377-4000.