A controversial drilling process has raised environmental concerns.
By Steve Bennish, Staff Writer
Updated 12:00 AM Saturday, September 10, 2011

DAYTON — Ohio appears on the cusp of a 21st-century oil and gas boom that could net tens of thousands of new jobs and perhaps build a foundation for new industry, proponents say. The source is natural gas-rich shale rock beneath three-quarters of the state.

But a meeting Saturday in Yellow Springs to organize opponents of a technique that pries the gas from the earth shows just how uncomfortable some are with the potential implications of that boom. Opponents believe the use of hydraulic fracturing, or “fracking,” could irreparably harm the environment.

A series of moves and announcements this week shows how fast the issue is coming to a head.

• Hess Corp., said it expanded its reach into shale deposits with a series of lease purchases in Ohio worth $750 million. The latest purchases give Hess 85,000 acres that it expects to begin exploring in the fourth quarter.

• David Mustine, a former oil company executive and chief of the Ohio Department of Natural Resources, changed jobs to work for the new JobsOhio economic development office as general manager for energy. Mark Kvamme, JobsOhio chief investment officer, said “oil and gas in Eastern Ohio has the potential to permanently transform that end of the state and position Ohio overall for a renaissance in manufacturing that depends on the low-cost, reliable energy that shale can provide.”

• State Sen. Michael J. Skindell, D-Lakewood, introduced legislation calling for a moratorium on hydraulic fracturing until federal review of environmental impacts.

• Chesapeake Energy Corp.’s CEO Aubrey McClendon, with a huge stake in potential Ohio gas reserves, lashed out at critics during an industry meeting, calling them fear-mongering extremists who want Americans to live in a world where “it’s cold, it’s dark and we’re all hungry.”

In late July, Gov. John Kasich said he was “simply thrilled” by a report on Chesapeake’s natural gas explorations. The Oklahoma City-based company told shareholders it had leased 1.25 million acres to get at the deep Ohio Utica Shale formation. Chesapeake estimated, based on two years of drilling, that it could be worth up to $20 billion to the company. It spent $1 billion just to lease the acreage.

“Just as I’m excited about the direct benefit that can come from production-related jobs, I’m also excited about the potential for jobs at pipeline and processing facilities,” Kasich said. “Equally important is how manufacturing and agriculture can benefit from new access to a plentiful, domestic energy source.”

The Utica Shale, which geologists say has yet to be fully analyzed, extends westward across three-quarters of the state from Ohio’s eastern border, state estimates show. It also lies under New York, New Jersey, Pennsylvania, Maryland, West Virginia, Virginia, Kentucky, and Tennessee.

It could extend to Montgomery County, but drilling potential remains unknown. Chesapeake said it will increase drilling rigs in the Utica to 20 by the end of 2012 and 40 by 2014.

This year, the state opened up parks and other public land to drilling over opposition from environmentalists.

It might seem a stretch that Ohio could profit from a boom based on oil and gas, an industry with roots here that date to the 19th century. But a new boom appears possible if Pennsylvania’s recent experience with new drilling in another formation, the Marcellus Shale, is any guide. The Marcellus has a smaller footprint in Ohio than the Utica and lies beneath Ohio’s easternmost counties.

Pennsylvania is weathering an iffy economy well, with an unemployment rate of 7.8 percent. Its share of the Marcellus is helping. The Pennsylvania Department of Labor & Industry issued its estimate this month that natural-gas and crude oil extraction and related industries created 72,000 new hires from the fourth quarter of 2009 to the first quarter of 2011.

It’s too tricky to attribute all the hires to new drilling, said Tim McElhinny, an analyst with the department. But there are so many new hires that a portion must be due to the Marcellus. Those jobs include well drilling, engineering, trucking, highway and bridge building, testing, metal fabrication and new government hires.

The jump in employment in the core gas industries — extraction, drilling and pipeline work — is smaller but nevertheless doubled to 18,837 from the fourth quarter of 2007 to the fourth quarter of 2010.

For the immediate future, it looks like the eastern third of Ohio and the Marcellus Shale is where the action will occur. But longer term, besides offering job opportunities to out-of-work or underemployed residents, low-cost natural gas from the Utica could fuel industrial redevelopment in Ohio, propoponents say.

The U.S. Geological Survey in August updated its estimates for the Marcellus Shale region underlying New York, Pennsylvania and Ohio, saying it contains 84 trillion cubic feet of undiscovered, recoverable natural gas, vastly more than thought nearly a decade ago in large part because of new drilling and extraction technology. The last government assessment in 2002 suggested about 2 trillion cubic feet of recoverable gas.

The Utica Shale, some experts believe, could be bigger still. Tom Stewart, executive vice president for the Ohio Oil and Gas Association, said more drilling and analysis is needed to fully comprehend the Utica.

“I believe the Utica Shale will be real and startlingly exciting for Ohioans and what it will do for the Ohio economy. I feel more wells need to be drilled to understand it,” Stewart said.

With wells costing about $7 million to drill, the exploration is based on a firm belief that something is worth recovering.

Also promising have been expressions of interest by the chemical industry about locating close to a rich supply of low-cost, natural gas. New Ohio natural gas could be a key feedstock of chemical production, Stewart said. That could prove a rich spin-off from the finds, he said.

Natural gas has been touted by some as a potential transitional energy source to renewables because it’s a cleaner fuel than coal and has reduced impact on climate change.

But getting the gas out of the shale requires using hydraulic fracturing. The technique involves creating a fracture in a rock layer with pressurized fluids. Critics say the technique threatens ground water.

New Jersey’s Republican Gov. Chris Christie late last month vetoed a permanent ban on fracking, but imposed a one-year fracking moratorium so that state and federal regulators could evaluate safety. New York state also has a moratorium in place, and outright fracking bans have been imposed in the cities of Pittsburgh, Buffalo, and Detroit.

Locally, challenges to the use of fracking are shaping up. The Ohio Alliance for People and Environment and Ohio Sierra Club are hosting a “No Fracking” organizing event today at Antioch University Midwest. An allied group, the Network for Oil & Gas Accountability and Protection, cites incidents in New York, West Virginia, and Pennsylvania it says includes “ruined water wells, leaks of toxic chemicals and radiation, ruined roads from heavy truck traffic, air pollution, noise pollution, and many other problems.”

Vickie Hennessy, president of the Green Environmental Coalition based in Yellow Springs, will speak at the event. “It’s a disaster for the environment,” she said. “It doesn’t make sense to me. We are raping the environment and not doing anything in sustainable energy.”

She concedes, however, that a wave of stepped-up drilling in Ohio seems inevitable.

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