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Economy and Business

To keep the drilling boom from going bust, go midstream
After the frackers come the crackers, and fractionators, and then on to the pipelines

Tim Rudell
Mid-Stream expo in Youngstown
Courtesy of Rudell
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In The Region:

Boom and bust can be two sides of the same economic coin...abandoned mining towns of the 19th century and collapsed investment banks in our time bear witness. But, WKSU’s Tim Rudell reports on strategies to keep our current oil and gas boom from going bust.

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When the drilling is done
“Mid-stream,”  “supply chain,” and “industrial integration.” They’re all ways area businesses, governments and workers hope to use to tap long-term prosperity from the Utica shale under Ohio.

Midstream refers to things like “crackers” and “fractionators” and pipelines that make the oil and natural gas that flow from wells into usable products on their way to customers. Decades after the drilling, and the rigs and temporary jobs leave for the next  gas or oil “play,” those enterprises could still be paying local workers and taxes.

Eric Planey of the Youngstown/Warren Chamber of Commerce “The more the midstream processing and facilities we can build in this area, the more the wells and the pipeline infrastructure come to us to be separated.  So that does help smooth out the boom-and-bust cycle.”

Local expertise
Jim Bacon is with Bolt Construction, a northeast Ohio company that builds compressor stations. These are the compact structures in the size range of sheds and garages. And the complex of pipes, sensors and pumps inside them keep the pipelines flowing. He says Bolt gets business because it has partners and a staff with unique skills “Oh yeah, we do. The firms that design these facilities are very specialized. Our trades people—our welders for example, are a very specialized class of welders. 

Eric Planey believes the skill levels and high-end industrial production experience that’s already part of the region’s economy can be an even bigger factor with focused training and development. “We have a lot of good metal benders in northeast Ohio. Giving them the tools to get certified to sell to the oil and gas industry helps them to diversify their top line revenue stream. A lot of these guys have already sold to the machine tool industry, aerospace, automotive. Let’s give them that other industry. But, furthermore, once the drilling slows up, these guys are going to be qualified to sell their products throughout other shale plays in the United States, and globally.”

Attracting companies to Ohio
Existing midstream and supply-line companies from outside Ohio are interested in coming here. MarkWest Energy of Denver is leading a half-a-billion dollar fractionator project in the Cadiz area to process the output of wells in Harrison and Belmont Counties. 

And, Jack Macintyre an executive of gulf coast drilling equipment maker ASAP Industries was visiting Mahoning and Trumbull counties recently. “We’re one of the largest original equipment manufacturers in southwest Louisiana; and we’re currently looking to come in this area and open up another facility. And we’re attracted to this area because of the machinists that were here in the auto industry. We’re looking to tap into that expertise.”

New growth cycle
According to Eric Planey, part of what is motivating outside manufacturing companies to consider locating in northeast Ohio could also draw local business into a new industrial expansion cycle. “From everything that we hear right now, there is a shortage of manufacturing capacity because of the growth in the oil and gas industry. So it gives us the opportunity to integrate our local manufacturing companies. So that’s sort of our long-term strategy.”

Trickle down, up and sideways
Scott Davis of Cerni Motors, a northeast Ohio heavy-truck dealership, sees local development of midstream businesses from the shale gas boom affecting many parts of the area economy, including truck sales. “Many of the companies work in our area now are from outside the area. But, as we grow and learn in the business, our expertise will pick up and local companies will be formed. And we expect that there are going to be more locally purchased pieces of equipment rather than brought in from other areas.”

Go Global
Eric Planey says thinking and developing local are keys to beating the bust. But, he says, thinking big is, too. He envisions eastern Ohio as an international manufacturing center for the gas and oil industry, and says the region has a head start. “We have the capability of making products and shipping around the world. Seventeen percent of our gross manufacturing product is tied to export. So, one of those hedges against the boom bust cycle is making sure we’re manufacturing the goods that won’t just sell here.”

Ohio has oil
Meanwhile, the natural  gas part of the drilling boom has slowed nationally as prices remain at historic lows. But, exploration remains active in northeast Ohio because the Utica shale here appears to be rich with oil and other liquid products -- for which the market is strong.  

(Click image for larger view.)

Related WKSU Stories

The next step in eastern Ohio's natural gas boom
Wednesday, September 5, 2012

Three non-water ways to frack a well
Thursday, August 23, 2012

Ohio's Utica Shale boom may pick up momentum
Wednesday, August 15, 2012

Frackers little affected by lower water levels
Wednesday, July 25, 2012

Property owners try the courts
Tuesday, July 3, 2012

Natural gas surplus means price problems
Thursday, May 3, 2012

A major piece of the picture is just now emerging
Thursday, April 26, 2012

Fracking where you least expect it
Thursday, April 5, 2012

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