Tom Shepstone
Shepstone Management Company, Inc.
The Utica Shale has brought $70 billion of investment to Ohio and there’s more to be had. The Utica also underlies most of the Marcellus. Imagine that!
When we think Utica Shale, we tend to think Ohio because that’s where the oil and gas industry has put $70 billion to work in pursuit of the shale oil and gas to be had. It’s an incredible number and the Utica Shale is an incredibly large formation, extending from Ohio to the Hudson Valley and from Virginia to Canada.
Not all of is developable, of course, but we know Shell has developed successful wells just south of the New York border in the Tioga County and there is very thick Utica Shale there, in Southwestern Pennsylvania and to the Northeast of Hancock, New York. Imagine, if what has happened in Ohio could happen in those places.
The $70 billion story was told in a recent Ohio Oil & Gas Association (OOGA) editorial that appeared in the Martins Ferry, Belmont Country, Ohio Times Leader (emphasis added):
The Ohio Oil and Gas Association represents all of those who are in active in today’s oil and gas industry from drilling and completing wells of every size and scope, to the various pipeline and processing projects to the hopefully many end users…
The most fundamental message we deliver when beginning a project is, the industry is committed to protecting public health, safety and the environment. We are well aware that we can be the talk of the town and strive to keep everyone informed on our industry to keep those discussions fact based. We know that when we share information about who our members are and what they are doing it brings awareness…
From the inception of the severance tax on oil and natural gas in Ohio, the revenue has solely gone to support the oil and gas regulatory program, including plugging orphaned wells. These funds safeguard proper regulations over our industry to ensure the protection of public health, safety, and the environment…
The severance tax dollars paid by the industry are managed by the Ohio Department of Natural Resources, with the intention to be kept there to run a robust regulatory program that is fully staffed and equipped to carry out its long-standing mission to oversee the oil and gas industry…
In addition to the severance tax, our members pay the ad valorem tax – simply put, a property tax. It is a tax directly paid to schools and communities where oil and gas activity exists. The Association released a report, using information gathered from public records requests, that showed from 2010 to 2015 oil and gas producers paid $43 million in property taxes across six Ohio counties where shale development is most active. When 2017 and 2018 are factored in, as well as two additional counties, that number jumps to $132 million. When the initial report was released we projected that ad valorem tax payments would reach $200-$250 million through 2026. We are well on our way to meeting and perhaps exceeding that projection.
The ad valorem taxes are going straight in the community coffers, the oil and gas industry is also exclusively spending millions on public infrastructure projects in the communities we are working in. Public records data from eight county engineers in Appalachia shows that 639 road miles have been improved to the tune of $302 million. That contribution comes directly from industry dollars, not taxpayer dollars via what is known as a Road Usage Maintenance Agreement.
First, it establishes the route our trucks take from the interstate, to the county route, to the township road. We do this so we can avoid things like bridges that are too low or not built to withstand the traffic.
Second, the RUMA establishes the road condition before the first truck leaves the bay. Regardless of its condition due to weather related slips or lack of ongoing maintenance, the industry often times proactively upgrades roads, before we begin hauling loads. We share these roads with neighbors in the community, trash haulers, other industrial trucks and anyone else. We are, however, going to continue to do our part. Is any other private sector industry signing RUMAs and investing hundreds of millions of dollars for road repairs?
The other number I will call your attention to is $70 billion. That is what the state of Ohio has calculated has been invested since 2011 in building out the necessary infrastructure to make the shale play happen. Those are dollars spent directly on construction jobs and the materials necessary to put pipe into the ground, construct processing plants and build well pads. We also know there is more investment coming as producers continue to develop the Utica Shale, build future pipelines, additional storage and processing capacity, and hopefully soon an announcement from PTT. All of this is in addition to the millions of dollars our companies have contributed to local charities, first responders, schools, healthcare facilities and sports teams.
Lastly, our commitment to you, our friends, landowners, officials and partners in southeast Ohio remain as important as ever. We will continue to do what we do best, which is find and produce oil and gas, and bring it to market all while making sure we are being good, responsible and transparent corporate citizens along the way.
Who wouldn’t want that? Especially in New York, where, according to MineralWise, “Well over 100 wells have been drilled in the Utica Shale.” New York State also has an ad valorem tax that would be of huge benefit to New York communities who could develop their Utica Shale. The same applies to Pennsylvania where our impact fee structure could be used to do the same.
Hat Tip: Marcellus Drilling News
This post appeared first on Natural Gas Now.