UPDATE: Shale Development Bringing Investment Across Ohio River Valley

UPDATE II ( 1:13 p.m. ET; Apr. 22, 2013) – Ohio is getting closer to having a vast network of midstream operations in place.  The Utica East Ohio cryogenic plant in Columbiana County is being built at a rapid pace.  Until plants like these come online, production at many natural gas wells across the state is being held back.

George Fransisco, executive vice president of M3 Midstream, recently explained how the projects construction will aid in realizing the Utica’s bigger picture:

“A lot of us are working as fast and fierce as we can to get our plants up and running. Once that’s done wells can flow at unrestricted rates, so we’ll see more of what the play entails”–George Fransisco (Cryogenic Processing Plant Takes Shape in Kensington, 4/19/13)

The Kensington plant, part of the $900 million investment by Utica East Ohio, should have their first phase ready to process natural gas liquids by June.   Baron John, construction coordinator for the Kensington project, says things are on schedule:

“We’re a little over halfway finished with the first phase. We’re keeping on schedule and want to commission sections of the plant so we can get gas flowing”–John Baron (Cryogenic Processing Plant Takes Shape in Kensington, 4/19/13)

Baron explained 300 to 350 workers are currently on site, backing up the claim that shale development is aiding in a construction industry revitalization.  Also a part of the Utica East Ohio project is the fractionation plant 50 miles south in Harrison County, which employs hundreds more construction workers.

The construction is also supporting regional companies.  While many of the components are prefabricated offsite, UEO is also using suppliers in Ohio.  Pioneer Pipe/Viking Fabricators Inc. out of Marietta supplied structural steel for the project and Exterran‘s new plant in the Mahoning Valley will likely supply additional components.

UPDATE (03/07/13 6:00 am ET): Ohio may be seeing more midstream facilities in the coming year.  At a conference last year, information surfaced pointing to Kinder Morgan building a processing plant.  According to the Akron Beacon Journal, company spokesman Richard Wheatley said Kinder Morgan is looking at Ohio’s Tuscarawas County for the facility, but nothing has been confirmed.  While this is only speculation, it is positive to hear the company is considering Ohio locations.  Another company, EV Energy Partners, who are active in the state, mentioned Kinder Morgan’s project during its earnings call last week.

Kinder Morgan is the largest midstream and the third largest energy company in the North America.  Between its four publicly traded entities, it owns or operates 75,000 miles of pipeline and 180 terminals, totaling $100 billion.

The proposed Kinder Morgan project would include a natural gas processing plant meant to handle up to 300 million cubic feet of natural gas per day and a fractionation plant to handle up to 48 million barrels of natural gas liquids a day.

Word of the continent’s largest midstream company coming to Ohio is excellent news.  Not only would Tuscarawas and the state benefit from job creation, but also facilities allowing producers to continue developing Ohio’s Utica Shale.  The project would join five other gas processing plants in the works in eastern Ohio.

–Original post from February 20, 2013–

Communities across Appalachia are seeing new jobs and incredible investment stemming from a new influx of oil and natural gas related operations. As  the development of the Marcellus and Utica/Point Pleasant Shale formations continues to expand,  new projects –  like the recently announced processing and polyethylene manufacturing plants – are coming online to create marketable products from the incredible amount of natural gas being produced in the region.

In Ohio, the construction of a cryogenic plant will begin later in 2013 in Leesville . The plant is expected to bring  hundreds of construction jobs and 25 to 30 permanent jobs once it goes online in June of 2014.  The plant is part of a project containing another cryogenic plant in Kensington in Columbiana County and a fractionation facility in Scio in Harrison County.  The project is a joint venture of M3 Midstream, Access Midstream, and EnerVest Energy Partners.  Cryogenic processing facilities subject natural gas to low temperatures and recover more than 90 percent of natural gas liquids (NGLs). Once the Kensington and Leesville facilities have completed that process, the NGLs will be piped to the Scio fractionation facility which should come online in June of this year.

The Leesville facility will be part of the Utica East Ohio Buckeye complex, where the three partners are making an initial investment of $900 million.  Ground is expected to be broken in late summer or early fall of this year.  The location was chosen because they needed one cryogenic location in the north and one in the south.  The plant was originally to be constructed in Scio, but the partners recently signed an agreement with Dominion East Ohio Gas, giving them access to their pipelines.  Leesville made sense because the location is close to the pipelines.

George Francisco, executive vice president of M3, explained how the location benefits the companies in a recent interview with the Canton Repository.

It’s strategic for us. It extends our footprint to the south, and it enhances the efficiency of our overall system to have two plants at either end—(Plant construction to create jobs in Leesville, 2/19/13)

The move – and the jobs that come with it – is welcome news to the residents of Leesville, including  Mayor Ed Alsept.

I’m all for it. We need growth in this area. If we get 20 to 30 jobs, that’s a good thing. (Plant construction to create jobs in Leesville, 2/19/13)

Not only is the plant bringing jobs to Leesville and Carroll County, but also opportunities for infrastructure.  The village is currently trying to build sanitary sewer system. Since the plant would mean more customers for the sewer system, prices should be lower for residents.

I’ve heard they would need infrastructure run up there. I’ve talked with our engineering firm, and we would have the capacity to take that—(Plant construction to create jobs in Leesville, 2/19/13)

Since the plant would mean more customers for the sewer system, prices should be lower for residents in yet another example of the far-reaching benefits shale development is bringing to the area.

It’s good news that we’re getting a Midstream plant in the county, such as water and sewer. These are good-paying jobs, and they should all become local jobs. – Amy Rutledge, director of the Carroll County Chamber of Commerce (Plant construction to create jobs in Leesville,2/19/13)

Just over the river in West Virginia, Appalachian Resins Inc. announced they are seeking to place a polyethylene (PE) manufacturing plant at with a targeted construction date in late 2013.  The plant, which will be located south of Wheeling, is being created to take advantage of the resources in the Marcellus and Utica/Point Pleasant formations. Included in their plans is the construction of a small cracker plant, a project that will bring additional construction jobs along with the ability to “crack” ethane, crude and liquids coming from the area’s shale production to extract ethylene.

The Appalachian Resins Inc. project will bring $500 million dollars in investment, with the plant being designed to hold the capacity to produce 500 million pounds of PE per year. This feedstock, the most widely used plastic in the world, is used to create some of the most common, everyday items we use in our lives. Plastic bottles,  cling wrap, kitchen utensils  and plastic bags – all are polyethylene products.

James Cutler, the company’s CEO, explained how the vast resources in shale formations across the Appalachian Basin have redefined the refining and petrochemical industries to the  Marcellus Drilling News:

In the 1960s, the petrochemical industry was an extension of the refining industry, and the decision was made to build petrochemical plants on the Gulf Coast, because that’s where the feedstocks were. But now people don’t know what to do with all this natural gas — there’s no shortage of it. – James Cutler, CEO Appalachian Resins Inc. (“Small” Ethane Cracker Plant Coming to Wheeling, WV, 2/16/13)

In addition to increasing the company’s ability to produce a valuable, widely utilized commodity at lower cost (thanks, of course, to the geological gifts the region offers) the plant will bring hundreds of construction jobs, and create up to 125 full-time jobs to West Virginia. That’s always welcome news to any community.

Along the Ohio River, communities across the banks have new cause to celebrate. And, as we’ve noted here before, we are still only scratching the surface of the incredible potential of these vast natural resources. As Rhonda Reda, Executive Director of the recently noted, the billions of dollars of investments, and the thousands of jobs created are only “a glimpse” of what is to come in the years ahead. As our infrastructure and production continue to expand, so too will our pillar industries. This, of course, bring more investment, and more jobs.

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