Oil, gas industry has growth, responsibilities

CADIZ – The oil and gas industry is bringing opportunities to Eastern Ohio that just a few years ago no one dreamed possible.

But with opportunity, John Molinaro says, comes responsibility.

“We do have to be careful with this shale stuff, make sure we maintain our basic economy while wages get bid up for the work force for shale,” said Molinaro, president and chief executive officer for the Appalachian Partnership for Economic Growth, the regional economic development organization serving 25 counties in Southeast Ohio. “If we let some of those companies go, like the manufacturing companies that might have to pay a little more for workers, with the shale industry also bidding for the same workers, then we won’t have the economy in the back end we’ll need to support the region.”

Molinaro, in Cadiz recently to celebrate MarkWest’s $500 million investment in a cryogenics natural gas processing plant, said there’s no disputing the impact oil and gas already has had on the economy, “but we also have to work to get out ahead of this stuff so on the back end of the drilling boom we don’t see another economic bust. I think we can do it, but it’s going to take all of us working together to get there.”

Once the wells have all been drilled and the pipeline built, he said things will change markedly in terms of jobs numbers.

“The ongoing extraction of resources, the ongoing processing of resource, doesn’t take very many workers,” Molinaro said. “So we do need to work, not just on what happens in the shale arena, but on trying to make sure we build up the underlying economy so as those jobs go away five- or 10-years down the road, we have jobs to backfill them to sustain the economy we’re creating (now).”

Molinaro said there’s been more than $750 million in new investment in the region over the past six month, “and it’s not all energy related.”

“Probably a third of the projects and two-thirds to three-fourths of the investment has been in energy, but we’ve seen a lot of investment in other areas, a lot of interest in other areas, a lot of projects in other industries, and that’s really encouraging,” he said.

More than 800 jobs were created and 14 job-creating or job-retaining projects completed in APEG’s 25-county region during the first six months of 2013. The completed projects, distributed across 11 of the region’s 25 counties and among several economic sectors, are expected to create more than $17 million in new payroll while retaining wages of nearly $95 million.

Included on that list are work done at C.A. Joseph Co. and Spectra Energy in Jefferson County, and at MarkWest Energy Partners and Somerset Regional Water Resources, on behalf of Waterford Tank, in Harrison County.

“We’ve had a lot of opportunities, a lot of inquiries,” he said, and oil and gas has a lot to do with that, too.

“As a state, we’ve never really focused on development of the Ohio River, as surrounding states have,” he said. “There’s an incredible amount of interest right now in it (as an) economic driver. We have companies that are re-shoring because of increasing global transport costs, they see the need to begin producing things back in the U.S. if they’re going to meet the needs of U.S. markets. And for certain kinds of products, the river is ideal. And for certain (industries) that have heavy shipping needs, the river is an ideal location, so we’re working very, very hard to try and identify development sites on the river that might be appropriate for some of those things to happen.”

Ahead, he said there should be opportunities in logistics because of the APEG region’s geographic location and proximity to most major North American markets.

“And there are some great opportunities in the automotive supply chain, a lot of that activity is coming back to the states,” he said. “We’re very well-positioned in parts of the region to serve both traditional northern automotive plants and southern plants that (developed) in the last couple of decades. For companies that want to serve both, you can’t get a better location than Appalachian Ohio.”

Because of the region’s prominence in oil and gas development, he figures there’s also going to be coat-tail opportunities in the chemical and polymers industry

“If we get development of a cracker in this region, which I think will happen, then that completely changes the economy of our chemicals and polymers industry because you have to be able to get natural gas liquids out of the ground, turn them into feedstocks for the industry and produce it here and minimize shipping costs. That’s going to bring back a lot of the business that had gone to places like Saudi Arabia in that industry, because that’s where feedstocks were coming out of the ground and they’re just not coming out of the ground there anymore,” he said.

“This is a once-in-a-generation set of opportunities for this region,” Molinaro added. “We really need to take advantage of it while it’s here, while we can, while re-shoring is happening, which will probably be over the next five- to 10 years, while shale development is happening and opportunities are being built out to take advantage of it where it comes out of the ground. Most of those opportunities are going to be captured over the next five- to 10 years, even though drilling will continue. We really need to be paying attention to it now.”