The New Petro-State?

The real energy gusher produced by Ohio fracking: Oil

Scott Tong Oct 22, 2012
The New Petro-State?

The real energy gusher produced by Ohio fracking: Oil

Scott Tong Oct 22, 2012

An oil boom is coming to Carroll County in the hills of Appalachia, in eastern Ohio. Much of this region sits atop a geologic formation called the Utica Shale. In a new report, the U.S. Geology Survey estimates the Utica contains nearly a billion barrels of crude oil.

One winner: Carroll County’s historic Atwood Lake Resort. It shut its doors two years ago, but just reopened. The savior is the oil and gas company Sierra Buckeye. It’s paying an initial $2.25 million for the rights to drill under the resort’s more than 500 acres.

There’s oil in them Ohio hills, to the delight of local retiree Janet Edie. She grew up around the lodge, which opened in 1965, and is relieved it escaped the bulldozer’s fate.

“When I was a kid, we came here to ski,” Edie says. “We came here to go horseback riding. We came here to walk trails. We came for tobogganing.”

In this rural county of 30,000 -– including many dairy and Christmas tree farmers –- drilling leases have made many a landowner rich with the stroke of a pen. “It’s an influx of money I have never seen in this country before,” Edie says.

County tax receipts are up. The jobless rate is nearly a point below the national average. Rents are up, in some cases, by four times. The county has seen an influx of oil workers, says Denver, a local pipeline manager who said he could give only his first name, because his employer requires workers to sign confidentiality agreements.

“Roughnecks — we have money, we spend money,” Denver says. “Roughnecks don’t have a pot to pee in. I don’t know a roughneck out there that has a bank account. We have toys: motorcycles, houses and trucks. That’s what we do.”

Like Pennsylvania next door, Ohio contains large amounts of natural gas below. But it also stores more profitable crude oil. Getting it out requires the controversial process called fracking: by government and industry estimates, around 90 percent of U.S. wells today are fracked.

The technology has also spurred shale energy booms in North Dakota and Texas. Shale production, along with that in the Gulf of Mexico and the Canadian oilsands, has some suggesting North America is the world’s next great fossil-fuel producer.

“Look at Pennsylvania, look at Ohio,” says Jack Gerard of the American Petroleum Institute in Washington. “All these are potential major energy sources. The United States could become the new Middle East.”

Wells and pumpjacks aren’t new to eastern Ohio. Drillers found oil back in the days of the Civil War. It’s one reason a certain man named Rockefeller built refineries in Cleveland.

But over the years, energy fortunes — oil, gas or coal – have swung up and down, with price.

“One of the things about energy in particular that’s always a little scary is the boom-bust cycle,” says Ohio State economist Mark Partridge. “It’s what economists call the natural resources curse. Places with a lot of natural resources often underperform places without natural resources.”

Partridge cites historic economic underperformers like Louisiana and West Virginia.

How could a resource be a curse? The question is what happened to a community after the initial oil surge.

Take the roads. It takes a thousand water tanker trucks to frack one well. Local roads aren’t strong enough, so drilling companies are paying to repave them. Which is great for the community: they get new roads.

The question is whether energy firms chew up the roads again over time.

“Will they repave the roads one more time before they leave?” asks local activist and businessman Paul Feezel. ”The proof will be 10 to 20 years from now, when the bottom-feeders are here, whether or not those roads continue to get taken care of or not.”

Another issue is the workers. When the rigs and trucks move on, will they have the skills to move on to other industries? By then, will they be rich from the oilpatch?

Oilman Denver is skeptical. He’s a hiring manager, and often offers jobs to experienced workers out of state, from places like Texas and Oklahoma.

“Most of the people cannot pass the test around here, the drug test,” Denver says. “So we have to outsource to a lot of people from out of the area.”

And the questions keep coming:

Will Carroll County’s farm land produce, after it’s poked and fracked? What about the water wells – will they be contaminated? Will high rents and labor costs turn away other businesses? Will Carroll County end up with more bars, and fewer parks?

“You know, we’re not sure how we prevent that,” says Carroll County Commissioner Jeff Ohler. He worries the county will depend too much on oil and gas, to the exclusion of other sectors.

For many locals, though, the oil hangover may never come. They’d rather focus on the optimistic assessment of Aubrey McClendon, the outspoken and controversial founder of Chesapeake Energy. Chesapeake is one of the most aggressive early drillers in the region.

In McClendon’s words, the Utica Shale “is the biggest thing to hit Ohio since the plow.”

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