As shale gas development continues to fuel economic activity in Ohio, one group of companies already experiencing business growth is the railroad industry. In December 2012, Hannibal Real Estate and Carload Express announced plans to revive a short line in Monroe County, Ohio. Now, more railway companies, such as Norfolk Southern Railway and CSX Transportation, are touting the benefits of Utica gas wells for their short line rails. Not only are trains hauling sand and other aggregates to development sites, but wet gas and oil production presents the opportunity to haul products from the well site to industrial centers. The demand for rail services is expected to increase in 2013 and 2014 as the number of wells drilled in the Utica grows.
The State Journal reports that average residential utility bills decreased 5.3 percent in West Virginia in 2012. According to a January 9 report from the Public Service Commission of West Virginia’s Consumer Advocate Division, a decline in natural gas utility rates was the main driver for the decrease. Consumer Advocate Division Director Byron Harris indicated that the average bill in January 2011 for electricity, gas, and telephone service was $292.81 per month, and the current average is $277.22.
Don S. Wardius, head of Renewable and Alternative Feedstocks Development at Bayer Material Science, said Bayer wants to see a research and development consortium organized to explore turning methane, a main component in natural gas, into benzene, as reported by the Tribune-Review and Pittsburgh Business Times. Bayer uses benzene as a raw material for the polymers in high-performance plastics. Wardius spoke at the Manufacturing Renaissance Series held in Pittsburgh on Thursday, which was a gathering of chemical executives, academics and lawmakers to discuss the attractive economics around using natural gas to create compounds required in plastics and other industries.
The Kanawha County Commission is accepting bids for the development of a compressed natural gas (CNG) fueling port to service the County’s CNG-powered Chevrolet Tahoe and future CNG-powered fleet vehicles, reports the Charleston Gazette. Kanawha County Commission President Kent Carper stated that he would like “a good portion of the fleet to go toward natural gas.” Local government and business leaders in Kanawha County created the “Kanawha Converts” consortium in January 2012 to work on initiatives to convert local fleets to CNG in order to take advantage of the economic and environmental benefits offered by the cheaper and cleaner-burning fuel.
The domestic steel industry is drawing increased investment as a result of the surge of natural gas production across the United States, Bloomberg News reports. Not only does hydraulic fracturing require the use of steel pipes, but additionally the low cost of natural gas is a huge benefit to steel producers. United States Steel Corporation recently spent $100 million on a facility to make tubular product for gas producers. According to a press release of U.S. Steel, “Energy industry customers utilize U. S. Steel Tubular Products’ casing, tubing, line pipe and couplings to help them locate, retrieve, transport and refine the oil and natural gas products that fuel the world.” U.S. steelmaker Nucor Corporation is constructing a $750 million Direct-Reduced Iron facility in Louisiana. Nucor entered into a long-term natural gas agreement with Encana Oil & Gas (USA) Inc. in order to guarantee a reliable, low cost natural gas supply for its existing and expected future needs. The international steel industry has also noticed the benefit of the natural gas boom in the United States. Austrian steelmaker Voestalpine AG has announced that it plans to focus on investments in North America.
Royal Dutch Shell plc and Horshead Corp. agreed to a six-month extension for Shell to acquire land for a proposed cracker plant that it is considering building in Beaver County. Shell had a December 31, 2012, deadline to buy the land in Center and Potter Townships, but obtained the extension to allow it more time to assess the project. The Tribune-Review reports that local and state officials remain optimistic that Shell will move forward with the plant. The cracker facility will be used to process ethane produced from the Marcellus and Utica shales, and the plant and associated businesses are projected by some to create up to 8,000 jobs for the local economy.
Hannibal Real Estate of White Plains, NY, and Carload Express of Oakmont, PA, plan to revive a 12 mile rail line serving Hannibal Industrial Park in Monroe County, OH. The partners hope the rail line, known as the Ohio Terminal Railway Co., will attract businesses that are participating in the Utica and Marcellus shale plays. Trains are expected to haul sand, concrete and other materials used in shale development to and from the 122 acre industrial park.
Encouraging well results have fueled the creation of 38,830 jobs in Ohio since the beginning of 2012, and studies have indicated another 100,000 jobs could be produced by 2020. Labor income from jobs created directly and indirectly from the development of the Utica Shale in Ohio is estimated to reach $9.2 billion in 2020, a 3.8 percent increase to wage earning potential and salaries across the state. According to the Ohio Chamber of Commerce, such an influx in jobs and wage earning potential could provide the resources going forward for Ohio to reinvest in its infrastructure, schools and other areas of need.
West Virginia and Pennsylvania are positioning themselves to be at the forefront of the nationwide movement to transition more of the country’s vehicles to natural gas as a fuel source. In an op-ed published in the Charleston Gazette earlier this month, former West Virginia governor Ed Wise cited Kanawha and Harrison counties’ efforts to add new natural gas-powered vehicles into their fleets as a showcase for the benefits of extraction of shale gas in the Appalachian Basin. In Pennsylvania, the Port Authority of Allegheny County, which manages Pittsburgh’s bus system, is considering the cost savings that would come from converting its fleet to compressed natural gas. Also, Pennsylvania’s Department of Environmental Protection announced this month it will begin accepting applications for its Natural Gas Vehicle Grant program, which will provide up to $20 million over the next three years to help pay for the incremental purchase and conversion costs of heavy-duty natural gas fleet vehicles.
On October 31, 2012, the American Clean Skies Foundation published a report highlighting, on a state-by-state basis, the positive economic impacts for consumers and supply chains from the increased development and production of natural gas. The report notes that, since 2007, the oil and natural gas industry will create up to 1.6 million new jobs across the country and will increase the U.S. gross domestic product by up to $245 billion by 2017. In breaking these numbers down, the report estimates that for every billion cubic feet of additional gas demand per day, 13,000 new drilling and pipeline jobs are created, plus thousands of additional new jobs in various downstream sectors that use natural gas. Significant benefits highlighted in the report include Shell’s construction of an ethane plant and up to 145,000 new jobs in Pennsylvania, and how the development of natural gas resources in Ohio has brought new life to Ohio’s steel industry as U.S. Steel and Timken plan to expand to meet the increased demand for steel pipe and other drilling materials.
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