Welcome to the Business Journal Archives
Search for articles below, or continue to the all new BusinessJournalDaily.com now.
Search
Former NRM Complex in Line for Shale Industry Makeover
EAST LIVERPOOL, Ohio – When Jerry Stoneburner purchased the former National Refractories complex just outside Columbiana nine years ago, he had no idea how he was going to fill the 300,000-square-feet of space and the nearly 100 acres it sits on.
The purchase, Stoneburner now says, was a simple case of buying the right place at the right time.
“If everything goes through, we'll be a major distribution center” serving oil and gas companies operating in the Utica shale, Stoneburner said on the second day of the Teaming 4 Success Economic Development Summit at the East Liverpool Motor Lodge.
Stoneburner, president of Buckeye Transfer Inc. and Better Management Corp. of Ohio, said he’s developing two projects there. The first, worth $8 million, would bring a wastewater recycling operation to the site. "We have a contract with a Pennsylvania company to take brine water and recycle it," he said.
Wastewater discharged as a result of drilling and hydraulic fracturing operations must be disposed of in deep injection wells or recycled for reuse, Stoneburner said. The company with which he is negotiating is a perfect fit for the site, he added, noting that the former refractory plant is situated in the heart of the Utica shale play.
In several months, the complex is likely to be humming with activity to a degree not witnessed since the giant refractory closed its doors in the early 2000s, Stoneburner said.
Three weeks ago, Stoneburner's company, Buckeye Transfer, requested a zoning variance for the property for High Sierra Energy LLP, a Denver-based oil and gas logistics and marketing company.
The company plans to truck in crude oil and condensate to the former refractory and transfer the products to railroad cars parked on a spur at the site, Stoneburner said. The rail cars would carry the gas and oil to centers for further processing.
"The reason we bought the plant was because of the rail access," he said. Once these two companies are up and running, he estimates there could be more than 200 working at the site.
It could become a vibrant hub for distribution and storage for sand, water and pipe used in the oil and gas industry, he said.
Stoneburner's venture is one of many that are making their way into the oil and gas industry.
Larry Drane, a geologist with Tetra Tech, a large national company that performs primary engineering work at potential oil and gas drill sites, said his company has worked with large energy firms since the oil and gas industry hit the Marcellus shale in 2008.
"We saw what was happening in Washington County [Pa.] and it excited us," he said. "I told others that this was coming and worked hard to bring a local office here."
Tetra has since opened up new offices on Tippecanoe Road in Canfield, Drane reported. The company provides services such as overseeing permitting, land surveying, and wetland control.
"This is just the tip of the iceberg," advised Jefferson County Commissioner Tom Gentile, who was asked to sit in a panel discussion on how the oil and gas industry has affected his constituents.
Jefferson County, he noted, is developing slightly differently than other focal points such as Carroll and Columbiana counties. In the northern area of the county, Gentile said, Chesapeake Energy Corp., the largest leaseholder in the Utica shale play of eastern Ohio, is very active.
Chesapeake holds almost all of the permits in Carroll and Columbiana counties, for example.
However, in the southern portion of Jefferson, Hess Energy is the dominant company signing leases. In Belmont County, he noted, Chesapeake doesn't hold a single permit. "Instead, you've got companies such as Hess, XTO [Exxon-Mobil], Gulfport and possibly Shell moving in," he said. "Everybody is chasing it. It's a real exciting time."
Gentile added, "Just about every business will benefit from it" in some way.
Tim Weigle, a trustee from Unity Township in northeastern Columbiana County, said that 15 of the 18 townships in the county have well pads either constructed or permitted. His major concerns revolve around how increased traffic would affect rural township roads.
Weigle said Unity is using a standard road agreement used throughout the county and other parts of the state that mandates companies such as Chesapeake to agree to the necessary road improvements to accommodate increased traffic.
He said as much as a foot of new material had to be laid down on some roads in anticipation of the increase. In once case, he recalled, crews had only a week to upgrade a road.
"They were working 12-hour days," Weigle said, "and never once did they completely shut the road down."
Construction companies, engineering firms, general labor services, and suppliers have a shot at getting into the business. However, the trick is to find just how your company fits into the many phases of the industry's development, those attending the summit were advised.
In some cases, a company wanting to do business with the oil and gas industry doesn't need to directly negotiate with the major energy companies. Those who do need to be on top of their game, said Mark Matusick, manager of corporate development at Chesapeake.
"We're the liaison between the company and the communities," he said.
First, a company must demonstrate that the service it renders meets the needs of companies such as Chesapeake. Then, it's Matusick's job to evaluate whether it makes sense to add this vendor to a list of contractors.
It's usually the first step in acquiring a master service agreement, or MSA, with Chesapeake, he said. "There is nothing more important than environmental health and safety," he continued, and vetting a potential contractor is paramount.
The company must comply with all Occupational Health and Safety Administration regulations and undergo a validation process through a third-party vendor known as ISNetworld Information before entering any MSA with Chesapeake, Matusick said.
The review for some vendors or suppliers could take months, he added. "The company's background must be impeccable. It's very competitive."
Chesapeake has spent more than $2 billion in leasehold agreements in eastern Ohio, locking up more than 1.3 million acres. To date it has also spent some $500 million on suppliers and vendors associated with drilling activity now underway in the play.
"There are still a lot of unknown [about the Utica],” he said. "The initial results were encouraging, but we're still trying to find out where the plays are."