YOUNGSTOWN, Ohio -- The rapidly developing shale industry will contribute $4.86 billion to Ohio’s gross state product and 65,680 jobs to the state’s workforce in 2014, estimates an economic study sponsored by the Ohio Shale Coalition.
The study, released Tuesday, estimates a $9.6 billion output of oil and gas production in 2014 compared to the $1.67 billion output it estimates for 2012 and the $292 million output it recorded for 2011.
“The results were pretty spectacular even though the assumptions that were used in the study were very conservative,” said Linda Woggon, executive director of the Ohio Shale Coalition and executive vice-president of the Ohio Chamber of Commerce.
The study used conservative estimates, Woggon explained, to avoid raising public expectations should differing data come out, such as what occurred in September when the Ohio Oil and Gas Energy Education Program estimated 200,000 jobs by 2015 followed in December by economists from the Ohio State University who estimated that number closer to 20,000 new jobs in Ohio.
“There’s not a lot of data that’s out there right now. It’s relatively new activity in Ohio and while we have great hope for what it will bring for our state, we didn’t want to be overly optimistic,” Woggon said.
The Ohio Shale Coalition study, prepared by faculty and staff from Cleveland State University, Ohio State, and Marietta College, acknowledges the data set it used is incomplete because the shale industry is still in its early stages, particularly in Ohio.
Woggon knew of no overlap between those who worked on Ohio State’s study and the university’s faculty that took part in the coalition’s study except for one professor who reviewed the university’s study.
The shale coalition and the Ohio Oil and Gas Energy studies were comparable in developing a model, she said, except for the conservative estimates the shale study pulls from as well as the projected dates. The oil and gas program study projected 200,000 jobs by 2015 compared to the 66,000 jobs the shale coalition study projects in 2014. And while the shale coalition focused solely on Utica shale production, the oil and gas program study took some Marcellus activity into account.
“Given those differences, we think they’re very similar and compatible studies,” Woggon said.
She also noted the two previous studies had even less data to work with than the coalition’s team.
As the industry grows and more data becomes available to work with, the researchers plan to update the model and present more accurate and far-reaching projections, she said.
“We did the study because we think it’s particularly important for businesses to be able to plan their investment as it relates to the wonderful opportunity here in Ohio related to shale energy,” Woggon said.
CLICK HERE to download the complete study.
The following is an excerpt from the study’s executive summary:
Nearly 17 percent of the increase in the number of jobs triggered by the development of Ohio’s Utica Shale deposits will come from oil and gas field service companies, with employment doubling between 2013 and 2014. The average earnings for this group are $69,000 per year.
The largest growth in employment will be in construction-related trades as wells are drilled and midstream facilities are constructed. Nearly 11,000 local construction jobs will be created as new manufacturing facilities and other nonresidential structures are constructed, which includes midstream infrastructure, as well as pipelines and roads and bridges.
These will pay an average of $48,000 per position. Truck drivers will be in great demand as servicing companies, wholesalers, delivery services, and construction companies ramp up their employment to meet demand. Expected average labor income is nearly $53,000.
The model estimates that by 2014 over 1,500 jobs for engineers and architects will be established, as will 1,000 environmental compliance technicians. There will be demand for more than 1,800 office workers along with nearly 500 technical consultants.
The leasing and contracting work will help turn around a soft market for attorneys, with nearly 841 positions expected to open.
The highest paid in this sector are the managers, with average labor income of $109,000, followed by those who provide consulting services at $75,000. A related source of employment will be of “landmen,” a career unique to the oil and gas and mining industries. More than 2,100 people in the real estate industry, with average incomes of nearly $70,000, will be engaged as a result of the Utica development.
The development of the Utica formation will also result in increased land and property values throughout the region. This will not only be due to the direct economic activity triggered by drilling and building out supporting infrastructure, but will also be due to the increased value of housing and general commercial structures throughout the eastern half of the state as employment increases and wages and incomes rise. Gross State (or Domestic) Product is expected to increase by $4.9 billion in 2014.
Copyright 2012 The Business Journal, Youngstown, Ohio.