Summit County is starting to feel the economic benefits of Utica shale development, according to a new report from Cleveland State University.
In the 38-page Ohio Utica Shale Gas Monitor, authors Edward W. (Ned) Hill, Kelly L. Kinahan and Allan R. Immonen III, of the Maxine Goodman Levin College of Urban Affairs, say that Akron, Canton, Youngstown and suburban Columbus increasingly are attracting service-industry jobs and workers tied to drilling.
“Robust increases in sales” in those urban areas are due to their locations close to the main drilling areas, plus the fact they have larger populations and stronger retail presences than the more-rural counties where drilling is strongest, the report said.
Stark, Portage and three other “moderate shale” counties, plus neighboring Summit County, saw “solid” economic growth. Combined, sales in the six counties increased an estimated 10.7 percent in the second quarter of 2013, based on Ohio Department of Taxation figures.
“The spending is real,” Hill said in an telephone interview Thursday.
Those counties, however, show only a small employment increase: 0.5 percent in the first three months of 2013 and 0.4 percent in the second quarter.
The report also said there have been “marked increases” in sales receipts in 2012 and the first half of 2013 in the eight “major” Utica shale counties: Carroll, Columbiana, Jefferson, Harrison, Guernsey, Belmont, Noble and Monroe.
Second-quarter sales receipts in those counties increased by 12.2 percent ($1.3 billion) over the same three months in 2012 ($1.16 billion), according to the Ohio Utica Shale Gas Monitor.
Sales in the so-called strong and moderate shale counties “continued to outperform” sales in the rest of Ohio, and that maintained a trend that started in 2009, the report said.
Increased sales reflect spending by landowners with leasing bonuses — dubbed “shaleionaires” in the report — and out-of-state workers paying hotel and restaurant bills.
In fact, the report said, employment appears to be growing more in outlying areas than in the eight counties in eastern Ohio that are the heart of the Utica shale drilling, where employment remained “relatively flat” through the second quarter of 2013.
Many of the numbers in the report reflect where a person lives rather than where they work, the authors noted.
The report downgraded Summit County to “weak” for future shale drilling. Medina and Wayne counties share that designation.
Other key points from the report:
• Prices paid for natural gas and natural gas liquids likely will determine what happens in Ohio. Low prices for natural gas have resulted in Ohio drillers switching to extraction of liquids to make more money.
• The state will reap significant economic benefits if an ethane cracker plant is built in or close to Ohio.
Proposals to build such multibillion-dollar plants — they turn ethane, a liquid, into ethylene, a key component of plastic — have come from Beaver County, Pa., and Wood County, W.Va.
• On the other hand, competing plans to ship that ethane by pipeline from Ohio to the Gulf Coast for processing would hurt Ohio’s economy in the long run.
• Stark and Portage counties have been dubbed “moderate” shale areas along with Trumbull, Mahoning and Tuscarawas counties. More exploratory work is needed to determine if those five counties can produce significant volumes of natural gas liquids (ethane, butane and propane) to be attractive to drillers.
Hill said that determination plus three others — continued oil development near Cambridge, the tapping of natural gas liquids in Southern Ohio counties and the future development of Marcellus shale in eastern Ohio (if natural gas prices rise significantly) — will help shape the overall success of Ohio’s Utica shale industry.
Bob Downing can be reached at 330-996-3745 or bdowning@thebeaconjournal.com.