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Mid-, Downstream Investments Continue in Ohio Utica Despite Downturn

The list of announced mid- and downstream Utica Shale investments in Ohio continues to grow, even as persistently low commodity prices have constrained the region’s exploration and production (E&P) companies, according to a list compiled by Columbus, OH-based law firm Bricker & Eckler LLP.

Bricker & Eckler released its updated tally of Ohio Utica investments this month, which shows more than a dozen projects announced since the Spring 2015 update (see Shale Daily, May 8). The law firm said exact dollar amounts aren’t available for all of the recently announced projects. But counting only new projects for which dollar figures are available, more than $3.4 billion in planned investment has been announced since spring.

Since it began keeping track in 2013, the law firm, compiling its report from news media stories, has counted more than $33.7 billion in investments in the Ohio Utica either proposed or under construction.

The biggest new investments on the list are pipeline projects, with the likes of MarkWest Energy Partners LP, Rice Midstream Holdings LLC, Marathon Petroleum Corp., Columbia Pipeline Group, Sunoco Logistics and more all attaching their names to various transmission projects planned for the region.

Matt Warnock, a partner at Bricker & Eckler and co-chair of the firm’s oil and gas industry group, said the low commodity prices, while driving E&Ps to reduce capital expenditures, have actually incentivized major investments in the midstream and downstream.

“Obviously, the pricing environment has had a huge impact on the upstream or E&P segment. The rig count is down, the number of permits are down, the number of wells being drilled are down. You’ve seen a shift in the Utica from the condensate window to the gas window, a little bit closer to the Ohio River and the Pennsylvania-West Virginia border,” Warnock told NGI’s Shale Daily.

“You still have some E&P activity, but it’s certainly slowed down. On the midstream side, it’s not slowed down, which is probably not surprising. I mean, for the last three or four years, you’ve been hearing about the need for infrastructure, particularly pipelines and processing plants, so you’ve seen a significant amount of investment in those.”

Warnock noted that Ohio has also attracted a number of natural gas-fired power plant projects in recent years (see Daily GPI, Oct. 12; Sept. 21; July 23; Nov. 3, 2014; April 17, 2014).

And then there’s the $5.7 billion ethane cracker plant in Belmont County proposed by PTT Global Chemical pcl and Marubeni Corp. (see Shale Daily, Sept. 3, May 19, April 23).

“If those come to fruition, that’s a huge benefit to the region as a whole, not just the states where they’re going to be located,” Warnock said, alluding to a similar cracker plant project proposed for Beaver County, PA. “Obviously, all eyes are on those as they very, very slowly move forward with their due diligence.”

Warnock said a number of hotel projects in Ohio had been announced over the last few years and were completed “relatively recently.” He suggested that these projects will provide another indication of the downturn’s ripple effect.

“The reality is, as E&P stuff slows down, a lot of the service company work and title work and leasing work slows down because you don’t have as many people moving around and following what’s going on,” Warnock said. “I’m interested to see how the hotels, in particular, do over the next couple years.”

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