A group of elected officials, economic development and real estate experts in northeastern Ohio have developed a proposal to create a network of wet gas gathering lines and other infrastructure in the Utica Shale, using the region's steel industry, abandoned or partially used rail lines and existing highways.
Meanwhile, an industry analyst said oil and gas producers in the Utica are "in a bit of a holding pattern" due to a lack of infrastructure, and said three major projects under way in the play are being watched very closely.
In an eight-page presentation, the group Mahoning Valley Midstream (MVM) identified seven rights-of-way in Ashtabula, Geauga, Mahoning, Portage and Trumbull counties that could be used to bring wet gas to market. The group added that although the seven rights-of-way were privately owned or owned by the government, their owners and controllers had either verbally or contractually agreed to make their property available for midstream development.
"The opportunity is here," MVM said. "The repurposing of these assets for gathering, processing, cracking and distribution of gas, NGLs [natural gas liquids] and crude oil has been vetted on all levels of government and private industry, and welcomed. It has received enthusiastic support from all corners and has received offers of incentives and financing that are unparalleled."
The seven rights-of-way being suggested for midstream development are:
"All of these rights-of-way were originally constructed to serve the steel industry in northeast Ohio," MVM said. "They are both rail beds either abandoned, or active single tracks in a multi-track right-of-way with enough space to install gathering or distribution pipelines. A unique feature of these sites is that they all have industrial power, zoning and both highway access and active rail."
MVM added that midstream and downstream, developers would avoid most or all of the legal and environmental challenges they face elsewhere, and that most of the rights-of-way were already zoned industrial, making them appropriate locations for compressor stations.
The group also identified several large parcels of land in the region that could be used by the oil and gas industry, especially more than 200 acres in McDonald, site of a former U.S. Steel Corp. plant (see Shale Daily, Jan. 12, 2012).
"This site has power, redundant water supplies, two Class I rail lines, highways nearby and an immediate user of methane at the V&M Star tube plant," MVM said. "From here processed gasses could easily be distributed via rail or via pipeline in the [Ohio Route 11] corridor."
Other parcels near Warren that are being touted by MVM include more than 500 acres in the Ohio Commerce Center, 138 acres formerly owned by the Denman Tire Co., and property owned by RG Steel LLC and Warren Steel Holdings LLC. Elsewhere, the group said more than 23,000 acres at the Ohio National Guard's Camp Ravenna is available, along with 6,000 acres at West Branch State Park, which is located in Portage County.
On Monday, Motley Fool analyst Tyler Crowe said that despite the Ohio Department of Natural Resources only publishing Utica Shale production figures once a year (see Shale Daily, May 17), there were "other ways to evaluate the health of the region." He said three projects in the Utica were noteworthy:
"Once these projects start to come online, production in the Utica will take off," Crowe said.