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Some facts, figures on the shale boom

February 13, 2012
Salem News

Beginning today, the Salem News will publish a series of stories on how the shale boom is impacting Carroll County which borders southwest Columbiana County. The stories are provided through the Tribune Chronicle in Warren, a sister Ogden newspaper of the Salem News. The stories are designed to give people here a glimpse at what might be in our future, and to help them prepare.

There are those who say the play in the Marcellus and Utica shales is about to bust. Natural gas prices are down, stockpiles are up and a mild winter has made the situation worse for companies in the natural gas industry. Companies can no longer sell gas at a price that recoups the cost of drilling for it.

As Samuel Langhorne Clemens once said about his own death, reports of the shale play's bust are greatly exaggerated.

Here are some important facts and figures to chew on:

According to PricewaterhouseCoopers, the number of mergers and acquisitions involving the Utica Shale went from one worth $179 million in 2010 to seven worth $6.7 billion in 2011. The financial firm and the Deloitte Center for Energy Solutions announced strong expectations for the Utica Shale in 2012 because of its anticipated rich liquid deposits, including oil.

FTS International Inc., a hydraulic fracturing company, recently announced that a shortage in rail cars to haul facking sand will continue this year.

Drilling companies use water, sand and a smattering of chemicals under high pressure, a process called hydraulic fracturing, or fracking, to penetrate the shale formations deep underground. It takes 35 rail cars of sand to drill one well. According to the Railway Supply Institute, the order backlog for freight cars as of the third quarter of 2011 is more than 65,000, triple the backlog during the same period in 2010.

OAO TMK, the world's largest pipemaker by output, recently announced its expectation for a strong 2012. The pipemaker's TMK-IPSCO unit, which has a factory in Trumbull County, accounts for almost 30 percent of revenue and shipments.

According to the world's largest drilling companies, super-fracking will soon lower the cost of extracting oil and natural gas and also allow deeper deposits to be tapped.

Schlumberger's HIWAY uses fibers to extend the time it can hold open cracks in the shale. Halliburton's rapidfrac requires half the water needed to break through shale, thus reducing the cost of buying, shipping and then disposing of water (this has the added benefit of reducing how much brine has to be disposed of in deep injection wells that some speculate cause earthquakes).

Baker Hughes' DirectConnect concentrates the drilling blast, allowing it to reach deeper targets. According to JP Morgan Chase, these super-fracking techniques could reduce wellhead costs by 70 percent. This would negate the impact of low natural gas prices.

The plunging price of natural gas is causing non-energy industry manufacturers, such as steelmaker Nucor Corp in Louisiana, to build factories that run on natural gas.

More important than worrying about the bust would be for Columbiana, Mahoning and Trumbull counties to prepare for the boom.

The stories we are publishing show life in Carroll County - everything from higher residential leasing costs to increased traffic, to lower unemployment to increased sales tax revenue in the county's coffers. From that information, everybody here can develop strategies on how to prepare.

 
 

 

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