Ohio’s ‘Shale Crescent’ to tout low natural-gas costs to recruit businesses

Southeast Ohio leaders and others in shale country hope to attract large manufacturers and other businesses to their area to take advantage of what they call the lowest natural-gas prices in the industrialized world.

A campaign called “Shale Crescent USA” was launched Thursday to begin recruiting business to a region along the Ohio River that includes Marietta, Ohio, and Parkersburg, West Virginia. The region has plentiful natural gas from the Marcellus and Utica shale formations.

“Our ultimate goal is to create some high-paying, blue-collar manufacturing jobs,” said Jerry James, president and CEO of Artex Oil Co. in Marietta, who is helping to organize the campaign.

In marketing materials, an illustration of a crescent moon covers the region, pointing like a backward “C” roughly toward the Columbus and Cleveland areas.

The sponsors’ efforts got a boost with Shell’s announcement Tuesday that it is moving forward with plans to build an ethylene cracker plant in Beaver County, Pennsylvania, just east of the Ohio-West Virginia line. The energy giant said it will start building the petrochemical plant in 18 months. The cost has not been disclosed, but other cracker plants are multibillion-dollar investments and tend to attract related spending by other businesses.

A cracker plant processes natural gas into ethylene, which has broad applications in making chemicals and plastics. In addition to the Shell project, several other groups have said they are exploring building cracker plants in the region.

Shale Crescent leaders have identified the 200 companies active in the country that use the most energy and will try to sell them on the region’s advantages.

The campaign bases its assertion about the low natural-gas prices on data from BP showing that the local price — the Appalachian Index price for gas delivered to Dominion Transmission — is lower than the U.S. benchmark price, and much lower than prices in Germany and Japan. The data excludes numbers from Middle East gas producers such as Qatar.

But some of the local price gap is because of factors that are bound to change, said Kenneth Medlock III, director of the Center for Energy Studies at Rice University in Houston.

“The gas is certainly cheap, but a word of caution should go up there,” he said.

Appalachian gas is inexpensive now partly because there is not enough pipeline and processing capacity to handle the supply, Medlock said. As pipelines and processing plants are built, and as businesses move to the region for the inexpensive gas, the local prices are expected to rise to near-parity with the U.S. benchmark price.

“You never want to extrapolate a long-term vision from a short-term reality,” Medlock said.

At the same time, he said it is safe to say that Ohio’s plentiful gas supply is a great asset for business.

The Shale Crescent campaign is being led by the Marietta Area Chamber of Commerce, the Southeastern Ohio Port Authority and the Ohio Oil and Gas Energy Education Program, among others. Organizers said it is too early to comment on budgets and staffing for the effort, but they said the campaign eventually will have employees. The campaign has a website, www.shalecrescentusa.com.

“What makes Shale Crescent USA unique is we are branding the Ohio Valley,” said Mark Schwendeman, president of the Schwendeman Agency, an insurance and financial-services firm in Marietta.

He said he hopes ‘Shale Crescent’ becomes a shorthand for the region’s intrinsic advantages, which include inexpensive gas, plentiful water and close proximity to markets in the East Coast, South and Midwest.

From The Columbus Dispatch  |  June 11, 2016