Oil and gas downturn may not be all bad

CARROLLTON, Ohio — The slowdown in the oil and gas industry may not be good for royalty owners, but there may be an upside to this downside.

Mike Jacoby, shale energy director for the Appalachian Partnership for Economic Growth, said there is little encouraging news on upstream oil and gas development. Natural gas spot prices in 2015 were at 16-year lows, and most analysts feel well development will likely be curtailed until prices recover.

“Some companies are predicting 2017 will be the year for the turnaround, but no one really knows,” said Jacoby in a statement.

On the bright side, he said, abundant supply and low prices are creating new opportunities midstream and downstream.   

“Midstream processors are rumored to be considering NGL petrochemical projects in Ohio. Downstream, the PTT Global Chemical ethane cracker project is ramping up engineering work and anticipating a final investment decision in about a year,” said Jacoby.

Jacoby said gas-fired power plant projects are also actively being discussed

Welcomed breather

Tait Carter, Carroll County Economic Development assistant director, said the good thing is that oil and gas drilling in Carroll County has not reached the peak.

She said the lull in the action is welcomed.

“Our county has seen a lot of boom and bust. We don’t want to go through a bust, instead we are trying to capture companies and create jobs,” said Carter.

No warning

Carter said that the oil and gas activity took off without warning in Carroll County, a rural county in southeastern Ohio. When it hit, the county didn’t have the infrastructure to accommodate the boom. She said it lacked rail service in parts of the county, electricity that could support industries, along with water and sewer service.

This caused problems because many industries and companies wanted to locate in the county, but couldn’t because of the lack of infrastructure. Now that a slowdown is occurring, she is hopeful the county can get some infrastructure built, and when the boom returns, the county will be ready.

“This is giving us time to get ready for what is to come,” said Carter.

Water and sewer

The county hopes to complete a 4-mile water and sewer project before the oil and gas activity regains momentum.

Carter said Fairmont Tool wants to expand in the county by 100 more employees, but the existing septic system will not support that many employees, according to state regulations.

With the support of grants, four miles of water and sewer lines are being planned along state Route 43. Carter said it is the main way to Canton, Ohio, and it parallels to the railroad, which makes it a good place for other businesses to locate once complete.

She said there are companies on a list waiting for infrastructure to be constructed.

“We want to be proactive in Carroll County instead of reactive like we have in the past,” said Carter.

Pipelines

The pipeline construction in Carroll County is also a plus, she said. The Rover pipeline and transmission pipelines are either under construction now or waiting to be constructed.

Once that happens, she said, it will get the oil and gas activity moving forward and produce more royalty income for landowners in the county.

Investments

Carter said farming is a big part of the county’s economy and it is good to see farmers investing in their operations again. She expects more to happen once the lull in the oil and gas industry lifts.

“It’s great to see farmers investing in themselves and not leaving the area. It’s evident how much they have invested in farm equipment and some of that is attributed to the oil and gas,” said Carter.

Electricity

Take a drive along state Route 9, and it’s hard to miss the Carroll County Energy construction. Carroll County Energy is an electric generation facility that will use natural gas to produce power.

In addition to creating construction and industry jobs, the power plant is helping to do one thing long overdue in the community: get a school built. Pending final state approval, the power plant will receive a tax abatement on property taxes for 15 years, but will earmark $1.3 million annually to the Carrollton Exempted Village School District to help pay for new school buildings.

Carter said without the shale industry, the electric plant may not have come to the area, and without it, students would probably not get a new school. The last tax levy approved by voters was in the 1970s.

Housing

Carter said the housing situation in Carroll County is getting better with the slowdown. In the middle of the drilling frenzy, the said there was big shortage of rental housing. Now that oil and gas employees have gone home, the housing prices have gone down and “there is definitely a lot more signs up for rent or sale,” said Carter.

She added that one bright spot to the housing situation has been the construction of the new assisted living center, Centreville Villages of Carroll County. It is providing 55 jobs and will provide a service that the county needs — housing for the aging population.

Hospitality

It’s not doom and gloom for the restaurant business. Que Paso bought a building in the downtown area of Carrollton and appears to be working on its second location. The first location is in Minerva, Ohio.

One industry that is feeling the economic pinch is the hotel industry. Carter said the hotels in Carroll County began feeling hit as early as 2014.

The county is trying to rebuild Carroll County as a destination, in the hopes that hotels will be booked no matter what the primary industry happens to be.

“We’ve got to make this the new place to be,” said Carter.