CANTON: The downturn in shale drilling will likely be costly for Ohio landowners hoping to cash in on Utica Shale royalties, says an energy researcher.
The drilling slowdown and low commodity prices are projected to cost Ohio landowners $6.5 billion in lost income over the next five years, said Maria Cortez of Houston-based Wood Mackenzie, an energy research company.
Cortez, speaking Wednesday at the Canton Chamber of Commerce’s daylong Utica Upstream conference, said the downturn will also cost the state of Ohio about $665 million in lost tax income over the five years.
Those losses could reach $12 billion for landowners and $2 billion for the state of Ohio over the next nine years, she told the audience of 110 people at the Pro Football Hall of Fame.
Cortez also predicted an increase in drilling companies acquiring one another through late 2017 when prices are expected to rise. In addition, she expects companies to develop more joint ventures to share costs in the Utica Shale.
The Utica Shale in Ohio and the Marcellus Shale in West Virginia and Pennsylvania produce about one-third of all natural gas in the United States and will play an important role in exporting liquefied natural gas to other countries, she said.
Those areas are “the OPEC of natural gas liquids” but increased prices are still likely 18 months away, she said.
She said the Marcellus Shale should exceed 30 billion cubic feet per day by 2020, while the Utica Shale will double to 9 billion cubic feet per day in that time.
A billion cubic feet of natural gas is enough to heat 10,000 to 11,000 houses for a year.
Between 150 and 250 Utica wells were drilled but not completed by drilling companies before the downturn hit, Cortez said.
Completing those wells will be a cheaper alternative than drilling new wells for companies when drilling resumes, she said.
The drilling slowdown could result in fewer interstate pipelines being built because there is less natural gas and liquids to be moved, Cortez said.
The Rover Pipeline across northern Ohio has firm commitments and is likely to be constructed, but the need for the Nexus Pipeline that would transport natural gas across northern Ohio appears to have declined, she said.
The market for that pipeline may not exist anymore, she said.
Bob Downing can be reached at 330-996-3745 or bdowning@thebeaconjournal.com.