Ohio energy industry remains cautious despite high prices, rising demand

The future is currently looking bright for the energy industry in eastern Ohio as the price for gasoline and natural gas remains high around the country.

"For gasoline, the price at the pump is the highest it has been since 2014, on average," said Mike Chadsey, director of public relations for the Ohio Oil and Gas Association.

"We also know that natural gas prices are up, we also know that crude oil prices are up, and really one of the most fundamental reasons why is that energy demand is rising as we come out of the COVID lock-down of last year. 

"Demand is rising but the energy supply is not rising at the same rate. So that's kind of the squeeze right there."

That has had a dramatic impact on the oil and gas industry in Ohio, but companies remain cautious.

"We are seeing producers being very responsible with capital," Chadsey said.

"It isn't the free-for-all that it was a couple of years ago in terms of drilling.

"They're being mindful of that. We also don't know what tomorrow brings from the Biden administration in terms of methane taxes, climate change policy, so it's a little bit of wait and see. It's also fiscal responsibility, drilling within your means."

The industry remains strong in the Buckeye State.

There are around 10 to 12 drilling rigs operating in Ohio. For much of this year, there had only been three or four rigs, he said.

Currently, there are 3,145 Utica Shale play wells in production in Ohio.

And, according to JobsOhio, there are about 208,000 Ohioans employed in the oil and gas industry. 

One of the biggest players in eastern Ohio is Ascent Resources, the largest producer of natural gas in Ohio. The Oklahoma City-based company has its local headquarters in Cambridge. It operates primarily in Belmont, Jefferson, Guernsey, Harrison and Noble counties.

Chadsey said Ascent and other companies are focusing on Jefferson County because it's in the natural gas window. Prices are up, the infrastructure is in place and there's a big demand for natural gas as the country enters the winter heating season. 

The industry is also very active in Harrison and Carroll counties. 

Another player in the region is Encino Energy, a Houston, Texas, company with local offices in Stark County.

“We have added another rig this year, but it’s important to note that we’ve had two rigs consistently running since our acquisition in 2018," said Jackie Stewart, director of external affairs for the company. 

In October 2018, Encino closed a $2 billion deal to buy Chesapeake Energy’s Utica Shale play assets in Ohio, acquiring about 900 operating and non-operating wells with about  900,000 acres of oil and gas leases. Encino is the second-largest producer of natural gas and oil in Ohio.

"We said from day one that we planned to develop the Utica with a steady hand and that’s exactly what we’ve done," she said. "The Utica is re-emerging as among the best gas plays on the continent, but it’s also an unsung success story as it pertains to oil and NGLs (natural gas liquids).

"What’s important to recognize is that Ohio remains supportive of seeing this development occur here at home, and we strongly believe that clean, domestically produced natural gas and oil is more critical now than ever before.”

Chadsey said the oil and gas industry is here to stay.

"Our message has really been, innovate not eliminate," he said. "We as an industry can, should and will do better as being part of the climate change solution and not part of the climate change problem."

As countries move away from coal and switch to natural gas, consumption of natural gas is up around the world, he said.

"We're lowering emissions. That's a good thing. We're here to be part of the solution, not part of the problem," he said. 

He added, "So that's why eastern Ohio is situated very nicely, because we are predominately a natural gas play."

Higher energy prices are a mixed blessing for this area. While residents are paying more to fuel their vehicles and heat their homes, landowners are seeing bigger royalty checks as production goes up. 

Energy companies are trying to balance the needs of consumers and landowners, he noted. 

Chadsey said the industry is opposed to using that nation's Strategic Petroleum Reserve to lower prices at the pump. 

President Biden announced last week that the his administration would be releasing 50 million barrels of oil from the emergency stockpile to lower energy costs.

"Our message to the White House is don't touch the Strategic Petroleum Reserve. That's for an emergency case if there's a global incident. Even if they did, that's only going to last a couple of days," Chadsey said.

Overall, energy companies operating in the Appalachian basin had a good year in 2021.

"We look for a good year again next year. Things are pretty good right now," he said.