Study: 39,000 Ohio jobs linked to shale oil, gas production

Source: The Columbus Dispatch

Ohio this year has 39,000 jobs linked to shale oil and gas production, a number that is projected to more than triple by the end of the decade, according to a new report.

Shale oil and gas accounts for $4.1 billion of the value of the goods and services produced in Ohio this year, a number that will rise to $18 billion in 2020 and $35 billion in 2035, said the national report by the research firm IHS Global Insight.

The IHS report is the most recent of several studies that make estimates on the moving target of shale development.

“The unconventional oil and gas revolution is having a bigger impact across the country, including in nonproducing states, than is generally recognized,” said Daniel Yergin, vice chairman of IHS, in a statement. “What we found is that the economic and financial links reach out across all the states in our highly-interconnected national economy.”

The report was financed by business groups that support shale drilling, including the American Petroleum Institute and America’s Natural Gas Alliance.

Ohio has approved more than 500 permits to drill horizontal wells in the Marcellus and Utica shale formations, according to the state Department of Natural Resources. Oil and gas are extracted through a process called hydraulic fracturing, or fracking.

The state ranks ninth out of the top 10 for production related to shale oil and gas, a group led by Texas and Pennsylvania. As group, the top 10 will contribute 1.2 million jobs and $178 billion to their state economies this year.

For some perspective, the $4.1 billion worth of Ohio goods and services, is roughly 1 percent of the state’s total for 2011; this measure, called gross domestic product, is tracked by the Bureau of Economic Analysis.

On the employment total, 39,000 jobs is a little more than half of 1 percent of the state’s current total work force. IHS says the shale jobs will hit 144,000 by 2020 and 267,000 by 2035.

The growth projections assume that oil and gas prices will be high enough to encourage further investment. Estimating the commodity prices and their effect on employment is one of the most difficult parts of making such a report, said Daniel Meges, an economist at Chmura Economics & Analytics in Cleveland.

“Ultimately employment depends on drilling,” he said. “Nobody gets employed unless they are drilling wells. They are not going to drill too much if the price of gas is too low.”

Prices are low right now, but have been rising.

Meges’ firm issued a report of its own, showing that Ohio has 25,000 jobs related to shale oil and gas as of 2011. Working on the report, he learned the difficulty in deciding which jobs are connected to oil and gas drilling. His estimate was on the conservative side, including employees and independent contractors directly involved with the industry.

“If you add in the lawyers that are running around southwestern Ohio right now and you throw in some engineering consulting, you could get some big numbers,” he said.

The IHS study found that the largest employers in Ohio’s industry are administrative and support services, scientific and technical services, and manufacturing.

The report also looks at how drilling will contribute to the economies of all 32 states where there is no drilling activity, including jobs in manufacturing and legal and financial services.