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Utica Summit III Shines Light on Play’s Possibilities

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Examining the overall North American energy sector and more importantly how Ohio can reap the benefits of continued oil and gas activity in the Utica shale play was overarching theme at the Canton Regional Chamber of Commerce’s Utica Summit III on Oct. 13.

Utica Shale SummitAs the name implies, this is the third Utica Summit hosted by the Canton, Ohio chamber and the theme for the day was “Shaping and Energy-Rich Future.” Experts discussed, among other things, how the nation uses the products produced in the Utica shale play – namely natural gas and ethane – where the products are headed (Japan, India or our own backyard), how the abundance of Utica gas is contributing to the nation’s move towards energy independence and how companies/investors view the play and its potential for growth.

Discussing the importance of ethane cracker plants for the region were Jason Hamman, founder of The Hamman Consulting Group Inc. and economic development consultant for Monroe County, Ohio and Tom Gellrich, founder of TopLine Analytics of Philadelphia. Both men noted that at this point it’s not a matter of if, rather when a cracker plant will be built.

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Gellrich noted that Shell’s proposed ethane cracking facility in Pennsylvania is the furthest along and most likely to be completed. Gellrich cited the fact that Shell, as a company, is not afraid to pull out of projects if it’s no longer a sound investment. Shell has recently pulled out of several projects across the globe but remains committed to the cracker in the Appalachian Basin. Other possible cracker plant builders are PTT Global Chemical, which is looking at a site in Belmont County; Braskem and to a lesser extent Appalachian Resins, of Houston, which expressed interest in a Monroe County, Ohio site, but recently put the project on hold.

According to Hamman, the Appalachian Resins project was halted and the company cited difficulty in finding qualified workers if other proposed projects (PPT and Shell) move forward. No matter though, Hamman told the audience that any facility in the region will benefit the region as a whole.

As for investment in the region both Frederick Shepperd, managing director of Shepperd Investors AG (SIAG) and Nicol Decker, equity sector strategist for UBS; said that the world is looking at investing in U.S. energy.

Shepperd, an Ohio native, moved his investment firm to Zurich in 2007 and he says foreign investors are aware of the shale boom, and more specifically, what is happening in the Utica play. Ohio, he says is an emerging market and the Utica shale will help return the state to a center of “real” business.

Because SIAG is a family firm, versus a big bank, Shepperd and his investors are willing to take a long-term view at investments in the play and work with the ups and downs in the industry. The deals are being made in the midstream sector, where the slowdown in production and low oil and gas prices, have had less of an effect.

Decker referred to the U.S. as the swing producer in terms of oil and gas and the nation is now competitive on a global basis thanks in part to the shale boom. She told the audience she was excited by the opportunities in the U.S.

On the other end of the spectrum, Bruce McKay, senior policy advisor, federal affairs, for Dominion and Jonathon Winslow, vice president of development for Advanced Power discussed where the Utica gas was headed.

On the Dominion side, McKay discussed the Cove Point LNG terminal under construction in Cove Point, Maryland. The facility, the third one in-line for activation in the U.S., will process the natural gas for domestic companies and the LNG will be sold to Sumitomo Corp. in Japan and GAIL, in India. Once complete and on-line in 2017, will be able to fill a ship every four or five days for the next 20 years.

As for Advanced Power, the story is much more local. The company, based in Switzerland, formed its North American arm in 2008 to focus on opportunities in this market as coal-fired electric plants came offline.

The company is in the process of building a 700-megawatt natural gas-fueled electric power plant in Carroll County. When complete, the $899 million project will produce enough electricity to power 750,000 homes. Making the plant possible is its proximity to existing gas pipeline (Tennessee Pipeline) and electric infrastructure as well as abundant natural gas from Marcellus and Utica plays. The plant should be operational in 2017.

But, Advanced power is not done with Ohio. The company recently announced plans for the South Field Energy project , a 1,100 megawatt facility in Columbiana County. The proposed plant is in the application process and once complete would commence operation in Q3/Q4 of 2019.

Thanks to the shutdown of coal-fueled plants across the country, as well as an abundance of natural gas, in April 2015, natural gas electric generation exceed coal generation for the first time in U.S. history.

When it was all said and done, the overall message of the day was that the Utica shale region, and more specifically Ohio, stand to benefit from continued energy sector development and investment.

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