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Daniel J. Graeber

Daniel J. Graeber

Daniel Graeber is a writer and political analyst based in Michigan. His work on matters related to the geopolitical aspects of the global energy sector,…

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Will Shale Create Ohio Ghost Towns in 2040?

Will Shale Create Ohio Ghost Towns in 2040?

A report released this week from IHS finds unconventional oil and natural gas activity will add as much as $61 billion to federal and state coffers this year. In Ohio, where much of the boom is focused, the U.S. Geological Survey found the Utica shale play could hold as much as 38 trillion cubic feet and 940 million barrels of oil reserves. Against the clamoring over the prospects that resources like shale may be a panacea for a beleaguered economy, however, comes quiet concern that an inevitable bust will follow the current boom.

IHS, in a study published on what it says is the new American future, finds that the upstream unconventional oil and natural gas sector in the United States could support as many as 3.5 million jobs by 2035. In terms of revenue, that translates to as much as $124 billion for federal and state government revenues by 2035. For reserves, IHS expects a transformation in the U.S. energy sector, where as much as 70 percent of total U.S. oil production is expected to come from so-called unconventional tight oil reserves.

Daniel Yergin, the author of the study, said the United States has the highest growth rate in crude oil production capacity in the world.

"That growth has not only contributed to U.S. energy security but is a significant source of new jobs and economic activity at a time when the economy is a top priority," he said in a statement.

Related Article: Can Russia Afford to Cut Itself off from Western Oil Companies?

In its first estimate of the Utica shale play in Ohio, the U.S. Geological Survey found the formation could hold as much as 38 trillion cubic feet of recoverable natural gas and 940 million barrels of oil. The Utica play lies underneath the Marcellus formation, which is thought to be one of the richest deposits of natural gas in the world.

"The study highlights the extraordinary opportunities we have right here at home to develop our unconventional oil and gas resources and return our economy to a pro-growth engine," said Jack Gerard, president of the American Petroleum Institute.

A recent independent survey of Ohio legislation, however, found the state is one of the least transparent in terms of energy reporting. Analysts said the lack of third-party assessments has given potential investors cause for concern. An economist from Ohio, meanwhile, said long-term cycles in resource-rich states are "a little scary" for the state. Though landowners there are getting rich by leasing their property to prospective oil and natural gas developers, future prospects may eventually dwindle once wells there dry up.  States with natural resources, the economist said, usually underperform when compared with their counterparts with no natural resources.

Related Article: Oil Still Calling the Cards in Mideast

Technological advancements in oil and natural gas exploration have uncovered reserves previously considered off limits. These advancements, in turn, may transform the United States into something of a petroleum state on par with the likes of Saudi Arabia. A report from Citibank stating that Riyadh may eventually start importing oil in the next 20 years, however, serves as a stark reminder that resources like oil and natural gas aren't renewable. While the oil and natural gas boom in the United States may last a generation, every well, no matter the prospects, dries up.

By. Daniel J. Graeber of Oilprice.com

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Leave a comment
  • Randy on October 26 2012 said:
    Yes, Daniel, oil wells do eventually dry-up. Yes, some people involved with said oil drilling will 'eventually' have to move-on and find new employment. Life's tough.

    But, what's the point of this silly article. Ghost towns in,....30 years? Let's NOT drill for oil/gas resources because the wells are finite and will eventually run-out? Rather than look on the bleak side, how about writing an article as to the economic benefits such oil drilling activity will create? We still need energy, don't we? Perhaps you are suggesting that we need to slow down this fracking phenominon? Tax em! Yep, that's what we should do. Or maybe we can get the EPA to crank-out 70or more new laws regulating this new energy thing? We need to slow this thing down right now,..or,..or, all of these ghost towns will appear in 30 or so years? Can't have that now, can we? Stop em now!
  • Matt on October 26 2012 said:
    Seems to me that shale gas plays are giving these towns a temporary reprieve from fading away, not causing their inevitable demise. If they had anything other than oil and gas development going for them it would be a moot point.

    Yes, ghost towns happen. So what?
  • shirley on October 26 2012 said:
    Response to Randy:The fracking process, as it is now practised, is a danger to clean drinking water. It is a process which requires millions of gallons of fresh water to which sand and chemicals are added. The waste that is produced is toxic. Knowledge of the chemicals used is of no value because there is no process available to recover clean water from whatever fluid remains in the waste. In addition to this the industry has gained exemptions for the Safe Drinking Water Act. Among the potential consequences are contamination of ground water from leakage resulting from the pressure used to split the rock and surface contamination from spills and flowback.

    Clean water is a necessity for all forms of life and there is a finite amount of it on earth. If the drought conditions existing during the last few years continue and these conditions are added into the expense equation, fracking is indeed a very expensive way to gain jobs and cheap fuel when viewing clean water use and its impact on life.

    If the method can be altered to help mitigate these circumstances, then go for it.
  • Lyle on October 26 2012 said:
    If we followed the logic of the 35 year prediction the west would never have been settled, since a large part of that settlement was due to resource booms in places no one would live otherwise, such as Virgina City, Austin, Eureka, Goldfield, Tonopah or even Ely NV. Any major resource discovery leads to a boom, and eventually a bust, as an example look at Calumet Mi, in the copper country, in 1900 it had 60k people and the city had so much money it built a fancy theater (opera house). Today the same town has 6k people. Or indeed much of northern MI before cars whose prosperity was based on logging until the trees were gone.

    Note that Halliburton has solutions for fracking and produced water treatment: http://www.halliburton.com/ps/Default.aspx?navid=2427&pageid=4975&prodid=PRN::L4VUQW15
    This solution is said to enable water reuse, instead of deep disposal, all be it at a higher price.

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