Some of the biggest drillers in Ohio, including Chesapeake Energy Corp., Gulfport Energy Corp. and EV Energy Partners, have commented in recent earnings reports that delays in completing the new midstream facilities are keeping Ohio shale development from moving forward.
Production will ramp up sharply in Ohio next year, however, as midstream pipelines and processing plants are completed, Chesapeake CEO Aubrey McClendon said.
Gulfport CEO James D. Palm said getting pipeline right-of-way from landowners in Ohio has been slow and difficult and has delayed work by its partners.
That’s the main reason only 45 wells in Ohio are in full production. Another 143 wells are drilled but not hooked up to pipelines and processing facilities.
Acquiring leases and drilling wells is known as the “upstream” end of the gas and oil business. Midstream operations begin with pipelines, processing plants and fractionation facilities that separate liquids from dry gas.
Payrolls for Ohio midstream companies are expected to top $1 billion annually by 2014, according to industry estimates.
Ohio’s natural gas _ mostly methane _ requires more processing because it contains such natural gas liquids as butane, ethane and propane that are all lucrative commodities after they have been removed from the natural gas. They are liquids below ground but are gaseous at the surface and are mixed with the natural gas.
Other impurities also must be removed from the natural gas before it can be pumped into large transmission pipelines.
Three major gas-processing and fractionation projects are proposed in eastern Ohio: Columbiana-Harrison counties, involving three companies; Harrison-Noble counties, with MarkWest Energy Partners LP; and Mahoning County, involving two partner companies.