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Ohio Shale Gas and Oil Market Set to Explode


Despite industry estimates that 15 trillion cu. ft. of natural gas and 5.5 billion barrels of oil are in Ohio shale, the ballyhooed boom hasn't happened.

That's about to change.

The first of several large natural gas-processing plants in eastern Ohio – crucial to getting the gas cleaned up and moved into commercial pipelines – is on schedule to open in May.

The $1 billion plant is being built in Kensington, Ohio, a small town in eastern Columbiana County.

Without the plant and others like it, Ohio's shale gas would continue to be stuck in the exploration stage, say industry experts.

Details of the construction were unveiled during Oilfield Expo 2012, an Ohio Oil & Gas Association expo held at Cleveland's International Exposition Center. The event drew more than 3,000 people.

M3 Midstream LLC, a Houston-based company, is building the plant under a partnership with Chesapeake Energy Corp. of Oklahoma and EV Energy Partners, another Texas company.

“We believe we are in the heart of the rich gas area,” said Les Smith, an engineer and vice president of business development with M3 Midstream. Smith said the Kensington facility will draw gas from seven counties as the wells are drilled.

The facility will be connected through a 24-in. high-pressure pipeline to a sister plant about 40 miles south in Leesville in Harrison County.

The two plants will be able to process 800 million cu. ft. of natural gas a day and will employ about 60 people, said Smith, whose company does business under the name Momentum.

The gas that will flow into the Kensington facility will be from Chesapeake's wells, which is drilling them through another partnership, with Total S.A., a global oil company based in France.

Chesapeake has leases to drill into the Utica Shale rock under about 1 million acres in Ohio, and is planning a pipeline system to move the gas from the wells to the plant, said Smith.

“That gas needs to be processed,” he said. “The producers are eagerly awaiting its completion.”

The Kensington plant will clean the gas as it arrives from the wells as well as remove any naturally occurring crude oil. Some of the initial eastern Ohio wells have produced oil, though geologists predicted that oil would be found in larger amount further west.

The Harrison County plant will “fractionate,” or separate the more valuable gases from the methane that is the principal gas in commercial natural gas. Fractionation is done cryogenically, cooling the gases well below zero, causing each different gas to liquefy at a different temperature.

Even more critical for a real Ohio boom to get under way, those other gases – butane, propane and ethane and natural gasoline – are used in oil refineries and are the foundation of the entire petro-chemical industry. They are often called natural gas liquids.

Smith said the methane, or natural gas, will be fed directly into Ohio commercial pipelines, including a Dominon East Ohio line.

“Getting that gas into the grid is what we do,” he said.