Marcellus and Utica Seeing Manufacturing Resurgence, Thanks to Shale

by Nicole Jacobs, Energy in Depth

The Appalachian Basin that encompasses Pennsylvania, Ohio and West Virginia has a long history of being a manufacturing hub. This region in the Ohio Valley and throughout Southwestern Pennsylvania recently went from being part of the Rust Belt to seeing a resurgence in investment in manufacturing,  thanks to shale development. And that story just keeps getting better as more and more companies return thanks to the affordable energy available in the region.
The Wall Street Journal highlighted this trend earlier this week:
“The Ohio Valley from Pittsburgh to Cairo, Ill., has a long industrial heritage, with chemical companies, and oil and gas producers, that have been operating there for decades. A group of them in Marietta, Ohio, and Parkersburg, W.Va. – with a combined population of about 50,000 — aim to tout their low gas prices and industrial heft to energy-hungry businesses from Brazil to Thailand.”
In fact, recently businesses have been able to get their natural gas—a necessary feedstock for many industries—through the Dominion South Point hub at the lowest prices in the country, once again making the region appealing to all types of businesses. From the WSJ article:
We’re back at the center of energy production in the United States, and even the world,” said Jerry James, chief executive at Artex Oil Co., an independent producer based in Marietta. “We’ve got everything that a manufacturer needs.”
The low prices, coupled with new infrastructure investment, continue to set the region apart from other areas of the country with the growth potential improvements in shale development have created. For instance, just this week, Shell announced its official plans to build an ethane cracker plant in Beaver County, Pennsylvania. This facility will not only create thousands of jobs for the region, but will also be a major attraction for chemical plants and plastics manufacturers looking to reduce costs by locating closer to feedstocks. As Cal Dooley, American Chemistry Council President and CEO, explained following the announcement,
“Thanks to our nation’s abundant supplies of shale gas, the U.S. has become the world’s destination for new chemical industry investment. Our competitive edge will mean new jobs and exports and a stronger manufacturing sector for years to come.”
Over the border in Ohio, a Thai company, PTT Global, has also announced plans to potentially build a cracker plant in Belmont County. A Brazilian company, Odebrecht, has met with officials to discuss the possibility of another in Wood County, West Virginia, although both of these projects are still in the beginning phases of discussions and planning. As Pat Ford, executive director of the Brooke Hancock Business Development Corporation, explained of the planned investments,
“So you’re looking just within the past 2 years, 20 billion dollars of private investment being planned in our region. The number of employment opportunities, spin-off employment opportunities for all of these businesses,  and the investment it’s going to be creating, it pretty much paves the way for a bright future for our region economically for the next 20-30 years.”
Even as states await large-scale projects such as these to come online, they are already seeing a resurgence in manufacturing within their borders. For instance, as the New York Times reported in 2014:
“Both Youngstown and Canton are places which experienced nothing but disinvestment for 40 years,” said Ned Hill, a professor of economic development at Cleveland State University. Now, “they’re not ghost towns anymore. You actually have to go into reverse to find a parking spot downtown.”
That’s in large part due to companies like Vallourec and Exterran opening factories as a direct result of the nearby shale development. The steel industry has seen similar growth in both Ohio and Pennsylvania. President Obama has even acknowledged the importance of shale in the resurgence of manufacturing during visits he made to the Marcellus Shale stating,
“Our manufacturing sector that used to be losing jobs, just hemorrhaging jobs, is now adding jobs for the first time since the 1990s.”
Vice President Biden echoed similar sentiments during the same visit:
“And now there’s an energy boom.  You all know about the Marcellus Shale — I think you heard of that, right? There’s an energy boom that’s changed the paradigm of manufacturing.  It’s cheaper to manufacture in the United States than it is in Europe and/or in Asia.”
This isn’t surprising given a recent study from IHS Economic, commissioned by the National Association of Manufacturers (NAM) that showed:
“Thanks to technological improvements in energy development, such as fracking and horizontal drilling, the report predicts energy intensive industries (chemicals, refining, metals, etc.) will outperform the U.S. economy through 2025.”
All in all, thanks to shale development, good things are in the works for Appalachia that equate to more jobs, greater economic stimulation, and new opportunities in the region.
Copyright Energy in Depth. Reprinted with permission. See original article:

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