Ohio Shale Development: The Community Impact

Feb. 19, 2014

Oil and gas production in eastern Ohio dates back to the 1800s, with thousands of wells having been drilled into shallow sandstone deposits and other formations.  However, energy resource development since 2010 has been on a scale far exceeding what had occurred during the previous 100 years.  The impact on farmers and other rural landowners has been substantial, including pay-outs of hundreds of thousands of dollars for many who have leased their subsurface resources.  Local communities and governments have experienced change as well.

To begin with, the boom was felt in and around county courthouses, which are the only places where resource ownership can be determined.  Recorders’ offices have been swamped with individuals investigating past leases and registering new agreements.  Some local officials have limited the duration of visits and have obliged researchers to work in shifts.  Elsewhere, evening and weekend hours have been added.  To accommodate the demand, staffs have been enlarged and money has been spent on the computerization of historical records, which has had favorable financial consequences.  In Noble County, for example, fees paid to the recorder’s office have increased by more than 530% since 2009.

With more courthouse activity, parking is now harder to find in county seats.  Caldwell is a case in point.  Surveying on July 3, 2013 of all vehicles parked in a nine-block area surrounding the Noble County Courthouse revealed that 44.4% of those vehicles were locally registered, 13.6% were from other parts of Ohio, and 42.0% were registered in other states.  Almost two in every five of the out-of-staters were from West Virginia, less than 50 miles to the south or 65 miles to the east.  However, one-fifth of the parked vehicles were registered in Oklahoma and another one out of every ten was from Texas, which is a clear sign that Noble County now commands the energy industry’s attention.

Recorders’ offices are not the only places where activity has picked up in recent years.  Storefronts, including many that had been vacant for years, now house property abstractors and other legal and office workers employed by leasing firms and energy companies.  More broadly, counties with active drilling are undergoing a retail rebirth, as exemplified by new restaurants and fast-food eateries, machine and hydraulic repair shops serving the energy industry, stores that sell specialized clothing to rig workers, etc.  As a result, local tax collections are up dramatically.  For example, general fund revenues in Noble County have risen by 87.4% since 2009.  During the same period, sales tax revenues have practically doubled.

Simultaneously, eastern Ohio is experiencing a boom in rental housing, to meet the demands of non-local laborers.  Where housing supplies are limited, monthly rents have spiked, more than doubling in recent years in a number of places.  Also, RV camps have sprung up – not as large as some of the camps in North and South Dakota, for instance, though certainly numerous.  The hotel business is growing as well.  Much of the expansion is happening in small cities with numerous lodging facilities already in place:  Cambridge, New Philadelphia, and St. Clairsville, for example.  But new hotels are also being built in smaller county seats, such as Caldwell, Cadiz, and Carrollton.

Traffic has increased as well.  There are more cars and small trucks on the road, driven by workers commuting to drilling sites, new pipeline right-of-ways, and cryogenic processing plants and other midstream processing facilities.  Larger trucks deliver supplies and carry away the crude oil that is extracted along with natural gas.  The greatest wear and tear on infrastructure results from the circulation of heavy tractor-trailers that haul drilling rigs and fracking equipment to well pads and large pieces of machinery to processing facilities.  For the largest equipment, roads and highways need to be closed temporarily, which involves close coordination with local law enforcement.  Additionally, local authorities have signed Road Use Maintenance Agreements (RUMAs) that spell out energy companies’ responsibilities for the upkeep of infrastructure the companies are using as well as for the final condition of those roads once drilling is over.

As hydrocarbon extraction has surged in eastern Ohio, OSU Extension has provided much-needed advice to local communities and governments.  Two federal grants have been obtained recently to broaden this effort.  One, from the North Central Regional Center for Rural Development, allows OSU Extension and its counterparts in the Dakotas to create educational materials designed to help local leaders prepare for the challenge of shale development while simultaneously harnessing for their communities’ long-term sustainability.  The other grant is from the U.S. Economic Development Administration and will enable OSU Extension to assist local communities with their development strategies by carrying out industry cluster analyses, industry capacity assessments, and asset mapping.  The same grant will support a strategic planning process that makes use of that information as well as the formulation of measures for implementing strategic plans.  Together, the two grants will help local communities take full advantage of shale energy production for their long-term benefit.

Written by Mike Lloyd, OSU Extension Educator, Community Development