American Oil and Gas Reporter - February 2015 - 131

ConventionSection: Ohio Oil & Gas Association

The Year Ahead
Despite the benefits lower energy costs
offer to Ohio consumers, Hill cautions,
2015 is likely to be very difficult for
OOGA members. "Anybody who uses
natural gas as a raw material-such as
Ohio's manufacturers-is having a great
time with these lower prices," he says.
"The key is hitting the right tone: It will
be a short-term good for people who use
natural gas as a raw material. But the
low prices also mean a drop in drilling
rigs, and a year or two from now, prices
could skyrocket, which would be hard
on those same manufacturers. So, we
have to find a delicate balance where
everyone can survive."
The manufacturing sector always has
been one of the oil and gas industry's
best customers, Bennett says. "Our state
does not have mountains or coasts, but,
historically, many industries came here
because there was a supply of affordable,
reliable energy," he elaborates. "And that
is what keeps them here. So, if we are a
providing them with a product, we are
keeping them here and bringing more
jobs and investment to Ohio."
Slower activity will prompt more competition to drill and complete wells, he
forecasts. "The well that cost $10 million
in 2014 may cost $8 million in 2015,"
Hill relates. "For Ohio's market to normalize, we need a commodity price increase, and a decrease in well costs.
When companies can meet their internal
rates of return, we will get back to business."
The challenges are by no means limited

to companies participating in the Utica
play. According to Hill, Ohio's conventional operators already were struggling
with high land prices, which have been a
drag on conventional drilling. Meanwhile,
Ohio has lost drilling rigs since the price
shift, and because drilling shale wells
can cost millions, Hill says Utica drilling
will drop.
"The worst part is, this is hitting
hardest in areas that already were de-

pressed economically," he emphasizes.
"When shale drilling started, people who
had been unemployed or underemployed
were able to work well-paying jobs for
the incoming oil and gas companies.
Now, for example, we are seeing title
companies in county-seat cities, such as
Cambridge, Oh., downsizing their staffs.
Previously, there had been a very tight
housing market because of the influx of
workers. That has loosened now."

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part of the state, especially, he says, has
seen a change because that part of the
Utica Shale play relies more on natural
gas liquids and condensates-which are
tied to the price of oil.
Overall, he comments, companies in
the Utica play have responded to the slipping oil price in diverse ways. "It's a
fairly new play, and some larger companies
are going on as before," he says. "Meanwhile, others are slowing, especially if
they also are operating in more oil-driven
basins."
OOGA President David Hill remarks
that the oil and gas industry has a strong
history of making the best of less-thanideal market situations. This latest market
shift, he predicts, will be no different.
"Already, there has been a good atmosphere of cooperation among various companies within the industry," he says.

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FEBRUARY 2015 131



American Oil and Gas Reporter - February 2015

Table of Contents for the Digital Edition of American Oil and Gas Reporter - February 2015

Contents
American Oil and Gas Reporter - February 2015 - Cover1
American Oil and Gas Reporter - February 2015 - Cover2
American Oil and Gas Reporter - February 2015 - Contents
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American Oil and Gas Reporter - February 2015 - Cover3
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